Administrator Removed With Special Costs

Administrator RemovedIn Re Campbell estate 2015 BCSC 774, an administrator was removed and ordered to pay special costs of the application on the basis that his conduct throughout was reprehensible and called for reproof and rebuke.

Three siblings had been named co administrators of their late father’s estate.

One of the co administrators demanded to be paid before he would discuss the estate, bringing the administration of the estate to a standstill.

The court removed him on the basis that his behaviour in  insisting on compensation from his co-administrators as a prerequisite to working with them, put his own interests ahead of the interests of the beneficiaries, displaying a want of reasonable fidelity. That behaviour constituted a serious breach, and the only practical manner in which to deal with the deadlock was to remove the cause of the problem.

 

The Law

]         The Court is empowered to remove a co-administrator or trustee. Section 158 of the Wills, Estates and Succession Act, S.B.C. 2009, c.13, provides in part:

(2) A person having an interest in an estate may apply to the court to remove or pass over a person otherwise entitled to be or to become a personal representative.

(3) Subject to the terms of a will, if any, and to subsection (3.1), the court, by order, may remove or pass over a person otherwise entitled to be or to become a personal representative if the court considers that the personal representative or person entitled to become the personal representative should not continue in office or be granted probate or administration, including, without limitation, if the personal representative or person entitled to become the personal representative, as the case may be,

(f) is

(i) unable to make the decisions necessary to discharge the office of personal representative,

(ii) not responsive, or

(iii) otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative,

to an extent that the conduct of the personal representative hampers the efficient administration of the estate …

[15]         Section 30 of the Trustee Act, R.S.B.C. 1996, c. 464, reads as follows:

A trustee or receiver appointed by any court may be removed and a trustee, trustees or receiver substituted in place of him or her, at any time on application to the court by any trust beneficiary who is not under legal disability, with the consent and approval of a majority in interest and number of the trust beneficiaries who are also not under legal disability.

 

In Levi-Bandel v. McKeen, 2011 BCSC 247, Mr. Justice Butler removed a co-executrix. At paras. 15-16, he referred to the authorities supporting the inherent power of the court to remove a trustee. The test for removal of a trustee is the welfare of the beneficiaries of the trust estate: Letterstedt v. Broers (1884), 9 App. Cas. 371 (P.C.); Conroy v. Stokes, [1952] B.C.J. No. 111 (C.A.). Not every act of misconduct should result in removal. The question is whether the acts or omissions endanger the trust property or show a want of honesty or proper capacity to execute the duties or reasonable fidelity: Letterstedt, at 386.

[18]         By insisting on compensation from his co-administrators as a prerequisite to communication, James has put his own interests ahead of the interests of the beneficiaries, and in my opinion this displays a want of reasonable fidelity. This behaviour constitutes a serious breach of his duties as a trustee: Scott v. Scott, [1991] 5 W.W.R. 185 (Sask. Q.B.). By his flagrantly provocative style of communicating with his co-administrators, James has demonstrated a want of proper capacity to execute the duties of administrator.

 

Special Costs

The applicants apply for an order that the costs of this application be paid as special costs by James. I so order. I find that James’ refusal to cooperate in the administration of the estate until his co-administrators pay the very large invoices he has generated shows a troubling disregard for his duties as administrator in favour of attempts to further his own interests. The correspondence in the material shows that James has used his position as co-administrator, and the de facto veto that he enjoyed in this position, as leverage to attempt to extract sizable concessions in his favour from his co-administrators who, like him, are the intestate heirs whose interests ought to be uppermost in his mind. In a similar vein, there is James’ allegation of complicity in criminality made against his co-administrators in the midst of argument, accompanied by the suggestion that he is in possession of information supporting these allegations that he is unwilling to disclose to them because he has not been paid.

[24]         It is to be expected that trustees may fall well short of perfection in the course of administering trusts. Mistakes will be made. However, these errors I have just referenced are not in the category of careless mistakes or errors in judgment. On the contrary, I find that this is reprehensible behaviour that calls out for reproof and rebuke. Aside from punishment of a wayward party, one of the valid purposes of a special costs order is deterrence. Perhaps a special costs order such as this will serve as a warning to others entrusted with the important duties of administering estates: trustees who engage in this sort of nonsense will pay a high price.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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