Court Again Refuses to Remove Executor

Fitzgerald v Hill 2022 BCSC 968 is one of many examples where disgruntled beneficiaries with hostility towards the executor failed in court to have the executor/trustee removed and replaced.

The court listed off the many things that the executor had performed in carrying out his duties and saw no endangerment to the estate assets so refused to remove and substitute the executor.

THE LAW

An executor may be removed and replaced under ss. 158 and 159 of Wills, Estates and Succession Act, S.B.C. 2009, c. 13 [WESA], and a trustee under s. 30 of the Trustee Act, R.S.B.C. 1996, c. 464. Both may also be removed and replaced under the inherent jurisdiction of the court.

If the court removes a personal representative under WESA, it must appoint another person who consents to act as a substitute personal representative, unless the administration of the Estate is complete or the court considers it unnecessary.

The guiding principles are well-established for the exercise of judicial discretion to remove an executor and trustee. As stated by Butler J., as he then was, in Levi-Bandel v. McKeen, 2011 BCSC 247:

[19] The test for removal of an executrix or trustee is not contentious. The leading authority in British Columbia remains the decision in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.). In Conroy, the Court of Appeal considered whether it was expedient to remove one trustee and appoint a replacement when some of the beneficiaries were dissatisfied with the way the trustee was handling the estate. The court confirmed at 126-127 that the main test for removal of a trustee is the welfare of the beneficiaries:

In Letterstedt v. Broers (1884), 9 App. Cas. 371, their Lordships of the Judicial Committee held that the main principle upon which the jurisdiction of Courts of Equity has been exercised to remove old trustees and substitute new ones in cases requiring such a remedy, is the welfare of the beneficiaries of the trust estate.

[20] In Letterstedt, the court noted that it is not every act of misconduct that should result in removal of a trustee, only acts or omissions which endanger the trust property or show “a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”

Out of respect for the will-maker’s choice of executor, the court should interfere only for good reason: Re Blitz Estate, 2000 BCSC 1596, at para. 20; Tomlinson Estate (Re), 2016 BCSC 1223, at para. 43. This test has been put even higher in some cases, for example in Veitch Estate, 2007 BCSC 952, at para. 19, citing Re Weil, [1961] O.R. 888 (ONCA):
It seems to me that such an interference with the discretion and choice of a person in preparing his last will and testament must be not only well justified but, as has been said before, must amount to a case of clear necessity.

The court’s discretion in deciding whether to remove a trustee should be guided by the following principles, set out in Parker v. Thompson (Trustee), 2014 BCSC 1916, at para. 37:

[37] I accept the principles pertaining to the removal of an estate trustee set out by Madam Justice Nolan in Haines v. Haines, 2012 ONSC 1816 at para. 10 as equally applicable to the removal of the trustee:

In Johnson v. Lanka, 2010 ONSC 4124, (2010), 103 O.R. (3d) 258 at para. 15, Pattillo J. summarized the principles that should guide the court’s discretion in deciding whether to remove estate trustees:

(1) the court will not lightly interfere with the testator’s choice of estate trustee;
(2) clear evidence of necessity is required;
(3) the court’s main consideration is the welfare of the beneficiaries; and
(4) the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

To remove an executor on the basis of misconduct, the evidence must show they endangered the estate property, acted dishonestly and without proper care, without capacity to execute the duties, or without reasonable fidelity: Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.). In all cases, the fundamental guide must be the welfare of the beneficiaries: Letterstedt v. Broers (1884), 9 App. Cas. 371 (South Africa P.C.).

Mere friction between the trustee and one or more beneficiaries is usually insufficient to justify removal of the trustee. As stated in Miles v. Vince, 2014 BCCA 289:

[84] What circumstances justify the removal of a trustee? In Letterstedt v. Broers (1884), L.R. App. Cas. 371 (J.C.P.C.), the court established guidelines justifying the removal of a trustee (at 385-389):

1. If the Court is satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.

2. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.

3. In exercising the delicate jurisdiction of removing trustees, the Court’s main guide must be the welfare of the beneficiaries. It is not possible to lay down any more definite rule in a matter that is so “essentially dependent on details often of great nicety.” The Court must proceed to look carefully into the circumstances of the case.

