Estate Funds Not to Be Used To Defend Wills Variation Claim ( S. 60 WESA)


Defendants may not use estate funds to defend their personal interests in wills variation cases ( now section 60 WESA)

As plaintiff’s counsel, Steernberg v. Steernberg Estate (2007), 33 E.T.R. (3d) 78, 74 B.C.L.R. (4th) 126, 40 R.F.L. (6th) 106, 2007 BCSC 953, 2007 CarswellBC 1533, Martinson J. (B.C. S.C.); additional reasons to (2006), 2006 CarswellBC 2751, 32 R.F.L. (6th) 62, 28 E.T.R. (3d) 1, 2006 BCSC 1672, [2006] B.C.J. No. 2925, D. Martinson J. (B.C. S.C.)   is one of my favourite cases, primarily for the reason in the headnote.

Prior to this case, it was not uncommon for defendants to routinely use estate funds in the hope of depriving a plaintiff of sufficient resources to continue the fight.

Steerberg levels the playing field  by making each party pay for their own legal costsas the litigation proceeds,  save for the executor, who must remain neutral in the litigation.

Here are the facts of Steerberg:

The Wife, husband’s son, husband’s three daughters and husband’s brother-in-law were beneficiaries under husband’s will.

The  Plaintiff wife challenged husband’s will — Husband’s son was executor of will.

An Offer to settle made under R. 37 of Rules of Court, 1990 was signed by son as executor and other four beneficiaries, but not on behalf of son in his personal capacity as beneficiary

Legal fees for defendants’ litigation counsel of $148,250.62 and legal fees of counsel for executor of $72,895.24 were deducted before net values of estate were calculated

Shortly after the  trial ended and before reasons for judgment were issued, the estate paid defendants’ litigation counsel’s invoice of $60,700

None of these payments were made or recorded with wife’s consent and no funds from estate were made available to wife before, during or after trial for her legal fees.

During the trial, the wife raised concern that defendants took substantial sum of money out of estate for legal fees to defend action before trial started

Parties agreed that issue would be decided after Court gave its decision on whether will should be varied

Aubsequent to the trial this hearing was held to determine that issue and costs generally

It was inappropriate to withdraw funds from estate at start of litigation, or throughout course of litigation to fund defence of Wills Variation Act claim in absence of court order or unanimous agreement of beneficiaries

 In Wills Variation Act claim validity of will itself was not being challenged and there was no need for executor to “defend” will

The son was not entitled, in his neutral role as executor, to make a R. 37 offer and he did not join in the offer in his personal capacity as beneficiary

It was not offer made on behalf of all persons beneficially interested in assets of estate and hence would not be binding on estate

The losiing beneficiaries must pay wife’s costs personally, not out of estate

It was directed that executor pass his accounts before Registrar and that Registrar enquire into and make recommendations with respect to net value of estate after taking into account appropriate legal fees and income that ought to have been earned on funds had they remained invested.

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