Independent Legal Advice – 7 Factors to Look For

Independent Legal Advice

I am typically attempting to set aside a transaction or a will and I often look to see if there was independent legal advice (ILA) given and if so, was it truly independent.

For example on a recent file a daughter took her mother to a lawyer and instructed the lawyer to transfer the mother’s property into joint tenancy with her mother’s  grandson, the son of the instructing daughter.

The owner/grandmother then died and the grandson purported to be the owner of the property.

When we obtained and reviewed the lawyers file, he not only took instructions to prepare the transfer from the mother of the recipient grandson of the interest in joint tenancy,  but the bill was also rendered to the daughter , while meanwhile the lawyer  takes the position that he acted for the donor grandmother.

If so, where was her independent legal advice?

Factors to Look For in Independent Legal Advice

1. The person taking advantage of the wealth transfer is present at the time the advice is given or the time the documents are signed.

2. Some or all of the instructions have come from the person taking advantage from the transaction.

3. The lawyer does not have a full understanding of the client’s overall asset picture, and is unable to assess or to discuss the extent to which it will impoverish them.

4. The lawyer has any prior professional relationship with the person taking advantage.

5. The lawyer has a past or current personal relationship with the person taking advantage (e.g., childhood friend, best friend of lawyer’s wife).

6. The lawyer is upon close scrutiny really acting for someone other than the client, or is acting in a joint retainer with the person taking advantage.

7. Any part of the fees are being paid by the person taking advantage under the rela­tionship rather than by the client himself or herself.

Use of Multiple Wills Approved

Use of Multiple Wills Approved

In re: Berkner Estate 2017 BCSC 619 the Court approved the use  of Multiple Wills in estate planning. 

The applicant submits that a person is entitled to have more than one valid will. As an example, multiple wills may be used when a will maker has assets in multiple jurisdictions. Rather than preparing a single will and then seeking a resealing in all other jurisdictions where the deceased holds property, multiple wills may be utilized. The Canadian Estate Planning Guide (Toronto: Wolters Kluwer, 1995) (loose-leaf revision 233), ch. 10, at p. 216 states:

In a world in which individuals frequently maintain assets in different jurisdictions, the convenience of using multiple wills has long been recognized. The testator simply prepares an original will for each jurisdiction in which he or she has assets. The principal advantage is that each will can be submitted to the proper court or put into effect without any dependence on the other will(s). Where there are assets in several jurisdictions, there is no need to limit oneself to two wills. But in each case, care should be taken to ensure that the will satisfies the formalities of execution of the relevant jurisdiction. Likewise, it is necessary to ensure that one will does not accidentally deal with assets that are also dealt with under another will and thereby create a situation of conflict, presumably resulting in the provisions of the later-dated will having priority with respect to the disposition of such assets.

10      There is no evidence that the deceased prepared two wills to address jurisdictional issues. A more likely motivation for the two wills is found in the following paragraph from the Canadian Estate Planning Guide:

Multiple wills are also used in some provinces as a means of reducing probate tax. Simply put, the basic strategy is to sequester assets that do not require probate in one will, while dealing with the remaining assets that do require probate in a second will. Of course, only the second will is probated, thereby saving probate tax on the assets covered by the primary will. . . .

11      The estate planning strategy of preparing two wills but only applying for probate of one of them was permitted in two Ontario cases, Granovsky Estate v. Ontario, 1998 CanLII 14912, 156 DLR (4th) 557, which I will refer to later, and also in Kaptyn v. Kaptyn (2010), 2010 ONSC 4293.

12      Authority for permitting two wills can be found in Astor, In the Goods of, [1876] P.D. 150, at p. 152:

. . . The question of incorporation in the probate of separate documents has frequently been a subject of consideration, and, I may say, a troublesome matter both to myself and my predecessors, in carrying out the jurisdiction I have now to exercise. I endeavoured to lay down the principles which should guide me in these cases In the Goods of Lord Howden (4), in which I held that where an English will ratifies and confirms a foreign will, it is right that the latter should be incorporated in the probate. In the present case, however, the testator has carefully used the clearest and strongest language to indicate his intention of keeping the English property separate from the American, and for that purpose has made the English will, which does not purport to ratify or confirm the American will, but merely expresses his desire that, if the two cannot be kept totally distinct, the English will shall be treated as a codicil to the American one. I have come to the conclusion that his wishes need not be disappointed, and that there is no reason why I should insist on the incorporation of the American will in the English probate.

