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.

Passing Over an Executor

Passing Over an Executor

Passing over an executor utilizes essentially the same legal criteria as removing an executor except it occurs before the named executor starts to act in the representative capacity.

Re Thommasson Estate 2011 BCSC 481 removed a named  executor who was not a beneficiary but his siblings wished to review a questionable land transaction made to him by the deceased prior to death .

The criteria for the passing over of an executor is essentially the same as removing an executor- the court’s are reluctant to do so except for good reason having regard to the best interests of the beneficiaries.

19      Courts are hesitant to interfere with the testator’s right to nominate his or her executor. However, the court has both a statutory power under s. 31 of the Trustee Act, R.S.B.C. 1996, c. 464 and an inherent power to remove or pass over a trustee or executor: Mardesic v. Vukovich Estate (1988), 30 B.C.L.R. (2d) 170 (B.C. S.C.); Seaton Estate, Re, 2003 BCCA 555 (B.C. C.A.).

20      Section 31 of the Trustee Act provides:

If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.

21      In Mardesic, Finch J. (as he then was) in finding it necessary and expedient to remove the trustee because he was in a conflict of interest with the interests of all the beneficiaries of the estate, noted that s. 31 conferred a very broad power on the court.

22      The test for removal of an executrix or trustee is set out in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C. C.A.), where 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.

23      In Stadelmier v. Hoffman (1986), 57 O.R. (2d) 495 (Ont. Surr. Ct.), (sub nom. Stadelmier v. Hoffman), the Court found the executor should be passed over because there was a conflict as a result of the fact the executor could not attack the gift and transfer of properties to him while at the same time maintaining in his personal capacity that the transfers were proper. The Court summarized the findings at 500:

In considering the fitness of the respondent to act as an executor I have considered also the duties of an executor in a general way. One duty of an executor is to bring in the estate for distribution among the beneficiaries. If it is perceived, on good grounds, that that important duty is compromised by a personal conflict of interest because the executor will be asked to sue himself to recover what may be a large part of the estate property, he must be passed over. That consideration is particularly important when the action against the executor is for a very significant amount in respect to the size of the estate.

24      In this case, Alex asserts he should not be removed because it would be pre-judging the case. He says that Brian is seeking to overturn the testators’ right to nominate an executor. Alex submits that the possibility of a future lawsuit is not sufficient to overturn a testator’s right to nominate an executor. He relies on the following cases for the proposition that this is not an appropriate case in which to pass over him as an executor: Hautakoski Estate, Re, 2009 BCSC 868 (B.C. Master); De Cotiis v. De Cotiis, 2008 BCSC 1206 (B.C. S.C. [In Chambers]); Le Roux v. Shannon, 2009 BCSC 331 (B.C. S.C. [In Chambers]); and Fawcett Estate v. Steiner, 1998 CarswellBC 625 (B.C. S.C. [In Chambers]).

25      Brian provided the following authorities in which the courts found a conflict that warranted either passing over or removal of an executor or trustee because of either a potential or actual conflict: Stadelmier v. Hoffman; Mardesic; Montgomery v. Osborne Estate1993 CarswellOnt 3482 (Ont. Gen. Div.); Maki Estate, Re, 2007 BCSC 1034 (B.C. Master); and Stern v. Stern, 2010 MBQB 68 (Man. Q.B.).

26      It is clear from reviewing the case law that each case turns on its own facts.

27      In this case, Alex is not a beneficiary under either of his parents’ wills, and his only interest in the estates is as an executor. The other named executor wants to make enquiries into the transfer of the Property to Alex in order to determine what, if any, interest the estates have in the Property, and what, if any, obligations Alex and his wife have to the estates as a result of the transfer.

28      The application is not to remove Alex as an executor but simply to pass over him so that an enquiry can be undertaken of the transfer of the Property to him and his wife by the deceased in 2006, and a determination can be made if any further actions need be taken in regards to the Property.