4. Where a trustee is asked to resign, and if it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, and if there is no reason to the contrary from the intentions of the framer of the trust to give this trustee a benefit or otherwise, the trustee is always advised by his own counsel to resign.

5. 5. The lack of jurisprudence in respect of the removal of a trustee reflects that a trustee when asked to do so, will resign.

6. If, without any reasonable ground, the trustee refuses to do so the court might think it proper to remove him.

7. Friction or hostility between trustees and the beneficiary is not of itself a reason for the removal of the truste

es. But where the hostility is grounded on the mode in which the trust has been administered, where it has been caused wholly or partially by substantial overcharges against the trust estate, it is not to be disregarded.

The Hill Beneficiaries rely on Sheppe v. Harlingten, 2018 BCSC 1460, regarding dismissal of a trustee due to hostility to the beneficiaries. In that case, the trustee was the grantor’s former husband, and the disputing beneficiaries her children from a subsequent relationship. The trustee wished to sell their family home in which they lived, to use the proceeds in his real estate project. He listed it for sale and they filed a CPL. The trustee then sent them scathing, insulting correspondence (see para .16).

[27] Not every neglect of duty or mistake will result in removal of the trustee. The key question is whether there is or has been endangerment of trust property, whether through a lack of honesty, lack of capacity or lack of reasonable fidelity: Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.); Miles at para. 85.

[28] In Parker v. Thompson (Trustee), 2014 BCSC 1916 at para. 37, Chief Justice Hinkson said at para. 37:

[37] I accept the principles pertaining to the removal of an estate trustee set out by Madam Justice Nolan in Haines v. Haines, 2012 ONSC 1816 at para. 10 as equally applicable to the removal of a trustee:

In Johnson v. Lanka, (2010), 103 O.R. (3d) 258 at para. 15, Pattillo J. summarized the principles that should guide the court’s discretion in deciding whether to remove estate trustees:

(1) the court will not lightly interfere with the testator’s choice of estate trustee;
(2) clear evidence of necessity is required;
(3) the court’s main consideration is the welfare of the beneficiaries; and
(4) the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

[39] I also cannot ignore the hostility that Mr. Harlingten expressed to the beneficiaries when they took what they considered to be necessary steps to protect their interests.
[40] Dissension between a trustee and beneficiaries is not necessarily a reason to remove the trustee: Conroy at p. 126. The questions is whether it would become difficult for the trustee to act with impartiality or whether the friction is of a nature or degree that it prevents, or is likely to prevent, the proper administration of the trust: Radford v. Radford Estate (2008), 169 A.C.W.S. (3d) 688 (Ont. S. Ct. J) at paras. 112 and 113.

Executor Removed By All Beneficiaries

Re Kara Estate 2022 BCSC 923 ordered an executor removed, or passed over since probate had not been started, where all of the beneficiaries sought such an order.

 

There were allegations of executor delay and favourtism to one party.

 

The LAW

Section 158 of the Wills, Successions and Estate Act, S.B.C. 2009, c.13, provides that:

158 .

(2) A person having an interest in an estate may apply to the court to remove or pass over a person otherwise entitled to be or to become a personal representative.

(3) […] the court […] may remove or pass over a person entitled to be or to become a personal representative if the court considers that the personal representative or person entitled to become the personal representative should not continue in office or be granted probate […] if the person entitled to become the personal representative […]:

(f)         is:

(ii)        not responsive, or

(iii)       otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative,

to an extent that the conduct of the personal representative hampers the efficient administration of the estate.

 

The Court of Appeal in Conroy v Stokes, [1952] 4 DLR 124 (BCCA), set out the types of conduct that could warrant removal of an executor, which include:

(a)  Endangerment of the trust property;

(b)  Want of honesty;

(c)   Want of proper capacity to execute the duties; and

(d)  Want of reasonable fidelity.

Butler J., as he then was, noted in Levi-Bandel v. McKeen, 2011 BCSC 247 at para. 21 that “it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal.” In Dirnberger Estate, 2016 BCSC 439, Kelleher J. confirmed that unreasonable delay and failure to act to distribute an estate may be grounds for the removal of an executor.

In Ching Estate (Re), 2016 BCSC 1111 at para. 22, Affleck J. noted:

The authorities indicate that even a “perceived” conflict of interest between an executor’s personal interests and her obligation to administer the trusts in the will in the interests of the beneficiaries may cause this court to intervene to appoint a new executor or an administrator to avoid even the appearance of conflict.

