Removing and Replacing Executors and Trustees

This video is on removing executors and trustees. Personally, I think being an executor is like being a fire hydrant on a street of dogs. You can never, ever get enough appreciation. Unfortunately, it seems to attract a lot of heat. Now there are good executors and there are bad executors. But the fact that you don’t like the executor or you can’t get along with the executor really is not going to be sufficient to remove that executor.

At common law, it has historically been very difficult to remove an executor. But more recently, the courts I think have adopted a more flexible approach. Therefore, you can remove an executor for such reasons as dishonesty or total impasse where nothing is happening whatsoever and things along that line. It’s very difficult. It’s something you’re going to have to consult an expert on and ultimately, it has to be resolved in favour of getting the estate distributed to the proper heirs.

Use of Multiple Wills Approved

Use of Multiple Wills Approved

In re: Berkner Estate 2017 BCSC 619 the Court approved the use  of Multiple Wills in estate planning. 

The applicant submits that a person is entitled to have more than one valid will. As an example, multiple wills may be used when a will maker has assets in multiple jurisdictions. Rather than preparing a single will and then seeking a resealing in all other jurisdictions where the deceased holds property, multiple wills may be utilized. The Canadian Estate Planning Guide (Toronto: Wolters Kluwer, 1995) (loose-leaf revision 233), ch. 10, at p. 216 states:

In a world in which individuals frequently maintain assets in different jurisdictions, the convenience of using multiple wills has long been recognized. The testator simply prepares an original will for each jurisdiction in which he or she has assets. The principal advantage is that each will can be submitted to the proper court or put into effect without any dependence on the other will(s). Where there are assets in several jurisdictions, there is no need to limit oneself to two wills. But in each case, care should be taken to ensure that the will satisfies the formalities of execution of the relevant jurisdiction. Likewise, it is necessary to ensure that one will does not accidentally deal with assets that are also dealt with under another will and thereby create a situation of conflict, presumably resulting in the provisions of the later-dated will having priority with respect to the disposition of such assets.

10      There is no evidence that the deceased prepared two wills to address jurisdictional issues. A more likely motivation for the two wills is found in the following paragraph from the Canadian Estate Planning Guide:

Multiple wills are also used in some provinces as a means of reducing probate tax. Simply put, the basic strategy is to sequester assets that do not require probate in one will, while dealing with the remaining assets that do require probate in a second will. Of course, only the second will is probated, thereby saving probate tax on the assets covered by the primary will. . . .

11      The estate planning strategy of preparing two wills but only applying for probate of one of them was permitted in two Ontario cases, Granovsky Estate v. Ontario, 1998 CanLII 14912, 156 DLR (4th) 557, which I will refer to later, and also in Kaptyn v. Kaptyn (2010), 2010 ONSC 4293.

12      Authority for permitting two wills can be found in Astor, In the Goods of, [1876] P.D. 150, at p. 152:

. . . The question of incorporation in the probate of separate documents has frequently been a subject of consideration, and, I may say, a troublesome matter both to myself and my predecessors, in carrying out the jurisdiction I have now to exercise. I endeavoured to lay down the principles which should guide me in these cases In the Goods of Lord Howden (4), in which I held that where an English will ratifies and confirms a foreign will, it is right that the latter should be incorporated in the probate. In the present case, however, the testator has carefully used the clearest and strongest language to indicate his intention of keeping the English property separate from the American, and for that purpose has made the English will, which does not purport to ratify or confirm the American will, but merely expresses his desire that, if the two cannot be kept totally distinct, the English will shall be treated as a codicil to the American one. I have come to the conclusion that his wishes need not be disappointed, and that there is no reason why I should insist on the incorporation of the American will in the English probate.

13      The Astor case was referred to by the Ontario Court in each of Granovsky Estate and Kaptyn, and I am satisfied that it remains good law in the absence of any rule or legislation to the contrary 

Executors Entitled To Indemnification For Fees and Expenses

Executors Entitled To Indemnification For Fees and Expenses

Re Collett Estate 2017 BCSC 473  confirmed the well settled law that executors at entitled to  indemnification for properly incurred fees and expenses in carrying out their administration of an estate.

