Converting a Petition to an Action

Converting a Petition to an Action

Kent v Kent 2017 BCSC 1392 discussed converting a Petition to an Action when a court action has been commenced by a Petition and becomes mired in the litigation process, usually due to disputed facts, and requires the petition process to be converted to an action so that examinations for discovery, a trial, discovery of documents and such can be provided for as in an action commenced by a Notice of Claim. Petitions are generally sued when the facts and credibility will not be disputed and the case is argued by affidavits.

36 Rule 22-1(7)(d) of the Supreme Court Civil Rules empowers a court hearing a chambers proceeding to refer a matter to the trial list. Specifically, Rules 22-1(4) and 22-1(7)(d) provide as follows:

Rule 22-1 Chambers Proceedings
. . .
Evidence on an application

(4) On a chambers proceeding, evidence must be given by affidavit, but the court may
(a) order the attendance for cross-examination of the person who swore or affirmed the affidavit, either before the court or before another person as the court directs,
(b) order the examination of a party or witness, either before the court or before another person as the court directs,
(c) give directions required for the discovery, inspection or production of a document or copy of that document,
(d) order an inquiry, assessment or accounting under Rule 18-1, and
(e) receive other forms of evidence.
. . .

Power of the Court

(7) Without limiting subrule (4), on the hearing of a chambers proceeding, the court may
. . .
(d) order a trial of the chambers proceeding, either generally or on an issue, and order pleadings to be filed and, in that event, give directions for the conduct of the trial and of pre-trial proceedings and for the disposition of the chambers proceeding.

37 In British Columbia (Milk Marketing Board) v. Saputo Products Canada G.P., 2017 BCCA 247 and Robertson v. Dhillon, 2015 BCCA 469, the Court of Appeal recently clarified the applicable test for conversion into an action of a proceeding commenced by petition. The multifactorial test heretofore applied by the trial court of this Province has been based on Haagsman v. British Columbia (Minister of Forests) (1998), 64 B.C.L.R. (3d) 180 (S.C.), Terasen Gas v. Surrey (City), 2009 BCSC 627, and Boffo Developments (Jewel 2) Ltd. v. Pinnacle International (Wilson) Plaza Inc., 2009 BCSC 1701. In B.C. (Milk Marketing Board), the Court found that the framework adopted in the Boffo line of cases is similar to the test applied when determining whether a matter is suitable for summary trial under Rule 9-7. However, as held in Robertson and B.C. (Milk Marketing Board), the test for determining whether a matter should be converted into an action is not similar to the one under Rule 9-7. Rather, it is akin to an application for summary judgment under Rule 9-6 (i.e., whether, on all the relevant facts and applicable law, there is a bona fide triable issue): Robertson at paras. 55-56; and B.C. (Milk Marketing Board) at paras. 44, 46.

38 The Court of Appeal has long held that proceedings brought by petition should be referred to the trial list when there are disputes of fact or law, unless the party requesting the trial is bound to lose: B.C. (Milk Marketing Board) at para. 43.

39 The proper test, as explained in Robertson at paras. 55-56 and affirmed in B.C. (Milk Marketing Board) at para. 44, is as follows:

[44] In Robertson, the Court set out the test to determine whether a petition should be converted to a trial:

[55] On the hearing of a petition, a judge must be satisfied that there is no dispute as to the facts or law which raises a reasonable doubt or which suggests that there is a defence that deserves to be tried: Douglas Lake Cattle Co. v. Smith (1991), 54 B.C.L.R. (2d) 52 (C.A.) at 59. If such a dispute exists, the judge may refer the matter to the trial list, pursuant to R. 22-1(7) (former R. 52(11)(d)).

[56] The test is not that used to determine a summary trial. Rather it is akin to that on an application for summary judgment under R. 9-6. Mr. Justice Lambert summarized the task in Montroyal Estates Ltd. v. D.J.C.A. Investments Ltd. (1984), 55 B.C.L.R. 137 (C.A.) at 138-39:

We were referred by counsel for T& A Holdings Ltd. to the judgment of Esson J. (as he then was) in Progressive Const. Ltd. v. Newton, 25 B.C.L.R. 330, [1981] 2 W.W.R. 741, 117 D.L.R. (3d) 591 (S.C.), and particularly at p. 334. There Esson J. summarizes, in my opinion, accurately, the law in relation to establishing a defence on an application for summary judgment in these words [pp. 334-35]:

The cases do not establish an invariable rule as to what steps must be taken to resist a R. 18 application for summary judgment. On all such applications the issue is whether, on the relevant facts and applicable law, there is a bona fide triable issue. The onus of establishing that there is not such an issue rests upon the applicant, and must be carried to the point of making it “manifestly clear”, which I take to mean much the same as beyond a reasonable doubt. If the judge hearing the application is left in doubt as to whether there is a triable issue, the application should be dismissed.

