IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Haley (Re), |
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2017 BCSC 2057 |
Date: 20171116
Docket: P4628
Registry: Courtenay
In the Matter of the Estate of Sherwood Daly Haley, also known as Dale Haley, also known as Dale S. Haley, deceased
IN THE SUPREME COURT OF BRITISH COLUMBIA
Docket: 08702
Registry: Courtenay
Between:
Barbara Elizabeth
Chapman, David Martin Haley,
Stephen Dale Haley, and Gerald William Haley
Plaintiffs
And
Pauline May Lyons,
also known as Pauline May Haley-Lyons,
Executrix of the Estate of Sherwood Dale Haley,
also known as Dale Haley, also known as Dale S. Haley,
and Pauline May Lyons, also known as Pauline May Haley-Lyons
Defendants
Before: District Registrar Nielsen
Reasons for Decision
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Counsel for Plaintiffs: |
E. Chesterley |
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Counsel for Defendant, Pauline May Lyons: |
C. Allen |
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Place and Date of Passing of Accounts /Hearing: |
Courtenay, B.C. October 16, 17, 18, 19, 20, 2017 |
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Place and Date of Decision: |
Vancouver, B.C. November 16, 2017 |
Table of Contents
The Care and Responsibility Involved
Success Achieved in the Final Result
[1] This is the final passing of accounts for the estate of Mr. Sherwood Dale Haley (Dale), who died December 10, 2004. Dale was survived by his wife Shirley Haley (Shirley) and his five children. His five children are Barbara Chapman (Barbara), David Haley (David), the executrix of the estate Pauline Haley Lyons (the executrix), Stephen Haley (Stephen), and Gerald Haley (Gerald). Given that the majority of the parties and the deceased share the same surname, I will refer to them by their first names for ease of reference.
[2] Dale’s will provided a life estate to his wife Shirley, with the remainder of the estate, on Shirley’s death, to be divided equally among his five children, the residual beneficiaries. Shirley died on July 29, 2009. The executrix is a residual beneficiary. She is also a certified management accountant. This training, and her close relationship to Dale, resulted in her being appointed the executrix of the estate.
[3] On December 13, 2016, Mr. Justice Bracken ordered a reference to the Registrar for the purpose of passing the executrix’s accounts. The order provided:
. . .
2. BY CONSENT, this matter shall be referred to the Registrar, who shall conduct an enquiry, assessment, and accounting relating to the accounts, and assessment of the remuneration payable to the Executrix.
[4] As the court did not direct that the reference be a report and recommendation, it follows that the matter will be certified pursuant to Supreme Court Civil Rule 25-13(5) which provides:
Certification of results
(5) Unless the court otherwise orders, if the court directs the registrar to conduct an inquiry, assessment or accounting under subrule (3) (b),
(a) the registrar must, by certificate in Form P39, certify the result of the inquiry, assessment or accounting, and
(b) if filed under Rule 18-1 (9), the certificate is binding, subject to appeal, on the persons interested in the estate who
(i) had notice of the inquiry, assessment or accounting,
(ii) consented to the accounts or the remuneration, or
(iii) are the subject of an order made under Rule 18-1 (20) (b).
[5] At the passing of accounts, oral evidence was provided by the executrix, Barbara, David, Gerald, Ms. Shelley Dunbar, Gerald’s common-law wife, and Mr. Griffin, a friend of Dale.
[6] The plaintiff beneficiaries did not consent to the passing of the executrix’s accounts. For the most part, their objections centred upon a lack of information concerning the assets of the estate, their disposition, the degradation of the assets, the deduction of alleged debts owed to the estate by Barbara and Gerald, and the remuneration of the trustee.
[7] I am satisfied the executrix’s accounts have been proven. The executrix has accurately accounted for the monies coming into the estate and subsequently being paid out by the estate. With the exception of the deduction of money allegedly owed by Barbara and Gerald, and the remuneration of the executrix, the accounts are passed as presented.
[8] Dale was a long-haul truck driver. He generally kept his financial affairs to himself and rarely discussed matters of a financial nature. By all accounts he was an extremely hard working individual with mechanical talent.
[9] When Dale died, he owned and resided at a property situated at 1506 - 1510 Ryan Road, Courtney, British Columbia (the “property”) with his wife Shirley. In geographic terms, the property was located in the Comox Valley. The property was the largest asset of the estate.