Jackson et al v. King et al, 2003 BCSC 328 at para. 12:

As Executors, the Respondents are entitled to be indemnified out of the Estate for all proper expenses incurred in relation to the Estate and this right of indemnity is a first charge upon the capital and the income of the Estate: Halsbury’s Laws of England, vol.17, 4th ed. (London: Butterworths, 1976) at 612, paragraph. 1190. The Respondents are also entitled to be indemnified for all costs including legal costs which are reasonably incurred: Geffen v. Goodman(1991), 81 D.L.R. (4th) 211 (S.C.C.). As well, the Respondents are entitled to full indemnity for all costs and expenses properly incurred in the due administration of the Estate: Thompson v. Lamport, [1945] S.C.R. 343.

The Supreme Court of Canada in Geffen v Goodman stated:

75      The courts have long held that trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred. Reasonable expenses include the costs of an action reasonably defended: see Re Dingman (1915), 35 O.L.R. 51. In Re Dallaway [1982] 1 W.L.R. 756, [1982] 3 All E.R. 118, Sir Robert Megarry V.C. stated the rule thus at p. 121:
In so far as such person [trustee] does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court otherwise orders; and the court can otherwise order only on the ground that he has acted unreasonably, or in substance for his own benefit, rather than for the benefit of the fund.

See also Re Ladner Estate, 2001 BCSC 943 at para. 9:

The cases and texts to which I have referred above indicate: (1) that executorship expenses, testamentary expenses and administration expenses are in essence synonymous terms which relate to the proper performance of the duties of the executor of the estate;

(2) such expenses include the costs incurred in obtaining the advice of solicitors or counsel with respect to ascertaining the debts and liabilities due from the estate, the payment of such debts and liabilities, and the legal and proper distribution of the estate among the persons entitled.

Trustee Fee For Care and Management of Estate Assets

Trustee Fee For Care and Management of Estate Assets

Re Pedlar 1982 BCJ 1553 deal with the criteria for an estate trustee fee for the care and management of estate assets not to exceed .4% of the average market value of the estate assets.

It was recently followed in Collett Estate 2017 BCSC 473

In 1980 the BC Trustee act was amended to allow an executor trustee to claim an additional fee for the care and management of estate assets not to exceed .4% of the average market value of the assets.

Re Pedlar estate stated inter alia:

3      Because s. 90(2) of the Act refers to s. 90(1) thereof, it will be convenient to set forth both s. 90(1) and (2) of the Act.

90.(1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or the registrar of that court if so directed by the court, to allow him a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his care, pains and trouble and his time expended in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him under any will or letters of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or the registrar of the court if so directed by the court thinks proper. The court or the registrar of the court if so directed by the court, may so order from time to time, and the amount of remuneration shall be allowed to an executor, trustee, guardian or administrator, in passing his accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(2) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

4      Briefly stated, it is apparent that s. 90(1) pertains to an allowance to be awarded to an executor, administrator, guardian appointed by any court, testamentary guardian, or any other trustee (hereinafter referred to as “a trustee”) for his care, pains, trouble and time expended by him in administering, arranging, disposing and settling an estate or trust, whereas s. 90(2) pertains to the allowance to a trustee of a care and management fee with respect to an estate or trust.

12      Under the common law of the provinces of Ontario and Nova Scotia a fee for the care and management of an estate or trust has been allowed for many years in addition to an allowance for the care, pains, trouble and time expended in administering, arranging, disposing and settling of an estate or trust: see Re Berkeley’s Trusts (1879), 8 P.R. 193; Re Williams (1902), 4 O.L.R. 501 (C.A.); Re Farmers’ Loan & Savings Co. (1904), 3 O.W.R. 837; and Re Creelman (1973), 40 D.L.R. (3d) 306 (N.S.).

13      It is apparent that by the addition of subs. (2) of s. 90 of the Act in 1980, the provincial legislature decided to accord a trustee in the province of British Columbia an opportunity to apply to the Supreme Court for a similar care and management fee. The care and management fee referred to in s. 90(2) is clearly an allowance for remuneration in addition to the allowance for remuneration referred to in s. 90(1) of the Act. To hold otherwise would frustrate the obvious intent of the legislation.