13      The Astor case was referred to by the Ontario Court in each of Granovsky Estate and Kaptyn, and I am satisfied that it remains good law in the absence of any rule or legislation to the contrary 

Gratuitous Agency

Gratuitous Agency

Agency can simply be defined as a person authorized by another to act for him or her with entrusted business, and the agent represents that the agent is acting for another under the contract of the relation of agency.

The  case of Siemens v Howard 2017 BCSC 587 involved the plaintiff alleging a gratuitous realtor agency agreement that had been breached and damages should be awarded. The judge found that there was no agency agreement created.

A lawyer and a realtor are two common examples of the many types of agency relationships that exist in the business world.

The plaintiff  Siemens asserted that Mr. Howard was his realtor and agent, and that Mr. Howard acquired Old Riverside in breach of Mr. Howard’s obligations to Mr. Siemens.

The principal relief sought by Mr. Siemens is a declaration that Mr. Howard holds Old Riverside on a constructive trust for Mr. Siemens, and an order that the property be conveyed to Mr. Siemens accordingly. Mr. Siemens asserts that he is entitled to that relief based on the principles set out by the Supreme Court of Canada in Soulos v. Korkontzilas, [1997] 2 S.C.R. 217 (“Soulos SCC“), where a constructive trust was imposed as a remedy for wrongful conduct by an agent. A claim for general damages was abandoned by Mr. Siemens at the close of trial.

3      Mr. Howard says that there was never any agency relationship between him and Mr. Siemens, that he owed no obligations to Mr. Siemens and that, at all times, he was entitled to acquire Old Riverside for himself.

Mr. Howard says that he and Mr. Siemens discussed Mr. Siemens acquiring a portion of Old Riverside from Mr. Howard, but they were never able to reach an acceptable agreement on the essential terms. Accordingly, Mr. Howard says that he has no liability to Mr. Siemens and the action should be dismissed.

The Court found there was no agency relationship and dismissed the claim.

130      The principle applicable to deemed or gratuitous agency is stated in Bowstead & Reynolds on Agency, 20th ed. (London: Sweet & Maxwell, 2014), at p. 61, as follows:

Agreement between principal and agent may be implied in a case where each has conducted himself towards the other in such a way that it is reasonable for that other to infer from that conduct consent to the agency relationship.

131      That principle was cited and applied, for example, at trial in Soulos v. Korkontzilas (1991), 4 O.R. (3d) 51 (Gen. Div.) (“Soulos Trial“), at pp. 65-66, in support of the trial judge’s finding that Mr. Korkontzilas was the agent of Mr. Soulos. This finding was accepted in the subsequent appeals to the Ontario Court of Appeal and the Supreme Court of Canada. Indeed, in Soulos SCC, McLachlin J. observed, at para. 12, that “Most real estate transactions involve one person acting gratuitously for the purchaser, while seeking commission from the vendor.”

132      Thus, the fact that Mr. Siemens had no obligation to pay a commission to Mr. Howard is irrelevant to the question whether a deemed agency relationship existed.

133      The concept of gratuitous agency in relation to a realtor or real estate agent appears to have received little explicit attention in B.C. It is mentioned in Sandhu v. Shiell, 1996 CanLII 2193 (B.C.C.A.), where Lambert J.A. (writing for the court) said:

16      The [plaintiffs/appellants’] argument based on the existence of a relationship of gratuitous agency is said to be supported by a decision of the Ontario District Court in Calandra v. B. A. Cleaners (1990), 11 R.P.R. (2d) 63 where such a relationship was found. Reliance was also placed both on that case and on this passage from the “Restatement of the Law” 2d ed., vol. 2: Agency (2d) of the American Law Institute, at s.378:

One who, by a gratuitous promise or other conduct which he should realize will cause another reasonably to rely upon the performance of definite acts of service by him as the other’s agent, causes the other to refrain from having such acts done by other available means is subject to a duty to use care to perform such service or, while other means are available, to give notice that he will not perform.

17      That is a statement of a very attractive legal principle. I would not be prepared to say, in the context of this case, that the concept of “gratuitous agency” is entirely foreign to the law of British Columbia, but it is not necessary for me to say anything more about it than that.

 

Drafting Lawyer Has Heavy Duty to Investigate Testamentary Capacity

Drafting Lawyer Has Heavy Duty to Investigate Testamentary Capacity

Friesen v Friesen Estate (1985) 24 ETR 191 sets out inter alia the heavy duty upon a lawyer taking instructions for a will to investigate and satisfy him or herself that the testator has testamentary capacity.

