Duties of an Executor or Administrator

Duties of an Executor or Administrator of an Estate

A personal representative, whether an executor by a will, or an administrator appointed by the court,  has a duty to act solely and exclusively for the benefit of the beneficiaries.  This duty is construed strictly, and forbids a personal representative from making a profit that is not authorized, or occupying a position where the personal representative’s self interests would conflict with the duty to the beneficiaries.

The Courts of Equity have required personal representatives to ensure that each beneficiary receives exactly what he or she is entitled to receive under the will or the estate.  The personal representative must maintain an “even hand” when dealing with all beneficiaries.

The personal representative has a duty in exercising all of his or her powers, whether discretionary or administrative, to maintain the standard of care of a reasonably prudent businessperson managing someone else’s property.

Generally speaking, the personal representative cannot delegate his or her duties. The Courts in recent years however have permitted delegation of administrative duties that a reasonable and prudent businessperson would delegate in the management of his or her own business affairs.  This would include the use of brokers, real estate agents, accountants, lawyers, appraisers and so forth.

 

The personal representative’s general duties are as follows:

Duties of an Executor or Administrator

(1)        To dispose of the deceased’s body.

 

It is the executor and not the testator’s spouse or family, who has the right to determine the place and manner of burial. The Cemetery and Funeral Services Act sets up a priority structure as to who has the right to control the disposition of human remains.  First priority is given to the executor, then to the spouse, and then to various categories of relatives.  If the person who has the right to control disposition is unavailable or unwilling, the right passes to the next person of the priority list.   Proper funeral expenses incurred are payable out of the estate.  Generally, the person who instructs the funeral director will be personally liable to pay all expenses incurred, but is entitled to indemnity as a first priority against the estate for the reasonable expenses of a suitable funeral.  There are some cases where the executor has been denied reimbursement of the full funeral costs, where the costs have been found to be excessive under the circumstances.

 

(2)        Take possession or control of the deceased’s assets.

 

The personal representative must take steps to search for any cash, jewelry, valuables and the like, and arrange for their safekeeping.  Any personal property must be locked up and properly insured.  Other assets that may require insurance coverage must also be checked into.  Financial institutions and government agencies must be notified of the death.  Mail must be re-directed and the bills, including mortgages, must be paid.   Rents must be either collected or paid and businesses must be managed for the interim until distribution of the estate or until the sale of the business.  A personal representative must enquire as to whether they have sufficient legal authority to carry on the business, and must also be cognizant of the potential for personal liability for carrying on the business.

 

(3)        Complete a schedule of all of the deceased’s assets and ascertain their value.

 

After the executor has taken charge of the assets of the estate, and has made a full inventory of the assets and a valuation of same, the personal representative should then arrange to have an application made to the court for the issue of a grant of probate.  In the case where the deceased dies intestate or without a named beneficiary, there is often a delay experienced in finding some appropriate person to step forward and apply for letters of administration.The Rules of Court, seem to assume that in practice, in the absence of special circumstances, the court will usually give priority to appointing as administrator of the estate, the person or persons who have the greatest interest in the estate.  In practice consents will be required from any person entitled to share in the estate who has a greater or equal right to apply.  Thus, if two or more persons are equally entitled to apply, they must either apply jointly, consent to the appointment of one of them, or be served with notice under the Rules of court.  There is no limitation on the number of administrators who may be appointment.

 

(4)        Advertise for creditors.

 

Before any debts of the estate are paid, the executor or administrator should see to the publication of the proper advertisement for creditors, claims and other claims against the estate.  From my experience, common sense should prevail in deciding whether or not to advertise for creditors, as the costs can be considerable.  In the case of a little old lady with simple assets and a history of paying her bills on time, it may not be necessary to publish such an advertisement.  However if the personal representative is to protect him or herself from liability, then serious consideration should be given to the placement of such an advertisement, as Provincial Legislation states that the personal representative shall not be personally liable to creditors, where notice has been properly given and the assets of the estate have already been distributed.

 

(5)        To notify beneficiaries, and persons who would take on an intestacy with respect to an application for probate or letters of administration;

 

(6)        To act personally, although as aforesaid, delegation may be allowed in certain administrative  circumstances;

 

(7)        To ensure that investments are authorized.