29      In the circumstances of this case, it is my opinion that there is a perceived conflict of interest between Alex in his role as an executor and his interest in his personal capacity. If an action is instituted by the executors as a result of the transfer of the Property, it would be against Alex. In my opinion, Alex, in his capacity as executor, cannot attack the transfer of the Property to himself while at the same time maintaining, in his personal capacity, that the transfer of the Property was proper. By making such a finding I am not prejudging the case. I am simply of the view that, in the circumstances of this case, if an action is commenced as a result of the enquiries into the transfer, Alex cannot conscientiously act as a plaintiff in his capacity as an executor in a case where he will be the defendant.

30      As a result I conclude that the passing over of Alex is necessary and expedient. His right to apply to be added as a co-executor under the grant of probate after the enquiry has been completed is reserved. There will be a grant of probate naming Brian as the personal representative of the estate of Herbert Thomasson and the estate of Agnes Annie Thomasson.

Prohibiting Lawyer From Acting

Prohibiting Lawyer From Acting

Rubin Estate v Rubin Estate 2017 ONSC 1404  dealt with an application of prohibiting Lawyer from acting for her siblings and mother who were being sued by one daughter.

The lawyer in question had previously given US tax advise on a ” no names basis” and the court found that this did not warrant sufficient grounds to prohibit the lawyer from acting as counsel.

2. Lawyers can be prohibited from acting against a person where:

a. the lawyer has received relevant confidential information from the person attributable to a lawyer client relationship; and

b. there is a risk that the lawyer will use the person’s confidential information to the prejudice of the person.

Ontario v. Chartis Insurance Co. of Canada, 2017 ONCA 59 (Ont. C.A.) (CanLII) at para.33.

In the leading Supreme Court of Canada case on this topic, MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 (S.C.C.), Mr. Justice Sopinka adverted to this very issue.

In discussing the need to protect the client’s confidentiality during a motion to remove opposing counsel, Sopinka J. held that clients cannot be required to prove that their former lawyer had confidential information because “[i]n order to explore the matter in depth may require the very confidential information for which protection is sought to be revealed.”

To avoid this conundrum, the Supreme Court of Canada created a rule under which all that a former client needs to do is to show that there was a previous relationship between the client and the lawyer related to the lawyer’s current, adverse retainer, and the court will then infer that confidential information was imparted to the lawyer by the former client unless the lawyer proves otherwise.

Moreover, if the lawyer wants to try to prove that no confidential information was disclosed to him or her, the lawyer’s burden “must be discharged without revealing the specifics of the privileged communication.” See MacDonald Estate at pp. 1260 and 1261.

 Accordingly, I do not have to assess whether a lawyer who receives information on a “no names” basis has a duty akin to a law firm marketing its services to a potential client as discussed in Ainsworth Electric Co. v. Alcatel Canada Wire Inc., 1998 CarswellOnt 2162 (Ont. Master).

Nor do I have to try to balance the applicant’s right to a lawyer of her choosing against the respondents’ right to protection of their confidences in a solicitor client relationship. In light of the disclosure of the email, there is no more confidential information in the hands of the applicant’s firm and therefore there is no risk of the applicant’s lawyer illicitly using any confidential information in his firm’s possession.

Judicial Bias

Judicial Bias

Allegations of judicial bias occasionally make the news when a litigant asserts that the proposed  Judge is so biased that a fair trial cannot be obtained, and the Judge is asked to recuse him or herself.

Bias is very different from a court finding a witness not credible, loathsome or some other unworthy adjective- those comments might appear  after hearing the evidence and  then such conclusions might be made by the court.

 

Judicial bias is often asserted prior to a trial such as when President Trump asserted he could not get a fair trial in front of an American born Latino judge due to Trump’s  “Build a Wall” comments.

 

Suh applications rarely succeed as they generally have no probative value, similar to Trump’s.

 

Everyone has some biases including Judges, but Judicial bias is something far more serious to the point that it requires cogent evidence in addition to the reasonable expectation that bias might exist and a fair trial not be posible.