In essence, if the defendant is bound to lose, the application should be granted, but if he is not bound to lose, then the application should be dismissed.
[Emphasis added in B.C. (Milk Marketing Board)]

40 Additionally, the Court held that the suggestion in Boffo that the mere existence of a bona fide triable issue is not in itself sufficient to warrant conversion to the trial list is contrary to the test established by the Court of Appeal: B.C. (Milk Marketing Board) at para. 46. Further, at paras. 47-48, the Court in B.C. (Milk Marketing Board) stated the following:

[47] I would note the fact that a matter is converted to an action does not necessarily mean that a full trial will be required. It still remains open to the parties to bring a summary trial application under Rule 9-7.

[48] Given the authorities in this Court, it is not open to this division to adopt the Boffo approach. A five-justice division would be necessary as it would require overruling previous decisions of this Court: Bell v. Cessna Aircraft Co., (1983) 46 B.C.L.R. 145 (C.A.). I should also note that although Haagsman, Terasen and Boffo all suggest a different test, in each of those cases the petition was converted into an action.

41 In B.C. (Milk Marketing Board) at paras. 49-52, the Court found that the trial judge had erred in principle in resolving the matter by applying the Boffo criteria. The trial judge failed to consider both whether the appellant, Saputo, raised a bona fide triable issue, and what the implications of such a determination would be. Moreover, he did not find that Saputo was bound to lose. In the result, the Court allowed the appeal and ordered that the petition be converted into an action. In Robertson at para. 60, the Court similarly found the chambers judge erred by failing to indicate his reasoning with respect to whether he was satisfied of the absence of a bona fide triable issue and whether he gave consideration to any substantive defences.

42 While Ms. Kent challenged the suitability of the Petition under Rules 2-1(d) and 2-1(g)(i) of the Supreme Court Civil Rules, I am satisfied that the Petition was properly brought. The issue is not so much whether the particular property is trust property, but whether the Trust Agreement should be enforced; and if it is, whether Ms. Kent is entitled to some compensation: McDonald v. Lau, 2016 BCSC 1651at para. 56. Consequently, the real question for determination is whether the Petition should be converted into an action pursuant to Rule 22-1(7)(d).

43 In light of the recent guidance from the Court of Appeal, I will apply the test enunciated in Robertson at paras. 55-56, as affirmed in B.C. (Milk Marketing Board) at para. 44. That test involves the petitioner satisfying this Court that there is no dispute as to the facts or law which raises a reasonable doubt or which suggests that there is a defence that deserves to be tried. The onus of establishing that there is not such an issue rests on the applicant, and must be carried to the point of making it “manifestly clear”, a standard similar to proof beyond a reasonable doubt. If the judge hearing the application is left in doubt as to whether there is a triable issue, the application should be dismissed. In essence, if the respondent is bound to lose, the application should be granted; but if the respondent is not bound to lose, the application should be dismissed.

Ian Mulgrew: As if Death Weren’t Bad Enough — Fraudulent Wills

Ian Mulgrew: As if Death Weren't Bad Enough — Fraudulent Wills

Originally published in The Vancouver Sun May 4, 2017

Written by Ian Mulgrew

The B.C. inheritance-and-estate law brought in two years ago has increased the risk of forged and fraudulent wills, says a lawyer involved in the debate about its creation.

Trevor Todd, who runs, said the situation is worrying given that in his 40-year practice he previously saw only one forged will — in the late-1970s.

That case involved a nightclub doorman and his legal-secretary girlfriend taking advantage of the chronically drunk bar owner with a will that left everything to the bouncer. The club owner’s widow hired a handwriting expert and the case was settled out-of-court when the will was unveiled as a fake.

The old rules required that a will be in writing, signed by the testator and two witnesses, all in the presence of each other, and neither of whom nor their spouses could inherit as a beneficiary.

(The doorman used two bar flies as witnesses — the girlfriend having alerted him to the perils of signing the phoney document.)

Most forged-wills cases involve handwritten documents, known as holographs, putatively signed by the deceased with no witnesses.

Several decisions since the Wills, Estates and Succession Act (WESA) came into effect March 31, 2014, however, have allowed wills that previously would have been ruled invalid to be probated despite irregularities such as the lack of witnesses.