 

There is a duty to examine the assets and investments of the estate, and in general, to convert in a reasonable and timely manner, the assets that do not qualify as authorized investments for the estate.  The executor must be concerned with assets that may waste (ie, an unheated greenhouse) or that are to speculative (penny stocks), or reversionary assets;

 

(8)        To complete and file income tax returns and where necessary obtain a Clearance Certificate from Revenue Canada;

 

(9)        To pay the debts, including funeral, legal, testamentary expenses, succession duties and probate fees;

 

(10)      To claim all debts due to the deceased and generally collect all of the assets;

 

(11)      To keep accounts:

 

The personal representative has a duty to be prepared to account to creditors and to persons who have a beneficial interest in the estate.  The personal representative must give to anyone to whom he or she owes a duty such information as that person reasonably requires.  The type and amount of information varies, but the duty to account is owed to beneficiaries, unpaid legatees, unpaid creditors, successors, trustees, others who may have an interest in the deceased’s assets, and others provided for by statutes such as the Public Guardian or Revenue Canada.

 

(12)      To continue or bring and maintain court actions on behalf of the estate:

 

Under Section 59  of the Estate Administration Act, a personal representative of a deceased claimant may continue or bring and maintain an action for a loss or damage to the person or property of the deceased in the same manner and with the same rights and remedies as the deceased, except for certain actions such liable and slander, pain and suffering, and loss of expectancy of earnings.  A personal representative may continue or bring and maintain an action under the Wills Variation Act, or an action for constructing or resulting trust on behalf of the deceased.

 

(13)      To distribute the assets in accordance with the will or the laws of intestacy.

What is a Fiduciary?

What is a Fiduciary?

The term “fiduciary” is not well understood by the average citizen.

It was probably best stated  in the simple terms of the following:

” If one person undertakes to act in relation to a particular matter in the interests of another, and has been entrusted with a power of discretion to affect the other’s interests, in a legal or practical sense, so that the other is in a position of vulnerability, then a fiduciary duty exists.”

Williams Lake Indian Band v. Abbey (1992), 1992 CarswellBC 1067, [1992] 4 C.N.L.R. 21, K12,13,SkippJ.(B.C. S.C.)

Other  noted comments on the definition are:

“where by statute, agreement, or perhaps by unilateral undertaking, one party has an
obligation to act for the benefit of another, and that obligation carries with it a discretionary
power, the party thus empowered becomes a fiduciary. Equity will then supervise the
relationship by holding him to the fiduciary’s strict standard of conduct.”

Guerin v. R. (1984), 36 R.P.R. 1, 20 E.T.R. 6, [1985] 1 C.N.L.R. 120, 55 N.R. 161,13 D.L.R. (4th) 321, [1984] 2 S.C.R. 335, [1984] 6 W.W.R. 481, [1984] S.CJ. No. 45,1984 CarswellNat 813,1984 CarswellNat 693, 59 B.C.L.R. 301, f98, Dickson J. (Beetz, Chouinard and Lamer J J. concurring) (S.C.C.)

[In Guerin v. ft, [1985] 1 C.N.L.R. 120 (S.C.C.)] … Dickson J. writing for the majority stated at [p. 137] … that:

… where by statute, agreement, or perhaps by unilateral undertaking, one party has an obligation to act for the benefit of another, and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary.

Desjarlais v. Canada (Minister of Indian Affairs & Northern Development) (1988), 1988 CarswellNat 184, [1988] 2 C.N.L.R. 62,18 F.T.R. 316, f9, Strayer J. (Fed. T.D.)

– See more at: http://www.disinherited.com/blog/what-fiduciary#sthash.5GPs6Tw5.dpuf

A Fiduciaries Duty Of Trust and Loyalty

Fiduciaries duty is a persons in a position of trust, ranging from doctors, lawyers, accountants, to financial advisors and many others in between.

“Wilson J. offered some guidance on the subject of fiduciary relationships in the leading case of Frame v. Smith, [1987] 2 S.C.R. 99 (S.C.C.). At p. 136, she stated:

Relationships in which a fiduciary obligation have been imposed seem to possess three general characteristics:

  1. The fiduciary has scope for the exercise of some discretion or power.
  2. The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.
  3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power”

 

  • The Supreme Court of Canada considered the concept of loyalty in fiduciary relationships in Hodgkinson v. Simms, [1994] 3 S.C.R. 377 (S.C.C.). At p. 407, Sopinka and McLachlin JJ., writing for the dissent, adopted the language from Keech v. Sandford (1726), 25 E.R. 223 (Eng. Ch. Div.):