 

The Legal Test for Judicial Bias    (from 4361814 Canada Inc.v Daicor Inc. 2015 BCSC 1481):

 

 22.  The principles are set out succinctly by Justice Laskin, writing for the Court of Appeal in Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham8, beginning at paragraph 131:

 

133…. These principles, now well established, have recently been summarized by the Supreme Court of Canada in R. v. S. (R.D.), [1997] 3 S.C.R. 484 (S.C.C.). They are as follows:

1. All adjudicative tribunals owe a duty of fairness to the parties who appear before them. The scope of the duty and the rigour with which the duty is applied vary with the nature of the tribunal. Courts, however, should be held to the highest standards of impartiality.

2. Impartiality reflects a state of mind in which the judge is disinterested in the outcome and is open to persuasion by the evidence and submissions. In contrast, bias reflects a state of mind that is closed or predisposed to a particular result on material issues.

3. “Fairness and impartiality must be both subjectively present and objectively demonstrated to the informed and reasonable observer. If the words or actions of the presiding judge give rise to a reasonable apprehension of bias to the informed and reasonable observer, this will render the trial unfair.” (R. v S. (R.D.) at para. 94)

4. The test for bias contains a twofold objective standard: the person considering the alleged bias must be reasonable and informed; and the apprehension of bias must itself be reasonable. In the words of de Grandpré J. in Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369 at 394, approved of by the Supreme Court of Canada in R.D.S., supra:

[T]he apprehension of bias must be a reasonable one, held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information. [The] test is “what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude ….”

5. The party alleging bias has the onus of proving it on the balance of probabilities.

6. Prejudgment of the merits, prejudgment of credibility, excessive and one-sided interventions with counsel or in the examination of witnesses and the reasons themselves may show bias. The court must decide whether the relevant considerations taken together give rise to a reasonable apprehension of bias.

7. The threshold for a finding of actual or apprehended bias is high. Courts presume that judges will carry out their oath of office. Thus, to make out an allegation of judicial bias, requires cogent evidence. Suspicion is not enough. The threshold is high because a finding of bias calls into question not just the personal integrity of the judge but the integrity of the entire administration of justice.

8. Nonetheless, if the judge’s words or conduct give rise to a reasonable apprehension of bias, it colours the entire trial and cannot be cured by the correctness of the subsequent decision.

23      From these principles it is clear that the test for judicial bias is an objective one: what would the informed person reasonably conclude from the facts. Unimac disagrees.

Probate Revoked For Improper Service

Probate Revoked For Improper Service

Al- Sabah Estate 2016 BCSC 1781 both have a probate revoked and removed the administrator for both failing to disclose important information to the court as well as sending the required probate notice to her close relatives at addresses that were mostly incorrect and could have easily been corrected.

The court held that   equity favoured the revocation of grant of letters of administration and followed the decision of Desbiens v Smith Estate 2010 BCCA 394 where a grant of probate was set aside in order to allow a wills variation action brought” out of time”, but the defendants had not received notice of the probate application due to an incorrect address used by the executor who should have been more diligent.

40      Moreover, I am satisfied that, at the time she applied for the grant of letters of administration of the estate, Sheikha Salem failed to disclose to the court pertinent information that ought to have been disclosed.

41      Where the evidence discloses that the person who is obliged to give notice failed to exercise sufficient diligence to ascertain the correct address to which the notice was to be mailed, the notice requirements of the Act are not complied with, and the court has a general discretion to revoke a grant of letters of administration: Desbiens v. Smith Estate 2010 BCCA 394 (B.C. C.A.) at paras. 21 to 35 inclusive. I do note that that decision dealt with the Act’s predecessor, the now-repealed Estate Administration Act, which was replaced by the Act. However, the general principles of law remain applicable.

42      When it is alleged that an administrator should be removed because he or she is not acting in the best interests of the estate, the main factor to be considered is the welfare of the beneficiaries: Veitch v. Veitch Estate, 2007 BCSC 952 (B.C. S.C.) at para. 22

Proper Estate Expenses

Double Costs and Offers to Settle

Re Vince Insurance Trust 2016 BCSC 1992 reviewed the law as to what constitutes proper estate expenses such that the executor would be entitled to be reimbursed for same. It is a question of fact in each case.