[10] The assets of the estate are described in the P40 affidavit of the executrix as follows:
As at 13 December, 2004
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Item |
Assets |
Asset Values |
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A1 |
PROPERTY LOCATED AT 1506 EAST RYAN ROAD |
$133,200.00 |
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A2 |
BANK OF MONTREAL ACCOUNT 0826-8019-227 |
$55,024.03 |
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A3 |
COMOX VALLEY CREDIT UNION EQUITY SHARE ACOCUNT 61259 |
$101.05 |
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A4 |
DEBT FROM CONTRACT TRACTOR SERVICES LTD. |
$8,246.00 |
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A5 |
PAULINE MAY LYONS MORTGAGE OWED TO ESTATE |
$102,794.15 |
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A6 |
1988 VW JETTA VIN: WVWFH0160JW086706 |
$5,995.00 |
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AT |
1987 GMC JIMMY VIN: 1GKEV18H8HF523674 |
$2,500.00 |
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A8 |
1994 FREIGHTLINER VIN: 1FUYBXYBV8RL679306 |
$22,000.00 |
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A9 |
1982 HARLEY DAVIDSON VIN: 1HD1AAK17CY02191S |
$2,500.00 |
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A10 |
LAWN MOWER (RIDE ON) |
$2,000.00 |
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A11 |
ATV (- THREE WHEELED (KAWASAKI) |
$600.00 |
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A12 |
UTILITY TRAILER |
$1,200.00 |
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A13 |
PERSONAL EFFECTS AND TOOLS |
$5,000.00 |
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TOTAL |
$341,160.23 |
[11] The property was situated on a 1.03 acre parcel of land zoned “light industrial”. It consisted of a 1,120 square foot, three-bedroom home and a 1,080 square foot adjacent workshop.
[12] At the time of Dale’s death, the property was in a general state of disrepair. The roof of the home was leaking, the central heating system was not working, the hot water heater was not working, the well water was not drinkable, there was no city garbage service, the oven was not working, and there were electrical problems, including a rotting power pole to the workshop which needed to be replaced.
[13] The property needed immediate attention. Barbara, David and Gerald lived in the Comox Valley whereas the executrix did not. At the time of Dale’s death, she was resident in Alberta, and later Manitoba.
[14] Upon Dale’s death, Barbara took control of arranging the clean-up of the property and David arranged for various repairs and ensured that they were completed. Within a year of Dale’s death, the property was completely repaired.
[15] David was also instrumental in arranging for Dale’s freightliner truck, an asset of the estate, to be transported to Vancouver and sold for the benefit of the estate. David had the mechanical skill to get the vehicle in a condition where it could be transported for the purpose of sale.
[16] Gerald arranged for the garbage removal until a formal service in that regard could be arranged, and he also brought bottles of water to the property for Shirley until the home was eventually hooked up to the city water system. As Shirley could not drive, Gerald and his common-law wife regularly drove Shirley to her doctor’s appointments, the mall for shopping, and the Elks’ Club where she enjoyed bingo and the meat draw.
[17] Immediately after Dale’s death, the executrix, with the help of her husband, set about locating Dale’s financial records. Some of the records were stored in the home at the property, some in the shop, and some in several of the vehicles parked on the property. Locating the records was not an easy task.
[18] The executrix arranged to pay all of Shirley’s bills, however, there was difficulty in this regard. Shirley resented the fact that the executrix had control of the finances and she wanted to continue to receive her bills directly, rather than forward them onto the executrix. She was also unwilling to consent to the hydro bill being paid on-line by the executrix. BC Hydro would not allow the executrix to pay the bill electronically without Shirley’s consent, and she would not grant it. Nevertheless, the executrix diligently ensured that all bills were paid.
[19] Upon Dale’s death, it was also discovered that he had not filed income tax returns since 1961. Needless to say this presented a unique and immediate problem that needed to be addressed.
[20] The executrix also had concerns regarding Shirley’s mental state and arranged to have her assessed in the family home on the property. The plaintiff beneficiaries were not informed of this decision. As a consequence, when Shirley phoned David to advise of a registered nurse’s arrival at the property, and her concerns in that regard, David demanded that the nurse leave immediately. This event caused a rift between David and the executrix.
[21] When Dale died the second biggest asset of the estate was a mortgage owed by the executrix to Dale. The executrix testified that part of Dale’s financial plan for retirement was to take a mortgage on his children’s homes and use the mortgage as an income stream. The mortgage to the executrix was part of that plan.
[22] The details of the mortgage remained private during Dale’s life and continued to be a mystery thereafter. It was not until the second day of the passing of accounts that the mortgage details, and amortization schedules, were disclosed. This created considerable discord and distrust amongst the plaintiff beneficiaries.
[23] Having reviewed the accounts, I am satisfied that the executrix regularly and dutifully made all payments required of the mortgage, and, in fact, overpaid by two bi-weekly payments of $291 for a total overpayment of $582. Dale clearly trusted the executrix and she in turn had earned that trust. The balance of the mortgage was properly accounted for and paid into the estate. Regretfully, the executrix had used the mortgage account to pay several of Shirley’s bills which lead to some uncertainty when the balance in the account did not add up.
[24] This required considerable attention on cross examination before the matter came into focus. I am satisfied that this has now been properly accounted for. Regretfully, the precise accounting in this regard was not provided until the executrix’s oral evidence during the course of the passing of the accounts.
[25] Shortly before his death, Dale had purchased a VW Jetta for $5,995. The executrix purchased the VW Jetta for the $5,995 which Dale had originally paid for the vehicle, however, the documents which prove the amount paid to the estate were not produced until many years later. Also, the plaintiff beneficiaries were not aware of the purchase until after the fact. It is clear from the bank records that the executrix did pay the full $5,995 for the vehicle, and disbursed that amount into the trust account. However, the general lack of information provided to the plaintiff beneficiaries led to resentment and mistrust.
