Passing of Accounts Hearing Reveals Executor’s Theft

Passing of Accounts Hearing Reveals Executor's Theft

Passing of Accounts Occur When the Executor Applies To Court to Approve the Estate Accounts- Guardian ordered to repay missing funds.

It presents a very familiar fact pattern to many estate litigants.

The Court followed  Zimmerman v. McMichael Estate (2010), 103 O.R. (3d) 25 (Ont. S.C.J.), in which Strathy J. awarded no compensation for a guardian of property, where significant amounts of money had disappeared from an estate without adequate explanation.

The applicant was the guardian of property for his mother . In Ontario, this is the same as a court appointed committee of a patient in British Columbia under the Patients Property Act of RSBC.

The  guardian of her property passed accounts in 2001 and not again until 2010 shortly after mother’s death.

The total revenue from 2001 to 2010 was $195,776.41 and total disbursements totaled $207,036.44 .

His mother’s investment account had value of $152,055.71 in 2001 and $46,562.91 in 2010 .

The guardian made cash withdrawals from investment account of $122,534.40 between 2001 and 2010, without explanation.

The guardian brought an application to passing of accounts and for his compensation for being guardian.

The guardian’s brother objected  and the  application was  dismissed.

Instead, the guardian was ordered to pay $132,628.33 and repay $12,699 to mother’s estate .

The guardian was not entitled to compensation as the guardian’s conduct was shocking, as he withdrew thousands of dollars from his mother’s estate for his own benefit.

The estate was not complicated.

The guardian adversely affected the estate leaving the  investment account  reduced to fraction of its original size with no explanation.

The Court instead ordered the guardian to personally pay the brother’s  costs of the court application.

Resulting and Constructive Trust Claims Dismissed

Resulting and Constructive Trust Claims Dismissed

Both the plaintiff’s claims of resulting trust and constructive trust( unjust enrichment), were dismissed in Chambers v Chambers 2012 BCSC 88

The facts of Chambers were blogged yesterday, as was the younger brother’s claim for an express trust, also dismissed.

Todays blog centres around the plaintiff’s two other two arguments, that of resulting trust and constructive trust , and why each of those claims also failed.

After analysing all of the three trust claims brought by the plaintiff, the court had no difficulty in finding that the defendant intended to gift the younger brother only 1% of the equity in the house and to be irrevocably bound by that gift.

It was clear that the younger brother was only to have a minimal ownership stake in the house right from the outset, despite the older brother having initially having contemplated putting the property in joint tenancy, or letting the plaintiff claim the home owner grant.

The excerpts from the court with respect to the issues of resulting trust and constructive trust are as follows:


Resulting Trust

[29]    Fred argues that the equity in the house should be subject to a resulting trust on the basis of a common intention. The common intention resulting trust is somewhat different from the ordinary resulting trust. Normally a resulting trust arises where the objects of a trust fail to be exhausted or there is a gratuitous transfer that is not proven to be a gift. In these circumstances, the resulting trust operates to return the asset in question to its original owner, as equity presumes bargains rather than gifts.

[30]    The presumption of resulting trust is discussed in the recent Supreme Court of Canada case of Pecore. That case makes it clear that the court will begin with the applicable presumption and then on a balance of probabilities attempt to ascertain the transferor’s actual intention. This traditional type of resulting trust has no application here as Fred is not asking the court to return an asset to him that he transferred to Al.

[31]    Fred argues that the much less common type of resulting trust, the common intention resulting trust, applies. The common intention resulting trust arises where two parties share an intention that a property be jointly owned in light of joint contributions even though the property is held in the name of only one of the parties.