The application for the interim distribution was made under section 155 of the Wills, Estates Succession Act, S.B.C. 2009, c.13, ( and Rules 8 — 1, 14 — 1, and 22-1 of the Supreme Court Civil Rules for the payment of an interim distribution of $250,000 from the estate of Patricia May Burns (“Patricia”) to the defendant Brent Arthur Dale (“Brent”).

29      Trustees are entitled to be indemnified against all reasonable costs and expenses they incur as trustees: Geffen v. Goodman Estate [1991] 2 S.C.R. 353. This is reflected in s. 95 of the Trustee Act, R.S.B.C. 1996, c. 464, which provides, in material part, that a trustee “may reimburse himself or herself, or pay or discharge out of the trust premises, all expenses incurred in or about the execution of his or her trusts or powers”.

30      The general test to determine whether an expense is properly incurred, and therefore recoverable, is described in Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada Limited, 2012) at 1209 as:

whether the expense incurred arose out of an act within the scope of the trusteeship duties and powers, whether in the circumstances it was reasonable, and whether it was something that his duty as the trustee required him to do. 

31      The application of this test, generally speaking, would disentitle a trustee to indemnification for expenses arising out of his or her own misconduct: Tebbs v. Carpenter (1816), 1 Madd. 290, and expenses that he or she voluntarily assumed: Waters’ Law of Trusts at 1210. The matter is more complicated, however, in cases where a strict application of the test would preclude indemnity but where the trust benefited from the incurred expense.

32      It has been observed that in such circumstances, it would be reasonable “to indemnify the trustees on the ground that the beneficiaries are unjustly enriched”: Albert H. Oosterhoff, “Indemnity of Estate Trustees as Applied in Recent Cases” in Megan Connolly & Anne E.P. Armstrong eds, Ontario Estate Administration Manual, (Toronto, Thomson Reuters Canada) (WL). Similarly, the authors of Lewin on Trusts, 17th ed. (London: Sweet & Maxwell, 2000) at 539, express the view that where a trustee has acted in good faith and has incurred costs in a transaction benefiting the trust estate, he or she may be entitled to indemnification even where the transaction was unauthorized:

In general, a trustee is not entitled to indemnity if he incurs costs or liabilities in a transaction which is unauthorised and without the request or implied assent of the beneficiaries. However, if the trustee acts in good faith, and the transaction benefits the trust estate, he may be entitled to indemnity to the extent that the transaction benefits the trust estate, though whether the indemnity is a matter of right rather than of discretion of the court is not clear.

[Emphasis added]

33      Ultimately, what is regarded as a properly incurred and therefore recoverable expense is “a question of fact in the circumstances of each particular case”: Waters’ Law of Trusts at 1209. The applicable principle I draw from the foregoing authorities is that there is no absolute prohibition against the indemnification of a trustee for expenses incurred as a result of acts beyond the scope of the trust (including voluntary acts) in circumstances where the denial of indemnification would result in unjust enrichment of the beneficiaries.

Executor Cannot Use Estate Funds To Defend Personally

Executor Cannot Use Estate Funds To Defend Personally

In a Wills variation claim (now section 60, WESA) an executor cannot use estate funds to defend him or herself if a beneficiary, and may  use reasonable estate  funds to defend the claim but only in the capacity of executor and not beneficiary.

In a wills variation claim the executor cannot use estate funds to defend his personal interests.

The executor may have his reasonable legal fees paid in his role as executor but should have separate counsel in most cases and the fees should be kept to a minimum–typically for advising on estate developments, liabilities and assets.

Generally, the executor is required to play a neutral role in litigation, and as a result of having to play a neutral role, the executor is generally entitled to special costs from estate.

But when the executor is also a beneficiary the costs must be separated.

If one counsel acts for the executor in both the capacity of executor and personal beneficiary, then the legal fees must be apportioned between the two separate roles, with the estate paying only for the role of executor. Wilcox v Wilcox 2002 BCCA 574.