14      Each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee (not exceeding 0.4 per cent of the average market value of the assets of the estate), include the following:

15      (a) the value of the estate assets being administered;

16      (b) the nature of the estate assets being administered — such as an active business, a farm, real property held for investment or appreciation, a portfolio of investments and the type of such investments;

17      (c) the degree of responsibility imposed upon the trustee by the terms of the will or other instrument, including the length or duration of the trust;

18      (d) the time expended by the trustee in the care and management of the estate;

19      (e) the degree of ability exhibited by the trustee in the care and management of the estate;

20      (f) the success or failure of the trustee in the care and management of the estate;

21      (g) whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate.

22      While the foregoing list of factors is not intended to be exhaustive, it has been derived, primarily, from a consideration of the Ontario Court of Appeal decisions in Re Mortimer [1936] O.R. 438, [1936] 3 D.L.R. 380 (C.A.), and Re Smith, [1953] O.R. 185 (C.A.). It is recognized that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application.

23      Section 90(2) of the Act does not indicate what information should be placed before the court in support of the application for a care and management fee. In my view, the trustee should give a general summary of the estate and of his services performed in the care and management of the estate, including information with respect to the factors previously referred to, and any other factors which may be relevant to the particular application.

Passing Over an Executor

Passing Over an Executor

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

Re Thommasson Estate 2011 BCSC 481 removed a named  executor who was not a beneficiary but his siblings wished to review a questionable land transaction made to him by the deceased prior to death .

The criteria for the passing over of an executor is essentially the same as removing an executor- the court’s are reluctant to do so except for good reason having regard to the best interests of the beneficiaries.

19      Courts are hesitant to interfere with the testator’s right to nominate his or her executor. However, the court has both a statutory power under s. 31 of the Trustee Act, R.S.B.C. 1996, c. 464 and an inherent power to remove or pass over a trustee or executor: Mardesic v. Vukovich Estate (1988), 30 B.C.L.R. (2d) 170 (B.C. S.C.); Seaton Estate, Re, 2003 BCCA 555 (B.C. C.A.).

20      Section 31 of the Trustee Act provides:

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.

21      In Mardesic, Finch J. (as he then was) in finding it necessary and expedient to remove the trustee because he was in a conflict of interest with the interests of all the beneficiaries of the estate, noted that s. 31 conferred a very broad power on the court.

22      The test for removal of an executrix or trustee is set out in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C. C.A.), where 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.

23      In Stadelmier v. Hoffman (1986), 57 O.R. (2d) 495 (Ont. Surr. Ct.), (sub nom. Stadelmier v. Hoffman), the Court found the executor should be passed over because there was a conflict as a result of the fact the executor could not attack the gift and transfer of properties to him while at the same time maintaining in his personal capacity that the transfers were proper. The Court summarized the findings at 500:

In considering the fitness of the respondent to act as an executor I have considered also the duties of an executor in a general way. One duty of an executor is to bring in the estate for distribution among the beneficiaries. If it is perceived, on good grounds, that that important duty is compromised by a personal conflict of interest because the executor will be asked to sue himself to recover what may be a large part of the estate property, he must be passed over. That consideration is particularly important when the action against the executor is for a very significant amount in respect to the size of the estate.

24      In this case, Alex asserts he should not be removed because it would be pre-judging the case. He says that Brian is seeking to overturn the testators’ right to nominate an executor. Alex submits that the possibility of a future lawsuit is not sufficient to overturn a testator’s right to nominate an executor. He relies on the following cases for the proposition that this is not an appropriate case in which to pass over him as an executor: Hautakoski Estate, Re, 2009 BCSC 868 (B.C. Master); De Cotiis v. De Cotiis, 2008 BCSC 1206 (B.C. S.C. [In Chambers]); Le Roux v. Shannon, 2009 BCSC 331 (B.C. S.C. [In Chambers]); and Fawcett Estate v. Steiner, 1998 CarswellBC 625 (B.C. S.C. [In Chambers]).

25      Brian provided the following authorities in which the courts found a conflict that warranted either passing over or removal of an executor or trustee because of either a potential or actual conflict: Stadelmier v. Hoffman; Mardesic; Montgomery v. Osborne Estate1993 CarswellOnt 3482 (Ont. Gen. Div.); Maki Estate, Re, 2007 BCSC 1034 (B.C. Master); and Stern v. Stern, 2010 MBQB 68 (Man. Q.B.).