77      The law reports of England and Canada are replete with lengthy decisions setting forth the principles to be applied when testamentary capacity has been challenged, and describing the standards expected of a solicitor who has drafted a challenged will. Banks v. Goodfellow (1870), L.R. 5 Q.B. 549; Tyrrell v. Painton, [1894] P. 151 (C.A.); Menzies v. White (1892), 9 Gr. 574; Murphy v. Lamphier (1914), 31 O.L.R. 287 (affirmed 32 O.L.R. 19); Leger v. Poirier, [1944] S.C.R. 152, [1944] 3 D.L.R. 1 (S.C.C.), and Slater v. Chitrenky, [1981] 4 W.W.R. 421, 10 E.T.R. 191, (sub nom. Re Campbell; Slater v. Chitrenky) 28 A.R. 54 (Alta. Surr. Ct.) [affirmed [1982] 3 W.W.R. 575, 11 E.T.R. 171 (C.A.)], are only a few. Rather than review or quote extensively from those cases, I will enumerate what I regard to be the basic rules to be garnered therefrom, as they apply to this case.

1. Proving testamentary capacity rests upon he who propounds the will or seeks to take advantage therefrom.

2. For a testator to be of a sound and disposing mind, he must understand the extent of the property of which he is disposing; he must be able to comprehend and appreciate the nature of the claims of others who might be expected to participate in his bounty.

3. Whenever a will is prepared and executed in circumstances which arouse the suspicion of the Court, it will not be admitted to probate unless the person propounding it produces evidence which is sufficient to remove the suspicion and to satisfy the Court that the testator both knew and approved the contents of the will.

4. The weight of the onus will be proportionate to the gravity of the suspicion raised in any particular case.

5. Neither the superficial appearance of lucidity nor the ability to answer simple questions in an apparently rational way are sufficient evidence of capacity.

6. The duty upon a solicitor taking instructions for a will is always a heavy one. When the client is weak and ill, and particularly when the solicitor knows that he is revoking an existing will, the responsibility will be particularly onerous.

7. A solicitor cannot discharge his duty by asking perfunctory questions, getting apparently rational answers, and then simply recording in legal form the words expressed by the client. He must first satisfy himself by a personal inquiry that true testamentary capacity exists, that the instructions are freely given, and that the effect of the will is understood.

Gift to Witness to Will Cured By S 43 WESA

Gift to Witness to Will Cured By S 43 WESA

Bach Estate 2017 BCSC 548  cured a gift to witness to will to be valid   when prior to WESA  on March 31, 2014 it would  have been invalid.

One of the witnesses to the will was the husband of the deceased and a beneficiary under her will.

The Court followed the reasoning of previous decisions made under S 58 WESA to cure defective wills  and allowed extrinsic evidence to be introduced to show the true testamentary intention of the testator.

Validity

(2) A person may witness a will even though he or she may receive a gift under it, but the gift may be void under section 43 [gifts to witnesses].

(3) A will is not invalid only because a witness was, at the time the will was signed by the will-maker, or afterwards became, legally incapable of proving the will, unless the witness was not 19 years of age or older at the time the will was signed by the will-maker.

47      The document signed by Mr. Bach on September 9 meets the requirements of ss. 37(1) and 40 and is therefore a valid will under the WESA. This act revoked all prior wills created by Mr. Bach: s.55 WESA.

48      The difficulty arises from s. 43(1):

43(1)  WESA states:

Unless a court otherwise declares under subsection (4), a gift in a will is void if it is to

(a) a witness to the will-maker’s signature or to the spouse of that witness,

(b) a person signing the will by the will-maker’s direction, or the spouse of the person signing, or

(c) a person claiming under a person, other than the will-maker, referred to in paragraph (a) or (b).

49      One of the witnesses to this will was Mr. Thibodeau, the husband of the beneficiary under the will.

50      Prior to 2014, the law was clear: the court had no discretion to allow for such gifts: see Estate of Jason M. Bird, 2002 BCSC 1584. This rule operated as a safeguard against fraud and undue influence, however, the rigid application often defeat the genuine intention of the testator. Under the rule, the gift to Ms. Thibodeau would have failed.

51      However, on March 31, 2014, WESA came into force. Under this new legislation, gifts made in these circumstances are still presumptively void however, the court now has the discretion to declare them valid under s. 43(4):

(4) On application, the court may declare that a gift to a person referred to in subsection (1) is not void and is to take effect, if the court is satisfied that the will-maker intended to make the gift to the person even though the person or his or her spouse was a witness to the will.