 

The bottom line was stated in Nieweler Estate (Re), 2019 BCSC 401

” The main guide in exercising the Court’s discretion to remove trustees is the welfare of the beneficiaries: Letterstedt at 387. It is not the interests of a particular beneficiary that are to be considered, but rather the benefit of the beneficiaries collectively: Conroy v. Stokes, at 128; Re Winter Estate, at para. 22.”

Removal of Trustee Refused

Re Koglin Estate 2021 BCSC 2525 is one of many court decisions where an application to remove an executor/trustee was refused by the courts. This is not to say that such application cannot succeed, but the evidence must be clear and strong for the courts to interfere with the choice of the will maker as to his or her chosen executor.

The law is reasonably well settled with the leading case in British Columbia, being Conroy v Stokes (1952) 4 DLR 124 BCCA that stated that in order to succeed in such an application, the evidence must show that:

1. The executor acted in a manner that endangered the asset, or

2. As executor, he or she acted dishonestly, without proper care, or without reasonable fidelity;

In Parker v Thompson ( Trustee) 2014 BCSC 1916 . The deceased established in inter vivos trust in which is corporate solicitor was trustee. His chief for children from his first marriage sought to remove the trustee on the basis that he acted in a way that gave precedence to the interests of the second wife and son of his second marriage.

The court quoted an Ontario judgment that stated the principle that “removal of an estate trustee should only occur on the clearest evidence that there is no other course to follow”.

The court stated that the standard of care and diligence required of a trustee is that of a man of ordinary prudence in managing his own affairs and accepted the following principles applicable to the court’s discretion on an application to remove a trustee:

• The court will not lightly interfere with the testator’s choice of estate trustee;
• clear evidence of necessity is required
• the court’s main consideration is the welfare of the beneficiaries;
• the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

The existence of friction between the trustee in one or more beneficiaries is not usually sufficient of itself to justify the removal of the trustee Erlichman v Erlichman 2000 BCSC 173 at para.8, however, the court will remove a trustee, where the welfare of the beneficiaries requires it.

In Dimberger Estate 2016 BCSC 439 the court did remove the trustee for failure to distribute the estate after four years after the grant of probate, and took into consideration the trustees ongoing hostility towards his sister the co-beneficiary

Removal of Executor for Conflict of Interest

Removal of Executor for Conflict of Interest

In Jury v Rodogzinski 2021 BCSC 2241 the court removed the executor for a perceived conflict of interest where the executor had received the bulk of the estate by way of an inter vivos transfer prior to death, and then was to also receive an equal share of the residue.

The beneficiaries successfully argued that the executor was in a conflict of interest as they asserted that the true intention of the deceased was that all of the beneficiaries would share equally and that under that false impression transferred the real property to the executor two weeks after the will was signed.

The Law

It has been held in a number of cases that an executor may be removed when involved or potentially involved in litigation against the estate in a personal capacity.

In Weisstock v. Weisstock, 2019 BCSC 517

It has repeatedly been held that a conflict of interest may disqualify an executor from acting in that capacity: Re Becker (1986), 57 O.R. (2d) 495 (Ont. Surr. Ct.); Thomasson Estate (Re), 2011 BCSC 481; Stevens v. Whittaker, 2012 BCSC 1188; Ching Estate (Re), 2016 BCSC 1111. Such a conflict may arise if the executor has or may have a claim against the estate or if the estate has or may have a claim against him or her.

In particular, courts have exercised the authority to remove or pass over an executor where there was a dispute over an inter vivos gift made by the deceased to the executor before death.
In Re Becker, 1986 CanLII 2596, 57 O.R. (2d) 495 (Surr. Ct.) the deceased named four persons as executors. One of them, the respondent, purportedly received an inter vivos gift of $107,000 in guaranteed investment certificates shortly before the testator’s death.

The three other named executors brought an application seeking to have the respondent passed over as an executor on the basis that the estate had a claim against him to set aside the gift.

