Kyle estate v Kyle 2017 BCSC 752 was ordered to pay approximately $400,000 to the beneficiaries as a result of deceitfully transferring monies from a joint account into his personal account and undertaking almost 2 years of misdirection and deceit.
The executor knowingly permitted inaccurate information to be conveyed by the estate lawyer and was not honest complete or neutral in disclosing the benefits he had received from the deceit.
The court found that it was the intention of the deceased that the joint bank account to be distributed equally between the four children.
The court held that it would have been appropriate for the executor to disclose the joint account at the outset and seek directions on how the asset was to be handled.
The court held that it would be unjust and contrary to public policy that the party who misappropriated trust assets to then expect that the cost of pursuing those assets would be borne by the estate, rather than by the beneficiary who misappropriated the assets.
In a proceeding involving the misconduct of an executor or trustee, including where the executor has acted dishonestly and in breach of fiduciary obligations, the beneficiary may obtain an award of special costs against the executor personally, and if the executors a beneficiary under the estate, these costs can come out of the executor share of the estate. Szpradowski v Szpradowski Estate ( 1992) 44 ETR 89.
Szpradowski succinctly stated “ there is no reason why the estate or the legatee should bear the cost to which the executor put the estate” para 227.
In the Kyle decision , the court found that prior to and during the litigation, the breaches and failures of the executor are worthy of rebuke. The reprehensible conduct of the executor, both before and during the proceedings required in order of special costs remain subject to an assessment of the same before the registrar.