[32]    This trust was discussed in one of the cases submitted by Fred, Opperman v. Andersen,

2009 BCSC 992. However, the jurisprudence in this area had become confusing and

contradictory and the Supreme Court of Canada, in the recent case of Kerr v. Baranow, 2011

SCC 10 [Kerr], stated that the common intention resulting trust is “doctrinally unsound”,

elaborating at para. 25:

First, as the abundant scholarly criticism demonstrates, the common intention resulting trust is doctrinally unsound. It is inconsistent with the underlying principles of resulting trust law. Where the issue of intention is relevant to the finding of resulting trust, it is the intention of the grantor or contributor alone that counts. As Professor Waters puts it, “In imposing a resulting trust upon the recipient, Equity is never concerned with [common] intention (Waters’, at p. 431).” The underlying principles of resulting trust law also make it hard to accommodate situations in which the contribution made by the claimant was not in the form of property or closely linked to its acquisition. The point of the resulting trust is that the claimant is asking for his or her own property back, or for the recognition of his or her proportionate interest in the asset which the other has acquired with that property. This thinking extends artificially to claims that are based on contributions that are not clearly associated with the acquisition of an interest in property; in such cases there is not, in any meaningful sense, a “resulting” back of the transferred property: Waters’, at p. 432. It follows that a resulting trust based solely on intention without a transfer of property is, as Oosterhoff puts it, a doctrinal impossibility:”… a resulting trust can arise only when one person has transferred assets to, or purchased assets for, another person and did not intend to make a gift of the property”: p. 642. The final doctrinal problem is that the relevant time for ascertaining intention is the time of acquisition of the property. As a result, it is hard to see how a resulting trust can arise from contributions made over time to the improvement of an existing asset, or contributions in kind over time for its maintenance. As Oosterhoff succinctly puts it at p. 652, a resulting trust is inappropriate in these circumstances because its imposition, in effect, forces one party to give up beneficial ownership which he or she enjoyed before the improvement or maintenance occurred.

[33] While the Supreme Court of Canada in Kerr, which is a case involving a common-law relationship, was clear that the common intention resulting trust has no further role to play in domestic cases, arguably it is still applicable in the present case.

[34]    The burden to demonstrate that a common intention existed to share the property rested with Fred. He has not discharged it. It is not enough that Fred says that at one time Al may have considered registering the house 50% in his name. Al’s actions, in discussing the matter with his lawyer and in registering the house 99% in his own name, clearly evidence an intent to do exactly the opposite. If Al had shared a common intention with Fred that the two should be joint 50/50 owners of the house, then he could have easily accomplished this by registering the house 50% in each party’s name.

[35]    This is not a situation where a property was originally registered in the name of one party with an intention to share the property subsequently arising, as is often the case in domestic relationships. Here, Al made an affirmative decision as to what share he would give to Fred. As the Supreme Court of Canada said in an earlier case dealing with common intention resulting trusts, Pettkus v. Becker, [1980] 2 S.C.R. 834; a common intention cannot be attributed to the parties where such an intention was negated by the evidence (at p. 847). Here, on the evidence, no common intention to equally share ownership of the House existed.

Constructive Trust

[36]    Fred argues in the alternative that he is not found to be the beneficiary of an express trust or a resulting trust, that the court should impose a constructive trust on 50% of the equity in the house as Al has been unjustly enriched. In order to succeed in an unjust enrichment claim, Fred would need to prove that Al has been enriched, that he, Fred, has suffered a corresponding deprivation, and that there is no juristic reason for the enrichment and deprivation.

[37]     The Supreme Court of Canada in Kerr said the following with respect to the first stage of the analysis:

The Court has taken a straightforward economic approach to the first two elements -enrichment and corresponding deprivation. Accordingly, other considerations, such as moral and policy questions, are appropriately dealt with at the juristic reason stage of the analysis: see Peter, at p. 990, referring to Pettkus, Sorochan v. Sorochan, [1986] 2 S.C.R. 38, and Peel, affirmed in Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 31.