52      I am not aware of any case in British Columbia in which this provision has been applied. I find however, that recent jurisprudence under s. 58 of the WESA (concerning court-ordered curing of formally deficient wills) that relates to testamentary intent instructive.

53      For example, in Yaremkewich Estate (Re), 2015 BCSC 1124, Watchuk J. considered s. 58 and the concept of testamentary intent. She stated:

[29] WESA, which came into effect on March 31, 2014, contains a new provision in s. 58 that even if a document fails to comply with the formalities of the statute, a court may nonetheless order that the document is fully effective as if it had complied with the statute.

The provision reads as follows:

Court order curing deficiencies

58(1) In this section, “record” includes data that

(a) is recorded or stored electronically,

(b) can be read by a person, and

(c) is capable of reproduction in a visible form.

(2) On application, the court may make an order under subsection (3) if the court determines that a record, document or writing or marking on a will or document represents

(a) the testamentary intentions of a deceased person,

(b) the intention of a deceased person to revoke, alter or revive a will or testamentary disposition of the deceased person, or

(c) the intention of a deceased person to revoke, alter or revive a testamentary disposition contained in a document other than a will.

(3) Even though the making, revocation, alteration or revival of a will does not comply with this Act, the court may, as the circumstances require, order that a record or document or writing or marking on a will or document be fully effective as though it had been made

(a) as the will or part of the will of the deceased person,

(b) as a revocation, alteration or revival of a will of the deceased person, or

(c) as the testamentary intention of the deceased person.

(4) If an alteration to a will makes a word or provision illegible and the court is satisfied that the alteration was not made in accordance with this Act, the court may reinstate the original word or provision if there is evidence to establish what the original word or provision was.

[30] Accordingly, s. 58(3)(a) empowers the court to order that a document or other record is fully effective as the will of a deceased person if the court is satisfied that the document represents the testamentary intentions of that deceased person.

[Emphasis added.]

54      The same inquiry is relevant under s. 43(4). Watchuk J. continued:

Evidence

[31] As a preliminary matter, the statements that Ms. Yaremkewich made to the various affiants and the other evidence of her intention in the affidavits are admissible evidence in this case.

[32] The approach to evidence under Manitoba’s Wills Act, R.S.M. 1988, c. W-150 was summarized by Philp, J.A. in Langseth Estate v. Gardiner (1990), 75 D.L.R. (4th) 25 at 33 (Man. C.A.)

The general rule that extrinsic evidence is not admissible in construing a will (the function of a court of construction) does not apply to the probate court whose duty is to determine whether a document is a valid will. Extrinsic evidence is admissible on the question of testamentary intent, and the Court is not limited to the evidence that an inspection of the document provides.

Testamentary Intent

[33] The s. 58 curative provision was well summarized in Estate of Young, 2015 BCSC 182 [Young]. This provision is one of WESA‘s “most far-reaching remedial provisions”, and it represents a marked departure from the traditional, formalistic approach to the creation of wills (at para. 16). It confers the court with a broad discretion to treat a testamentary record as valid even if it does not comply with the formalities of the statute. However, this provision can only be used to cure errors concerning formalities, and cannot cure substantive errors such as testamentary incapacity or undue influence (at para. 17).

[34] To apply s. 58, the applicant must prove on the balance of probabilities that the record at issue is authentic and that it represents the testamentary intentions of the will-maker: Young at paras. 19, 36; and Bunn Estate (Re) (1992) 100 Sask. R. 231 at 237 (C.A.) [Bunn Estate]. This analysis asks whether the court is satisfied that the document records the will-maker’s deliberate or fixed and final expression of intention as to the disposal of her property upon death. This was summarized in Young as follows:

[34] As is apparent from the foregoing, a determination of whether to exercise the court’s curative power with respect to a non-compliant document is inevitably and intensely fact-sensitive. Two principal issues for consideration emerge from the post-1995 Manitoba authorities. The first in an obvious threshold issue: is the document authentic? The second, and core, issue is whether the non-compliant document represents the deceased’s testamentary intentions, as that concept was explained in George.

[35] In George the court confirmed that testamentary intention means much more than the expression of how a person would like his or her property to be disposed of after death. The key question is whether the document records a deliberate or fixed and final expression of intention as to the disposal of the deceased’s property on death. A deliberate or fixed and final intention is not the equivalent of an irrevocable intention, given that a will, by its nature, is revocable until the death of its maker. Rather, the intention must be fixed and final at the material time, which will vary depending on the circumstances.

