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.

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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