At the heart of the fiduciary relationship lie the dual concepts of trust and loyalty. This is first and best illustrated by the fact that the fiduciary duties find their origin in the classic trust where one person, the fiduciary, holds property on behalf of another, the beneficiary. In order to protect the interests of the beneficiary, the express trustee is held to a stringent standard; the trustee is under a duty to act in a completely selfless manner for the sole benefit of the trust and its beneficiaries (Keech v. Sandford (1726), 25 E.R. 223) to whom he owes “the utmost duty of loyalty”. (Waters, Law of Trusts in Canada (2nd ed. 1984), at p. 31). And while the fiduciary relationship is no longer confined to the classic trustee-beneficiary relationship, the underlying requirements of complete trust and utmost loyalty have never varied.

109     In Moffat v. Wetstein (1996), 29 O.R. (3d) 371 (Ont. Gen. Div.), Granger J. canvassed the
duty to avoid conflicts of interest. At p. 390, he stated:

Subsumed in the fiduciary’s duties of good faith and loyalty is the duty to avoid a conflict of
interest. The fiduciary must not only avoid a direct conflict of interest but must also avoid
the appearance of a possible or potential conflict.

The fiduciary is barred from dividing loyalties between competing interests, including self-interest.

– See more at: http://www.disinherited.com/blog/fiduciaries-duty-trust-and-loyalty#sthash.ODGYjz0U.dpuf

Letters of Administration Revoked For Failing To Satisfy Test

Letters of Administration Revoked For Failing To Satisfy Test of Co

Letters of Administration Revoked For Failure to Prove Common Law Spouse Marriage Like Relationship

Souraya v Kinch 2012 BCSC 1252 involves a case where the grant of letters of administration revoked on the basis that the deceased’s alleged common-law spouse,failed to  prove that she met the  definition of common-law spouse as per  section 1 of the Estate Administration Act, which defines a common-law spouse as either:

1) a person who is united to another person by a marriage that, although not a legal marriage, is valid by common-law, or

2) a person who has lived and cohabited with another person in a marriage like relationship, including a marriage like relationship between persons of the same gender, for a period of at least two years immediately before the other person’s death.

The deceased was gunned down in his motor vehicle at the age of 36, apparently  a victim of gang violence.

He died without leaving a will or children.

The defendant Kinch contended at the time of his death that she was his common-law spouse and on that basis, she claims sole entitlement to his estate and the right to administer the estate.

Kinch had earlier applied for and was granted letters of administration, but the sister of the deceased brings this action to set aside the order granting letters of administration to Kinch.

The court held that the grant should be set aside on the basis that Kinch was not, and had failed to prove that she was a common-law spouse of the deceased as per the after said definition.

The court found that there were many factors which pointed to a lack of permanent reason long-term marriage like commitment to each other.

Some of the criteria which the court relied upon were:

  • that the deceased maintained a separate residence from Kinch and intended to do so indefinitely,
  • there was a lack of significant financial interrelationships,
  • and there was a relationship characterized by conflict and breakups.

THE  LAW

The decision gives a very good review of recent law relating to common-law relationships.

The following extract is important:

[11]    In Austin v. Goerz, 2007 BCCA 586, the Court of Appeal held that neither capacity to legally marry nor financial dependence upon the deceased are required in order to come within the definition. The Court applied the decision of the Supreme Court of Canada in M. v. H. [1999] 2 S.C.R. 3, in which the Court considered the requirements of a “conjugal” relationship, for purposes of the statute under consideration in that case. In Austin, at para. 57, the Court quoted from M. v. H. as follows:

[57] Apposite is the more recent decision of the Supreme Court of Canada in M. v. H., [1999] 2 S.C.R. 3, which concerned that portion of the definition of “spouse” in the Family Law Act, R.S.0.1990, c. F.3, conferring certain rights on either a man or woman who are not married to each other but who live together in a “conjugal relationship.” In discussing the requirements of conjugal (i.e., marriage-like) relationships, Cory J. indicated that while financial dependence is a factor it is but one of many to be considered:

59 Molodowich v. Penttinen (1980), 17 R.F.L (2d) 376 (Ont. Dist. Ct.), sets out the generally accepted characteristics of a conjugal relationship. They include shared shelter, sexual and personal behaviour, services, social activities,

economic supportand children, as well as the societal perception of the couple. However, it was recognized that these elements may be present in varying degrees and not all are necessary for the relationship to be found to be coniuoal. While it is true that there may not be any consensus as to the societal perception of same-sex couples, there is agreement that same-sex couples share many other “conjugal” characteristics. In order to come within the definition, neither opposite-sex couples nor same-sex couples are required to fit precisely the traditional marital model to demonstrate that the relationship is “conjugal”.