In one of the first post-WESA cases, (Re the Estate of Woolrich, V140043, unreported, Jan. 21, 2015), the B.C. Supreme Court found a suicide note to be a valid will.

In Re Smith Estate 2016 BCSC 350, the court granted probate to three clipped and stapled-together documents — two handwritten and the other an original funeral-arrangements brochure, all unsigned and unwitnessed.

In Re Yaremkewich Estate 2015 BCSC 1124, the witnesses signed a blank template that didn’t have attached the lists of bequests found with the will after death.

Also, they couldn’t recall if the deceased had signed the will template at the same time as they did. The judge still approved the will, including the lists of bequests.

“To date the courts have not set any limit on what type of documentation is necessary to prove a will-maker’s true intentions with respect to his or her last will,” Todd said. “It is possible, for example, that an email message might be admitted to probate as a will. Such a thought immediately conjures up the prospect of an increase in faked wills.”

The previous legislation took a very strict approach to wills, Todd explained, so any deviation caused a will to be deemed wholly or partly invalid.

For policy reasons, the government decided far greater court discretion was required to “cure” previously “defective” wills.

Passed in 2009, WESA included provisions that allowed probate as long as the intention of the testator was clear.

At the time, litigators including Todd, predicted more, not fewer lawsuits with the adoption of a significantly different conception of what could be considered a valid will.

With the public now increasingly preparing their own wills, Todd maintained, the self-help process has exacerbated the problem providing even greater opportunity for deathbed legerdemain.

“As the public increasingly prepare their own wills, all without the ‘screen’ of a lawyer testing for capacity and undue influence, it appears inevitable that there will be more forged or faked testamentary documents,” he said.

Combating a counterfeit will, he added, is difficult because bringing a charge of forgery is tantamount to alleging fraud, requires expensive handwriting experts and, if unproven, results in a heavy, special-costs award against the accuser.

“Handwriting experts require 20 to 30 handwritten signatures of the deceased, preferably originals only, which they analyze through microscopes,” he said. “Their job is often complicated by the effect of tremors, arthritis or other related afflictions that a frail or elderly will-maker may have.”

And lawyer-prepared wills aren’t a palatable solution.

“There is a great price barrier as to what people will pay professionals to prepare wills, given the availability of will kits and such on the Internet,” Todd noted.



Sato v Sato 2017 BCSC 1394 ( upheld at 2018 BCCA 287) discusses in detail the legal issue of domicile. The issue was whether the deceased was domiciled in British Columbia at the time of his marriage to the plaintiff. If so his  2011 Will was revoked by operation of law. If not, the parties agree that the deceased’s domicile was Luxembourg and under  the laws of Luxembourg, the 2011 Will would not be revoked by the plaintiff’s marriage to the deceased. (The facts took place before WESA was introduced on March 31,2014 when marriage still revoked a will)

The plaintiff, Makiko Sato, is the widow of the deceased, Hiroyuki Rex Sato, commonly called Rex.   The defendant, Helen  Sato, is the sister of the deceased and is the executrix of the deceased’s will dated May 19, 2011 (the 2011 Will).

The plaintiff and the deceased were married in April 2013.    The deceased ceased to be a resident of Canada in 1999. From 2009 until his death on March 7, 2015, he was a resident of Luxembourg.

The Court found that the deceased was domiciled in British Columbia when he married the plaintiff in April 2013. As a result, his 2011 Will was revoked. The deceased was found to have had the intention to make British Columbia his domicile.

One of the determining facts was that the deceased indicated to CCRA that he intended to retire in Canada. The defendant had the onus of proving his domicile was in Luxembourg and failed to do so.


[8]            In Scott v. Vanston, 2016 SKCA 75, the Saskatchewan Court of Appeal reviewed the law of domicile, and of particular interest in the case at bar, the principles involving domicile of choice and abandonment. Justice Herauf, for the Court, stated:

Domicile of choice

[52]      [Wadsworth v. McCurdy (1886), 12 S.C.R.466] is the earliest decision of the Supreme Court on the law of domicile in Canada. In Wadsworth, all five judges authored opinions but Ritchie C.J. largely sets out the opinion of the three-two majority. Chief Justice Ritchie begins by stating that the law of domicile is well-settled in Canada, having previously been established by the courts of England. He then cites numerous authorities for the principles that form the law of domicile.

[53]      In regard to acquiring a domicile of choice, Ritchie C.J. sets out the law at 475-76:

What will constitute a change of domicile has been frequently enunciated in the highest courts. Thus in Lord v. Colvin the Vice Chancellor:

I would venture to suggest that the definition of an acquired domicile might stand thus: That place is properly the domicile of a person in which he has voluntarily fixed the habitation of himself and his family, not for a mere special and temporary purpose, but with a present intention of making it his permanent home, unless and until something (which is unexpected or the happening of which is uncertain) shall occur to induce him to adopt some other permanent home.