[26] Another point of contention between the plaintiff beneficiaries and the executrix was a debt in the amount of $8,246 owed to the estate. When Dale died he was owed $8,246 by his former employer, Contract Tractor Services Limited.
[27] The executrix testified that she had contacted the employer and was advised by him that he was making an assignment into bankruptcy and that he had lost his house, and was unable to honour the $8,246 debt. The executrix further testified that Dale had told her, while in the hospital before his death, that it was unlikely the employer would ever pay the $8,246, and therefore, there was no point in pursuing the debt.
[28] The executrix did not make inquiries with the Superintendent of Bankruptcy to confirm that the employer had indeed made an assignment into bankruptcy. From the corporate records put to the executrix during her cross-examination, it appears likely that the former employer did not make an assignment into bankruptcy, rather, the employer simply changed the corporate name and carried on business.
[29] There was no evidence the executrix approached the plaintiff beneficiaries to inquire whether the matter ought to be pursued through court proceedings or otherwise. The amount owed by the employer was simply not pursued as a matter of judgment on the part of the executrix.
[30] After Dale’s death, two bank accounts were located at the Bank of Montréal having a balance of $55,024.03, and the Comox Valley Credit Union, having a balance of $101.05.
[31] The plaintiff beneficiaries believe that Dale had an additional account in the Lower Mainland and a U.S. account. However, no further accounts were located and there is no evidence that any further accounts existed at the time of Dale’s death. The bank records produced refer to several accounts opened and closed, however they were consolidated within the two accounts referred to.
[32] I did not hear evidence of the executrix having made an inquiry with the Bank of Canada concerning whether there were any unclaimed account balances in the name of the testator. If not, given the belief and evidence of the plaintiff beneficiaries, inquiries ought to be made in this regard with both the Bank of Canada and its US equivalent.
[33] The remaining assets of the estate referenced in the P40 affidavit included a 1987 GMC Jimmy, a 1982 Harley Davidson motorcycle, a ride-on lawn mower, a three-wheeled ATV, a utility trailer, and personal effects and tools.
[34] The personal effects and tools were shared by the beneficiaries shortly after Dale’s death and the Harley Davidson motorcycle was purchased by Gerald at its listed value of $2,500, which was paid to the estate.
[35] The Jimmy, ATV, ride-on lawn mower and utility trailer remained on the property until Shirley’s death on July 29, 2009.
[36] In the intervening period, the roof on the shop where the ATV and the lawn mower were stored collapsed, causing severe water damage to both vehicles. Also, by the time of Shirley’s death, the GMC Jimmy was so badly rusted it was scrapped at a cost to the estate.
[37] The utility trailer went missing from the property by the time of Shirley’s death, although by all accounts, it was in a decrepit and worthless state when last seen.
[38] There were other assets of the estate which are not listed in the P40 affidavit. They include a gun collection; a life insurance policy; and three non-working vehicles consisting of a 1996 Camaro, a Dodge Horizon and a Chevy S10.
[39] The three vehicles were not in working condition and were ruined when the roof on the shop collapsed. Dale’s intention was to restore the vehicles when he had the time. It was to be a retirement project.
[40] While the vehicles may have had value if and when they were eventually restored, on the evidence before me, I find they had no proven value and do not need to be included in the P40 affidavit.
[41] The gun collection was seized by the RCMP shortly after Dale’s death. The executrix and her husband received threats from Shirley. The threats were reported to the RCMP and the guns were seized on January 27, 2005.
[42] The RCMP records indicate that there was a total of 15 guns seized. Of note is the fact that one of the guns was a Luger pistol, model P08. Barbara, during her evidence, described the weapon as a World War II German officer’s side arm.
[43] The value of the weapons was not formally assessed, nor do I have any evidence of their condition prior to seizure, although I note they all had serial numbers recorded by the RCMP.
[44] Three of the guns were sold by a local sport shop for a total of $125. The remaining weapons were destroyed at the direction of the executrix on February 17, 2007.
[45] The plaintiff beneficiaries were not given an option of purchasing the guns, nor were they offered the guns that were eventually destroyed. The executrix testified that her brothers had not expressed interest, nor had they hunted for many years.
[46] David indicated during his oral evidence that he had hunted with his father and would have appreciated being given the weapons or the opportunity to purchase the scoped hunting rifle.
[47] The executrix did not indicate any concern for her safety in the event the guns had been given to the plaintiff beneficiaries. Her concern was strictly with the threats made by her mother Shirley.
[48] Finally, there is the life insurance policy. Barbara testified that the executrix had advised her that Dale had a life insurance policy, but the amount involved was very small. When Barbara asked for further information concerning the value of the life insurance policy, the executrix would either not answer her, or would leave the room.
[49] The amount of the life insurance policy was not disclosed until the formal passing of accounts. The executrix was correct in her description. The total amount of the policy at the time of death was $17.81. The documents indicate that this amount was paid into the estate in June 2005.
[50] The bank accounts of Shirley, following her death, were pooled and divided equally amongst the beneficiaries by David, who had access to his mother’s accounts. Those accounts are not part of this passing of accounts.