[Emphasis added.]

55      The question, then, is whether the gift expresses the testamentary intentions of Mr. Bach, despite the fact that the will was witnessed by the spouse of Sharon Thibodeau. Extrinsic evidence is admissible.

56      Here, there is the evidence from Ms. Veres: she deposed that when she visited Mr. Bach in August, 2014, he made no mention of intending to change his will. He was frustrated in his efforts to sell the house and said to her in this regard: “you would just have to deal with selling the house yourself”.

57      I note that if a person chooses to exclude a relative from her or his will, it is human not to mention it. The statement he apparently made, however, implies that he was not intending to change his will.

58      But the evidence to the contrary is overwhelming. First, Ms. Thibodeau deposed that on July 17, 2014 the deceased told her that he intended to change his will.

59      Her affidavit goes on:

  1. We were sitting in Terry’s house, and Terry started a conversation with me and said he was going to change his Will, and that he wanted to leave everything to me, including his house. He said that I had always been there for him, and I had been so good to him all his life. He said that he did not know what he would have done without me. Terry said, “why should Jamie have my house?”, and that he had worked hard for it.
  2. Terry stated that Jamie [Veres] has a farm and all that land, she doesn’t need it. He further stated that Jamie had always told him that she did not want the house.
  3. Terry told me he was going to call Jamie and let her let her know that he was going to change his Will. I have no knowledge as to whether Terry told Jamie that he intended to change his Will or not; I never questioned him about that at any time.

60      Furthermore, as outlined above, Mr. Bach advised his friend Wendy Boyes that he was leaving all of his estate to his sister Sharon. He told her that on August 9, 2014. On September 2, 2014 he told his sister, Diane Vanderburg, that he wished to leave all of his estate to Ms. Thibodeau.

61      Dr. Willms’ evidence in this regard is significant as well. She deposed that a document expressing Mr. Bach’s intention to leave his estate to his sister was signed. She said that it was read aloud to him and that he stated that he agreed with the contents of the document and that he understood that the document was intended to indicate his wishes for the estate.

62      Finally, there is the evidence of the last 24 hours of Mr. Bach’s life. The deceased had asked Ms. Thibodeau and her husband to take him to a notary for the purpose of making a new will and making other final arrangements. That included signing a power of attorney appointing Ms. Thibodeau as his attorney.

63      On all the evidence, I am satisfied that the document executed on September 9, 2014 amounts to a will and represents Mr. Bach’s testamentary intent. The gift is not void.

64      The application is therefore allowed.

Spoliation of Evidence

Spoliation of Evidence

Spoliation of evidence is the intentional destruction of relevant evidence when litigation exists or is pending.

There are few cases on the issue in Canada but it does occur on occasion.

In Holland ( Guardian ad litem) v Marshall 2008 BCCA 468 the appeal court stated re a medical malpractice suit where it was alleged hospital records had been deliberately destroyed:

55      Justice Brooke stated his understanding of the law of spoliation of evidence based on four case authorities to which he was referred by counsel for the respondents. The following is a summary of what was stated:

1. A rebuttable evidentiary presumption arises where evidence of spoliation exists; the doctrine of spoliation is an evidentiary rule raising a presumption and not an independent tort giving rise to a cause of action (St. Louis v. R. (1896), 25 S.C.R. 649 (S.C.C.)).

2. In an appropriate case, destruction of documents carries a procedural but not substantive remedy, an action for damages cannot be sustained solely on the ground that documents have been destroyed (Endean v. Canadian Red Cross Society (1998), 48 B.C.L.R. (3d) 90 (B.C. C.A.)).

3. Spoliation requires four elements in evidence: a) the evidence has been destroyed; b) the evidence destroyed was relevant to an issue in the lawsuit; c) legal proceedings were pending; and d) the destruction of documents was an intentional act indicative of fraud, or an intention to suppress the truth (Dyk v. Protec Automotive Repairs Ltd. (1997), 41 B.C.L.R. (3d) 197 (B.C. S.C.)).

4. There is no common law duty of care to preserve property which may possibly be required for evidentiary purposes; such an obligation can only be imposed by court order granted pursuant to the Rules of Court (Dawes v. Jajcaj, 1999 BCCA 237, 66 B.C.L.R. (3d) 31 (B.C. C.A.), aff’g (1995), 15 B.C.L.R. (3d) 240 (B.C. S.C.), leave to appeal ref’d (2000), [1999] S.C.C.A. No. 347 (S.C.C.)).