The court granted the order, stating at pp. 6 and 8 (CanLII):
In. It is self-evident that the respondent, in his capacity as executor, cannot conscientiously (as a plaintiff) attack the gift and the transfers of securities to himself while at the same time maintaining in his personal capacity that the gifts and transfers were proper. That will not be a potential conflict; it will be actual…

In Thomasson Estate (Re), 2011 BCSC 481 it was ordered that one of the executors named in a will should be passed over as trustee because he had received an inter vivos transfer of property from the testator, his father.

The beneficiaries of the estate, the testator’s other children, brought the application to have him passed over as trustee on the basis the beneficiaries claimed the property he received in the inter vivos transfer belonged to the estate.

The court noted that courts are hesitant to interfere with the testator’s right to nominate an executor but held that the potential for conflict on the part of the proposed executor was sufficiently disabling that he ought to be passed over.

In Ching Estate (Re), 2016 BCSC 1111, Justice Affleck ordered that an executor be passed over due to a conflict of interest where the named executor, one of the testator’s daughters, applied to prove the will in solemn form and confirm her appointment as trustee. Her sister, a beneficiary, opposed the application on the basis she had commenced an action against the executor to recover an asset the sister claimed was part of the estate. The executor had received the asset from the testator through an inter vivos transfer before her death.

The executor claimed the property was a gift in recognition of continuing assistance she had given to her parents for their medical care.

Without commenting on the merits of the asset recovery action, Justice Affleck found the circumstances placed the executor in a “disabling conflict of interest”.

He said at para. 23 the executor is put in difficult circumstance “when she defends her right to retain assets as her own when there is a dispute over whether they belong to the estate. She cannot perform her duty to claim assets for the estate while asserting the same assets belong to her.”

Court Appointed Trustees For Infants ( S 159 FLA)

Individuals, (typically parents) and trust companies may apply to be appointed the trustee of the minor’s property pursuant to section 179 of the Family Law act. ( FLA)

For example, I recently settled an infant’s claim under the wills variation proceedings and the mother wishes to be the trustee of the funds during their infancy. The Public Guardian and Trustee (PGT) is normally in such a role by default, but section 179 FLA makes provision for others to be appointed in that role.

Section 179 (2) FLA sets out the criteria to be considered by the court when appointing a trustee under that section, and sets out a number of matters that might be included in the order.

The Supreme Court may appoint a trustee only if satisfied that it is in the best interests of the child to do so, on consideration of all of the following:

(a) the apparent ability of the proposed trustee to administer the property;

(b) the merits of the proposed trustee’s plan for administering the property;

(c) the views of the child, unless it would be inappropriate to consider them;

(d) the personal relationship between the proposed trustee and the child;

(e)t he wishes of the child’s guardians;

(e) the written comments of the Public Guardian and Trustee;

(g)t he potential benefits and risks of appointing the proposed trustee to administer the property compared to other available options for administering the property;

(h)i f the Supreme Court is considering making an order under subsection (1) (b), that the interests of the child are likely better served by an order made under that subsection than by an order made under subsection (1) (a).

The (PGT) must be served with the court application and the written comments of the PGT in response to the materials will be provided to the court.
The PGT will typically recommend to the court that the property be secured by provisions in the court order, which may vary from bonding to specific provisions to protect the assets. These provisions are typically, a requirement that the trustee be restricted from registering real property transactions, including encumbrances and transfers without a further order of the court or the prior written approval of the PGT.

S.158 WESA-Executors Passed Over, Third party Administrator Appointed

In Re Yurkiw estate 2021 BCSC 1015 two executors applied to have each other passed over so as to be the sole executor but the court dismissed both applications and pursuant to S. 158 WESA  appointed a third party administrator.

 

Section 158 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13, provides for the passing over of a person entitled to become a personal representative if the court considers that the person “should not be granted probate or administration.”

In Dunsdon v. Dunsdon, 2012 BCSC 1274 at paras. 202-203, Justice Ballance outlined considerations for removal of a trustee:

”   Put broadly, a trustee may be removed where his or her acts or omissions endanger the trust property or demonstrate a want of honesty, of reasonable fidelity, or of the proper capacity to execute the duties of office:  Conroy v. Stokes [1952] 4 D.L.R. 124 (B.C.C.A.). The existence of friction between the trustee and one or more beneficiaries is usually not sufficient, of itself, to justify removal of the trustee: Erlichman v. Erlichman, 2000 BCSC 173; Re Blitz Estate, 2000 BCSC 1596.

