B.C. Case Comment: Dilatory Executor Personally Responsible for Portion of Legal Expenses

A personal representative of an estate (executor or administrator) has an obligation to account and to provide information about the administration of the estate to the beneficiaries.  The personal representative cannot simply ignore this obligation.  A beneficiary has remedies if the personal representative ignores requests.  The Court may reduce the remuneration payable to the personal representative (i.e. executor’s fees), or reduce the amount of costs that a personal representative is entitled to receive, with the result that the executor may be personally responsible for paying expenses that they expected to have paid by the estate.  The most common example is legal fees – if the personal representative delays or otherwise causes the estate to incur legal fees which could have been reasonably avoided, the executor may be personally liable for that expense.

The B.C. Supreme Court recently considered this issue in Bowling Estate (Re) 2022 BCSC 369.  In Bowling, the deceased died with no spouse and four children.  She left a will naming one of her children as executor, and dividing her estate equally between her four children.  The estate was worth approximately $110,000 and was primarily liquid assets, and so it was a straightforward administration.

The executor did not seek any remuneration.

The court identified “distrust” between the executor and one of her sisters.  The distrust was magnified when the executor ignored requests for information from her sister about the management and administration of the estate.  The executor did not provide any explanation for her failure to respond to requests for information.  The sister retained counsel, and then the executor retained counsel.

The executor eventually delivered formal accounts in relation to the estate.  There were no objections made or concerns raised with respect to the accounts.  The issue was the delay in delivering the accounts, and the fact that the sister had to retain counsel and incur legal expenses in order to compel the executor to produce those accounts.

In the normal course, legal fees which are reasonably incurred in the course of administering an estate ought to be treated as a disbursement of the estate, to be paid by the estate.  However, where an executor has misconducted themselves or is guilty of delay or neglect in administering an estate, there may be a reduction in their remuneration, and also a reduction in the amount of costs they are entitled to receive.

In Bowling, the executor claimed $10,000 in costs.  The sister sought special costs in the amount of $11,500.

The Court reduced the executor’s costs from $10,000 to $6,000.  The Court was not satisfied that the executor’s (mis)conduct was to the degree that she should not recover some of the legal expenses she incurred to have her accounts formally passed.  The executor was personally responsible for any legal expenses that she incurred over $6,000.

The Court awarded the sister $6,000, to be paid to her personally by the executor.  The sister was awarded an amount for costs because she had a legitimate reason to hire counsel in light of the executor’s refusal to respond to requests for information.  However, she did not get the entire amount sought because she ultimately consented to the accounts as presented when she found nothing suspicious (beyond the outstanding dispute about legal costs).

In making these awards, the Court was mindful of the very modest amounts left in the estate.  The Court expressed disappointment that this issue made it before the courts at all.  The entire application (including the legal expenses for both sides and the use of court time) could have been avoided if the executor had responded to the requests from the beneficiary for information about the administration of the estate.

B.C. Case Comment: Court of Appeal Confirms that Estate can Commence Family Law Claim on Behalf of Separated Spouse

A spouse who has separated from their partner does not meet the definition of a “spouse” under the Wills, Estates and Succession Act.  This means that they are not entitled to advance claims under that act, most notably wills variation claims or claims to entitlement on in intestacy.  Prior to death, the separated spouse could have brought a claim for property division under the Family Law Act.  What happens if a spouse has separated from their partner, but does not commence a family law claim for division of property prior to death?  Can the deceased’s estate commence a family law claim on their behalf?

The B.C. Court of Appeal recently considered this issue in Weaver Estate v. Weaver 2022 BCCA 79. In Weaver, the deceased married the defendant in 1993.  They separated in 2005.  The deceased passed away 15 years later.  While the deceased had consulted with a family law lawyer, no proceedings were commenced.  There were no divorce orders or other court orders, and there was no family law agreement.

After the deceased’s death, the administrator of her estate filed a notice of family claim against the deceased’s ex-spouse, seeking a division of property.

The surviving spouse applied to have the claim struck due to lack of standing to bring the claim, or lack of jurisdiction.  The application was dismissed, i.e. the family law proceeding brought by the administrator was allowed to continue.  This decision was upheld on appeal.

The interplay between the Family Law Act and the Wills, Estates and Succession Act allows the administrator of a separated and deceased spouse to commence a claim for the division of family property, as long as the time limits have not expired.  The fact that the deceased spouse did not personally commence that proceeding during their lifetime is not a bar to the action.

The Family Law Act provides that on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt.  This applies to married spouses, and “common law spouses” (who lived with each other in a marriage-like relationship – the term “spouse” is defined in the Family Law Act).  The interest crystallizes upon separation, and does not expire upon death.  The triggering event is separation.

The Family Law Act sets out a limitation period for bringing a claim for division of property.  The claim must be started no later than two years after, in the case of spouses who were married, the date a judgment granting a divorce of the spouses was made, or the date an order was made declaring the marriage of the spouses to be a nullity.

There is nothing in the Family Law Act which expressly prohibits an estate from commencing a family law claim for property division on behalf of a deceased spouse.  The Wills, Estates and Succession Act confirms that a cause of action or proceeding is not annulled by reason only of the death of a person who had the cause of action, and the personal representative for the deceased person may commence or continue a proceeding that the deceased person could have commenced or continued.

The Court of Appeal also agreed that a finding to the contrary “would result in a gap that carries the realistic potential for substantial injustice.”  A separated and surviving spouse could seek the division of family property and family debt against the estate of the deceased spouse.  The estate of the deceased spouse must have the same entitlement as against the surviving spouse.  As noted above, a separated spouse does not meet the definition of “spouse” entitled to advance a claim for relief under the Wills, Estates and Succession Act.  If the Court of Appeal did not reach the conclusion that it did, the estate of the deceased spouse would be cut out of both the Family Law Act regime, and the Wills, Estates and Succession Act regime.

The Court of Appeal was not asked to decide the issue of the limitation period for bringing a family law claim for division of property on behalf of a deceased spouse.  However, they “noted” that principles of statutory interpretation may support the position that the administrator of an estate would have two years from the date of death of the separated and deceased spouse to commence such a claim.  An administrator would be well-advised to commence an action on behalf of a deceased and separated spouse within the two years if at all possible to do so.

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

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

  1. Suzana Popovic-Montag at Hull & Hull LLP (in Ontario) discusses a recent Ontario case on the issue of entitlement to costs in estate litigation: https://hullandhull.com/Knowledge/2022/02/court-of-appeal-issues-new-decision-directing-how-to-award-costs-in-estate-litigation/
  2. Bryan Gilmartin at WEL Partners (Toronto) continued a series on the issue of dealing with a deceased’s remains: https://welpartners.com/blog/2022/02/what-remains-series-6-is-the-estate-trustee-obligated-to-consider-the-deceaseds-wishes/
  3. Bob Saget’s family applied to block public release of death records due to privacy concerns (https://www.cbc.ca/news/entertainment/saget-family-sues-1.6353623) and the judge granted a temporary injunction (https://www.cnn.com/2022/02/16/entertainment/bob-saget-family-lawsuit/index.html).  I have previously written on the issue of privacy in estate cases in the Canadian courts here.
  4. Trevor Todd at Disinherited.com writes about the principle of disgorgement: https://disinherited.com/uncategorized/the-equitable-principle-of-disgorgement/

Happy reading!