56      Justice Brooke accepted the evidence presented by the Hospital that Ms. Holland’s records were destroyed in accordance with its policy in place at the time and not for the purpose of suppressing evidence. He concluded there was no evidentiary foundation for Ms. Holland’s assertion of spoliation on the part of the defendant physicians or the Hospital. In that regard, Brooke J. said:

In Gray v McNeil 2016 ABQB 645 the court found evidence of spoliation had been rebutted by corroborative evidence:

A mother had contents of the deceased’s laptop computer erased days before examination for discovery, and her actions in erasing laptop computer amounted to spoliation .

Counsel for both parties agreed that the  laptop would be examined, and the mother engaged in deliberate act to destroy evidence so it was not available for ongoing legal proceedings.

The mother did not merely wipe out evidence of deceased’s private life, but also evidence that could prove or disprove whether and when 2011 will was created on laptop.

Spoliation created presumption that evidence on computer would have been unfavourable to mother, but the presumption was rebutted by other evidence that corroborated mother’s evidence. 

Spoliation, which is the intentional destruction of relevant evidence when litigation exists or is pending: McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, 440 A.R. 253 (Alta. C.A.), at para 29. The spoliation of relevant evidence is a serious matter. As was noted in Doust v. Schatz, 2002 SKCA 129, 227 Sask. R. 1 (Sask. C.A.), at para 27 “[t]he integrity of the administration of justice in both civil and criminal matters depends in a large part on the honesty of parties and witnesses. . . . A party is under a duty to preserve what he knows, or reasonably should know, is relevant in an action….”

124      The principle remedy for spoliation is the imposition of a rebuttable presumption that the evidence which was destroyed would not have assisted the spoliator. The presumption can be rebutted by evidence showing the spoliator did not intend, by destroying the evidence, to affect the litigation, or by other evidence that proves her case, McDougall at para 18:

. . . Spoliation in law does not occur merely because evidence has been destroyed. Rather, it occurs where a party has intentionally destroyed evidence relevant to ongoing or contemplated litigation in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation. Once this is demonstrated, a presumption arises that the evidence would have been unfavourable to the party destroying it. This presumption is rebuttable by other evidence through which the alleged spoliator proves that his actions, although intentional, were not aimed at affecting the litigation, or through which the party either proves his case or repels the case against him.

Renewal of Wills Variation Claim Not Served In Time

Renewal of Wills Variation Claim Not Served In Time

Rodgers v Rodgers Estate 2017 BCSC 518 dealt with an application for a  renewal  court proceedings in a wills variation claim under S 61 WESA that states in 61 ( B) that the proceeding must be served on the executor of the will no later than 30 days after the expiry of the 180 days after the representation grant ( probate) has been issued.

The plaintiff also claimed other relief that was improperly pleaded and 30 days was granted to the plaintiff to bring on an application to amend the pleadings.

The Court in Rodgers stated with respect to the renewal of an action to effect service under s 61 WESA:

22      The court has no jurisdiction to hear the wills variation action if it is not commenced within 180 days from the date the representation grant is issued in British Columbia. The court does have discretion to grant leave to extend the time for service under s. 61(1)(b).

The deadline for service is no later than 30 days after the expiry of the 180 day period referred to in s. 61(1)(a).

23      Counsel for the executor equates the extension of the time for service of a wills variation notice of civil claim to an application for a renewal of a writ. This comparison makes logical sense to me given that, in both scenarios the notice of civil claim or writ expires if it is not served within the proscribed time period. 

24      When hearing an application for renewal of a writ the authorities rely on the test set out in Bearhead v. Moorhouse, (1977) 3 B.C.L.R. 81 (B.C.S.C.) aff’d (1978) 5 B.C.L.R. 380 (CA) (B.C.C.A.):

1. Was the application brought promptly?

2. Did the defendant have notice of the claim from sources other than the writ?

3. Has the defendant suffered prejudice?

4. Was the failure to serve the writ attributable to actions of the defendant? and

5. Was the plaintiff or solicitor at fault?

25      In Seeliger v. Eagle Ridge Hospital, 2007 BCCA 582, the British Columbia Court of Appeal said that it is inappropriate to have an in-depth review of the merits of the case on a renewal application but that the plaintiff is required to demonstrate that the pleadings disclose a cause of action.