26      It is clear from reviewing the case law that each case turns on its own facts.

27      In this case, Alex is not a beneficiary under either of his parents’ wills, and his only interest in the estates is as an executor. The other named executor wants to make enquiries into the transfer of the Property to Alex in order to determine what, if any, interest the estates have in the Property, and what, if any, obligations Alex and his wife have to the estates as a result of the transfer.

28      The application is not to remove Alex as an 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.

29      In the circumstances of this case, it is my opinion that there is a perceived conflict of interest between Alex in his role as an executor and his interest in his personal capacity. If an action is instituted by the executors as a result of the transfer of the Property, it would be against Alex. In my opinion, Alex, in his capacity as executor, cannot attack the transfer of the Property to himself while at the same time maintaining, in his personal capacity, that the transfer of the Property was proper. By making such a finding I am not prejudging the case. I am simply of the view that, in the circumstances of this case, if an action is commenced as a result of the enquiries into the transfer, Alex cannot conscientiously act as a plaintiff in his capacity as an executor in a case where he will be the defendant.

30      As a result I conclude that the passing over of Alex is necessary and expedient. His right to apply to be added as a co-executor under the grant of probate after the enquiry has been completed is reserved. There will be a grant of probate naming Brian as the personal representative of the estate of Herbert Thomasson and the estate of Agnes Annie Thomasson.

Statute Barred Debt to Estate Deducted From Beneficiary

Statute Barred Debt to Estate Deducted From Beneficiary

Re Johnston Estate 2017 BCSC 272 upheld the rule in Cherry v. Boultbee  which provides that where a legatee of a share of the residue is a debtor of the estate, he or she is not entitled to receive his or her legacy without bringing his or her debt into account, even though the debt owed by the beneficiary in that case was 43 years old and was statute barred.

The rule derives from the case of Cherry v. Boultbee (1839), 4 My. & Cr. 442. It is an equitable principle designed to ensure fairness.

The purpose of the rule was to prevent a beneficiary who owed money to an estate from receiving more than his or her fair share of the estate.

In the case of Re: Akerman, Akerman v. Akerman, [1891] 3 Ch. 212, Kekewich J. stated:

A person who owes an estate money, that is to say, who is bound to increase the general mass of the estate by contribution of his own, cannot claim an aliquot share given to him out of that mass without first making the contribution which completes it. Nothing is in truth retained by the representative of the estate; nothing is in strict language set off; but the contributor is paid by holding in his own hand a part of the mass, which, if the mass were completed, he would receive back.

29      The rule has been held to apply even where the debt is statute-barred: see Re: Akerman.

30      The applicant submits that the rule continues to apply in Canada and relies on the decision of the Supreme Court of Canada in Canada Trust Company v. Lloyd et al, [1968] S.C.R. 300.

In that case, the Supreme Court applied the rule in Cherry v. Boultbee in finding that the contribution of three directors who had improperly withdrawn funds from the company some 43 years earlier, had to be taken into account in the distribution of the residue by the receiver. The court noted that the situation was analogous to that of a “legatee who must bring into account even a statute barred debt before he can claim a legacy left to him in the testator’s will”.

31      The applicant also relies on a more recent decision of the Ontario Court of Appeal, Olympia & York Developments Ltd. v. Royal Trust Co. (1993), 103 D.L.R. (4th) 129, where the court confirmed that the rule in Cherry v. Boultbee has been accepted in Canadian decisions and, where appropriate, applied.

The rule in Cherry v. Boultbee does not confer on the estate any right to recoup the amount owing but rather operates to ensure fairness in the distribution of an estate, recognizing that the relationship between a testator and his or her beneficiaries is typically not at arm’s length. The fundamental purpose of the rule is to ensure that beneficiaries are treated fairly and it embodies the principal that he who seeks equity must do equity. As the court noted in Re: Akerman, nothing is being retained by the representative and nothing is being set off but rather, the contributor is paid by what he is holding in his own hand.