However, where there is dissension among the trustees themselves by which the trust administration grinds to a standstill or otherwise hampers the proper administration, the courts tend to remove one or more of them. In those instances, misconduct per se is not an essential prerequisite: Re Consiglio Trusts (No. 1) (1973), 36 D.L.R. (3d) 658 (Ont. C.A.); Wilson v. Heathcote, 2009 BCSC 554.

 In all cases, the fundamental guide must be the welfare of the beneficiaries: Letterstedt v. Broers, (1884), 9 App. Cas. 371 (South Africa P.C.).

While the applications before the court were not for removal, it is common ground that the considerations in Dunsdon are relevant to passing over applications. as was done in : Weisstock v. Weisstock, 2019 BCSC 517.

S. 158 WESA- Removal of an Executor

The Estate of Jean Maureen Dahle, deceased 2021 BCSC718 discussed the law relating to the removal of an executor, both under s 158 WESA, the common law and S. 31 Trustee Act.

The court was asked by two co executors to remove the other.

The court declined to remove either but appointed a third corporate trustee as a third co executor.

 

           THE LAW

 

Section 158(3) of the WESA builds on the common law jurisprudence and provides statutory authority for removal of an executor of an estate (referred to as a “personal representative” in the WESA) in circumstances where the Court considers that the executor should not continue in office. The relevant part of s. 158(3) provides:

(3) Subject to the terms of a will, if any, and to subsection (3.1), the court, by order, may remove or pass over a person otherwise entitled to be or to become a personal representative if the court considers that the personal representative or person entitled to become the personal representative should not continue in office or be granted probate or administration, including, without limitation, if the personal representative or person entitled to become the personal representative, as the case may be,

(f) is

(i) unable to make the decisions necessary to discharge the office of personal representative,
(ii) not responsive, or
(iii) otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative,
to an extent that the conduct of the personal representative hampers the efficient administration of the estate, or

[ Section 158(4) of the WESA provides that an order to remove an individual as an executor does not remove that person as a trustee of the estate.

Section 31 of the Trustee Act provides the statutory authority for the Court to remove an individual as a trustee, including as a trustee of an estate:

31 If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.

[A testator’s discretion to choose their executors and trustees should be given deference and not interfered with lightly: DeCotiis v. DeCotiis, 2008 BCSC 1206 at paras. 11–12. Ms. Dahle did not provide either Tim or Martin with sole decision-making power with respect to the estate or the Nickey Trust, and thus, they must exercise their duties jointly as co-executors and co-trustees and they are expected to act unanimously: Clock Holdings Ltd. v. Braich Estate, 2008 BCSC 1697 at para. 16.

While not determinative, animosity among co-executors may be a relevant factor in determining whether it is reasonable for them to be expected to carry out their duties effectively and efficiently: Nieweler Estate (Re), 2019 BCSC 401 at para. 29 [Nieweler]. To this I would add that it is relevant to consider whether the animosity is such that the duties could not be carried out efficiently and effectively, even with the assistance of a third party.

Unreasonable delay and failure to act to distribute an estate may be grounds for removal. In Dirnberger Estate, 2016 BCSC 439, Justice Kelleher referred to the Court of Appeal’s decision in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.) [Conroy] when describing the categories of conduct that can warrant removal of an executor:

There are four categories of conduct on an executor’s part that will warrant removal:

1. endangerment of the trust property;
2. want of honesty;
3. want of proper capacity to execute the duties; and
4. want of reasonable fidelity.

In Nieweler, Justice Myers applied the categories from Conroy concurrently with the application of the factors listed in s. 158 of the WESA. At para. 31, Justice Myers emphasized the importance of the welfare of the beneficiaries as the key factor in the exercise of the Court’s discretion to remove an executor:

[ The main guide in exercising the Court’s discretion to remove trustees is the welfare of the beneficiaries: Letterstedt at 387. It is not the interests of a particular beneficiary that are to be considered, but rather the benefit of the beneficiaries collectively: Conroy v. Stokes, at 128; Re Winter Estate, at para. 22.

