James Steele to Present at CBA (Sask) Midwinter Meeting

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Join James Steele at the Canadian Bar Association (Sask) Mid-Winter Meeting on January 26, 2022, where he will participate in a panel discussion about wills. Entitled, Wills and Estates: Moving an Age-Old Practice Area Forward, James will draw on his experience as an estate litigator to share insights into this interesting practice area.

To register or for more information click here.

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James Steele Joins Robertson Stromberg LLP Partnership

Congratulations to James Steele who became Robertson Stromberg’s newest partner on January 1, 2023.  James joined Robertson Stromberg as an articling student and, since his call to the bar in 2015, has been an important member of the litigation department.

James has distinguished himself as a leading practitioner in estate litigation. James has successfully represented clients in dozens of estate disputes, having appeared successfully in every level of Saskatchewan court. He has also successfully presented written submissions to the Supreme Court of Canada. James publishes a blog on Saskatchewan estate law at skestatelaw.ca

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Saskatchewan Estate Litigation Update: Nagy v. Graves, 2022 CarswellSask 590, 2022 SKKB 257

The recent Saskatchewan Queen’s Bench decision in Nagy v. Graves reminds us that a Court will often remove executors who are guilty of extreme delay in administering an Estate.

Factual background:

The factual background in Nagy was as follows:

  1. Nine siblings of the Nagy family were engaged in a dispute respecting their mother’s estate;
  2. Their mother, Blanche Nagy, died some ten years before, on November 13, 2012;
  3. Of the nine children, Blanche named two children as her executors, Jo-Ann Graves and Dennis Nagy;
  4. The executors did not apply for letters probate in Blanche’s estate until February 2021, over eight years following the death of Blanche. Letters probate were issued April 16, 2021;
  5. In her Will, Blanche directed that her estate be divided equally among seven of her children: Jo-Ann Graves, Katherine Reid, Claudette Pachal, Kirk Nagy, Karen Nagy, Timothy Nagy and Mark Nagy;
  6. Blanche provided no gift to two sons: Dennis Nagy and David Nagy;
  7. All the children of Blanche except Timothy were still alive. Timothy died in 2017 without a will, spouse or child. This meant that under intestacy legislation, Timothy estate’s would go to his surviving siblings, who will each receive one-eighth of Timothy’s estate (including Timothy’s entitlement to a portion of Blanche’s estate).
Relief requested in Nagy:

In the application in Nagy, one of the beneficiaries, Karen, applied to have Dennis and Jo-Ann removed as executors. In their place, Karen sought that she herself be appointed as sole executrix of Blanche’s Will.

In support of her application, all of the remaining beneficiaries under Blanche’s Will (except Jo-Ann and Timothy), including Claudette, Mark, Kirk and Katherine) had signed a “Renunciation and Consent” that Karen be appointed as the executrix.

Notably, David, although he was not mentioned in Blanche’s Will, has also signed a “Renunciation and Consent,” ostensibly because, under Timothy’s intestacy, he will receive a portion of his mother’s estate;

Issue posed in Nagy:

The issue in Nagy was whether the executors, Dennis and Jo-Ann, had “failed to administer the estate in a reasonable and prudent manner” as to render their removal as in the best interests of the estate.

Court ruling in Nagy:

Power to remove executors:

We begin by surveying the power of the Court to remove an executor.

S. 14.1 of the Administration of Estates Act (“Act”) allows for the removal of executors. S. 14.1 reads as below:

14.1 Removal of executor or administrator
14.1(1) 
On the application of a person having an interest in the estate, the court may remove an executor or administrator if the court is satisfied that:

(a) the executor or administrator:

(i) has failed to comply with an order of the court;

(ii) refuses to administer or settle the estate;

(iii) has failed to administer the estate in a reasonable and prudent manner;

(iv) lacks capacity to act as an executor or administrator;

(v) has been convicted of an offence involving dishonesty; or

(vi) is an undischarged bankrupt; and

(b) the removal of the executor or administrator would be in the best interests of those persons interested in the estate.

The power of removal is also given to the Court under common law.

