Month: January 2022

What I’m Reading: Interesting Estate Litigation Articles for January 2022

January 31, 2022

The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

  1. Ian Hull at Hull & Hull LLP (in Ontario) discusses what happens when the estate assets include a firearm: https://hullandhull.com/Knowledge/2022/01/annie-was-bequeathed-a-gun-what-happens-next/
  2. Stan Rule at Sabey Rule writes about a recent B.C. Supreme Court decision which discusses the doctrine of unconscionable procurement, which as of late seems to be plead more often when challenging or seeking to undo an estate plan: http://rulelaw.blogspot.com/2022/01/unconscionable-procurement-pinsonneault.html
  3. James Steele at Robertson Stromberg (Saskatchewan) discusses a recent Saskatchewan decision which makes clear that beneficiaries should have good evidence of executor wrongdoing before bringing an application against them: https://skestatelaw.ca/2022/01/06/saskatchewan-estate-litigation-update-hayes-v-swift-2021-skqb-132/
  4. Veronica Manski at Onyx Law discusses who may apply to be the administrator of an estate: https://onyxlaw.ca/died-without-a-will-apply-to-administer-bc-estate/
  5. Rebecca Studin at de Vries Litigation LLP (in Ontario) writes about a recent Ontario decision in which held that a handwritten note did not incorporate by reference the testator’s unsigned but initialed typewritten Will: https://devrieslitigation.com/2133-2/

Happy reading!

B.C. Case Comment: Court Finds No Binding Agreement to Leave Estate to Niece

January 21, 2022

A person may enter into a testamentary contract, whereby they agree to leave their estate to another person in exchange for some consideration, for example services that the other person had provided or would subsequently provide.  This creates a binding agreement, and the party no longer has the ability to change the named beneficiary in their estate plan without breaching the agreement.

These agreements can be difficult to prove.  Testamentary autonomy is “a deeply entrenched common law principle,” and this type of agreement deprives a person of their testamentary autonomy (albeit for consideration).

The B.C. Supreme Court recently considered the existence of a testamentary contract in Angelis v. Siermy 2022 BCSC 31.  In Angelis, the court considered whether a childless aunt was obligated to leave her estate to one of her nieces.  In 2002, the aunt executed estate documents that would leave most of her substantial estate to the niece (the plaintiff).  In 2011, the aunt executed a subsequent will changing her main beneficiary to a different niece.

The plaintiff claimed that she had an oral contract with her aunt, whereby her aunt promised to leave the bulk of her estate to the plaintiff in exchange for the plaintiff providing years of unpaid service to the aunt and her company.  She alleged that the changes to the estate plan in 2011 resulted in a breach of that agreement.

The Court observed that this was an unusual case because the will-maker was still alive and in a position to defend the litigation.  She denied the existence of any agreement to leave her estate to the plaintiff.

The plaintiff was the only person who claimed that the agreement existed.  There were no collateral witnesses to confirm her position.

The plaintiff relied upon three letters, allegedly written by the aunt, which allegedly explained the aunt’s reasons for her estate planning decisions.  The aunt admitted that she wrote the first letter (which does not mention any agreement), but denied drafting or signing the second and third letter.

The court found no evidence that supported the existence of a testamentary contract in this case.  Instead, the evidence suggested that no such agreement existed.

The court considered the three letters in great detail (including expert evidence on ink and handwriting analysis).  The court focused on the content of the letters, and concluded that the plaintiff forged the second and third letters.  The plaintiff’s claim in breach of contract was dismissed.

The plaintiff also brought a claim in unjust enrichment, in the event there was no contract.    However, unjust enrichment is an equitable remedy, and a party who seeks a equitable remedy must come to court with clean hands.  In this case, the plaintiff’s claim in unjust enrichment was barred as a result of her forgery of the two letters.  In the alternative, the plaintiff provided any services with donative intent, and further she was compensated for her services.