It is important to note that perfection is not expected of an executor and not all acts of misconduct will lead to removal. Justice Thompson summarized this principle concisely in Estate of Forbes McTavish Campbell, 2015 BCSC 774 [Forbes McTavish]:

In Levi-Bandel v. McKeen, 2011 BCSC 247, Mr. Justice Butler removed a co-executrix. At paras. 15-16, he referred to the authorities supporting the inherent power of the court to remove a trustee. The test for removal of a trustee is the welfare of the beneficiaries of the trust estate: Letterstedt v. Broers (1884), 9 App. Cas. 371 (P.C.); Conroy v. Stokes, [1952] B.C.J. No. 111 (C.A.). Not every act of misconduct should result in removal. The question is whether the acts or omissions endanger the trust property or show a want of honesty or proper capacity to execute the duties or reasonable fidelity: Letterstedt, at 386.
[Emphasis added.]

 Section 159 of the WESA provides the Court with the statutory authority to appoint an executor in circumstances where the Court has discharged or removed an executor. However, the WESA, unlike s. 31 of the Trustee Act, does not explicitly provide the Court with statutory authority to appoint an additional executor where an order for removal is not made. Nonetheless, the parties are in agreement, and I also accept, that this Court’s inherent jurisdiction provides me with the authority and discretion to appoint an additional executor in circumstances where no removal order is made so long as such an order is in the best interests of the welfare of the estate’s beneficiaries.

Removing an Executor Can Be Difficult

Burke v . Burke 2019 BCSC involved an application brought under sections 130 and 132 of WESA, along with section 31 of the Trustee Act and the inherent jurisdiction of the court to remove an executor and trustee and substitute another, and indicated  how difficult it can be to succeed without strong evidence.

The introduction of WESA legislation on March 31, 2014 added the provisions of sections 131 and sections 132 as a procedure to follow when making such applications. There is a great deal of case law on this topic, and I do not think WESA overrules any of them in their general principles.

As the case law indicates, as well as the Burke case, the courts will not likely interfere with the testator’s choice of the estate trustee and will require strong evidence of necessity, such that the trustees acts or omissions endanger the administration of the trust.

In Burke the petitioner showed a strong prima facie case of executor conflict of interest yet the court refused to remove the executor and substitute another.

WESA states:

131. If a person dies, leaving a will, and the executor named in the will renounces executorship, or is unable or unwilling to apply for a grant of probate, or if no executors named in the will, the court may grant administration with will annexed to one or more of the following persons in the following order of priority:

a) a beneficiary who applies having the consent of the beneficiaries representing the majority in interest of the estate, including the applicant;
b) a beneficiary who applies not having the consent of the beneficiaries representing a majority in interest of the estate; and
c) any other person the court considers appropriate to appoint, including, without limitation, and subject to the public Guardian and trustee’s consent, the public Guardian and trustee.

s 132. Despite sections 130 and 131, the court may appoint as administrator of an estate any person the court considers appropriate. If, because of special circumstances, the court considers it appropriate to do so, the appointment of an administrator under subsection 1 may be conditional or unconditional, and it made for general, special, or limited purposes.
Section 31 of the Trustee Act states as follows:

31. If it is expedient to appoint a new trustee and it is found in expedient, difficult or impractical to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of the making of the order, and either in substitution for, or in addition to, any existing trustees.

In Parker V. Thompson 2014 BCSC 1916, Chief Justice Hinkson summarized the test to be applied on an application such as this at paragraph 37:

“37. I accept the principles pertaining to the removal of an estate trustee set out in Haines v. Haines 2012 ONSC 1816 at paragraph 10, as equally applicable to the removal of the trustee.”

In Johnson v. Lanka 2010 ONSC 100 0. R. 258 at paragraph 15, the court summarize the principles that should guide the court’s discretion in deciding whether to remove estate trustees:

1) the court will not likely interfere with the testator’s choice of estate trustee;
2) clear evidence of necessity is required;
3) the court’s main consideration is the welfare of the beneficiaries; and
4) the estate trustees acts or omissions must be of such a nature as to endanger the administration of the trust.

Removal of a Trustee Pointers

In exercising its discretion as to whether or not to remove a trustee, the courts will follow a general rule that their main guide must be the welfare of the beneficiaries. The circumstances of each case must be reviewed very carefully, as the courts are reluctant to remove an executor/trustee as same was chosen by the testator.