Should these executors be removed?

We turn next to the grounds on which the Court in Nagy held that these executors should be removed.

We turn next to the grounds on which the Court in Nagy held that these executors should be removed.

The Court in Nagy found that it was unreasonable for the executors to have waited 8 years to apply for probate. The Court noted that s. 14 of the Act provided in theory that executors should apply for probate within 60 days of the testator’s death:

9 …What can be gathered from these provisions is an executor who acts reasonably would ordinarily apply for letters probate within 60 days of the death of the testator. Dennis and Jo-Ann did not apply for letters probate for over eight years.

The Court held that the reasons offered by Jo-Ann for not applying for letters probate (or otherwise administering the estate), were not convincing. Some of these are set out below:

  1. First, Jo-Ann stated in her affidavit that she did not take “immediate steps” to administer her mother’s estate because she “was advised by a bank employee that due to the small amount of money in my mother’s bank account, I would not need to probate the Estate at all.” However, the Court held that Jo-Ann must have known that her mother owned land (indeed two quarter sections of land) at the time she died. This alone would require probate;
  2. Second, Jo-Ann stated in her affidavit that “none of my siblings were eager to finalize the estate until the matter was brought up in 2019.” The Court held that to justify one’s inattention as executrix because of an absence of a complaint from beneficiaries was not an appropriate excuse. Furthermore, by 2019 Blanche had been deceased for seven years, and from 2019 (when her siblings intervened), it took until April 2021 to overcome Jo-Ann’s inertia and finally obtain letters of probate.

Ultimately, the Court found that the delay in applying for letters probate, or to act on any other estate matters, was contrary to the statutory expectation that an executor should apply for letters probate within 60 days of a deceased’s death. 

The Court also noted the position of the other beneficiaries, influenced the Court’s decision to remove the executors:

25      If the overarching responsibility of an executor is to safeguard the deceased’s estate for the well-being of the beneficiaries, then the voices of the beneficiaries should be heard. In this instance all the beneficiaries of the estate, except Jo-Ann, are of one mind: they want Jo-Ann and Dennis removed as executors and, in their stead, they want Karen to be appointed executrix. Notably, even David, who received no gift under his mother’s Will (but who will pro-rata share his deceased brother’s (Timothy) share of his mother’s estate) has also consented to Karen’s appointment.

The final issue considered by the Court was whether to change executors in mid-stream, given that the estate was nearing completion.  Before the date of the application, the executors had already sold the two quarter sections of farmland for good prices and distributed $308,000.00 of the estate funds to the beneficiaries.

While nearness to completion would sometimes be a purely practical reason to grudgingly keep poorly performing executors in office, the Court, in this instance, held that the executors should still be removed. The Court reasoned that the executors’ prior lack of diligence boded poorly for the remaining steps required in this estate (such as a final accounting, filing of taxes etc.).

The Court wrote as follows:

35      In this instance, the court finds that Dennis and Jo-Ann have shown a past and unexplained lack of diligence in administering their mother’s estate — the absence of probate for eight and one-half years, the lack of estate record keeping, an accounting that offers little more than rounded approximations of expenses without receipts or invoices, the failure to file estate income tax returns, an apparent and unaccounted benefit to Dennis who lived in the estate property for several years — these all show a dereliction of duty one expects of an executor.

36      I accept that the emphasis in this application should be on the future administration of Blanche’s estate and the risks to which it will be exposed if Dennis and Jo-Ann continue to administer the estate. Removal is not to punish them for past misconduct but rather to protect the assets of the estate and the interests of the beneficiaries. However, past misconduct that is likely to continue will often be sufficient to justify removal: Radford v Wilkins, 2008 CanLII 45548 (Ont Sup Ct).

..

38      Finally, the court is concerned with the future administration of the estate, particularly providing the beneficiaries with a full estate accounting, the filing of estate income tax returns and the potential liability for income tax liability. The consequences of unpaid taxes — liability, interest and penalties — may potentially encroach on what would otherwise have been available to the beneficiaries. To date Dennis and Jo-Ann have not provided any assurance to the beneficiaries that estate income tax returns will be filed. Upon whom — the beneficiaries or the executors — should potential liability for unpaid estate taxes fall?

