The recent decision in Hayes v Swift, 2021 SKQB 132 offers a reminder that beneficiaries should ensure they have real evidence of executor wrongdoing before they bring a court application against an executor.

Facts:

The testator, Bernard William Hayes, had passed away, and his will made specific gifts for his son and two grandchildren These parties were the applicants.
The testator was married to the executor, Ann Swift, when he died. The will provided that Ann received the residue of estate. Letters probate were issued, and the executor duly provided each beneficiary with their specific bequests under will. Ann had shipped the testator’s son several boxes of woodworking tools at a cost of $1,496.25 to the estate. However, the son maintained that there were more tools in the estate. Ann claimed that she had provided all that she had found.
The applicants, who had no lawyer to represent them, applied in court for relief, including for an order directing the executor to deliver woodworking tools. The applicants also sought an accounting from the executor.

Outcome:

The application was dismissed. The Court held that the executor had not wrongly withheld woodworking tools. The executor had identified a box of miscellaneous hand tools which may be considered woodworking tools, but the Court held that the obligation to arrange for and pay the cost of transporting items was on the son. The executor had already incurred $1,496.25 in shipping to send bequeathed woodworking tools to the son. Here, the appraised value of the remaining tools was $2,700, and the cost to ship those tools was approximately $2,000. In considering the shipping costs already incurred by the estate, and the value of the remaining tools, any further expense to the estate would be unduly high in the circumstances. The Court held that if there remained woodworking tools that the son claimed to be entitled to, the son was responsible for the cost of shipping and transportation.
The beneficiaries sought a more detailed inventory of any tools in the estate. However, the Court held that the applicants had not shown that the executor had deliberately withheld any tools from the beneficiaries. The Court refused to order a more detailed inventory;

[64]         There is no evidence presented by the applicants, beyond speculation, that the inventory provided by the executor prior to and through this application is incomplete as it relates to any tools, including woodworking tools.

Refusal by the Court to order an accounting:

The applicants had also sought an accounting from the executor.  The court dismissed this application. The Court held that the applicants had not shown cause as to why an accounting should be ordered. The Court held that the grandchildren had already received their specific bequests and thus had no further interest in the estate.

The Court held that the executor had properly established a $100,000 trust for the testator’s son, and had duly made all payments required by the will. Thus, the Court held there was no practical purpose for ordering an accounting, as the only remaining property in the estate went to the executor herself.

The Court held that it would be an exercise in futility to require the sole residual beneficiary, the executor, to provide an accounting in this circumstance:

[71]                In this case, the applicants have not shown cause as to why this Court should order an accounting. Each of Jeremy Hayes and Amanda Campbell have received their $10,000.00 bequest and they have no further interest in the estate. The executor has established the $100,000.00 trust for Mr. Hayes and made the payments required under the Will. I see no practical purpose for which the applicants seek an accounting when there is a sole residual beneficiary and the financial bequests have been satisfied.

…

[75]             It would be an exercise in futility to require the sole residual beneficiary, in her role as executor, to provide an inventory or accounting of an estate to which she now has sole entitlement. The applicants have no further interest in the estate.

Conclusion:

The decision in Hayes v Swift was critical of the unreasonable demands made by the self-represented beneficiaries.

It is not uncommon to see situations in which beneficiaries – some who are well-intentioned, some who are not – seem to wrongly believe that the executor is hiding things from them. In cases where the executor provides all reasonable information, but the beneficiaries are never satisfied, misguided court applications by beneficiaries can arise.

Hayes v Swift shows that courts will readily criticize beneficiaries who pursue meritless concerns all the way to court, incurring expense for all concerned. The Court in Hayes v Swift specifically suggested that the beneficiaries should have sought legal advice, which would have prevented them from acting in a misguided manner:

[85]          The applicants’ approach is entirely consistent with the concerns repeatedly identified by this Court when a party receives “legal advice” from a non-party who is completely unfamiliar with the practice of law and who seeks to intervene in a legal proceeding in an uninformed manner. For a party to choose to rely on the “legal advice” of a non-party is to risk incurring costs when this “representation” is misguided and unreasonable.