I am disposed to think that the definition thus modified would be found to be in accordance with most, if not all, of the leading decisions on the subject of acquired domicile.

But whatever may be the most correct and proper terms in which to frame a definition of domicile, this at least is clear and beyond controversy, that to constitute an acquired domicile two things are requisite, act and intention, factum et animus. To use the language of an eminent jurist, to whose admirable writings I have before referred, two things must concur to constitute domicile (of course he is speaking of acquired domicile); first, residence; and secondly, the intention of making it the home of the party There must be the fact and the intent; for, as Pothier has truly observed, a person cannot establish a domicile in a place, except it be animo et facto.

Sir J. Romilly, the Master of the Rolls:

It is quite settled that two things are necessary to constitute a change of domicile; first, the factum of the change of residence; and next, the animus manendi. In other words, in order to effect a change of domicile, the person must have settled in a residence out of his former domicile, whether it be the domicile of origin or an acquired domicile; and he must also have the intention of making that residence his permanent home.

[54]      Therefore, based on the preceding analysis, a person establishes a domicile of choice by voluntarily choosing to reside in a location, not temporarily or for some special purpose, with the intention of making it his permanent home unless and until something unexpected or uncertain induces him to adopt some other permanent home.

[55]      This same principle has been cited and followed in numerous subsequent cases. In Trottier, Duff C.J. states at 207:

The principles which ought, I think, to be kept steadily in view and rigorously applied in this case are, first, that a domicile of origin cannot be lost until a new domicile has been acquired; that the process of the acquisition of a new domicile involves two factors, the acquisition of residence in fact in a new place and the intention of permanently settling there: of remaining there, that is to say, as Lord Cairns says, for the rest of his natural life, in the sense of making that place his principal residence indefinitely.

[56]      In Osvath, which is a relatively brief decision, the central principle cited is that quoted by Ritchie C.J. in Wadsworth from Lord v Colvin (1859), 62 ER 141. Further, this Court previously applied the same principle in Gunn v Gunn (1956), 2 DLR (2d) 351 at 353, and quoted Duff C.J.’s formulation of it from Trottier at 207.

[57] Most recently, the Alberta Court of Appeal summarized the law in relation to domicile of choice in Foote Estate, Re, 2011 ABCA 1 at paras 20-22, [2011] 6 WWR 453 [Foote Estate CA]:

[20]      One’s domicile of origin can be displaced by a domicile of choice, a place where a person has chosen to live. The classic description of domicile of choice is found in Udny v. Udny (1869),1866-69 L.R. 1 Sc. 441 (U.K. H.L.):

Domicile of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. … There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation.

[21]      Of particular relevance to this appeal is the requirement that the choice to change domicile must be voluntary, not dictated by business, debts or health. Some authorities speak of one’s domicile of choice as a place where one intends to end one’s days. That language is unhelpful where, as here, a person with a fatal and fast-moving illness makes a trip shortly before his death for treatment. Determining an intention to change domiciles in such a situation is not a simple matter of saying the deceased intended to live out his days in the new location. It could not, in most cases, be described as a voluntary move.

[22]      The acquisition of a domicile of choice involves two factors: the acquisition of residence in fact in a new place and the intention of permanently settling there … in the sense of making that place [one’s] principal residence indefinitely: Trottier v. Rajotte, [1940] S.C.R. 203 (S.C.C.), at 206, [1940] 1 D.L.R. 433 (S.C.C.) [emphasis added].

[58]      The onus of proving that a person has acquired a domicile of choice is on the party alleging the acquisition (see Wadsworth at 470-71).

[59]      Regarding permanency versus indefiniteness in relation to intention, it was noted in Foote Estate QB [Re Foote Estate, 2009 ABQB 654] that indefinite has been interpreted in a number of cases and that different case law has applied different standards but that ultimately it is a factual inquiry (para 46). The high standard that has been applied is that of living out one’s days in a jurisdiction (para 47). While the lower standard that has been applied is that of no fixed intention of leaving (para 48). I would settle any controversy relating to the proper standard to be applied in determining intention to acquire a domicile of choice by endorsing the test set out in para 22 of Foote Estate CA, namely, ¦ the intention of permanently settling there … in the sense of making that place [one’s] principal residence indefinitely.