[emphasis added]

Conclusion:

The Courts will generally not lightly interfere with the express wishes of a deceased person as to who should administer their estate. However, as Nagy shows, the Court will often remove executors in situations of extreme delay. Here, the Court removed Dennis and Jo-Ann as executors of Blanche’s estate.

Situations of 8-year delays in obtaining probate are not common. Many instances of delay in obtaining probate are closer to 1-3 years. It remains an individualistic (and thus less predictable) decision as to whether a judge will remove an appointed executor in situations of less extreme delay. In most such cases, a beneficiary would be well advised to consult a lawyer, to start the clock ticking by placing a demand on the executor, and threatening a court remedy if probate is not obtained. Most often, such demands will prompt the executors to act before the necessity of an actual hearing before the court is required. If no action is forthcoming, however, a beneficiary would be advised to consult a lawyer as to whether they should actually apply for a formal court order against the executors.

Costs order in Nagy:

The costs order in Nagy bears passing comment. The Court also ordered that costs of $2,500.00 shall be paid to Karen, jointly and severally, out of the estate share to be received by Dennis and Jo-Ann. This author has not seen the specific cost relief which was initially sought by Karen in terms of her notice of application.

However, one wonders if it would have been more equitable to award full indemnity (dollar of dollar) costs in favour of Karen so that Karen was not out of pocket. Courts routinely award costs on a full indemnity scale to a person who has taken a necessary court step required to advance the estate. Such, one other alternate costs order in the circumstances of Nagy could have been that Karen receives her entire full indemnity legal fees:

  1. With $2,500 to specifically come from the share of the estate given to Dennis and Jo-Ann; and
  2. The rest of the costs ordered to come from Blanche’s estate.

The above-proposed costs order would ensure that Dennis and Jo-Ann bore some of the responsibility for their own misconduct and delay but that the overall estate made sure that Karen was not out of pocket for taking a step that did not benefit her alone but instead benefited the entire estate. Part of the practical grounds for this can be illustrated by envisioning a future estate in which the executors have behaved poorly and need removal. If someone like Karen is expected to “step up” and hire a lawyer in such separate future estates, the incentive to do so would be lessened if that person had to bear a large portion of the legal fees of the court application personally. This results in a windfall for the other estate beneficiaries, who benefit from such a court order but do not have their estate shares diluted to bear their portion of the legal cost. It also reduces the chance that any one beneficiary “steps up” at all in the first place.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

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Saskatchewan Estate Litigation Update: Bell v Bell, 2022 SKQB 198

The recent Saskatchewan Queen’s Bench decision in Bell v Bell, 2022 SKQB 198 is an example of a Will challenge which did not succeed in raising a genuine issue for trial.

Bell reminds us that Courts will generally require firsthand evidence of incapacity or of coercion before the Court will subject a Will to the expense and delay of trial. If Courts consider the challenger’s evidence to be more circumstantial or unrelated in time to the specific signing of the Will, the Courts may find that there is no genuine issue.

Factual background:

The factual background in Bell can be summarized as follows:

  1. This will challenge was in relation to the Estate of Laurette Josephine Bell;
  2. On January 8, 2020, at the age of 86, Laurette executed a will (“Will”). After her death, one of her sons, Wayne, wished to have the Will proven in solemn form. Solemn form refers to the process of proving the validity of a Will through actual firsthand evidence in a trial process;
  3. In the Will, Laurette named two of her sons, Donald Bell and Grant Bell, as joint executors. The Will made two specific bequests and then proceeds to instruct that the rest of Laurette’s estate was to be divided equally among her children for their own use absolutely;
  4. Immediately following that bequest, however, the Will provided that Laurette’s son, Wayne, the applicant, was “not to receive anything from my estate nor any of his issue”;
  5. Laurette subsequently died on August 18, 2021, at the age of 88;
  6. Wayne sought to challenge the validity of Laurette’s Will and alleged that Laurette had been subjected to undue influence and/or had lacked capacity at the time the Will was executed;
  7. In Saskatchewan law, a will challenge requires a two-stage process. In the first stage, the challenger must first show that there “is a genuine issue to be tried.” That is, the applicant must generally offer evidence that, if accepted at trial, would tend to negate testamentary capacity or establish undue influence. Only if this genuine issue is raised at the first stage will a trial process (second stage) be legally required to actually determine credibility and make final rulings on whether the specific will is valid.
  8. In relation to testamentary capacity, Wayne suggested that a genuine issue was raised by the cumulative effect of the below factors:
  1. Laurette was elderly (87 years old at the time the Will was executed);
  2. Laurette had been forgetful and confused, as allegedly evidenced by her erroneous insistence that a historical loan to Dawn (the daughter of Wayne) remained outstanding (when Wayne alleged, and it did appear on the available evidence, that said the loan had been paid already years earlier); and
  3. That Laurette was forgetting names and had gotten lost in the mall on one occasion.
  1. In relation to the issue of alleged undue influence exercised on Laurette, Wayne alleged that Grant, Don and Garth (other sons of Laurette) were communicating disparaging and false statements to Laurette about Wayne and Dawn. Wayne essentially suggested that such poisoning had caused Laurette’s free will to be overburdened to the point that cutting Wayne out of the Will was not Laurette’s own voluntary act.
Issue:

The issue, as in most will challenges, was whether or not the challenger had raised a genuine issue requiring a trial (in relation to either capacity or coercion).

Court ruling in Bell:

The Court ultimately held that Wayne had not raised a genuine issue.

First, on the issue of capacity, the Court held:

  1. The fact that Laurette was 87 years of age was not enough to raise a genuine issue. The Court held that some 87‑year‑olds do lack testamentary capacity, others do not. Age does not negate testamentary capacity;
  2. Second, the Court did not find that a genuine issue of capacity was raised merely by the fact that Laurette may have mistakenly thought that a 20 year old loan to Dawn, remained unpaid.   The Court held that the issue was not material. If the loan had been repaid in full and if Laurette was mistaken in the belief that the loan was still outstanding, did not itself lead to the conclusion that Laurette was not competent to execute the Will on January 8, 2020. The Court held:
  1. 52 …Although Laurette may very well have been wrong about the repayment of the loan, this circumstance does not compel the inference that she was incompetent or lacked testamentary capacity. Many people forget details of the past and the fact that one may have been mistaken does not mean that she was incompetent or was not capable of executing a valid will. Even assuming for the moment that a trial of an issue was ordered and the applicant was able to establish this point, it does not amount to “some evidence which if accepted at trial would tend to negative testamentary capacity”. See Dieno at para 32 and Kapacila at para 22.
  1. Similarly, the fact that Laurette may have forgotten some names and may have gone in the wrong direction after leaving a certain business on one or more occasions does not constitute evidence that would negate testamentary capacity.

Second, the Court held that Wayne had no firsthand evidence of undue influence in relation to this Will:

  1. The Court held that the theory of Wayne was that Grant, Don and Garth somehow fed Laurette misinformation about the misappropriation of funds which caused Laurette to wrongfully view Wayne in a negative light. However, the Court held that “even if Laurette was wrong about her presumptions and perceptions, there is no evidence that there was influence that would have overburdened her will.” (para 56)
  2. The Court also noted that there was a crucial difference between:
  1. Merely alleging that there was undue influence or circumstantially that there must have been an undue influence because of what Laurette did; and
  2. Offering actual firsthand evidence which is potentially capable of establishing undue influence in relation to a Will.
Conclusion:

Ultimately, the Court in Bell held that no genuine issue had been raised on Wayne’s evidence.

Rather, the uncontradicted evidence before the Court was that Laurette went to her lawyer and provided the lawyer with precise, cogent, clear instructions to remove Wayne as a beneficiary. The lawyer who drew the will was a very experienced lawyer in estates, took Laurette’s instructions and found no cause for suspecting undue influence or a lack of testamentary capacity.