[51] After the death of their mother Shirley, all the residual beneficiaries attended the property and contributed to its clean-up and the preparation for sale. The evidence is unanimous with respect to an intention to sell the property as quickly as possible. However, there is a difference in the evidence insofar as Gerald, Barbara and David testified that Gerald had offered to rent the property in the meantime. Gerald’s evidence was that when he suggested his renting the property, the executrix dismissed the suggestion immediately with the response that the intention was to sell the property as quickly as possible.
[52] The executrix has no recollection of such an offer having been made by Gerald, although she does confirm the overall intent of the beneficiaries to sell the property as quickly as possible.
[53] The evidence of Gerald, Barbara, David and Gerald’s common-law wife, Ms. Dunbar, all confirm Gerald’s offer to rent the property while efforts were made to sell it. I find the offer was made. In making this finding I do not attribute any dishonesty to the executrix. Indeed, I found the plaintiff beneficiaries and the executrix to be straightforward and honest in the presentation of their evidence.
[54] Once the offer to rent the property was advanced and rejected by the executrix, the offer by Gerald was never renewed. This single event transpired eight years ago at a time when there was a flurry of activity. Given all the circumstances, I do not find it surprising that executrix has no recollection of Gerald’s offer to rent the property.
[55] Although the stated intention was to sell the property quickly, it was not formally appraised until June 21, 2010. The appraisal valued the property at $381,000 with no value being attributed to the house or shop.
[56] The property was not listed with a realtor until April 15, 2014. The property eventually sold for $300,000 on October 8, 2015, more than six years after the death of Shirley. The property sat empty from July 29, 2009, to October 8, 2015, without rental income.
[57] The executrix had hoped the property could be sold privately. Initially, a cardboard sign was put on the shop indicating that the property was for sale with a contact phone number. The sign was posted by Barbara.
[58] In the first year after their mother’s death Barbara chased away vagrants who broke into the property and she ensured the lawn was mowed. However, after the first year, Barbara found she did not have the time to continually attend to the property.
[59] There were three inquiries regarding the purchase of the property shortly after Shirley’s death. A neighbouring business made inquiries, the person who eventually bought the property made inquiries, and another individual made inquiries. However, this person wanted assurances that the zoned “light industrial use” was compatible with the Riparian Areas Protection Act, SBC 1997, c. 21 (the Riparian Act).
[60] There was a ditch behind the property which had been constructed by a neighbouring farm. The ditch drained into a fish bearing stream.
[61] The executrix made inquiries in this regard and arranged for an appeal of the restrictions which was generally successful. The executrix advises that the Riparian Act survey and environmental assessment were completed in 2011.
[62] The three early on inquiries regarding the property did not produce a firm offer.
[63] On October 10, 2011, an offer was made by the individual who eventually purchased the property. This offer was for $300,000 however, it was conditional. The offer involved the purchaser taking possession, paying $500 per month rent commencing November 1, 2011 to October 1, 2012, with the payment of the purchase price being made on the proposed completion date of November 1, 2012.
[64] The executrix rejected this offer on the advice of her lawyer. She did not seek the advice or input of the plaintiff beneficiaries.
[65] No further offers were received until the person who made the prior offer of October 10, 2011, made another offer to purchase the property for $300,000. This offer was made on November 3, 2014. The purchase did not complete until October 8, 2015, almost a year later, as the purchaser made repeated requests for extensions of time to complete while he attempted to secure financing.
[66] By the time the property was sold on October 8, 2015, the relationship between the plaintiff beneficiaries and the executrix was in tatters.
[67] The legal principles applicable to determining entitlement of an executrix to remuneration are summarized in Chau Estate (Re), 2016 BCSC 2541. At paras. 14‑16 and 18-19, the Court states:
LEGAL PRINCIPLES
14 The personal representative, or administrator, is entitled to remuneration to a maximum of five percent of the gross aggregate value, including capital and income, of all the assets of the estate at the date of the passing. Section 88 of the Trustee Act RSBC 1996 c. 464 provides:
Setting remuneration of trustees and guardians
88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper.
(2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.
(3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.
15 The criteria to be considered in determining the appropriate amount of remuneration are set out in a number of cases, the leading of which is Re Toronto General Trust Corp. v. Central Ontario Railway Company, (1905) 6 OWR 350, at 354, (Ont. HC). The criteria are: the magnitude of the trust; the care and responsibility involved; the time occupied in administering the trust; the skill and ability displayed; and finally, the success achieved in the final result.
16 Remuneration does not need to be fixed as a percentage of the gross aggregate value of the estate, it may be calculated as a lump sum, provided it does not exceed five percent of the total value of the estate; see Re Turley Estate, (1955) 16 WWR 72 (BCSC).
. . .
18 The allowance to be made for the administrator’s remuneration is determined on a quantum meruit basis, which is the reasonable value of the services rendered, subject to the five percent ceiling.
19 The personal representative is also entitled to a fee for annual care and management of the estate, in addition to the remuneration allowance under s. 88(1) of the Trustee Act; see s. 88(3) of the Trustee Act. The fee allowed must not exceed .4 percent of the average market value of the estate assets. The personal representative can apply annually for a care and management fee.