For the first requirement – enrichment – the plaintiff must show that he or she gave something to the defendant which the defendant received and retained. The benefit need not be retained permanently, but there must be a benefit which has enriched the defendant and which can be restored to the plaintiff in specie or by money. Moreover, the benefit must be tangible. It may be positive or negative, the latter in the sense that the benefit conferred on the defendant spares him or her an expense he or she would have had to undertake (Peel, at pp. 788 and 790; Garland, at paras. 31 and 37).

Turning to the second element – a corresponding deprivation – the plaintiffs loss is material only if the defendant has gained a benefit or been enriched (Peel, at pp. 789-90). That is why the second requirement obligates the plaintiff to establish not simply that the defendant has been enriched, but also that the enrichment corresponds to a deprivation which the plaintiff has suffered (Pettkus, at p. 852; Rathwell, at p. 455).

[38]    Fred has not demonstrated either of these requirements. Al has been enriched only in the sense that a property that he bought himself has appreciated, but this appreciation has not come about as a result of any action taken by Fred. On the evidence, Fred has not made any monetary contribution to the maintenance of the house, aside from paying the property tax for a number of years. However, during this time, he also did not have to pay rent. Fred’s argument that by paying property taxes, which amounted to significantly less than normal rent would have been, he was somehow deprived and Al enriched is without merit.

[39]    If the payment of property tax amounted to an enrichment and corresponding deprivation, I would find that there to be a juristic reason. One of the established categories of juristic reason is contractual (Kerr at para. 41). It is clear on the evidence that Fred only paid the taxes as consideration for being allowed to live in the house rent-free. There was a contractual intent between the two brothers, with Fred receiving 1% of the house equity as well as sole occupancy privileges in exchange for paying property taxes. is of the opinion that this case has been correctly decided and it should perhaps be pointed out that the plaintiff acted on his own behalf without counsel. I think it was simply an example of a somewhat ungrateful sibling reaching too far for something that he was never entitled to in the first place.

Spouse Not a Creditor Under Fraudulent Conveyance Act

Spouse Not A Creditor Under Fraudulent Conveyance Act Unless Separated At Death

Fraudulent Conveyance Act and Spouses

Mawdsley v Meshen 2012 BCCA 91 is a case where  the husband  contested the BC will of his wife under the Wills Variation act of British Columbia.

In particular, he attempted to have various estate planning steps taken by his deceased wife prior to her death, set aside as contrary to the Fraudulent Conveyance Act.

The Supreme Court found as a fact that the estate planning steps were taken with the knowledge of the husband, and were not done to defeat his potential claim

under the Wills Variation act, but rather for other, legitimate estate planning purposes.

The trial judge refused to allow the assets in the trust to become part of the estate and that decision was appealed.

On February 28, 2012 the Court of Appeal upheld the trial judge decision.

The BC  Court of Appeal held that transfers will be set aside under the Fraudulent Conveyance act only if they were made with the intention to defeat creditors, irrespective of the effect of the transaction, which is not in itself determinative.

The intention does not have to be of the fraudulent nature.

The court also considered whether the spouse is a “creditor or other” the same statute, and confirmed that unless the spouses are separated at the time of death, the spouse is not a creditor or other, and thus has no standing to claim under the Fraudulent Conveyance act.

Reduce Financial Abuse – 15 Good Suggestions

reduce Financial abusePart Two in a Series on Financial Abuse

Reduce Financial Abuse

The key to reducing financial abuse is to plan appropriately to avoid it. It is crucial to begin this planning while the elder person is still competent. It is essential to engage the advice of a legal professional with an expertise in that area.

Although there is no foolproof method of avoiding financial abuse, here are a few simple strategies that may reduce the risk. These are in addition to frequent contact and visits with the elder.

Engage a legal professional with expertise in estate planning and in minimizing elder abuse.

Help simplify the vulnerable person’s finances. Set up automatic deposits and bill payments to reduce the need for bank visits or Powers of Attorney.

Be very cautious in granting unlimited enduring Powers of Attorney to others.