Steernberg v. Steernberg Estate (2007), 33 E.T.R. (3d) 78, 74 B.C.L.R. (4th) 126, 40 R.F.L. (6th) 106, 2007 BCSC 953, 2007 CarswellBC 1533, Martinson J. (B.C. S.C.); additional reasons to (2006), 2006 CarswellBC 2751, 32 R.F.L. (6th) 62, 28 E.T.R. (3d) 1, 2006 BCSC 1672, [2006] B.C.J. No. 2925, D. Martinson J. (B.C.S.C.)  is one of my favourite cases, primarily for the reason in the headnote.

Prior to this case, it was not uncommon for defendants to routinely use estate funds in the hope of depriving a plaintiff of sufficient resources to continue the fight.

Steernberg levels the playing field by making each party pay for their own legal costs as the litigation proceeds, save for the executor, who must remain neutral in the litigation.

Here are the facts of Steernberg:

The Wife, husband’s son, husband’s three daughters and husband’s brother-in-law were beneficiaries under husband’s will.

The Plaintiff wife challenged husband’s will–husband’s son was the executor of the will.

An offer to settle made under R. 37 of Rules of Court, 1990 was signed by son as executor and the other four beneficiaries, but not on behalf of son in his personal capacity as beneficiary.

Legal fees for defendant’ litigation counsel of $148,250.62 and legal fees of counsel for executor of $72,895.24 were deducted before net values of estate were calculated.

Shortly after the trial ended and before reasons for judgment were issued, the estate paid defendants’ litigation counsel’s invoice of $60,700.

None of these payments were made or recorded with the wife’s consent and no funds from estate were made available to the wife before, during or after trial for her legal fees.

During the trial, the wife raised the concern that the defendants took substantial sums of money out of estate for legal fees to defend action before the trial started.

The parties agreed that the issue would be decided after the court gave its decision on whether will should be varied.

It was inappropriate to withdraw funds from estate at start of litigation, or throughout the course of litigation to fund defence of Wills Variation Act claim in the absence of a court order or unanimous agreement of beneficiaries

In a Wills Variation Act (S. 60 WESA) claim the validity of will itself was not being challenged and there was no need for the executor to “defend” will

The son was not entitled, in his neutral role as executor, to make a R. 37 offer and he did not join in the offer in his personal capacity as a beneficiary.

It was not an offer made on behalf of all persons beneficially interested in the assets of the estate and hence would not be binding on the estate.

The losing beneficiaries must pay the wife’s costs personally, not out of the estate.

It was directed that the executor pass his accounts before a registrar and that the registrar inquire into and make recommendations with respect to the net value of the estate after taking into account appropriate legal fees and income that ought to have been earned on the funds had they remained invested.

Spousal Committee Removed For Conflict of Interest

In Re Walsh 2015 BCSC 1992 the spouse and court appointed committee of a catastrophically injured wife was removed as committee in part for paying himself a “spousal allowance” to care for her.

The Court stated:

[73]         The Public Guardian also seeks the removal of Mr. Walsh as trustee on the basis that Mr. Walsh has a conflict of interest because Mr. Walsh has been paConflict of Interestying himself a “spousal allowance”.

[74]         In Gronnerud (Litigation Guardians of) v. Gronnerud Estate, 2002 SCC 38, the Supreme Court of Canada considered an alleged conflict of interest in the context of Saskatchewan’s adult guardianship legislation. The court emphasized the requirement that a property guardian be able to handle the financial matters of the estate in a disinterested and unbias manner:

[24] The requirement that the property guardian not be in conflict of interest is a proxy for ensuring that the property guardian protect the best interests of the dependent adult.  Similar to the requirement that a litigation guardian be “indifferent”, at minimum a property guardian must be able to handle the finances of the represented party in a disinterested, unbiased manner.  Although the statute is clear in stating that being a family member or a potential beneficiary is insufficient by itself to prove a disqualifying conflict, in some cases of family members or potential beneficiaries, there is evidence of other factors indicating a lack of objectivity.  It is the unusual case where a family member or potential beneficiary in a troubled estate can demonstrate an absence of conflict and thus act as property guardian.