[68] The factors to be considered in awarding the annual care and management fee are set out in Re Pedlar, [1982] 34 B.C.L.R 185 (SC). At paras. 14 and 15 the Court states:
14 Each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee (not exceeding 0.4% of the average market value of the assets of the estate), include the following:
(a) the value of the estate assets being administered;
(b) the nature of the estate assets being administered -- such as an active business, a farm, real property held for investment or appreciation, a portfolio of investments and the type of such investments;
(c) the degree of responsibility imposed upon the trustee by the terms of the will or other instrument, including the length or duration of the trust;
(d) the time expended by the trustee in the care and management of the estate;
(e) the degree of ability exhibited by the trustee in the care and management of the estate;
(f) the success or failure of the trustee in the care and management of the estate;
(g) whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate.
15 While the foregoing list of factors is not intended to be exhaustive, it has been derived, primarily, from a consideration of the Ontario Court of Appeal decisions in Re Mortimer, [1936] O.R. 438 and Re Smith, (1953) O.R. 185. It is recognized that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application.
[69] I will address the various factors from Re Toronto General Trusts Corp. supra, and Re Pedlar, supra, together where appropriate.
[70] At the date of the testator’s death in 2004 the estate had a value of $341,160.23. Twelve years later, at the point of distribution, after the deduction of a $50,000 interim distribution to the beneficiaries ($10,000 each), the estate had a value of $301,428.77.
[71] The magnitude of the trust and the value of the assets was modest. However, the trust did involve a life estate to the residual beneficiaries’ mother, Shirley, from December 13, 2004 to July 29, 2009.
[72] The trust involved locating assets and accounts. The testator had records in his home, his shop, and his vehicles. The home, from all accounts, was filled with possessions which made the search difficult and take days. The plaintiff beneficiaries still remain convinced that other assets exist, including a bank account in the Lower Mainland and a U.S. bank account. However, no such accounts have been located. The bank records that do exist do not disclose any other accounts or transactions beyond those which have been identified.
[73] The estate on both Dale’s death and Shirley’s death, needed substantial cleanup and organization. To this end, the executrix had the assistance of all the plaintiff beneficiaries. As the executrix does not reside in the Comox Valley, much of the work fell onto the shoulders of the plaintiff beneficiaries who lived locally.
[74] During Shirley’s life, Gerald and his wife drove Shirley to her doctors’ appointments, the mall to do her shopping, the Elks’ Club for social activities. David attended to the organizing and hiring of professionals to repair the home and property. He also assisted with Shirley’s personal finances.
[75] Barbara arranged to have the lawn of the property mowed for the first year after Shirley’s death and she also visited the property regularly and chased away trespassers who, on occasion, broke into the home and shop located on the property.
[76] The executrix ensured that all of Shirley’s household bills were paid. This was somewhat difficult given Shirley’s refusal to allow all mail to be sent to the executrix’s address for this purpose, and her refusal to allow the hydro bill to be paid electronically.
[77] It is fair to say that Shirley and the executrix did not get along. Indeed, Shirley’s threats towards the executrix and her husband’s family led to the involvement of the RCMP and the seizure of Dale’s gun collection from the property.
[78] The hostility between Shirley and the executrix made the executrix’s job much more difficult than it ought to have been. Tasks that ought to have been simple became difficult and time-consuming.
[79] The executrix did not keep time records relating to her administration of the trust. It is clear from the banking records that she was regularly and routinely involved in the paying of the bills of both Shirley during her lifetime, and those of the estate. During the entire period, the executrix resided outside the province of British Columbia. As a result, much of the hands-on work with respect to the estate was provided by professionals and the other beneficiaries.
[80] After the death of Shirley, it was decided that the property should be sold as soon as possible. For this reason, it was not rented.
[81] The sale of the property became more complicated by the fact that one prospective purchaser raised the issue of the Riparian Act and the corresponding use of the property as “light industrial”. The drainage ditch behind the back of the property dug by an adjoining farmer connected with a fish bearing stream. The executrix made inquiries, commissioned a study, and a subsequent partially successful appeal, to bring the property up to a standard where it could be sold. This took time. From the executrix’s account, these tasks were completed in 2011.
[82] The executrix had the property professionally appraised and a report in this regard was produced dated June 21, 2010. The appraised value of the property at $381,000 did not apportion any value to the house or shop.
[83] The house and shop sat idle after the death of Shirley. It was not rented and the executrix did not arrange for any form of routine maintenance such as lawn care. The house was not listed with a realtor until 2014.
[84] Between 2009 and 2014, there were three inquiries regarding the property and an offer which fell through. The inquiries and the offer involved the executrix’s time and involvement.
[85] The executrix was actively involved in the eventual sale of the property which was completed October 8, 2014 with the assistance of a realtor and a lawyer.
[86] The executrix is a certified management accountant. Her accounting displayed skill and ability to the extent that all monies paid into and out of the estate were accounted for accurately.
[87] The executrix used money in the mortgage account to pay Shirley’s bills which caused some concern and confusion when the mortgage account did not balance at first glance. During the course of her evidence, the discrepancy was explained and the account was balanced.