Do a full inventory of the vulnerable person’s household belongings and property; a video record and photos will assist. Make multiple copies and keep one outside the home.

Whenever possible, hire a caregiver through a reputable agency.

Conduct a thorough background check; insist on having and checking multiple references.

Before any caregiver is engaged—friend, family, or stranger—agree in writing on the terms of engagement.

The terms should be fair to both sides. Thus, any caregiver should be properly recompensed, whether family or stranger.

An appropriate termination period should be included so that upon the death of the elder, for example, the caregiver is not left homeless and unemployed. A provision for 3 months further pay and lodging may well alleviate his or her fears and ensure the caregiver is fully focused on the elder until the end of the contract.

The caregiver should acknowledge in writing his or her understanding of the vulnerability of the elder and agree not to accept anything more than a token gift from his or her charge.

The contract should provide for mandatory weekly respite care for the caregiver and annual respite care of at least 2 weeks. Respite care is crucial for the mental health of the caregiver, to ensure independent input into the care of the elder and to ensure there can be no complete isolation of the vulnerable person.

The agreement should provide for impromptu visits with no notice.

Keep banking and financial records off the premises.

Provide for the semi-annual review of accounts by designated parties.

Designate “gatekeepers” that may include neighbours, banking staff, family physicians, and legal professionals. Make them aware of the arrangements and give them contact numbers for the family and the Public Guardian and Trustee.

Last, if all else fails, to report financial abuse in British Columbia, visit the Website of the Public Guardian and Trustee.

BC Estate Lawyer- What Is Financial Abuse and How to Identify It?

Trevor Todd and Jackson Todd have handled contested estates for over sixty combined years and have experience in handling financial, abuse cases.
What Is Financial Abuse and How to Identify It?

At we frequently encounter estates depleted by financial abuse. Elders are by no means the only victims of this abuse. Less commonly we see the financial abuse of children or disabled adults who are the beneficiaries of trust funds, usually by a trustee in a conflict of interest.

With our aging population however, the potential for elder financial abuse is increasing greatly. This should be no surprise given that the elderly, often savers rather than spenders, apparently control over 70% of the nation’s wealth.Continue reading

Sexual Assault Victim Collects Judgement As Court Sets Aside Transfer

Sexual Assault Victim Collects Judgement As Court Sets Aside Transfer

Sexual Assault Victim Collects Judgement

S. (GW) v. R. (WW) 2010 BCSC 1741 is a case alleging a fraudulent conveyance of assets from the plaintiff’s stepfather, to his son,

The stepfather had sexually abused the plaintiff for several years when she was very young.

In about 1986 the plaintiff told her mother and her half-brother, the stepfather son, of the sexual abuse.

After the death of the plaintiffs mother in 1997, the stepfather transferred title to his home into joint names between himself and his son, the defendant.

The father also named his son as the designated beneficiary of his RRSP and other accounts, so that upon the the death of the stepfather, he left very little in his estate.

The defendant son inherited his father’s modest estate of $21,000, in 2003.

The plaintiff commenced a court action for damages in 2004 ( after the death of her father) and obtained judgment against the estate for $150,000 in 2007.

The plaintiff commenced this action alleging that the stepfather’s transfers of the various titles in 1997, were fraudulent conveyances made with the intent to defeat any claims the plaintiff might make.

The Court agreed.

The court accordingly set the transfers aside, thus allowing the plaintiff to realise her judgment. strongly applauds the reasoning and outcome of this decision.

BC Estate Lawyer-Unjust Enrichment Equals Fairness


Trevor Todd and Jackson Todd have handled contested estates for over sixty combined years and have experience in unjust enrichment claims.
Unjust Enrichment Equals Fairness

Unjust enrichment is a legal doctrine based on the general equitable principal that no one should be allowed to profit at another’s expense.

In other words, a person should pay for the reasonable value of any benefits, whether property or services, that he or she has been unfairly received and kept from another person.Continue reading