B.C. Case Comment: Wording of Remuneration Clause Does Not Entitle Executors to Fixed Fee

January 14, 2022

Under the B.C. Trustee Act, an executor is entitled to remuneration for the administration of an estate, unless the Will states otherwise.

Section 88 of the Trustee Act provides that the court may allow an executor or administrator or trustee a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, of all of the assets of the estate.  Determining the appropriate fee in any given case is a fact specific inquiry.  The criteria for determining an appropriate fee includes: the magnitude of the trust, the care and responsibility involved, the time occupied administering the trust, the skill and ability displayed, and the success achieved in the final result. The Court must exercise its discretion to determine a reasonable fee in any given case.

However, section 90 of the Trustee Act provides that s. 88 does not apply in any case in which the allowance is set by the instrument creating the trust. In other words, a will maker or settlor may purport to take away the discretion of the Court by expressly stating the amount of remuneration payable to the executor or trustee in the Will or Trust Deed.

Will-makers and trustees must take care when drafting remuneration clauses, as ambiguities or drafting errors may result in confusion and ultimately legal proceedings. This was the case in the recent decision of the B.C. Supreme Court in Zaradic Estate (Re) 2021 BCSC 2478.

In Zaradic, the Will contained the following provision:

My trustees may claim remuneration for acting as Trustees in the amount of Ten Percent (10%) of the net value of the residue of my estate to be shared equally between them, in lieu of any Executor or Trustee Fee’s.

This was the appeal of a registrar’s decision. I previously wrote about the registrar’s decision here.  The registrar held that this language meant that the executors were allowed to make a claim for remuneration, but the amount was not fixed. The 10% was a ceiling, not an entitlement as a matter of right.

The registrar went on to hold that the executors’ efforts were a “dismal failure” and their actions “were an egregious breach of their fiduciary duty,” and as a result they were not entitled to any fee. I discuss the particulars of the egregious conduct in my previous post.

On appeal, the executors argued that the remuneration was fixed in the will at 10%. Since the remuneration was fixed, the registrar had no discretion to determine remuneration (and so should not have even considered their conduct as executors).

The beneficiary agreed that fixed fees may not be challenged, but said that the will in this case did not set a fixed fee.   In the alternative, the beneficiary argued that even if the will set a fixed fee, the fee can be reduced.

The Court had to determine the intention of the testator, as expressed in the will, when read in light of any admissible extrinsic evidence.  The Court held that this particular clause was “poorly drafted” and “internally inconsistent”.

The Court concluded that the better interpretation was that the remuneration was discretionary and nature, and to be set in accordance with the factors to be applied under s. 88 of the Trustee Act. The use of the words “may claim” implied the exercise of discretion and not an absolute entitlement. The burden of establishing a fixed fee was on the executors, and they failed to meet their burden of proof.

The court did not have to consider the beneficiary’s alternative argument – that a court has discretion to reduce a fixed fee (although they did observe that only a judge and not a registrar would have that jurisdiction if it existed). This is an interesting issue that may have to be considered in a future case where there is a proper fixed fee.

The appeal was dismissed.   Since the clause did not create a fixed fee, the registrar was entitled to exercise discretion and order that no remuneration was payable as a result of the conduct of the executors.

Finally, the executors (not the estate) were ordered to bear the costs of the appeal, “as it was purely their own interests that they were pursuing.” This is another reminder that the Courts will not simply order that all parties are entitled to their costs payable by the estate.

BCEstateLitigation.ca Wins 2021 Clawbie Award for Best Canadian Law Blog

January 5, 2022

Happy New Year!

I am pleased to announce that BCEstateLitigation.ca has received a 2021 Clawbie Award (Canadian Law Blog Award) for best blog!

Thank you to all of the readers of this blog for the support, and thank you to Steve Matthews and his team at Stem Legal for choosing BCEstateLitigation.ca for recognition.

A full list of the winners can be found here: https://www.clawbies.ca/2021-clawbies-canadian-law-blog-awards/ . There are a number of interesting reads and great resources on the list.

Happy reading!