The court in Re: Goy & Co Ltd., [1900] 2 Ch. 149, also noted that the claimant has in his own hands that which is applicable to the payment and should pay himself out of that. The question of whether the testator or the estate can recover the debt or whether the debt is statute barred is therefore largely irrelevant to the application of the rule. In my view, the change in approach to limitation provisions by the Supreme Court of Canada in Tolofson does not affect the application of the rule in Cherry v. Boultbee.

37      The decision of the Yukon Territory Court of Appeal in Leeper Estate makes it clear that the rule in Cherry v. Boultbee continues to apply in Canada.

39      The Estate of William Leonide Johnston is, however, entitled to retain and deduct from the share of the estate otherwise payable to the respondent an amount on account of the debt owed to the Estate of William Johnston by the respondent that was outstanding and owing on his death.

Chain of Executorship When Executor Dies

Chain of Executorship When Executor Dies

The chain of executorship when the executor dies before finishing his or her  duties  refers to where probate has been taken by an executor who survives the original testator, the right of such executor to a grant of probate does not cease and the representation to and the administration of the testator’s estate devolves to his executor. Re Aikins Estate (1963) 41 W.W.R. 226, at 227

4      Re Aikins Estate (1963) 41 W.W.R. 226, a decision of Friesen, Surr. Ct. J., where that learned judge gave a careful decision in a similar matter and refused the order. In his reasons, Friesen, Surr. Ct. J., at p. 227, quoted from Macdonell & Sheard’s Probate Practice at p. 113 as follows:

‘… if a sole executor, or the survivor of several executors, having proved the will, dies without having completed the administration of the estate, his executor when he proves the will becomes the executor of the original testator. It is only an executor who has proved the will who can transmit the executorship, and, therefore, if the executor named predeceases the testator or dies without having taken probate there must be an administration.’

One of the leading cases on the topic in British Columbia is O’Gorman Estates (1965)  51 WWR 762

Probate Revoked For Improper Service

Probate Revoked For Improper Service

Al- Sabah Estate 2016 BCSC 1781 both have a probate revoked and removed the administrator for both failing to disclose important information to the court as well as sending the required probate notice to her close relatives at addresses that were mostly incorrect and could have easily been corrected.

The court held that   equity favoured the revocation of grant of letters of administration and followed the decision of Desbiens v Smith Estate 2010 BCCA 394 where a grant of probate was set aside in order to allow a wills variation action brought” out of time”, but the defendants had not received notice of the probate application due to an incorrect address used by the executor who should have been more diligent.

40      Moreover, I am satisfied that, at the time she applied for the grant of letters of administration of the estate, Sheikha Salem failed to disclose to the court pertinent information that ought to have been disclosed.

41      Where the evidence discloses that the person who is obliged to give notice failed to exercise sufficient diligence to ascertain the correct address to which the notice was to be mailed, the notice requirements of the Act are not complied with, and the court has a general discretion to revoke a grant of letters of administration: Desbiens v. Smith Estate 2010 BCCA 394 (B.C. C.A.) at paras. 21 to 35 inclusive. I do note that that decision dealt with the Act’s predecessor, the now-repealed Estate Administration Act, which was replaced by the Act. However, the general principles of law remain applicable.

42      When it is alleged that an administrator should be removed because he or she is not acting in the best interests of the estate, the main factor to be considered is the welfare of the beneficiaries: Veitch v. Veitch Estate, 2007 BCSC 952 (B.C. S.C.) at para. 22

Removed Executor Gets No Fees

Removed Executor Gets No fees

Watson v Strong 2016 BCSC 1897 dealt with a passing of accounts claim for executor’s fees by a removed executor  that was rejected by the court. The court instead awarded %4.5 fees on an interim basis to the executor who replaced the removed executor, with a further .5% fees when the estate is finalized.

The court outlined the criteria for determining executor’s remuneration and then listed all the reasons why the removed executor was not entitled to any fees.

45      Executor’s remuneration is contemplated by the will and by s. 88 of the Trustee Act, R.S.B.C. 1996, c. 464. The executor is entitled to a fair and reasonable allowance of a maximum of 5% of the gross aggregate value of all the assets of the estate for his or her care, pains and trouble and his or her time spent on the executorship.

