Defend Wills Variation Claim
Ketcham v Walton 2012 BCSC 175
[10] The basic principle of an Executor’s duty to specified and potential beneficiaries of the Will is neutrality.
[11] Mr. Justice Bouck stated in Quirico v. Pepper Estate (1999), 22 B.C.T.C. 32 at paras. 15-17:
15 The primary duty of an executor is to preserve the assets of the estate, pay the debts and distribute the balance to the beneficiaries entitled under the will or, in accordance with any order made under the Wills Variation Act. An executor should not pick sides between the beneficiaries and use estate funds to finance litigation on their behalf under the Wills Variation Act. It is a matter of indifference to the executor as to how the estate should be divided. He or she need only comply with the terms of the will or any variation of it made by a court.
16 For all these reasons, the law anticipates the executor will remain impartial between the opposing beneficiaries. Where proceedings are taken under the Act, all the executor need do is appear at the trial if required, and deliver to the court the Letters Probate and financial documents showing the value of the estate. Even this may be unnecessary if the parties agree to admit copies of those documents into evidence without the attendance of the executor.
17 It follows that the only purpose of Mr. MacKay appearing at the trial as solicitor for the executor was to deliver up the Letters Probate and the Estate Inventory. He could not act in an adversarial capacity against the plaintiff.
[12] In his submissions, the Executor attempted to circumvent the general thrust of these paragraphs by saying that he is attempting to “comply with the terms of the will” by defending the Will against the WVA claim. However, I read Bouck J.’s words as referring to the distribution provisions of the Will and not the Will as a whole. The general proposition that “it is a matter if indifference to the executor as to how the estate should be divided” makes the most sense.
No Party to Advance Position
[13] The Executor says that if it does not intervene to “defend the Will”, there is no other party with sufficient interest in the litigation to oppose the WVA claim. Indeed, according to the proposed distribution, there is a $277,000 residuary to this estate. This means that before any of the specific legacies are affected, an amount in excess of $277,000 would need to be reapportioned to the children under the WVA. Therefore, the real conflict in the WVA claim may actually be between the children‑plaintiffs and the residuary beneficiaries (in this case, the Cowichan Foundation and the Dominion Command of the Royal Canadian Legion).
[14] The Executor points out that neither of these organizations have filed responses to the civil claim in this matter and are therefore not taking an active role in defending the residuary. However, this does not seem sufficient to alter the essential character of an executor as neutral between beneficiaries and potential beneficiaries. Even if the WVA claim goes undefended, the matter will still be in the discretion of the court, weighing the evidence propounded by the plaintiffs against a statement of intention in s.8 of Eric Clay’s Will.
[15] In Doucette v. Doucette Estate, 2008 BCSC 506 at para. 16, Metzger J. wrote:
… The law requires an executor to remain neutral. Counsel for the executors did not cite any authority, with the arguable exception of the last paragraph of Erlichman discussed above, that would permit an executor to enter the fray of a WVA proceeding at the cost of the estate with the explanation that it was to defend the testatrix’s intentions.
[16] Again, the executor attempts to distinguish this case on the grounds that it did not involve a will that specifically directed the executor to take an active role in the litigation. However, in my view, this is not a relevant distinction, since the characteristic of neutrality is fundamental to the role of executor on WVA applications. Absent any authority to the contrary, these precedents that require the executor to remain neutral must stand.
[17] The executor points to examples of executors being given express authority to not maintain an even hand between beneficiaries when discretionary trusts or powers of appointment are involved. With respect, the “non neutrality” of the even‑hand principle has nothing to do with the neutrality required of the executor in WVA actions.
In Terrorem and Public Policy
[18] The plaintiffs point to the few cases decided on in terrorem clauses, which attempt to divest a party of their inheritance if they try to challenge the distribution under the WVA. These clauses have been held to be void as against public policy.
[19] The clause in question does not obviously prevent the children from an inheritance if they bring a WVA claim, but that possibility clearly lurks within it. The executor is instructed to resist their claim, even if it depletes the entirety of the estate to the detriment of the named beneficiaries. The executor is also granted the authority to incur whatever legal costs he feels are necessary and not have the legal bills taxed. It is easy to see how this clause, if given full effect, could be used to erase the $800,000 in the estate.
[20] If the clause is not repugnant for directing the executor to take an active role in the litigation, then I would find it void as amounting to an in terrorem clause. Alternatively, it should also be void as contrary to public policy as it purports to deny Eric Clay’s children their recourse to the courts. The clause does not directly divest the children of an inheritance, but it does have the potential to deny them the fruits of a victory. Since they have a statutory right to challenge the will under the WVA, any clause that attempts to deny them this right (or, by extension, any effective remedy under this right), should offend public policy and be void.
[21] This is the outcome that was reached in Bellinger v. Nuytten Estate, 2003 BCSC 563 at para. 22 and it should apply here.
[22] The executor attempts to distinguish the results in the Bellinger line of cases, since he claims he is only defending the testator’s intentions. However, this cannot be the case with a clause worded so broadly as to raise the spectre of depleting the entirety of the estate.
Amicus?
[23] If the children in the WVA action seek an amount in their claim larger than the aggregate amount of $515,000 specified for stated beneficiaries, no doubt counsel for the major stated beneficiaries will vigorously defend against the plaintiffs’ claim. The executor can and should remain neutral, as there is a party to defend the testator’s intention in his Will.
[24] However, should the specified beneficiaries effect a settlement with the plaintiffs such that the plaintiffs are only pursuing the residual interest amount of $277,000 in the Will, there is then no party to defend.
[25] In order to assist the Court in determining the merits of the plaintiffs’ WVA claim in a balanced and non adversarial role, the Executor might then retain counsel as Amicus for the Court with respect to questioning the plaintiffs’ claim for assistance of the Court.
[26] Item 2 of the direction request to pay incurred legal expenses by the Executor subject to the neutrality principles I stated previously is permissible at law and I would so endorse.