[Emphasis in original]

[12]    In Austin the Court of Appeal again held (as in Takacs) that how the parties arranged their financial affairs is but one factor to be considered. The Court stated that the presence or absence of any particular factor is not determinative of whether a relationship is marriage-like, observing that, equally, there is no checklist of characteristics that will invariably be found in all marriages. The Court concluded that the chambers judge (at para. 62):

[62] …properly took a holistic approach in finding that Ms. Goerz and Mr. Austin “were in a committed, marriage-like relationship for all purposes.”

[13]    The correct approach, therefore, is “holistic”, meaning that all appropriate factors should be considered, without any particular factor being considered determinative.

[14]    As the authorities set out, many objective indicators and factors may be considered. Several such factors are referred to in Gostlin v. Kergin (1986), 3 B.C.L.R. (2d) 264, (CA), where Justice Lambert stated (at 268):

Did the couple refer to themselves, when talking to their friends, as husband and wife, or as spouses, or in some equivalent way that recognized a long-term commitment? Did they share the legal rights to their living accommodation? Did they share their property? Did they share their finances and their bank accounts? Did they share their vacations? In short, did they share their lives? And, perhaps most important of all, did one of them surrender financial independence and become economically dependent on the other, in accordance with a mutual arrangement?

All those questions, and no doubt others, may properly be considered as tending to show whether a couple who have lived together for more than two years have done so with the permanent mutual support commitment that, in the relevant sense of the Family Relations legislation, constitutes living together as husband and wife.

[15]    Takacs, and M. v. H., cited in Austin, supra, refers to the list of generally accepted characteristics of a conjugal relationship as set out in Molodowich v. Penttinen, (1980) 17 R.F.L. (2d) 376 (Ont. Dist. Ct.). The list of factors referred to in Molodowich is as follows (at para. 16):

(1)       Shelter:

  1. Did the parties live under the same roof?
  2. What were the sleeping arrangements?

(c)        Did anyone else occupy or share the available accommodation?

(2)         Sexual and personal behaviour:

  1. Did the parties have sexual relations? If not, why not?
  2. Did they maintain an attitude of fidelity to each other?
  3. What were their feelings toward each other?
  4. Did they communicate on a personal level?
  5. Did they eat their meals together?
    1. What, if anything, did they do to assist each other with problems or during illness?
  6. Did they buy gifts for each other on special occasions?

(3)         Services:

What was the conduct and habit of the parties in relation to:

  1. Preparation of meals,
  2. Washing and mending clothes,
  3. Shopping,
  4. Household maintenance,
  5. Any other domestic services?

(4)        Social:

  1. Did they participate together or separately in neighbourhood and community activities?
  2. What was the relationship and conduct of each of them towards members of their respective families and how did such families behave towards the parties?

(5)        Societal:

What was the attitude and conduct of the community towards each of them and as a couple?

(6)        Support (Economic):

  1. What were the financial arrangements between the  parties regarding the provision of or contribution towards the necessaries of life (food, clothing, shelter, recreation, etc.)?
  2. What were the arrangements concerning the acquisition and ownership of property?
  3. Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?

(7)        Children:

What was the attitude and conduct of the parties concerning children?

– See more at: http://www.disinherited.com/blog/letters-administration-revoked-failing-satisfy-test-common-law-spouse-deceased#sthash.gfzr1Lj6.dpuf

Executors of Deceased Substituted For Deceased

substitute executorExecutors of Deceased Substituted For the Deceased In Court Action

Dicken Mechanical Ltd v Nohels Group Inc 2012 BCSC 917 is a good example of the process that the Rules of Court have established to deal with the situation where  one a party dies and how his or her executor can, in  court actions that survive a death, be substituted as the litigation  party in the place of the deceased.

The plaintiff had commenced a court action against the defendant  limited company and a personal director for damages relating to contaminated soil.

The defendant personal director died after the commencement of the proceedings.

The real issue was whether or not the claim was one that survived death or not, as it is only actions that survive death that the rules allow for an executor to be substituted as a party for a  deceased litigant.