Moreover, the Court in Hayes awarded costs to the executor, payable personally by the applicants, in the amount of $2200. If the costs were not paid, the beneficiary would not have the opportunity to receive any further tools. This is a stern warning that the Court was not pleased with the behaviour of the beneficiaries.

The recent decision in Whelan v Chaszewski, 2021 SKQB 286 offers guidance for a situation in which two competing parties want to be appointed to administer an estate. The lesson from Whelan is that a court will not generally appoint a party who has a potential conflict of interest in the Estate (that is, a conflict between their interest personally, and their interest as a neutral administrator)

Introduction:

Michelle Whelan and Peter Chaszewski applied to be appointed as administrators of the Estate of their father Michael Chaszewski. Michelle and Peter also sought an order against their adoptive brother, David Chaszewski, including an inquiry into David’s actions relating to the estate since 2015, and an order evicting David from the mobile home owned by the Estate.

David in turn applied for his own order appointing him as administrator of the Estate.

Background:

The facts may be summarized as follows:

1. Michael Chaszewski had passed away on March 6, 2015;
2. The deceased died without a will;
3. Michelle and Peter are the deceased’s biological children and David was his adopted son;
4. After Michael’s passing, David moved into the Residence with his family. He did not pay rent to the Estate;
5. Shortly after David moved into the Residence, Peter asked David to pay $500 per month as rent for his use of the Residence until the Estate was settled. David refused unless it was part of a legal settlement of the Estate;
6. David did what he describes as extensive renovations on the Residence. He paid all property taxes, fire insurance, utilities, and maintenance costs since moving in. David also began taking care of the Estate, albeit without any formal authority to do so. He dealt with Michael’s personal items, paid a small mortgage on the Residence and some outstanding utilities and looked after property taxes etc;
7. In July of 2021, Michelle and Peter filed an application for letters of administration in SUR 134 of 2021, Judicial Centre of Estevan;
8. There had never been a distribution from the Estate. David said that he hoped to obtain a loan to pay out Michelle and Peter’s share of the Residence once the Estate can be lawfully administered, and that he intended to continue to reside there.

Court’s decision:

The most important issue before the Court was who would be appointed as administrators of the Estate.

The Court first identified the test which governed the appointment of an administrator where there were competing applications. The Court adopted the following test:

• The first duty of the court is to place the administration of an estate in the hands of the person who is likely best able or best suited to convert it;
• An administrator must act with “detachment and even handedness” not be tainted by an actual or perceived conflict of interest.

The court recognized that there were some factors which favored David’s application to be appointed administrator. David had stepped in and began administering the estate when no one else was doing so. He had information about the Estate. In addition, David lived in the jurisdiction where the assets are located.

However, the court decided not to appoint David.  The Court held that the key consideration was the ability to convert the assets of the Estate to the advantage of the beneficiaries – including by making the appropriate necessary distributions.  The Residence is by far the largest asset of the Estate. It belonged to all those who are beneficially entitled to the Estate.

The Court held that David was not focused on the best interests of the Estate. The Court found the below facts:

1. David’s resistance to paying occupation rent showed that David had not been focused on realizing the best value for the beneficiaries in a timely way;
2. The biggest issue was that David was not taking any steps to realize the value of the Residence and to distribute it to the beneficiaries. Michelle and Peter were however motivated to do so;
3. David was in a conflict of interest position which compromised his ability to be neutral and made it inappropriate for him to be appointed as administrator. He was conflicted in at least four particular ways:

1. Michelle and Peter want to sell the Residence so its value can be realized and distributed, while David wants to continue to live there;
2. It was in David’s interests that the purchase price or value of the Residence to be divided is as small as possible, as he intends to keep the property and may be able to keep the difference between the current market value of the Residence and the amount paid out to the other beneficiaries;
3. Michelle and Peter want to receive occupation rent for the six years that David has been living in the Residence, which David does not want to pay; and
4. If occupation rent is to be paid, it was in David’s interests for the amount of that rent to be as low as possible, while it was in Michelle and Peter’s interests for the rent to be as high as possible.

As such, David was in a conflict-of-interest position which compromised his ability to be neutral. He should therefore not be administrator.