If a defendant can make out a case that the action has no hope of success and is bound to fail, then the interest of justice support refusing application on those grounds.

The burden is on the defendant to prove that it is plain and obvious that the action has no merit and is bound to fail.

The Court granted an additional 30 days to serve the court process on the executor.

Executors Entitled To Indemnification For Fees and Expenses

Executors Entitled To Indemnification For Fees and Expenses

Re Collett Estate 2017 BCSC 473  confirmed the well settled law that executors at entitled to  indemnification for properly incurred fees and expenses in carrying out their administration of an estate.

Jackson et al v. King et al, 2003 BCSC 328 at para. 12:

As Executors, the Respondents are entitled to be indemnified out of the Estate for all proper expenses incurred in relation to the Estate and this right of indemnity is a first charge upon the capital and the income of the Estate: Halsbury’s Laws of England, vol.17, 4th ed. (London: Butterworths, 1976) at 612, paragraph. 1190. The Respondents are also entitled to be indemnified for all costs including legal costs which are reasonably incurred: Geffen v. Goodman(1991), 81 D.L.R. (4th) 211 (S.C.C.). As well, the Respondents are entitled to full indemnity for all costs and expenses properly incurred in the due administration of the Estate: Thompson v. Lamport, [1945] S.C.R. 343.

The Supreme Court of Canada in Geffen v Goodman stated:

75      The courts have long held that trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred. Reasonable expenses include the costs of an action reasonably defended: see Re Dingman (1915), 35 O.L.R. 51. In Re Dallaway [1982] 1 W.L.R. 756, [1982] 3 All E.R. 118, Sir Robert Megarry V.C. stated the rule thus at p. 121:
In so far as such person [trustee] does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court otherwise orders; and the court can otherwise order only on the ground that he has acted unreasonably, or in substance for his own benefit, rather than for the benefit of the fund.

See also Re Ladner Estate, 2001 BCSC 943 at para. 9:

The cases and texts to which I have referred above indicate: (1) that executorship expenses, testamentary expenses and administration expenses are in essence synonymous terms which relate to the proper performance of the duties of the executor of the estate;

(2) such expenses include the costs incurred in obtaining the advice of solicitors or counsel with respect to ascertaining the debts and liabilities due from the estate, the payment of such debts and liabilities, and the legal and proper distribution of the estate among the persons entitled.

Trustee Fee For Care and Management of Estate Assets

Trustee Fee For Care and Management of Estate Assets

Re Pedlar 1982 BCJ 1553 deal with the criteria for an estate trustee fee for the care and management of estate assets not to exceed .4% of the average market value of the estate assets.

It was recently followed in Collett Estate 2017 BCSC 473

In 1980 the BC Trustee act was amended to allow an executor trustee to claim an additional fee for the care and management of estate assets not to exceed .4% of the average market value of the assets.

Re Pedlar estate stated inter alia:

3      Because s. 90(2) of the Act refers to s. 90(1) thereof, it will be convenient to set forth both s. 90(1) and (2) of the Act.

90.(1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or the registrar of that court if so directed by the court, to allow him a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his care, pains and trouble and his time expended in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him under any will or letters of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or the registrar of the court if so directed by the court thinks proper. The court or the registrar of the court if so directed by the court, may so order from time to time, and the amount of remuneration shall be allowed to an executor, trustee, guardian or administrator, in passing his accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(2) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

4      Briefly stated, it is apparent that s. 90(1) pertains to an allowance to be awarded to an executor, administrator, guardian appointed by any court, testamentary guardian, or any other trustee (hereinafter referred to as “a trustee”) for his care, pains, trouble and time expended by him in administering, arranging, disposing and settling an estate or trust, whereas s. 90(2) pertains to the allowance to a trustee of a care and management fee with respect to an estate or trust.

12      Under the common law of the provinces of Ontario and Nova Scotia a fee for the care and management of an estate or trust has been allowed for many years in addition to an allowance for the care, pains, trouble and time expended in administering, arranging, disposing and settling of an estate or trust: see Re Berkeley’s Trusts (1879), 8 P.R. 193; Re Williams (1902), 4 O.L.R. 501 (C.A.); Re Farmers’ Loan & Savings Co. (1904), 3 O.W.R. 837; and Re Creelman (1973), 40 D.L.R. (3d) 306 (N.S.).

