Trevor Todd and Jackson Todd have over sixty years combined experience in resolving estate disputes including the removal and substitution of a new executor
Re Rawji Estate 2023 BCSC 1652 is a good case exemplifying when the court will remove and substitute an executor for inter alia conflict of interest and other serious factors. The case also carefully reviews the duties of an executor.
The facts involve an application to remove the executor of an extremely acrimonious family that involved many days of court. The court found there were at least five reasons to remove the executor,
- his extreme animus to one of the beneficiaries,
- a debt owing by the executor to the estate,
- the fact that the executor sued the estate when that is contrary to the rule of the executor must remain neutral,
- a finding that he jeopardized estate assets
- an inability for him to move the estate administration forward.
The court provided a detailed explanation about each of the five reasons to remove the executor and provided caselaw to support each area.
The will itself divided the estate assets equally amongst the children which normally does not give rise to an application to remove an executor.
THE LAW
It is settled law that the primary duty of an executor is to preserve the estate assets, pay the debts, and distribute the balance to the beneficiaries under the will or in accordance with any order varying the will. An executor should not pick sides between beneficiaries and should be indifferent as to how the estate is to be divided: Kolic Estate (Re), 2016 BCSC 1312 at paras. 25-26. That said, pre-existing hostility between an executor and one or more of the beneficiaries does not necessarily disqualify the executor from performing his or her duties, so long as the executor is capable of setting aside that hostility with a view to the interests of all the beneficiaries: Ali v. Walters Estate, 2018 BCSC 1032 at paras. 104-106. Section 158 of the Wills, Estates and Succession Act. S.B.C. 2009, c. 13 [WESA] provides that the court may remove the personal representative of an estate if the court considers that the personal representative should not continue in office. The authority to remove an executor is also found in the inherent jurisdiction of the court: McKay v. Howlett, 2003 BCCA 555 at para. 17.
[34] As set out in Parker v. Thompson (Trustee), 2014 BCSC 1916 at para. 37, the court’s decision to remove an executor should be guided by a consideration of the following factors:
- The court will not lightly interfere with the testator’s choice of estate trustee and clear evidence of necessity is required;
- removal of an executor should only occur “on the clearest of evidence that there is no other course to follow”;
- The court’s main consideration is the welfare of the beneficiaries; and
- The estate’s trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate.
In deciding whether to remove a trustee, the court’s main guide should be the welfare of the beneficiaries. The question is whether the estate is likely to be administered properly in accordance with the fiduciary duties of the trustee and with due regard to the interests and welfare of the beneficiaries: Parker at para. 40.
An administrator must act with detachment, even-handedness and without animosity: Berlinguette Estate (Re), 2022 BCSC 1098 at paras. 19, 28-30; Ruffolo v. Juba-Ruffolo, 2005 BCCA 26 at para. 15. The court has jurisdiction to remove an executor when there is evidence the executor has acted in a manner that endangers the estate or, as executor, has acted dishonestly, without proper care, or without reasonable fidelity. As set out in Kyle Estate v. Kyle, 2016 BCSC 855 at para. 88, reasons for removal may include a “lack of neutrality, failure to disclose estate information or other misconduct including treating one or more of the beneficiaries with hostility.”
While mere dissension or friction with the beneficiaries is not of itself a reason for the removal of the executor, where the hostility is grounded on the mode in which the estate has been administered, it is not to be disregarded: Conroy v. Stokes, [1952] 4 D.L.R. 124, 1952 CanLII 227 (BCCA); Dunsdon v. Dunsdon, 2012 BCSC 1274 at para. 202. In circumstances where animosity hampers the proper administration of the estate, a finding of wrongdoing is not necessary in order to remove the executor: Dunsdon at para. 202; Weisstock v. Weisstock, 2019 BCSC 517 at para. 44. While actual dishonesty, lack of proper capacity to execute his or her duties, or lack of reasonable fidelity are all bases for removing a trustee, even the lesser basis of a trustee’s inability to act impartially may suffice to justify their removal: Parker at para. 39. Further, where an administrator acts in a manner that frustrates the investigation and identification of estate assets that endangers estate property, in an attempt to benefit some beneficiaries at the expense of others, the administrator must be removed: Pangalia Estate, 2021 BCSC 1070 at para. 40.
An executor should remain neutral in administering the wishes of the testator. By involving oneself in a will variation proceeding, an executor offends that principle of neutrality by pursuing a personal interest which conflicts with the impartial role as executor. In Yeh Estate (Re), 2016 BCSC 1550, Justice Williams expressed the conflict as follows:
[17] The main consideration in whether to exercise that discretion is the welfare of the beneficiaries: Thomasson Estate (Re), 2011 BCSC 481, at para. 22. Even a “perceived” conflict of interest between an executor’s personal interests and her duty to act in the interests of the beneficiaries of the will can be sufficient to warrant her removal: Ching Estate (Re), 2016 BCSC 1111, at para. 22.
[18] The respondent’s essential position here is that the will should not be enforced as it reads on its face—that is, that the deceased’s interest in the Property (as it was prior to the transfers) should not pass to the petitioners.
[19] That puts the respondent in a fundamental conflict of interest. Her position in this dispute (certainly as regards the Property) is squarely at odds with her role as executor to administer the will.