[60] Just as a person can acquire a domicile of choice, he or she may also abandon a domicile of choice. The principle of abandonment is not fully addressed in any of the three Supreme Court decisions on domicile except in reference to the abandonment of a domicile of origin in favour of a domicile of choice. The principle is, however, considered in Foote Estate CA and Foote Estate QB. The Court in Foote Estate CA sets out the principle of abandonment:

[25]      The following rule is set out in Dicey, Morris and Collins on The Conflict of Laws, 14th ed. (London: Sweet & Maxwell, 2006) at 151:

Rule 13 – (1) A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently or indefinitely, and not otherwise.

[26]      The test for loss of domicile of choice is two-fold: it requires an intention to cease to reside in a place coupled with acts that end one’s residence. It is described in Dicey as follows:

A domicile of choice is lost when both the residence and the intention which must exist for its acquisition are given up. It is not lost merely by giving up the residence nor merely by giving up the intention. [Emphasis added]

[27]      Castel & Walker, in their Canadian Conflict of Laws at s. 4.8, 6th ed. (Markham, Ont.: LexisNexis Butterworths, 2005), describe the process of abandonment of a domicile of choice as the converse of its acquisition. They also note the dual nature of the test. To paraphrase, for Mr. Foote to have abandoned his domicile of choice on Norfolk Island, it would be necessary for him to cease to reside there and also to cease to have the intention to return to Norfolk Island as his permanent home. Absence without the intention of abandonment is of no effect, nor is intention without any actual change of residence: Castel & Walker at s. 4.8.

[61]      In Foote Estate QB, Graesser J. cites other authorities to support the above proposition:

[51]      It is certainly possible to abandon a domicile of choice or origin in favour of a new domicile of choice, but such change involves more than a change in intention and requires some act of abandonment. That requirement to take some tangible step to abandon was identified in Fedeluk v. Fedeluk as relating to the dual prerequisites to adopt a new domicile of choice:

[12]      It is clear that the abandonment of a domicile of choice requires, as does its acquisition, the combination of factum and intention: See Jones v. Kline, [1938] 3 W.W.R. 65, at 75 (Alta.) and other cases cited at p. 409 of Power on Divorce, 2nd ed. The intention to abandon is insufficient in itself to effect the abandonment so long as the person remains within the domicile or territory: See Zanelli v. Zanelli (1948) 64 TLR 556, 92 Sol J 646. [Emphasis added.]

[53]      Howson J. in Jones v. Kline (Jones), at para. 16, stated the rule as:

… in order to lose the domicile of choice and revive the domicile of origin, it is not sufficient for the person to form the intention of leaving the domicile of choice, he must actually leave it with the intention of leaving it permanently. [Emphasis added.]

[62] As noted above, a person need not acquire a new domicile of choice for a prior domicile of choice to have been abandoned. Rather, a person may abandon a domicile of choice not having any other domicile but for their domicile of origin (see Foote Estate QB at para 77). Important, as well, is the point that a person need not completely cease to reside in a location to abandon it as his or her domicile (see Foote Estate CA at para 33).

[9]            In Osvath-Latkoczy v. Osvath-Latkoczy, [1959] S.C.R. 751, the Supreme Court of Canada considered whether the appellant’s domicile of choice was Ontario. Justice Judson writing for the Court stated at 753:

The principle to be applied is that stated in Lord v. Colvin, which was adopted in Wadsworth v. McCord, and followed in Gunn v. Gunn:

That place is properly the domicile of a person in which he has voluntarily fixed the habitation of himself and his family, not for a mere special and temporary purpose, but with a present intention of making it his permanent home, unless and until something (which is unexpected or the happening of which is uncertain) shall occur to induce him to adopt [some] other permanent home.

Lex Fori

[10]        Domicile is determined in the jurisdiction in which the issue is raised the lex fori: Re Annesley, [1926] Ch 692 at 705.

[11]        In the case at bar, the parties agree that the matter of the deceased domicile should be determined by the Supreme Court of British Columbia.


[12]        The party who asserts a new domicile of choice has the onus of proving the change in domicile: The Lauderdale Peerage (1885), 10 A.C. 692 at 739.

[13]        The onus of proof is that of a balance of probabilities: F.H. v. McDougall, 2008 SCC 53. As the Court in F.H. stated at para. 46:.. evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test.

Only One Domicile at any Particular Time

[14]        A person always has a domicile but never has more than one domicile at any particular time: Wadsworth v. McCurdy (1886), 12 S.C.R. 466 at 468; Udny v. Udny (1869), L.R. 1 Sc. & Div. 441 (H.L.) at 448.