Bell is an example of a case where the challenger no doubt had genuine concerns about what caused his mother to remove him from the Will. Such is a natural emotional reaction. That said, Bell reminds us that circumstantial concerns about unexplained actions by a testator (even if the testator’s actions are hurtful and shocking to a disinherited family member) are not the same as first-hand evidence, actually capable of establishing incapacity or actual coercion on the date of the signing of the Will.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

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James Steele presents at the Saskatoon Estate Planning Council

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Saskatchewan Estate Litigation Update: Martin v Martin, 2022 SKCA 79

The recent Saskatchewan Queen’s Bench decision in Peters (Estate) (Re), 2022 SKQB 186 prohibits the practice of altering an affidavit without actually re-swearing it.

Factual background:

The background facts in Peters can be described as follows:

  1. Antonia Peters died on March 1, 2022;
  2. She left a Will dated September 17, 2007. In that Will she named her husband, S. Frederick Peters, as executor and sole beneficiary of her estate;
  3. The Will provided that should her husband predecease Antonia, then two of her children (Edie Louise Nelson and Wally David Peters) would act as her executors;
  4. Her estate was then given to her children and grandchildren as well as two charities. There is nothing controversial about the Will itself;
  5. The initial application for grant of probate was filed on June 2, 2022;
  6. By fiat dated June 15, 2022, the Court rejected the application. The Court noted that the Will had named the testatrix’s husband as executor and that if he had predeceased her, then proof of the husband’s death was required under Rule 16-10 of The Queen’s Bench Rules;
  7. As well, what should be paragraph 4 of the probate application originally filed, had stated all beneficiaries named in the Will but did not list the husband as a beneficiary. The Court noted that it appeared that the husband had predeceased the testatrix. This reality required revision to the material;
  8. On July 25, 2022, a representative of the office of the executors’ solicitor removed the application, affidavits and Will to have the material corrected. Subsequently, revised and additional material was filed;
  9. The application and supporting affidavits were later refiled. A change was made only to the application form to read that all named beneficiaries had survived the deceased “except for S. Frederick Peters, who passed away on January 20, 2016”. Previously, on the initial filing, paragraph 4 had read that all named beneficiaries had survived the deceased;
  10. The Court found it problematic, however, that the executors’ affidavits were not re-sworn. What appeared to have occurred was that a new page containing a revised paragraph 4 was “slip-sheeted” into the material;
  11. That is, instead of the entire affidavit (and all of its pages) being re-sworn, the single erroneous page was revised and replaced after the affidavit had already been sworn before the deponents;
  12. Thus, the Court observed that the lack of a re-sworn affidavit meant that neither executor has verified under oath the revised, current content of the probate application.
Guidance offered by Peters:

The Court in Peters noted that the practice of slip-sheeting was being used more and more. However, such a practice was not consistent with the purpose of requiring a sworn affidavit from an executor who applies for probate.

Such an affidavit is not just a procedural hoop through which an applicant must leap. Rather, it verifies under oath the truth of the contents filed by the executor. The Court relies on these contents to be true, and the affidavit is the mechanism to verify that truth (as otherwise, a false sworn affidavit can lead to legal consequences, which incentivizes the deponent to be accurate).

The affidavit essentially takes the place of the deponent showing up in court, being affirmed or sworn, and testifying to the veracity of the application documents.

The “slip-sheeting” process entirely defeats the purpose of the affidavits. The two deponents of the affidavits in Peters could not have verified under oath the ultimate contents of the application (in its present form) when they first swore the affidavit in April.  This is because at the very moment that they had first sworn the original affidavits, the later slip sheeted pages were of course not yet in the affidavits.

Conclusion:

Ultimately in Peters, the court did not grant the application in the current form. The Court required that the executors refile fully sworn new affidavits.

Peters thus reminds us that affidavit exhibits need someone to identify and vouch for them. If a lawyer wants to change the content of an already sworn affidavit, the lawyer must have the client re-swear the affidavit in its final form.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

LawyersJames D Steele