Canada: When Will The Court Remove An Executor? Two Recent Decisions From The Supreme Court Of British Columbia

Last Updated: June 21 2019
Article by Emily Clough

Two recent BC Supreme Court decisions required the Court to determine when it is appropriate to remove an executor of an estate: Nieweler Estate (Re) 2019 BCSC 401 ("Nieweler Estate") and Burke v Burke 2019 BCSC 383 ("Burke").

The Court is generally deferential to a testator's choice for an executor. However, the Court will remove an executor if it believes there are good grounds to do so. The overarching consideration is whether the conduct of the executors harms the administration of the estate or the interests of the beneficiaries.

In Nieweler Estate, three siblings, Stephen, Ingrid, and Edward, were named as co-executors of their father's estate. The siblings were also all equal beneficiaries under the will.

In order to make any executor decisions, all co-executors had to agree because the will did not contain a majority clause allowing executor decisions to be made by a majority vote. The siblings were unable to agree on decisions regarding the distribution of the estate and Stephan brought a petition to have Ingrid removed as executor. In response, Ingrid sought to have Stephan removed as executor.

Stephan argued that Ingrid should be removed for various aspects of her conduct, such as:

  1. refusing to sell one of the estate properties unless the other executors agreed to unreasonable conditions completely unrelated to the sale;
  2. purposely having her husband sabotage a sale of the property;
  3. having the locks changed for an estate property without authorization or providing the new keys to Stephan or Edward;
  4. lying to a bank who granted a mortgage for one of the estate properties and inviting the bank to foreclose on the mortgage; and
  5. withdrawing substantial sums of money from family company bank accounts without authorization or telling her brothers.

Ingrid's main argument against Stephan was that when there were discussions about listing one of the estate properties for sale, Stephan indicated he would not agree to any sale unless certain conditions were met. However, Stephan eventually withdrew his demands and the property was sold.

In deciding the issue, the Court noted that while animosity between an executor and a beneficiary is not usually sufficient to remove an executor, animosity between co-executors can be relevant. This is because if executors cannot work together to carry out their duties, it harms the beneficiaries. For example, refusing to respond to requests for information, to sign cheques or provide an accounting, or to meet to discuss administrative issues regarding the estate can all lead to executor removal. Therefore, where a court finds that a co-executor's actions are blocking the administration of the estate, it will remove that executor for failing to do their job.

The Court in Nieweler Estate also pointed out four categories of conduct that warrant removal of an executor:

  1. endangerment of the trust property;
  2. want of honesty;
  3. want of proper capacity to execute the duties; and
  4. want of reasonable fidelity.

In the end, the Court found Stephan's actions did not require his removal as an executor. On the other hand, the Court removed Ingrid as an executor because it found her conduct fell within all four types of conduct that justified removal. It should be noted that in removing Ingrid, the Court also considered her actions in relation to privately held family companies which were not part of the estate. The Court considered this evidence relevant to show Ingrid's attitude to her siblings. She consistently disregarded her siblings interest and ignored their input, which helped illustrate to the Court that she would not act in a reasonable, collaborative manner with her siblings as an executor.

In addition to looking at the actual conduct of an executor in determining whether to remove them, the Court will also consider extenuating circumstances, such as whether the executor is in a conflict of interest. This could lead to an executor acting in ways that would harm the administration of the estate or the interests of the beneficiaries.

In Burke, the deceased named one of her granddaughters, Fiona, as executor. Fiona's sister, Phaedra, and their mother, Dolores, were attempting to remove Fiona as executor because they took issue with Fiona's management of the estate and argued that she was in a conflict of interest. All three women were beneficiaries under the will.

Dolores had also brought a wills variation claim against the deceased's estate alleging that the deceased's will did not make adequate provision for her. Additionally, she argued that a property that the deceased had given to Fiona while she was alive was subject to a resulting trust and therefore still part of the estate. Fiona filed a response, stating that the deceased's bequests in her will were fair to all beneficiaries and that the property wasn't part of the estate because the deceased had gifted it to her.

In taking issue with Fiona's management of the estate, Dolores and Phaedra stated that Fiona would not take their advice for the disposition of the estate and that she had not adequately responded to their questions. The Court quickly dismissed these concerns as not being serious enough remove Fiona as executor.

The only real issue was whether Fiona was in a conflict of interest because of the wills variation claim. The Court noted that a conflict of interest, by itself, will not always disqualify an executor. However, where the conflict of interest puts the executor in their personal capacity into conflict with their role as an impartial administrator of the estate, then they must be removed. For example, if beneficiaries are claiming that an executor exerted undue influence over the deceased while they were alive to receive a gift, then the executor would have to step down. Otherwise, the executor would be in a conflict of interest because, in their role as executor, they would be attacking the validity of the gift while, in their personal capacity, they would be attempting to uphold the gift.

The Court found that Fiona was not in a conflict of interest and did not remove her as an executor. The Court pointed out that in a wills variation action the executor has no interest in how the estate is distributed. An executor's duty is to preserve the assets of the estate, pay the debts, and distribute the estate to the beneficiaries. An executor is indifferent to how an estate should be divided. Also, the executor, or the estate, does not bring a wills variation claim and are not parties to wills variation actions unless the executor in their personal capacity is bringing a wills variation claim. As such, even if an executor could lose something through a wills variation, there is no conflict with their duties and obligations as an executor when they are responding to a wills variation claim. Furthermore, in this instance, there was no allegation of wrongdoing by Fiona in her capacity as executor. Even though Fiona in her personal capacity stood to lose either the property the deceased had given her or a portion of the estate, as an executor she had no interest in the outcome of the wills variation action and the Court declined to remove her as executor.

As Nieweler Estate andBurke demonstrate, if you are acting as an executor you must ensure you prioritize properly administrating the estate and acting in the best interests of the beneficiaries. If you're concerned you might be in a conflict of interest, you should reach out to a legal professional to determine how best to handle situation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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