Matrimonial Domicile

[15]        For the deceased’s 2011 Will to have been revoked by his marriage to the plaintiff in April 2013, he must have been domiciled in British Columbia as of that time: Allison v. Allison (1998), 56 B.C.L.R. (3d) 1 (S.C.).

Removal of an Executor Summarized

Removal of an Executor Summarized

I am frequently asked about the removal of an Executor that beneficiaries complain about and the following briefly summarizes when and if the court will act to remove and replace an executor.

Lord Blackburn stated in Letterstedt v. Broers (1884), [1881-85] All E.R. Rep. 882 (South Africa P.C.), at 887 (a case cited consistently by courts in this province) that the court’s “main guide must be the welfare of the beneficiaries”. At paragraphs 10-16 of Fleming v. Fleming, 2006 NLTD 112 (N.L. T.D.), Green, J. discussed the legal principles relating to removal of an executor:

(a) the removal of a trustee or executor will not be lightly undertaken;

(b) the court has to be satisfied that it is in the interests of the beneficiaries generally that removal should occur;

(c) if it is clear that the continuance of the trustee or executor in office would be detrimental to the execution of the trusts or the administration of the Estate, the court may remove him or her;

(d) positive misconduct amounting to abuse of trust; endangerment of the Estate or trust property; want of honesty or reasonable fidelity; lack of proper capacity or ability to execute the duties of office; and conflict of interest can justify removal;

(e) friction or hostility between the executor and one or more of the beneficiaries will not normally be enough, in itself, to ground the removal, nor will mere suspicions that the executor will favour one beneficiary over another;

(f) an isolated mistake or a technical breach of trust may not be enough, if done in good faith with the best interests of the beneficiaries in mind; and

(g) consistent administration of the Estate in a manner than does not maintain an even hand between beneficiaries will often be enough to justify removal.

9      The court has an inherent power to effect removal if the executor is in a conflict of interest. A conflict of interest occurs whenever the personal interest of the personal representative conflicts with the interests of others for whom he or she has a duty to act. This is a potential issue here because the executor is a creditor to the Estate relating to legal services rendered prior to the testator’s death. To address whether the conflict is such as to disqualify the executor, one must examine if the executor has placed himself in a position where his personal interest and his duty conflicted conflict, such that he could no longer be impartial vis-a -vis the beneficiaries

Executors: Specific Bequests and Fees

Executors: Specific Bequests and Fees

Janke, Re 1985 CarswellBC 2298 dealt with the presumption that when an executor is left a specific bequest it is in lieu of fees. This presumption applies only where the bequest is made to the executor in his capacity as executor and yields to very slight indications of a contrary intention on the part of the testator.

Macdonnell, Sheard and Hull on Probate Practice, 2d Ed, at p.329. This quotation was also quoted by Mr. Justice McKay in Re Ross, [1976] 3 W.W.R. 465 at page 466:

In addition to those cases in which the will contains an express provision for the executor in lieu of compensation, there is a presumption that when a legacy or annuity is left to an executor, it is intended to be in lieu of the compensation to which he would otherwise be entitled. But this presumption, like the presumption that such a provision is conditional upon the executor’s proving the will, applies only when the bequest is made to the executor in his capacity as executor and yields to very slight indications of a contrary intention.

In Canada Permanent Trust Co. v. Guinn 1981 CarswellBC 327, the respondent co-executor had been given a substantial legacy under the will, and had had minimal duties, as the bulk of administration was done by the trust company.

The questions submitted were whether the legacy was intended to be in lieu of executor’s compensation to the respondent, and, if not, how to divide the compensation.

The Court held that the Respondent was entitled to share of compensation.

The presumption that a legacy was intended to be in lieu of an executor’s compensation was not a strong one, and would yield to very slight evidence of contrary intention. The indications in the will were that the testator intended the respondent to take beneficially.

Extrinsic evidence was allowable to rebut or support a bare legal presumption. The extrinsic evidence allowed indicated that the respondent was to take beneficially, not as executor.

Executors Personally Liable For Failing to Invest

Executors Personally Liable For Failing to Invest
Re Proniuk 1984 CarswellAlta 285 held the executor personally liable for interest lost to the estate for failing to invest the estate assets for 11 months and for interest lost on their pre taking of executor fees.
In the administration of an estate, executors had failed to invest for approximately 11 months a sum of money which, if invested, would have produced interest of approximately $2,840. In addition, the executors had paid to themselves, without authorization, the sum of $3,600 as interim executors‘ fees. The executors applied to the Court for the passing of their accounts.
The executors were liable to pay to the estate the sum of $2,840 in respect of interest lost to the estate by reason of their lack of care and diligence and consequent non-investment of estate funds. In addition, they wrongly took the amount of $3,600 as interim fees and they were deemed to have received the benefit of the interest thereof. This amounted to $834.48, which they were liable to pay to the estate.