A court may remove a trustee on the basis of misconduct if the evidence shows that the executor acted in a manner that endangered the estate, or that as executor he or she acted
dishonestly, without proper care, without capacity to execute the duties, or without reasonable fidelity (Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.), followed by
Dunsdon v. Dunsdon Estate, 2012 BCSC 1274 at para.202).

A trustee will be removed under section 30 of the Trustee Act where there is potentialconflict of interest between the personal interests of the trustee and those of the
beneficiaries, particularly in the situation where the trustee sold assets at far below market value, and the trustee had benefited from her administration of the estate
(VanKoughnett and Others v. Austin, 2006 BCSC 1856).

A trustee may be removed if there is a concern that the trustee has not made a proper accounting of business that he or she had conducted on behalf of the trust or evidence that
he or she was treating the assets of the trust as his or her own personal assets (Hayne v.Moncrieff, 2012 ABCA 264).

The principles to be applied in applications for the removal of executors are the same as for those for removal of trustees (Powers v. Powers Estate, [1988] N.J. No. 19
(S.C.N.T.D.).

An executor may be removed where the executor’s actions are not in the best interests of the beneficiaries (McKay v. Howlett et at, 2003 BCCA 555).

An executor may be removed where the executor’s duties are found to be in conflict withhis or her personal interests, or where estate assets had been endangered by the executor’s
conduct and the executor had benefitted at the expense of the estate (Hall v. Hall, 45 B.C.L.R. 154; Veitch Estate, 2007 BCSC 952).

In matters involving an executor’s misconduct, the beneficiary may obtain an award of
special costs against him or her (Loftus v. Clarke Estate, 2001 BCSC 1136).

Passing Over/Removal of an Executor Trustee

Passing Over/Removal of an Executor Trustee

One of the most common enquiries in estate litigation relates to the beneficiaries’ dissatisfaction with the named executor/trustee and their intention to either pass over or remove him or her.

Passing over or removing an executor/trustee is very often a difficult task to achieve as the law has been clear for many years that the deceased’s right to nominate his or her executor is not to be lightly interfered with: Re Wolfe (1957) 7 DLR (2d) 215 at 219 (BCCA).

Passing over an executor utilizes essentially the same legal criteria as removing an executor except that a passing over occurs before the named executor starts to act in a representative capacity.

Section 158 of the Wills, Estates and Succession Act [SBC 2009] c. 13 (“WESA”)

Section 158 is a new provision where persons interested in the estate, including beneficiaries, intestate heirs, creditors and co-executors can apply to remove or pass over a person entitled to be the personal representative.

It must be noted that removal as a personal representative does not remove the person as a trustee, as the latter must be done under the Trustee Act. Whereas most personal representatives are named as the executor and trustee of the will, (or are court- appointed administrators), there is a distinction between the two roles of executor and trustee which can become important when applying to pass over or remove a personal representative, such as an executor.

S.158(1) defines pass over to mean grant of probate or administration to a person who has less priority than another person to become a personal representative.

A person having an interest in an estate may apply to the court to remove or pass over a person otherwise entitled to be or to become a personal representative.

S.158(3) codified some of the common law decisions by setting out some of the criteria that the court may consider in adjudicating an application to either pass over or remove a personal representative such as the named executor as follows:

a) refusal to accept the office of or to act as personal representative without renouncing the office;
b) is incapable of managing his or her own affairs;
c) purports to resign from the office of personal representative;
d) being a Corporation, is dissolved during liquidation;
e) has been convicted of an offense involving dishonesty;
f.) is an undischarged bankrupt
g) is:
i) unable to make the decisions necessary to discharge the office of personal representative;
ii) not responsive, or
iii) otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative

The aforesaid criteria must show that the personal representative is hampering the efficient administration of the estate, or a person granted power over financial affairs under the Patients Property Act (RSBC 1996) c.349.

Section 159 WESA

Section 159 of WESA is also a new provision that states that if the court discharges or removes a personal representative, the court must appoint another person who consents to act as the substitute personal representative, unless the administration of the estate is completed or the court does not consider it necessary that a new appointment be made.

Cases Involving Passing Over

In Re Thomasson Estate, 2011 BCSC 481, the court passed over the named executor by reason of personal conflict of interest.