 

The court ruled that claims under the Waste Management legislation do in fact survive death and allowed the deceased defendant’s executors to be joined in as substituted defendants for the deceased director.

Rule 6-2(1) of the Supreme Court Rules provides for a continuation of an action against a deceased person where the claim survives death.

With respect to the type of cases that survive death vs. those that do not, the court cited:

The maxim actio personalis moritur cum persona (“a personal right of action dies with

the person”: Black’s Law Dictionary, 6th Ed., p. 31) was discussed by Southin J.A. in McCulloch v. Green, [1995] B.C.J. No. 567, wherein she wrote at para.

… this maxim “is not applied in the old authorities to causes of actions on contracts, but to those in tort, which are founded on malfeasance or misfeasance to the person or property of another: which latter are annexed to the person, and die with the person, except where the remedy is given to (or by) the personal representatives by the statute law.” And the general rule of the common law was, that if an injury were done either to the person or to the property of another for which unliquidated damages only could be recovered in satisfaction, the action died with the person to whom, or by whom, the wrong was done …

For example, if a person is rear ended and suffers pain and suffering as well as wage loss, and dies before trial, the deceased’s  claim for pain and suffering dies with him or her, but the executors may continue the claim for the lost wages.

– See more at: http://www.disinherited.com/blog/executors-deceased-substituted-defendants-place-deceased#sthash.eECDC6oJ.dpuf

Debt to Estate Survives Bankruptcy Due to Breach of Fiduciary Duty

Debt to Estate Survives Bankruptcy Due to Breach of Fiduciary Duty

Debt to Estate Survives Due to Breach of Fiduciary Duty

Kingston Estate v. Charrette(2011), 2011 ONSC 7126, 2011 CarswellOnt 14834(Ont. S.C.J.) was in favour of the Estate Trustee/Plaintiff and held that the Defendants, the Charrettes, had not been given a gift of $25,000 by the deceased as they had alleged.  The Charrettes were ordered to  pay to the Estate the sum of $25,000 together with pre-judgment interest and costs to the Plaintiff on a substantial indemnity basis.

The Charrettes, however, declared bankruptcy after the proceeding was commenced.

A second application was therefore made by the Estate Trustee seeking an order that these amounts (the “debt”) owed to the Estate by the Charrettes should not be discharged by their bankruptcy.

Because the Charrettes went bankrupt after the proceeding was commenced, the order that  had been made would be worthless unless the debt created by his decision survived their bankruptcy.

The Estate Trustee sought an order that the debt was not discharged by the bankruptcy because it either (a) arose out of fraud, misappropriation or defalcation while they were acting as fiduciaries, or (b) resulted from obtaining the money by false pretences or by fraudulent misrepresentation.

The Estate Trustee, in the original statement of claim, had requested a declaration that the debt or liability owed by the Charrettes arose in circumstances set out in sections 178(1)(d) and (e) of the Bankruptcy and Insolvency Act (the “BIA”) which provides:

178(1) An order of discharge does not release the bankrupt from…(d) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity…; (e) any debt or liability resulting from obtaining property by false pretences or fraudulent misrepresentation;

 

The Estate Trustee’s counsel later requested an opportunity to address the issues under section 178 of the BIA which the Judge granted. Justice Ellies determined that the Court did have jurisdiction to consider the issues raised under section 178(1) of the BIA. Justice Ellies stated that as no formal order had yet been drawn up, he had the jurisdiction to deal with the order requested under section 178. He relied on the Supreme Court of Canada decisions in Paper Machinery Ltd. v. J.O. Ross Engineering Corp.(1934), 1934 CarswellNat 30, [1934] S.C.R. 186, [1934] 2 D.L.R. 239(S.C.C.) and, in particular, Chandler v. Assn. of Architects (Alberta)(1989), [1989] 6 W.W.R. 521, 36 C.L.R. 1, [1989] 2 S.C.R. 848, 70 Alta. L.R. (2d) 193, 40 Admin. L.R. 128, 62 D.L.R. (4th) 577, 99 N.R. 277, 101 A.R. 321, 1989 CarswellAlta 160, 1989 CarswellAlta 620(S.C.C.). Justice Ellies went further to say that even if the final order had been drawn up, issued and entered, it was clear from his earlier decision that the declarations sought were to be determined as a separate matter based upon the facts as he had found them. Therefore, there was no prejudice to the Defendants by granting the Estate Trustee’s request as they had been aware from the commencement of the proceeding that this type of order was going to be sought.