Appeals From Master’s Orders

Appeals From Master's Orders

In Abermin Corp. v. Granges Exploration Ltd. (1990), 45 B.C.L.R. (2d) 188, 42 C.P.C. (2d) 25 (S.C.), Mr. Justice MacDonald succinctly set out the scope of review on an appeal from a Master’s order.

He said at p. 31 [C.P.C.]:

An appeal from a Master’s order in a purely interlocutory matter should not be entertained unless the order was clearly wrong. However, where the ruling of the Master raises questions which are vital to the final issue in the case, or results in one of those final orders which a Master is permitted to make, a rehearing is the appropriate form of appeal. Unless an order for the production of fresh evidence is made, that rehearing will proceed on the basis of the material which was before the Master. In those latter situations, even where the exercise of discretion is involved, the Judge appealed to may quite properly substitute his own view for that of the Master.

16      The order under appeal is, in my view, final in nature, and accordingly the appeal should be considered a rehearing of the matter.


Damages For Breach of Trust

Damages in Equity for Breach of Trust

Huff v Price 1990 (BCCA) 51 BCLR 282 held that the amount of damages in equity  in an action for breach of trust will be equal to the highest price at which the property of which that person was deprived could have been sold in the period before the breach of duty was discovered.

It is no defence, where there has been a breach of trust for the defendant to argue that there would have been a loss that would have occurred in any event, notwithstanding the breach of trust.

Island Realty Investments ltd v Douglas (1985) 56 ETR dismissed an unfaithful trustees argument that a loss in the real estate market would have occurred in any event, despite his breach of trust. The court distinguished the amount of damages that may have followed as a result of a breach of contract and held that in actions for breach of trust, the measure of damages must be the highest price that the property attained during the period of the breach of trust.

These passages of law have been approved by the Supreme Court of Canada in Guerin v. The Queen (1984) 2 SCR 335 that stated ” just as it is to be presumed that a beneficiary would have wished to sell his securities at the highest price available during the period they were wrongfully withheld from him by the trustee, so also it should be presumed that the band would’ve wished to develop its land in the most advantageous way possible. During the period covered by the unauthorized lease.

Executor Liable For Lost Rents

Executor Found Liable For Lost Rents

Executors sometimes let friends or relatives live in estate property and not collect fair rent. The executor can be personally liable for lost rent.

Where an executor permits tenants to live rent-free in estate property and the court is satisfied that the property was capable of earning rent money for the estate during that period of time, the executor can be held responsible to the estate for the rental income that was lost as a result.

Sowa Estate, Re, 2003 ABQB 761 (Alta. Q.B.) per Veit J., at para. 3. stated

“I have concluded that Mr. Sowa should repay a total of $28,047 to the estate in relation to rent. The evidence before the Court is that, while he controlled the estate property, Michael Sowa granted tenants rent-free periods and rent reduction periods. While a private owner of property can dispose of that property however he chooses, a trustee holds for the benefit of others and must make prudent decisions concerning the property. In other words, if the property was capable of earning money for the estate, it should have been doing so. I am satisfied with the calculations which indicate that a total of $9,951.00 represents rent available, but lost, during the period. In the result, Mr. Sowa must repay a total of $28,047 representing rent received plus rent lost.”

Breach of Trust: “Knowingly Participating”

Breach of Trust: "Knowingly Participating"

In Scoretz v Kensam Enterprises Ltd 2017 BCSC 1356 a director of a corporate bare trust was found liable for damages for “knowingly participating” in the breach of trust by failing to deliver shares held in trust .

The court found that it is clear that Mr. Sai knowingly assisted in the breach of trust. Mr. Sai had actual knowledge of the existence of the trust and that the refusal of Kensam to deliver up the shares was a breach of trust. He failed to take the necessary steps to have the release of the LIM Shares and the Napier Shares to Mr. Scoretz and, at the same time, he received a benefit as a result of the breach of trust as LIM Shares were made available to him through his control of Kensam.

He was in a position to sell his LIM Shares in the market without competition from the shares that should have been available for Mr. Scoretz. Mr. Sai knowingly assisted in the breach of trust by failing to cause Kensam to deliver the LIM Shares as was required. Whether by intention, recklessness, or wilful blindness, Mr. Sai participated in the breach of trust which benefited himself. In those circumstances, Mr. Sai is personally liable for the breach of trust of Kensam.