46      The criteria to be considered in determining the executor’s remuneration are as follows:

a) the magnitude of the trust (or estate);

b) the care and responsibility involved;

c) the time occupied in the administration of the estate;

d) the skill and ability demonstrated;

e) the success achieved in the final result (McColl, Re (1967), 65 W.W.R. 110 (B.C. S.C. [In Chambers])).

1. Marian’s claim to Executor’s Remuneration

47      Applying the criteria as required, I have determined that Marian has not applied any skill or ability in her role as executor to justify any executor’s remuneration. She is a major cause of the excessive delay in getting Elwell Street sold, and of the associated legal expenses. I would be illogical to award a fee in light of the unnecessary delay and expense that Marian has caused. Marian says she spent 262 hours taking junk to the dump, arranging for curbside pick-up of junk by the City of Burnaby, and attending the property when the City of Burnaby bylaw inspector attended. The attendance of the bylaw inspector was due to debris on the property. The letter from the City dated September 13, 2013 to Marian and Rick refers to twelve previous Licence Office letters regarding a complaint about a sawmill business being operated on the property. The sawmill business was Gordon’s. The letter goes on to say:

A site inspection conducted on 2013 September 10 revealed: a dismantled portable saw, an accumulation of rough cut lumber, lumber, used building materials, construction debris, pieces of metal, sign, fridge drawer, sink, hand truck, rowing machine, seat from a [sic] automobile, wooden boxes, several pieces of outdoor furniture and various forms of debris stored on the property.

48      The letter states the City requires removal of all of the items listed and the lumber to be neatly stacked.

49      Finally, the City issued a ticket on August 22, 2014 based on the unsightly property. Rick appealed the ticket, but lost. The adjudicator noted that the City worked with the owner’s representative for three years to clean up the property and allowed debris to remain until the property was vacated on May 26, 2014. A second ticket was issued September 26, 2014 for unsightly property. In my view, it was inevitable that the City would take action regardless of Marian having attended the bylaw inspections. The bylaw inspector’s supervisor wanted him to close the file. It was inevitable that the patience of the City would eventually run out and a ticket would be issued. In any event, if Marian had not obstructed the timely sale of the property, the unsightliness issue would not have lingered as long as it did.

50      Marian says she preserved the property and because of her refusal to agree to an earlier sale of the property, the property increased in value and therefore, she should receive a care and management fee. Before being removed as executor, Marian resisted Rick’s attempts to sell Elwell Street. She wanted to buy the property herself, but had no realistic way of doing so.

51      The other beneficiaries wanted the property sold. If the property had been sold earlier, each beneficiary would have received his or her share to invest as he or she wished. Marian’s self-interest conflicted with her duties as executor to act for the benefit of all beneficiaries. I do not consider Marian’s hindering of the sale of the property a point in her favour in her claim for an executor’s fee.

52      Marian’s conduct as executor has resulted in her being removed by court order. That order was based on Marian obstructing the proper administration of the estate. She is responsible for the estate having to spend money on legal fees that would otherwise go to the beneficiaries.

53      Further, she has refused to claim the principal residence exemption (“PRE”) which would save the estate $60,000, $15,000 of which would go into her own pocket. She was only willing to claim the PRE if she were paid $30,000 for executor’s fees and that the estate dropped its claim for special costs. Needless to say, the offer was rejected. Even if I were to award Marian executor’s remuneration for junk clearing and attending at the property during the bylaw inspections, the amount of that fee would be very modest and eclipsed by the $60,000 she is costing the estate by refusing to claim the PRE. Marian’s own legal counsel advised her to claim the PRE and to leave her claim for executor’s remuneration to be determined by the court. Her refusal to claim the PRE is unreasonable. Marian still has the opportunity to act reasonably and claim the PRE because she is within the time limit for re-filing. She testified that “it’s still on the table”, which I take to mean that she may decide to claim the PRE. It is in her own interests to claim the PRE, even if she is not motivated by the interests of the other beneficiaries. If she requires some professional accounting assistance to re-file, Rick, as executor, might consider covering her reasonable accounting fees for this purpose. Such fees would be a reasonable estate expense.