[88] In my view, the failures of the executrix involve a failure to disclose in a timely fashion; a failure to consult where appropriate; and, a delay in the disposition of the estate.
[89] It is clear from the evidence that Dale was a man who did not share information of a financial nature with others. He kept this sort of information to himself. The executrix went about her duties in a similar manner which caused considerable consternation among the plaintiff beneficiaries.
[90] The executrix testified she provided annual financial reports to the plaintiff beneficiaries without any cover letter. I was directed to a document issued shortly after Dale’s death which the executrix testified was an example of the annual report she forwarded to them. The document can be found at page 49 of Exhibit 1. It is not easily discernible and is almost illegible. The remaining 12 years of financial statements allegedly sent to the plaintiff beneficiaries are not in evidence.
[91] With the exception of Gerald, who testified he may have received a financial statement once, early on, the beneficiaries were unanimous in their testimony that they did not receive any annual financial reports or disclosure, either annually, or at all. Indeed, Barbara testified that when she asked the executrix questions of a financial nature, the executrix would provide minimal information or simply leave the room if pressed.
[92] Given the lack of documentary evidence of annual financial disclosure, the testimony of each of the plaintiff beneficiaries that they did not receive annual financial disclosure, I find that the proper annual disclosure did not take place.
[93] The second largest asset of the estate was the mortgage owed by the executrix to the estate. The necessary accounting details, including amortization schedules, were not disclosed until the second day of the executrix’s oral testimony. This is roughly 13 years after the death of the testator.
[94] Similarly, an insurance policy existed. When the executrix was asked by Barbara concerning the amount of the policy, the executrix’s response was that it was not very much. Again, 13 years after the fact, during the course of the executrix’s oral evidence, the amount of the policy was disclosed to be $17.81.
[95] The amounts owed on the mortgage and the life insurance policy were properly recorded and accounted for. Indeed, the mortgage account was overpaid by two payments of $291 for a total of a $582 overpayment. However, the failure to disclose these details in a timely fashion has negatively impacted the administration of the estate. It prevented a consensual passing of the accounts and, in part, caused the parties to “lawyer up” at considerable cost to the estate.
[96] There was also a failure to properly disclose, in a timely fashion, details surrounding the gun collection and the VW diesel vehicle.
[97] The executrix feared for her safety and that of her in-laws when Shirley made threats directed at them. The RCMP were informed and 15 weapons were seized. The evidence of Barbara was that one of the weapons, a German Luger, was a World War II German officer’s side arm. The records of the RCMP confirmed the existence of a model P08 Luger with serial number 9365C. If it was indeed a World War II German officer’s side arm, it may have had collector value which might have benefited the estate. There is no evidence in this regard other than Barbara’s testimony.
[98] The weapons were not appraised formally, or informally. They were eventually given to a local sports store and three of the weapons sold, including the Luger, for $125. The rest of the weapons were destroyed. The destruction of the weapons was authorized by the executrix in a fax dated the February 17, 2007.
[99] None of the plaintiff beneficiaries were asked whether they would like to purchase the weapons or whether they wanted them if they could not be sold. The executrix testified that her brothers had not hunted in years, and had not otherwise indicated an interest.
[100] During the course of his evidence, David indicated he would have liked his father’s scoped hunting rifle.
[101] Just months before his death, Dale had purchased a VW diesel for $5,995. The executrix removed the vehicle from the property and purchased it by depositing into the estate the sum of $5,995. This was done without first informing, or consulting the plaintiff beneficiaries. It came as a surprise when, one day, the vehicle was simply nowhere to be found.
[102] There was considerable delay in disposing of the property. Shirley died July 29, 2009 and the property did not sell until five years later on October 8, 2014. The accounts were not passed for a further three years. The delay surrounding the disclosure of the accounting details, the disposition of the assets and the actual passing of accounts is significant. Some of the delay can be explained. The property was in a state of disrepair, it needed an appraisal which was done June 21, 2010, and there were difficulties associated with the Riparian Act and a subsequent appeal. There was also the need to attend to Dale’s unpaid income tax which was handled by an accounting firm.
[103] It was hoped the property could be sold quickly without the need for a real estate agent, thus saving the estate money. The property was eventually listed with an agent April 15, 2014.
[104] The plaintiff beneficiaries testified that there was no appropriate signage on the property indicating it was for sale and they were not kept informed regarding the apparent lack of buyer interest. With the passage of time the property fell further into a state of disrepair.
[105] Given the plan was a quick sale, the fact that there had been a lack of offers to purchase the property, the continuing state of disrepair, and the executrix’s absence from the province, the property ought to have been listed for sale with a realtor much sooner than it was.
[106] The plaintiff beneficiaries gave evidence of their personal financial state of affairs. That evidence made it clear that a timely distribution of the estate would have been of substantial financial assistance to them.
[107] Delay in the administration of estates has been a matter of judicial comment. The current spirit of the time in this regard is expressed by Mr. Justice Macintosh in Collett Estate (Re), 2017 BCSC 473. At para. 7 his Lordship states:
7 In Dirnberger Estate, 2016 BCSC 439, this Court wrote as follows in deciding to remove an executor as a result of his delays:
[13] The duty of an executor is to settle the affairs of the deceased and to distribute the estate in accordance with the terms of the will in a timely manner. Mr. Chase has failed to do this.