The leading case on the personal liability of strangers to a trust is Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787. There, a travel agency was obliged to hold in trust the proceeds from its sale of Air Canada tickets, breached the trust, and did not provide Air Canada with approximately $25,000 that was owed. The issue was exactly the same as the issue here: whether or not the director and shareholder of the travel agency could be held personally liable for the loss.

68  The starting point for liability for “knowing assistance” is the decision of the Court of Appeal in Chancery in Barnes v. Addy (1874), L.R. 9 Ch. App. 244where Lord Selborne L.C. stated at p. 252 that a stranger to a trust can be liable if they “assist with knowledge in a dishonest and fraudulent design on the part of the trustees”.
69  In Air Canada, supra, the Court noted that actual knowledge is required but that reckless or wilful blindness will also suffice. The Court also noted that, if a stranger receives a benefit as a result of the breach, it may be grounds to infer that the stranger had knowledge of the breach of trust.
70 Given that Kensam is a closely held company and Mr. Sai was the directing mind, this requirement of knowledge is easily satisfied. I have no hesitation in concluding that Mr. Sai had actual knowledge of the refusal of Kensam to deliver up the LIM Shares and the Napier Shares.
71  Concerning the nature of the breach of trust, the Court in Air Canada noted that there had developed two lines of authority: most English authorities required participation by the stranger in a dishonest and fraudulent design as set out originally in the Barnes decision whereas a line of Canadian authorities has developed holding that a person who is the controlling or directing mind of a corporate trustee can be liable for an innocent or negligent breach of trust if the person knowingly assisted in the breach of trust and that, in those circumstances, proof of fraud and dishonesty by the controlling mind of the corporate trustee is not a requirement if a finding can be made that the breach of trust amounts to fraud and dishonesty. In this regard, it is necessary to show that there is proof of fraud and dishonesty by the trustee and not by the controlling and directing mind of the trustee.
72  In Air Canada, supra, Iacobucci J. stated that the divergence in the case law was a result of the application of the traditional rule in the context where the corporate trustee is actually controlled by the stranger to the trust:
Where the trustee is a corporation, rather than an individual, the inquiry as to whether the breach of trust was dishonest and fraudulent may be more difficult to conceptualize, because the corporation can only act through human agents who are often the strangers to the trust whose liability is in issue. Regardless of the type of trustee, in my view, the standard adopted by Peter Gibson J. in the Baden case, following the decision of the English Court of Appeal in Belmont Finance, supra, [Belmont FinanceCorp. v. Williams Furniture Ltd. (No. 1), [1979] 1 All E.R. 118], is a helpful one. I would therefore “take as a relevant description of fraud ‘the taking of a risk to the prejudice of another’s rights, which risk is known to be one which there is no right to take’.” In my opinion, this standard best accords with the basic rationale for the imposition of personal liability on a stranger to a trust which was enunciated in Re Montagu’s Settlement Trusts, supra, [Re Montagu’s Settlement Trusts, [1987] Ch. 264] namely, whether the stranger’s conscience is sufficiently affected to justify the imposition of personal liability. In that respect, the taking of a knowingly wrongful risk resulting in prejudice to the beneficiary is sufficient to ground personal liability. This approach is consistent with both lines of authority previously discussed.
(at para. 60)
73  In British Columbia, there is a line of authority which is binding on me which provides that a person who is a controlling or directing mind of a corporate trustee can be liable for an innocent or negligent breach of trust if the person knowingly assisted in the breach of trust: Horsman Bros. Holdings Ltd. v. Panton, [1976] 3 W.W.R. 745 (B.C.S.C.); Trilec Installations Ltd. v. Bastion Construction Ltd. (1982), 135 D.L.R. (3d) 766 (B.C.C.A.); Henry Electric Ltd. v. Farwell (1986), 5 B.C.L.R. (2d) 273 (C.A.). In Scott v. Riehl (1958), 15 D.L.R. (2d) 67 (B.C.S.C.), Craig J. stated regarding an “innocent” breach of trust:
If a person deals with the funds, which are within the meaning of s. 3 [what was then the Mechanics’ Lien Act, 1956, S.B.C. 1956, c. 27] in a manner inconsistent with the trust, he breaches the trust, even though he may do so “innocently”.
74  Similarly, the courts in other jurisdictions have concluded that proof of fault and dishonesty is not required: Andrea Schmidt Construction Ltd. v. Glatt (1979), 25 O.R. (2d) 567. (C.A.); Austin v. Habitat Development Ltd. (1992), 94 D.L.R. (4th) 359 (N.S.C.A.).