Adding Defendants

Adding Defendants

Stewart v. Stewart  2016 BCSC 1576 was a contested application for adding defendants to a court action commenced by one of four children to wind up a trust.

The application to add the remaining three children as defendants was opposed on the basis that the trustee could and would represent the interests of the other three children.

The court allowed the three defendants to be added as parties as there was a different legal position being put forward between the -plaintiff as a beneficiary and the applicants to be added as defendants as beneficiaries.

A: RULE 6-2(7)(b)

[34]         This subrule provides two alternate tests:

  • whether the person ought to have been joined as a party, or
  • whether that person’s participation in the proceeding is necessary to ensure that all matters in the proceeding may be effectually adjudicated on.

[35]         The Applicants, relying on Kitimat (District) v. Alcan Inc., 2006 BCCA 562 at para. 28, submit that if either of the circumstances referred to in paragraph 34 above arise, then the person should be added as a party.

[36]         They argue it is necessary to join the Applicants as defendants since their direct interests might be affected by the granting of the relief sought in the NOCC.

[37]         Kitimat was considered and applied in Delta Sunshine Taxi (1972) Ltd. v. Vancouver (City), 2014 BCSC 2100 at para 14:

[14]      “Ought” is a broader concept than “necessary” and includes situations in which joining the person may be more than mere convenience but less than necessity (Kitimat at para. 29). Necessary parties are those whose direct interests might be affected by the relief sought (Canadian Labour Congress v. Bhindi (1985), 1985 CanLII 384 (BC CA), 61 B.C.L.R. 85 at 94 (C.A.) (Canadian Labour Congress), Kitimat at paras. 30-32). In Kitimat, the petitioners sought to quash a decision of the province that authorized Alcan Inc. (“Alcan”) to sell hydro power that it produced for use outside of Kitimat’s aluminum industry, without adding Alcan as a party. The Court found that Alcan ought to have been joined and that Alcan was a necessary party because a binding order would limit the instruments held by Alcan, without its participation. In other words, the effect of the petition could be to limit the ability of Alcan to sell the hydro power it produced, so affecting the value of the power and the financial interests of Alcan

[38]         Their arguments include:

  • as in Kitimat, the relief sought by the plaintiff in these proceedings will affect the Applicants’ rights and interests under the Trusts. If the plaintiff is successful, there will be a direct financial impact on the Applicants in that among other relief, the plaintiff seeks orders that QPPC and its subsidiaries, ABC and its subsidiaries, the Stewart Trust, and the Martin Trusts be liquidated, dissolved or wound up and the Trustees of the Stewart Trust and Martin Trusts distribute one-quarter of the assets held by the Trusts to each of the plaintiff, and the Applicants, adjusted for any unequal distributions;
  • accordingly, if the plaintiff’s claims were successful, the operations of QPPC, ABC, and their subsidiaries would be terminated prematurely. The Stewart Trust and the Martin Trusts would also be terminated, the Trust assets distributed, and the Applicants’ rights and interests as beneficiaries under those Trusts would be eliminated;
  • the Stewart Trust and the Martin Trusts are a major source of income for the Applicants. The plaintiff has stated that the Applicants and the plaintiff have received over $34 million in equal shares from the Stewart Trust alone since its settlement. The relief sought by the plaintiff in these proceedings would terminate this ongoing income source;
  • it is no answer for the plaintiff  to say that the interests of the Applicants are not directly affected because they would be entitled to a distribution of an approximately equal share of the trust property should the relief be granted. The plaintiff has pled that the purpose of the Trusts was to allow the Deceased’s assets to grow in a consolidated and diversified manner for the benefit of the Deceased’s children and their issue.
  • this is not one of those situations where the beneficiaries’ input is necessary or helpful;
  • to the extent that any of the interests of the beneficiaries of the family trusts are affected by the claims brought in the within proceeding, their interests ought to and can be protected by the defendant trustees of the family trusts. The Applicants have not asserted any argument or defence that would be available to them as trust beneficiaries that is not available to be advanced, or has not been advanced, by the defendant Trustees of the family trusts.

[41]         I have concluded that the application should be granted. While I accept that the Applicants do not currently have a position adverse in interest to the trustees, that is not, in my view, the proper test to be applied.