The court stated that the application was not to remove the executor but simply to pass over him so that an enquiry can be undertaken of the transfer of the property to him and his wife by the deceased in 2006, and a determination can be made if any further actions need be taken in regards to the property.

There was a perceived conflict of interest between the named executor in his role as an executor and his interest in his personal capacity regarding the property transfer that was being challenged and he was passed over.

In Re Haggerty Estate 21 WWR 85 BCCA, a grant was refused where the named executor had within the last year been convicted of a crime involving misappropriation of estate funds.

The court stated that while a testator’s choice of executor should not be lightly interfered with, this was a proper case where discretion should be exercised by refusing the grant to the named executor. The court discussed a long line of authorities which state that evidence of bad character alone is not a sufficient ground for refusing a grant.

However, in Re Oughton, 40 ETR 296, Oughton, a notorious sex offender who was sentenced to an indeterminate sentence, was not passed over as executor on the basis that his circumstances were not sufficient to justify passing him over.

In Stadelmier v. Hoffman 25 ETR 174, however, the court passed over one of four named executors where the other three intended to bring action against the fourth on the basis of undue influence with respect to some large inter vivos gifts. The court exercised its discretion to pass over due to the position of actual conflict that the fourth executor was in. He could not in his capacity of executor attack the gift to himself, while at the same time maintain in his personal capacity that the gifts were proper.

Courts are hesitant to interfere with the testator’s right to nominate his or her executor trustee.

The court does, however, have both a statutory power under s. 31 of the Trustee Act, RSBC 1996, c. 464 and an inherent power to remove or pass over a trustee or executor: Mardesic v. Vukovich Estate (1988), 30 BCLR (2d) 170 (BCSC); Seaton Estate, Re, 2003 BCCA 555 (BCCA).

In fact, in Crawford v .Jardine (1997) OJ No. 5041 at para. 18, the court stated that removal of an estate trustee should only occur on the clearest of evidence that there is no other course to follow.

The court further stated that it is not every mistake or neglect of duty on the part of the trustees which will lead to the removal. It must be shown by the applicant that the non-removal of the trustee will likely prevent the trust from being properly executed.

Section 31 of the Trustee Act (RSBC 1996) c. 464

If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.

In Mardesic the court removed the trustee because he was in a conflict of interest with the interests of all the beneficiaries of the estate, noting that s. 31 conferred a very broad power on the court.

The test for removal of an executor or trustee is set out in Conroy v. Stokes, [1952] 4 DLR 124 (BCCA), where the Court confirmed at pp. 126-127 that the main test for removal of a trustee is the welfare of the beneficiaries.

It is somewhat trite law that the court’s main guide in deciding to remove an executor or trustee should be the welfare of the beneficiaries: Letterstedt v. Broers (1884) 9 App. Cas. 371.

The sanction of removal of an executor or trustee is not intended to punish the executor or trustee for past welfare of the beneficiaries, but instead is to protect the assets of the trust and the interests of the beneficiaries. However, past misconduct that is likely to continue will often be sufficient to justify removal.

In Dirnbeger Estate (2016) BCSC 439 the court considered an application for removal and replacement of an executor. The executor had in fact retained numerous professionals to assist, but eventually dismissed each one due to his inability to maintain a professional relationship with them. After four years the estate remained undistributed.

The court, citing Conroy v. Stokes (1952) 4 DLR 124 set out the four categories of conduct on the part of an executor or trustee that warrant removal:

  1. endangerment of the trust property;
  2. want of honesty;
  3. want of proper capacity to execute duties; and
  4. want of reasonable fidelity.

The court removed the trustee due to his inability to discharge his duties after four years, and to maintain relationships with trustees, as well as his unaccountable hostility towards a sibling who was a beneficiary and an alternate executor.

Conclusion

The courts are most reluctant to interfere with the deceased’s right to nominate his or her executor/trustee, and it is only the most egregious conduct, that harms or potentially harms the best interests of the beneficiaries, that will prompt the court to pass over, or alternatively, remove an executor or trustee and substitute another.
Each case is very fact-specific and most applications to remove an executor are vigorously contested as there are often great personal conflicts between the beneficiaries and the named executor/trustee. However, emotional conflict is not a major factor in the court’s decision as to whether to pass over or remove an executor/trustee and substitute another.