[14] I have concluded that Mr. Chase must be removed as trustee. I have reached this conclusion for two reasons. His actions demonstrate that he lacks the necessary capacity to act as trustee. ... There is as well a want of reasonable fidelity.
[15] With regards to the first reason, this is a simple estate that has not been distributed more than four years after probate.
[16] In Levi-Bandel v. McKeen, 2011 BCSC 247, Justice Butler stated at paras. 21 and 23:
[21] . . . it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal. . .
. . .
[23] . . . I have little difficulty in concluding that [the executor’s] inaction and her intransigence caused unnecessary delay. Her refusal or reluctance to proceed with the administration of the estate amounts to a want of reasonable fidelity and a failure to carry out her duties.
Ms. Collett has not brought an application to remove Mr. Baird as trustee, but the observations about delay expressed in Dirnberger Estate will have application in my consideration of the executor’s fees Mr. Baird seeks.
[108] There was an interim distribution to each beneficiary of the reported amount of $10,000 in July 2015. The exact date is not stated in the P40 affidavit.
[109] The executrix deducted $1,700 from Gerald’s interim distribution of $10,000. Gerald’s evidence was that the alleged debt totalled $1,400, not $1,700. The debt, according to Gerald, consisted of $1,200 given to him by Dale to help him obtain an accreditation as a chef from the Southern Institute of Technology in Alberta, and $200 in cash was given to him when he was returning to the Comox Valley, at a time when he was that without funds due to his divorce. The alleged debt arose decades ago and Gerald testified that he did not believe his father expected the money to be repaid.
[110] The executrix deducted $2,100 from Barbara’s interim distribution of $10,000. The executrix believes the $2,100 was owed by Barbara from a time when their father paid Barbara’s property taxes. Barbara’s evidence was that it was probably for income tax she owed. Barbara testified that the $2,100 was paid so long ago, again decades, that she can no longer be sure whether it was for property tax or income tax. It was Barbara’s evidence that her father did not expect repayment.
[111] The executrix testified that she was advised of the debts by Dale while he was in the hospital. However, no change was made to the will by codicil or otherwise to reflect the alleged debts of Gerald or Barbara.
[112] As stated at the outset of these reasons, I declined to pass the accounts insofar as they purport to make deductions from Gerald’s and Barbara’s $10,000 interim distribution. The debts owed by each of them are decades old.
[113] Section 142 of the Wills Estate and Succession Act, SBC 2009, c. 13 states that:
Personal representatives — general authority
142 (1) A personal representative has the same authority over the estate in respect of which the personal representative is appointed as the deceased person would have if living, subject to
(a) a contrary intention appearing in the will of the deceased person, and
(b) this or any other enactment.
(2) A personal representative must exercise authority to
(a) administer and distribute the estate in respect of which the personal representative is appointed,
(b) account to beneficiaries, creditors and others to whom the personal representative has at law a duty to account, and
(c) perform any other duties imposed on the personal representative by the will of the deceased person or by law.
[114] The executrix has the same authority over the estate in respect of which she was appointed as the deceased person, if living, subject to a contrary intention appearing in the will.
[115] The will was clear insofar as it leaves the residue of the Dale’s estate to each of the residual beneficiaries in equal shares. No reduction was made for debts allegedly owed.
[116] The debts are decades old and the estate would be barred by the passage of time from commencing an action with respect to those alleged debts. It is not open to the executrix to summarily deduct the debts allegedly owed to the estate without a direction in the will, or an order of the court.
[117] To the extent that the passing of accounts purports to do so, they are not approved in this respect. The $10,000 interim distribution to both Gerald and Barbara must be paid, in full, for the accounts to be passed as presented.
[118] There were successes in the administration of the estate which can be directly attributed to the work of the executrix. Dale’s tax liabilities were resolved with minimum impact on the estate. This was achieved with assistance from a professional accounting firm. Shirley was provided for, and all her bills paid despite the conflict between her and the executrix. In regards to Shirley’s overall well-being however, the considerable work of the plaintiff beneficiaries must also be acknowledged.
[119] The executrix also ensured that the cash account was placed in GICs in order to earn a maximum return for the estate.
[120] There were also failures in the administration of the estate. Although the property did eventually sell in October 2014 for $300,000, it sold for $81,000 below its assessed value as of June 2010. Further, the property sat empty for five years where, with the benefit of hindsight, the property could have been rented.
[121] Gerald offered to rent the property shortly after the death of Shirley and it becoming vacant. Also, in October 2011, the eventual purchaser of the property had offered to rent the property for a year, while being able to renovate it, and with the full purchase price of $300,000 being payable on November 1, 2011. This offer was rejected by the executrix, without consultation with the plaintiff beneficiaries, on the advice of her lawyer. The goal was a quick sale and the offer did not further this objective.
[122] With the benefit of hindsight, the offer ought to have been accepted. The property would have generated rent and it would have been sold four years earlier for exactly the same purchase price as eventually received.