Justice Ellies then had to determine whether or not the debt or liability arose in the circumstances referred to in section 178(1)(d). He concluded that:

It was not necessary that a beneficiary communicate directly or even indirectly with a fiduciary in order to create a fiduciary duty. It is sufficient if the fiduciary is aware that the property in question is being held on behalf of the beneficiary and that the following things are true:

  1. the fiduciary has scope for the exercise of some discretion or power;
  2. the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests; and
  3. the beneficiary is particularly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

The Judge concluded that all three criteria had been met in this case and the award was not discharged by the bankruptcy.

It is therefore important, when commencing any litigation where the defendant is likely or has commenced a bankruptcy proceeding, to ensure that a claim is advanced for any amounts awarded by the courts that  fall within the requirements of section 178 of the BIA.

– See more at: http://www.disinherited.com/blog/debt-estate-survives-bankruptcy-due-breach-fiduciary-duty#sthash.UgmmmoPV.dpuf

Beneficiary Who Prepared Will Has Heavy Burden

Beneficiary Who Prepared Will Has Heavy Burden

Beneficiary Who Prepared Will and Substantially Benefits has a very heavy burden of proof

Cooke v Walsh 1965 (52) WWR 449 is a chestnut of a decision by former Chief Justice Wilson that deserves comment  even 37 years later.

The deceased made a will shortly before she died when she was very ill.

The defendant Walsh prepared the will on as he put it the instructions of the deceased. No lawyer or independent advisor was involved..

The judge found that at the time Walsh was not merely an agent of the deceased but instead was a fiduciary in that he managed her apartment, collected or rents, and got her to sign necessary checks, as well as looking after her personal affairs.

After reading extensively reviewing the law the court found that the burden of proof imposed on the defendants to prove that the testatrix knew and approved of the contents of the will of the time of execution, was so grave that it might hardly be removed.

The court cited the following authorities of law relating to its decision:

  • Kerr on Fraud, 7th ed., p. 429, says this:

If a person benefited by a will has himself prepared it, or procured it to be prepared, the law looks on the case with suspicion, and the Court requires clear and satisfactory proof that the testator knew and approved the contents of the instrument, and that it expressed his real intentions. {Baker v. Batt, [1838] 2 Moo PCC 317, at 320,12 ER 1026; Greville v. Tylee, [1851] 7 Moo PCC 320,13 E.R. 904; Re Harmes Estate; Harmes and Custodian of Enemy Property v. Hinkson, [1946] 2 W.W.R. 433,62 T.L.R. 445, affirming [1943] S.C.R. 61). If there be no evidence of instructions previously given, or knowledge of its contents, the party propounding it must prove by evidence of some description or other that the testator knew and approved of the instrument. (Barry v. Butlin, [1838] 2 Moo PCC 480, at 491, 12 ER 1089; Mitchell v. Thomas, [1847] 6 Moo PCC 137,13 E.R. 636; Vellasawmey Servai v. Sivaraman Servai (1929) 57 LR Ind App 96). The onus of proof may be increased by circumstances, such as unbounded confidence in the drawer of the will, extreme debility in the testator, clandestine and other circumstances, which may increase the presumption even so much as to be conclusive against the instrument. (Paske v. Ollat, [1815] 2 Phillim 323, at 324,161 ER 1158; Jones v. Godrich, [1845] 5 Moo PCC 16,13 E.R. 394; Greville v. Tylee; Ashwell v. Lomi, [1850] 2 LR P & D 477; Harmes v. Hinkson.)

Proof of knowledge of the contents of a will may be given in any form. The degree of proof depends on the circumstances of each case. Although in perfect capacity, knowledge of the contents will be inferred; yet where capacity is impaired, and the benefit of the drawer of the will large, the suspicion is strong, and the proof must be most stringent. Where the drawer of an instrument gives himself a benefit under the instrument, it is a case for suspicion, depending more or less upon the circumstances of each individual case, and the proof must be in proportion to the degree of suspicion, which of course will vary. {Paske v. Ollat; Harmes v. Hinkson.) The greater the benefit and the less the capacity the more stringent is the requirement of proof of knowledge of the contents. {Durnell v. Corfield, [1844] 1 Rob Eccl51,at63,163ER961.)