[75]         In the 2015 Annotated British Columbia Incapacity Planning Legislation, Adult Guardianship Act and Related Statutes (Toronto: Thomson Reuters, 2015), the authors commented on the importance of avoiding conflict of interest in these circumstances at para. 431:

Every effort should be made to avoid appointing someone with a conflict of interest. Problems will most likely occur with persons appointed to make decisions about the financial affairs, etc., of adults and especially when they are dependants, or individuals who are otherwise receiving support from the adults, and consequently pay themselves from the assets they are managing. A conflict of interest is good grounds for the removal of the committee.

[76]         In this case, Mr. Walsh has drawn funds well in excess of the amount the Public Guardian compensates committees and was aware, at least by the end of 2011, that the Public Guardian was not approving such expenditures without court approval. I accept that Mr. Walsh believed that he should be entitled to such compensation. I also accept he has done much over the years to benefit Ms. Walsh and, of course, their children. I do not underestimate the difficult position he found himself as a result of Ms. Walsh’s catastrophic injuries. However, at least since 2010, I find that his personal interest in receiving the amount of compensation he sought, which included a claim that he was entitled to a spousal allowance because he could not work, placed him in a conflict of interest as a fiduciary. Given his claimed dependency, he was no longer indifferent to the outcome of this proceeding. His interest stands in opposition to the interest of a fiduciary responsible for the prudent management of Ms. Walsh’s estate.

Incorporation By Reference In Wills

Wills on occasion mention another document in existence that the will maker wants to be given effect in the terms of the incorporation by reference in wills.

Re Kellogg Estate 2013 BCSC 2292 pagraphs 74-79 discusses the law relating to incorporation by reference.

 

[74]     The clause in the Will which I refer to as the “Incorporation by Reference Clause” is the following (and is also set out in paragraph 15(b) above):

“If for any reason the said Trust shall not be in existence at the time of my death, or if for any reason a court of competent jurisdiction shall declare the foregoing testamentary disposition to the Trustee under said Trust as it exists at the time of my death to be invalid, then I give all of my estate including the residue and remainder thereof to that person who would have been the Trustee under said Trust as Trustee, and to their substitutes and successors under the Trust, as such trust is described hereinabove. Property held by the designated Trustees shall be held, managed, invested, reinvested and distributed by the Trustees upon the terms, trusts and conditions contained in said Trust pertaining to the period beginning with the date of my death. The terms, trust and conditions shall be those as were constituted in said Trust (giving effect to amendments, if any, hereafter made) immediately prior to its state of non-existence or determination of invalidity, and for that purpose I do hereby incorporate such Trust by reference into this my Will.”

[Underlining Added]

 

[75]     The requirements for incorporating a document into a will were described in Re Mihalopulos  ( 1956) 5 DLR (2d) 628, Alta SC, as follows at para. 9:

It seems clear from the authorities that if a document is to be deemed as having been incorporated into a will, two conditions must be satisfied.:

(1) It must be clear that the testator in the will referred to some document then in existence; and

(2), the document in question must be beyond doubt the document referred to: Jarman on Wills, 8th ed., p. 154; Re WatMns (1865), L.R. 1 P.&D. \9; Allen v. Maddock (185%), 11 Moo. P.C. 427, 14 E.R. 757; Singleton v. Tomlinson (1878), 3 App. Cas. 404; Re Smart, [1902] p. 238; University College of North Wales v. Taylor, [ 1908] P. 140; Smart v. Prujean (1801), 6 Ves. 560, 31 E.R. 1195.

[76]     In Re Edwards’ Will Trusts, [1948] 1 Ch. 440, the English Court of Appeal incorporated into a will some but not all terms of a written trust settlement. Lord Greene M.R. said as follows at p. 448:

It seems to me that the directions for incorporation are directions to read into the will the entirety of a document which the testator no doubt thought would be effective. But if, on writing them into the will, it turns out that part of them is invalid from some rule of law, as in the present case, I cannot read the testator’s directions as meaning that therefore, the whole process of incorporation must be abandoned. I think that the effect of it is that so much of the settlement as can validly have operation as part of a testamentary disposition is left to take effect according to its true construction.

[Underlining Added].