13      It is apparent that by the addition of subs. (2) of s. 90 of the Act in 1980, the provincial legislature decided to accord a trustee in the province of British Columbia an opportunity to apply to the Supreme Court for a similar care and management fee. The care and management fee referred to in s. 90(2) is clearly an allowance for remuneration in addition to the allowance for remuneration referred to in s. 90(1) of the Act. To hold otherwise would frustrate the obvious intent of the legislation.

14      Each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee (not exceeding 0.4 per cent of the average market value of the assets of the estate), include the following:

15      (a) the value of the estate assets being administered;

16      (b) the nature of the estate assets being administered — such as an active business, a farm, real property held for investment or appreciation, a portfolio of investments and the type of such investments;

17      (c) the degree of responsibility imposed upon the trustee by the terms of the will or other instrument, including the length or duration of the trust;

18      (d) the time expended by the trustee in the care and management of the estate;

19      (e) the degree of ability exhibited by the trustee in the care and management of the estate;

20      (f) the success or failure of the trustee in the care and management of the estate;

21      (g) whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate.

22      While the foregoing list of factors is not intended to be exhaustive, it has been derived, primarily, from a consideration of the Ontario Court of Appeal decisions in Re Mortimer [1936] O.R. 438, [1936] 3 D.L.R. 380 (C.A.), and Re Smith, [1953] O.R. 185 (C.A.). It is recognized that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application.

23      Section 90(2) of the Act does not indicate what information should be placed before the court in support of the application for a care and management fee. In my view, the trustee should give a general summary of the estate and of his services performed in the care and management of the estate, including information with respect to the factors previously referred to, and any other factors which may be relevant to the particular application.

Executor Trustee Removed For Delay

Executor Trustee Removed For Delay

Re Collett Estate 2017 BCSC 473 is the most recent of a judicial trend to remove an executor trustee for delay in the distribution and finalization of an estate.

In Collett the deceased died in 2008 and was removed as a result of the inordinate delay in finalizing a simple estate in a timely manner.

In Dirnberger Estate, 2016 BCSC 439, this Court wrote as follows in deciding to remove an executor as a result of his delays:

[13] The duty of an executor is to settle the affairs of the deceased and to distribute the estate in accordance with the terms of the will in a timely manner. Mr. Chase has failed to do this.

[14] I have concluded that Mr. Chase must be removed as trustee. I have reached this conclusion for two reasons. His actions demonstrate that he lacks the necessary capacity to act as trustee. . . . There is as well a want of reasonable fidelity.

[15] With regards to the first reason, this is a simple estate that has not been distributed more than four years after probate.

[16] In Levi-Bandel v. McKeen, 2011 BCSC 247, Justice Butler stated at paras. 21 and 23:

[21] . . . it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal . . . .

. . .

[23] . . . I have little difficulty in concluding that [the executor’s] inaction and her intransigence caused unnecessary delay. Her refusal or reluctance to proceed with the administration of the estate amounts to a want of reasonable fidelity and a failure to carry out her duties.

 Justice Butler further stated:

19      The test for removal of an executrix or trustee is not contentious. The leading authority in British Columbia remains the decision in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C. C.A.). In Conroy, the Court of Appeal considered whether it was expedient to remove one trustee and appoint a replacement when some of the beneficiaries were dissatisfied with the way the trustee was handling the estate. The court confirmed at 126-127 that the main test for removal of a trustee is the welfare of the beneficiaries:

In Letterstedt v. Broers (1884), 9 App. Cas. 371, their Lordships of the Judicial Committee held that the main principle upon which the jurisdiction of Courts of Equity has been exercised to remove old trustees and substitute new ones in cases requiring such a remedy, is the welfare of the beneficiaries of the trust estate. 

20      In Letterstedt v. Broers [(1884), L.R. 9 App. Cas. 371 (South Africa P.C.)], the court noted that it is not every act of misconduct that should result in removal of a trustee, only acts or omissions which endanger the trust property or show “a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”

21      However, it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal. In Scott v. Scott, [1991] 5 W.W.R. 185 (Sask. Q.B.), Baynton, J. relied on the inherent jurisdiction of the Saskatchewan Court of Queen’s Bench to remove a trustee where the actions of one trustee in refusing to sign cheques or provide an accounting produced a stalemate amongst the trustees. His refusal was motivated by his wish to be compensated by the trust for caring for one of the principals of the trust. He refused to sign cheques or provide the accounting until he was paid. The court found that the trustee’s deliberate failure to act placed him in breach of his fiduciary duties to the beneficiaries of the trust.