Accounting:

The Court also ordered that David provide an accounting. It noted that David had had de facto control over the Estate since Michael’s death in March of 2015. His dealings with Estate property are entirely within his knowledge, and for this reason, it is appropriate that he provide a formal accounting of his actions.

Lesson:

Whelan reminds beneficiaries that they cannot take the law into their own hands. Here, David had no right to simply “move into” the home after the deceased died. David needed first to obtain the agreement of all beneficiaries. Because David unilaterally moved in and then became potentially indebted to the Estate for rent, David was in a conflicted position as a potential administrator.

The recent decision in Vance (Re), 2021 SKQB 320, reminds us of the importance of keeping our wills updated.

The application in Vance was brought by De-Anna Lynn Bailey, in relation to the estate of her nephew, James Benjamin Gilbert Vance (“Deceased”).

Background

To understand the outcome in Vance, we need to understand the effect of s. 17 of the s. 17 of The Wills Act, 1996, SS 1996, c W-14.1. S. 17 was only recently repealed. Before March 2020 the provision provided as follows:

17(1)   A will is revoked when:

1. the testator marries; or
2. the testator has cohabited in a spousal relationship continuously for two years.

Revocation by marriage was a historical principle of law.  Previously, the law felt that, entering into a spousal relationship, either by cohabiting or formal act of marriage, was a significant step that changed the legal landscape of the person involved. As a result, the legislature had concluded that any prior testamentary disposition will not be considered valid in the face of the new spousal reality.

In Vance, the factual situation meant that the prior will made by the Deceased had been revoked by his common law relationship. The chronology ran as follows:

1. The Deceased made his will in October 2004. In the will, De-Anna Lynn Bailey was named as the beneficiary of the Deceased’s estate;
2. In 2012, the deceased Christina Laturnas began cohabiting in a spousal relationship;
3. In 2014 (the second anniversary date of the commencement of the deceased’s cohabitation with Ms. Laturnas), the 2004 Will was deemed revoked by virtue of  17(1)(b) of the Act(as it then read);
4. In January 2020, the deceased and Ms. Laturnas separated and were no longer living together;
5. On March 16, 2020,  16(a)and 17 of the Act were repealed. However, the legislature did not specify that the repeal applied to wills already revoked by marriages or spousal relationships. Rather, the repeal appeared to only apply to future events; and
6. On June 6, 2021, the deceased died.

Thus, the issue in Vance was primarily whether the amendment to s. 17 was retroactive, and whether the amendment could “revive” the 2004 Will.

Decision in Vance:

As the court held “the issue here is whether the amendments to the Act were retroactive, with the result that the 2004 will was never revoked at all or was revived.” (para 7)

Vance held that, regrettably for De-Anna Lynn Bailey, the repeal to s. 17 was not retroactive. The Court relied on the principle that when a legislature changes the law, that change will “only apply retroactively where the legislature has clearly indicated that it has weighed the benefits of retroactivity with its potential unfairness or disruption.”

The Court in Vance was being asked to turn back time and revive the Deceased’s 2004 will long after it has been deemed revoked. As the amendment to s. 17 was not retroactive, the Court did not have the power to do this. Simply put, the legislature did not explicitly indicate that the repeal to s. 17 was to operate retroactively.

Lessons:

Vance shows us that the amendment to s. 17 is not retroactive. While the result in Vance was legally correct, it was a harsh (and unfair) blow to De-Anna Lynn Bailey, who understandably felt that the Deceased truly wished her to inherit his estate.

Most non-lawyers are not aware of the issue of revocation by marriage. There was no evidence referenced in this decision, showing that the Deceased knew that his spousal relationship in 2014 had operated to revoke his 2004 will. As a result, the Deceased likely wished De-Anna Lynn Bailey to receive his property. Because of the technicality of revocation by marriage, this did not occur, and the intentions of the Deceased were not given effect to.

Vance is a reminder that all persons should have an updated will. Here, if the Deceased had kept his will updated after the ending of his relationship with Christina Laturnas, there would have been an updated testamentary document in place, reflecting his actual intentions. This is in no way to cast blame on the Deceased, as there are likely millions of Canadians who have a will which is out of date. Nevertheless, as Vance shows, the alternative may be a harsh one.