[77]     Here, the KF Trust Indenture and the Will were dated the same day. The Pour-Over Clause refers to the trust as being in existence. I conclude that at the time that RPK executed the Will, the KF Trust was in existence, and the trustee was bound by the terms of the KF Trust Indenture.

[78]     The Incorporation by Reference Clause refers to the terms of the KF Trust “giving effect to amendments, if any, hereafter made”. As discussed under the heading “Pour-Over Clause”, it is contrary to the Wills Act for a testator to change a will by an instrument which does not comply with the requirements of the Wills Act.

Executor Removed For Lack of Impartiality and Conflict of Interest

 

conflict of interest 3

An executor was removed for improper behavior as executor, including lack of impartiality and conflict of interest in the decision Browne v. Browne Estate 2014 BCSC 656.

The parties were half siblings, and by her will,  their mother divided the estate equally between the parties.

After the mother’s death, and without obtaining probate, the respondent executrix used power of attorney  (which in law should have ceased upon death)  to sell the residence for $750,000 .

The executrix then applied one half of the net proceeds against her husband’s line of credit and deposited the balance and to investment accounts.  She then through counsel made an offer of settlement to her half-sister  to settle the estate without obtaining probate, and conditional upon the opposing half-sister not  contesting her “suspect” accounting .

The executrix claimed total expenses of $257,000  which she felt entitled to before providing personal care to the deceased for the last five years .

The petitioner half  sibling applied to the court and obtained an order removing the executor  on the basis that she was unable to act impartially, that the accounting was at best cursory, and that the claim for expenses were largely an unexplained without any supporting documentation.

The actions of the executor therefore demonstrated a lack of fidelity to the beneficiaries and underscored her potential conflict of interest because of her  significant claim  on the estate is a creditor.

Lastly the improper use of a power of attorney to deal with assets of the estate, rather than applying for probate, was a clear indication of her unwillingness to act as executrix.

Legal Framework

[37]         The general test for removal of trustees/executors is set out in Letterstedt v. Broers (1883-84) L.R. 9 App. Cas. 371 (South Africa P.C.) at 385-389. Lord Blackburn says:

[The] main guide must be the welfare of the beneficiaries…The acts or omissions must be such as to endanger the trust property, or to show a want of honesty, or want of property capacity to execute the duties, or a want of reasonable fidelity.”

[38]         Lord Blackburn stated at 387:

In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above annunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a manner so essentially dependent on details often of great nicety. But they proceed to look carefully into the circumstances of the case.

[39]         Letterstedt was followed in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.) at 127.

[40]         As noted by Donovan Waters, Q.C. in Water’s Law of Trusts in Canada Fourth Edition at 898:

… it is clear that much will turn on the facts of the particular case, and it is only by an analysis of the cases that the manner of application of those guidelines can be seen. The dishonesty of the trustee is an obvious ground for his removal. It is the gravest breach of trust, but dishonesty can extend beyond the situation where the trustee appropriates the trust property for himself to the situation where he has a discretion as to the division of the fund between himself and … other persons, and allocates to himself the lion’s share.

[41]         Courts are reluctant to remove an estate trustee. A priority is to respect the testator’s decision in appointing that person: Veitch v. Veitch Estate, 2007 BCSC 952.

[42]         Animosity or hostility between an executor and a beneficiary is not sufficient on its own to warrant removal as an executor: Letterstedt at 389

 

Other blogs on disinherited.com  relating to the removal of an executor/ trustee are as follows :

 1. April 10, 2014 – WESA Provisions for Removal

2. November 2, 2013 – Removal of an Executor/Trustee

3. November 19, 2013 – Removing and Replacing Executors and Trustees

4. October 10, 2013 – The 5 Criteria Necessary for Removal of a Trustee

5. August 17, 2012 – Borrowing Against Estate Assets Personally

6. November 8,2011 – Lack of co operation with co executor

7. May 29, 2011 – Removal for Conflict of Interest

8. April 12, 2011 – Court Removes one Co-Executor in Deadlock between Two

9. February 4, 2014 – For Selling Assets Below Market Value and Benefiting Personally

10. April 21, 2014 – Removal for Conflict of Interest