If a testator being of sound mind and capacity has read the will, there is, as a general rule, sufficient evidence to show that he knew and approved of its contents. {Atter v. Atkinson [1869] LR 1 P & D 665, 20 LT 404, 33 JP 440.) So, also, if a will has been read over to a capable testator on the occasion of its execution, or there is evidence to show that its contents have been brought to his notice in any other way, this fact when coupled with his execution thereof will, as a general rule, be sufficient to show that he approved as well as knew the contents thereof. {Guardhouse v. Blackburn, [1866] LR 1 P & D 109, at 116, 35 LJ P & M 116.) But circumstances may exist which may require that something further shall be done in the matter than the mere establishment of the fact of the testator having been a person of sound mind and capacity, and of his having had read over to him that which had been prepared for him, and which he executed as his will. There is no unyielding rule of law (especially when the ingredient of fraud enters into the case) that when it has been proved that a testator, competent in mind, has had a will read over to him, and has thereupon executed it, all further inquiry is shut out {Fulton v. Andrew [1875] LR 7 HL 448, at 469,44 UP 17).

The exercise of undue influence may be a ground for the interposition of the Court to set aside a will. Though a man may have a mind of sufficient soundness and discretion to manage his own affairs in general, still, if such a dominion or influence be obtained over him as to prevent his exercising that discretion in the making of a will, he cannot be considered as having such a disposing mind as will give it effect {Mountain v. Bennett, [1787] 1 Cox Eq Cas 353, at 355, 29 ER 1200).

In cases of weakness of mind, arising from the near approach of death or otherwise, strong evidence may be required that the contents of the will were known to and approved by the testator executing the will at such a time {Mitchell v. Thomas [supra]; Durnell v. Corfield [supra;), and that the execution was his spontaneous act {Tribe v. Tribe ([1849] 1 Rob Eccl 775,163 ER 1210,13 Jur 793).

When it has been proved that a will has been executed with due solemnities by a person of
competent understanding, and apparently a free agent, the burden of proving that it was
executed under undue influence rests on the party who alleges it {Boyse v. Rossborough;
Boyse v. Colclough, [1857] 6 HLC 2, at 49,10 ER 1192), or at least he must show facts
from which the Court would be justified in treating the circumstances attending the bounty
as suspicious.

Further, in order to set aside the will of a person of sound mind, it is not sufficient to show that the circumstances attending its execution are consistent with the hypothesis that it was obtained by undue influence; it must be shown that they are inconsistent with a contrary hypothesis {Boyse v. Rossborough; Boyse v. Colclough [supra], at p. 51).

The burden of proving that it was executed under undue influence is not discharged by showing merely that the beneficiary had the power unduly to overbear the will of the testator; it must be shown that in the particular case the power was exercised and that execution of the will was thereby obtained {Craig v. Lamoureux, [1919] 3 W.W.R. 1101, [1920] AC 349, 89 UPC 22, reversing 49 S.C.R. 305. As to the particulars that may be ordered see Re Shrewsbury [Earl] Estate; McLeod v. Shrewsbury [Earl] [1922] P 112, 91 UP 46).

  • I have taken the unusual step of citing this long passage from a text book because, having looked at the authorities cited, I cannot better epitomize them.
  • I suppose I should, since both were Privy Council decisions on Canadian appeals, pay particular regard to Re Harmes Estate; Harmes and Custodian of Enemy Property v. Hinkson, supra, and Craig v. Lamoureux, supra.
  • Wintle v. Nye, [1959] 1 W.L.R. 284,103 Sol J 220, a decision of the House of Lords, is cited in Hanbury’s Modern Equity, 8th ed., p. 655 and, at p. 656, the learned author says that, as a result of that judgment “no sensible distinction between wills and transactions inter vivos can now be drawn.”
  • I cite this passage from the opinion of the Lord Chancellor, Viscount Simonds, at p. 291:

My Lords, the relevant law is not, I think in doubt. It was, as the Court of Appeal were unanimously of opinion, correctly stated by the learned judge by reference in particular to the judgment of Parke, B. in Barry v. Butlin [supra], at 482. It is not the law that in no circumstances can a solicitor or other person who has prepared a will for a testator take a benefit under it. But that fact creates a suspicion that must be removed by the person propounding the will. In all cases the court must be vigilant and jealous. The degree of suspicion will vary with the circumstances of the case. It may be slight and easily dispelled. It may, on the other hand, be so grave that it can hardly be removed.

  • I do not think this passage quarrels with the previous authorities I have mentioned. But a thing to be kept in mind in regard to Wintle v. Nye is that the House of Lords did not find undue influence, they found that the issue was this (Lord Simonds at p. 292): “What was in issue was whether she [the testatrix] understood and approved the contents of the will she executed.” On the facts they decided the case against the solicitor who had drawn and propounded the will and who was the chief beneficiary.
  • The decision of the Supreme Court of Canada in Adams v. McBeath (1897) 27 S.C.R. 13, affirming 3 B.C.R. 513, citing Boyse v. Rossborough; Boyse v. Colclough, supra, at p. 49,

The Court held that the English rule of Wintle v Nye aforesaid had not been complied with and the very grave onus of proof the defendant  faced, not met.

– See more at: http://www.disinherited.com/blog/beneficiary-who-prepared-will-and-substantially-benefits-has-very-heavy-burden-prove-will-valid#sthash.bQ72ZSSd.dpuf

Court Refuses to Order Sale Despite Executor Acting Bona Fide

Court Refuses to Order Sale Despite Executor Acting Bona Fide

Acting Bona Fide

Hriczu v Bailey re Estate of Mackey 2011 BCSC 454 the issue before the court was whether a beneficiary could force the executor to sell a parcel of property and distribute the proceeds amongst the beneficiaries, where the executor had been holding the property for 11 years post death without sale.

The deceased died in 2000 and left a will which stated in clause 3(A) –

“my said trustee may in their uncontrolled discretion decide upon, or to postpone such conversion of my estate or any part or parts thereof for such length of time as they may think best, “

The aforesaid power to postpone a sale is an almost standard discretion provided in wills by most lawyers.

Most executors will not be willing or feel it is appropriate to delay a sale of property for as long as 11 years unless the property is unusual and has a particular

upside in value. In this particular case the parcel of property was 17.5 acres of undeveloped land in the agricultural land reserve , that had a value of $118,000

at the time of probate, but had since become 10 times more valuable.

The court held that so long as the executor had a bona fide intention to perform his obligation to convert the assets and to distribute them in accordance with the will, the exercise of his discretion should not be interfered with by the court.

In Lottman v. Stanford, [1980] 1 S.C.R. 1065, the Supreme Court of Canada considered a Will which directed the executors and trustees:

To sell, call in and convert into money all of my personal estate at such time and in such manner and upon such terms as my Trustees at their absolute discretion determine, with power to them to postpone such conversion… (at para. 2)

The court found that the executors were not under a duty to convert, and declined to compel the executor to convert the real property.

The following quote is taken form the decision:

[15]    In Re Anthony’s (1977), 17 N.B.R. (2d) 364 (Q.B.), the executor and trustee of a Will which was strikingly similar to the Will before this court, applied for a determination of whether or not she had discretion to postpone the time for sale of property for so long as she deemed advisable. The application was brought 17 years after the testator’s death. The beneficiaries did not appear to speak to the matter.

The court, in holding that the trustee had a discretion to postpone the sale, said:

  • A trustee may exercise all such lawful powers as are expressly reposed in him by the instrument creating the trust and may use such discretion with respect to the time and manner and extent of exercising them as is permitted by the terms of that instrument. He must however, exercise the powers reasonably and in good faith and for the purposes for which they were created, after first making any needed enquiry.
  • The Court will not interfere with the bona fide exercise by a trustee of a discretionary power. Where the exercise of the power is obligatory but the time and manner of its exercise are discretionary, the trustee’s discretion in those respects will not be overridden by the Court.
  • Discretion, though absolute, must be exercised honestly, reasonably, intelligently and in good faith. And discretion must not be allowed to become an absence of responsibility Courts will not as a general rule interfere in the exercise of an absolute discretion by a trustee if the trustee acts honestly and fairly…

10 Subject to this, this Trustee, in my opinion, has a discretion to postpone the time for sale…

[16]    I accept that those principles apply here. The Executor has been given a broad discretion to postpone converting (or selling) the land in question. That discretion must be exercised “honestly, reasonably, intelligently and in good faith”. It cannot be exercised in such a way as to give the executor a personal benefit or put him in a conflict of interest. It must also not be exercised in such a way as to defeat the purpose of the testator, which was to make a gift to each and every one of her five beneficiaries. In other words, the executor is not entitled to refuse to convert, or to postpone conversion indefinitely.”