[123] Given that an early sale of the property was the objective; the lack of offers; and the fact that the executrix resided out of province; the property ought to have been listed with a realtor much earlier than it was in order to facilitate the ultimate end being a quick sale.
[124] With respect to the $8,246 dollars owed to the estate by Dale’s former employer, these funds were not pursued in the belief that the former employer had gone bankrupt, or was about to make an assignment when the executrix last spoke to him.
[125] Inquiries were not made with the Superintendent of Bankruptcy to confirm this fact. Documents produced during cross-examination of the executrix indicates that the employer apparently did not make an assignment into bankruptcy. Rather, the employer changed its corporate name, but otherwise carried on business. The ability to pursue the former employer has long since passed given the expiry of the limitation period.
[126] The plaintiff beneficiaries submit that the executrix allowed the property to be vandalized and fall into a general state of disrepair by neglect. However, the property was in a state of disrepair and neglect when the executrix assumed her duties after the grant of probate.
[127] Improvements and repairs were made during her tenure as executrix during the lifetime of Shirley, and further repairs were made after Shirley’s death. The executrix was not diligent in her attention to the property, however, the property had an assessed value of $381,000 without any value being attributed to the home or the shop. The property’s value was in the land.
[128] The property eventually sold for $300,000, an amount below the assessed value of the property. I find the executrix’s inattention to the property had no appreciable effect upon its ultimate value and sale price. The estate suffered no loss in this regard.
[129] In my view, a significant failure on the part of the executrix was the failure to disclose financial information in a timely fashion, or at all, and a failure to consult with the plaintiff beneficiaries on matters that would bear directly on their interests.
[130] Full disclosure is an essential element to the smooth passing of accounts. Non disclosure or delayed disclosure results in the failure to pass accounts as presented, increases the expense associated with their passing, and leaves the beneficiaries with the bitter aftertaste of a reasonably based suspicion that justice was not done.
[131] The plaintiff beneficiaries were not consulted or informed with respect to the distribution and destruction of the gun collection, or the decision to not pursue Dale’s former employer for the $8,246 owed.
[132] The second largest asset of the estate was the mortgage owed by the executrix to the estate. However, the details of the amortization schedule and the accounting were not provided until the second day of the executrix’s oral evidence on this passing of accounts.
[133] The details concerning the life insurance policy were likewise not disclosed or properly accounted for until the presentation of the executrix’s oral evidence.
[134] Information surrounding the property was likewise not disclosed to the plaintiff beneficiaries in a timely fashion. The details and documents concerning past offers on the property were not fully disclosed by the executrix until the course of her oral evidence.
[135] An administrator/executrix/trustee has a fiduciary obligation to the beneficiaries of an estate. This duty can be forgotten when the beneficiaries are siblings of the executrix. Once an executrix, your siblings, if they are beneficiaries, are no longer simply brothers and sisters. As beneficiaries of the estate, they are persons to whom a fiduciary duty is owed.
[136] In Waters’ Law of Trusts in Canada, (4th ed.) at page 42, the author describes the role of the trustee as follows:
The hallmark of a trust is the fiduciary relationship which the trust creates between the trustee and the beneficiary. The whole purpose of a trustee’s existence is to administer property on behalf of another, to hold it exclusively for the other’s enjoyment. The express trustee is expected to put the interests of the trust and the beneficiaries first in his thinking whenever he is exercising the powers, or performing the duties of, his office. His duty is one of selfless service. And the object of describing a man as a resulting or constructive trustee is to emphasize that he is a person who is under the express trustee’s fiduciary obligation to hold property, of which he is technically the owner, for the benefit of another.
[137] In Cunha v. Cunha (1994), 99 B.C.L.R. (2d) 93 (S.C.), at para 9, Mr. Justice Fraser described nondisclosure of financial information and assets as “the cancer of matrimonial property litigation”. In my experience, his Lordship’s description applies equally to estate litigation surrounding the passing of accounts. Failure to disclose and consult breeds mistrust and litigation as occurred in the administration of this estate.
[138] Although the executrix was a certified management accountant, she had no prior experience as an executrix of an estate. She is not to be held to a standard of perfection. In Langley v. Brownjohn, 2007 BCSC 156, the Court addressed the issue of whether a trustee acted reasonably in the circumstances. At paras. 64 to 66, the Court stated:
64 At page 1258 Waters points out that the question of whether a trustee has acted honestly is not typically an issue in the cases. The more contentious question ordinarily focuses on whether the other requisite elements have been established and, in particular, whether the actions of the trustee can be characterized as being reasonable in the circumstances.
65 At 1260, Waters describes in general terms what is considered to be reasonable conduct:
Reasonable conduct is what the prudent business person would have exhibited in his own affairs. The court puts itself in the position of the trustee at the time of the disputed conduct, and considers what the prudent business person would have done in the light of the facts as they were then known and the prevailing opinion among business people at the time. [footnotes omitted.]
66 Among the factors to be considered when determining whether a trustee should be excused are: whether the trustee sought out and/or relied upon the advice of a professional in relation to the impugned conduct; whether the opinion relied upon was correct; the relationship and communication, or lack of it, between the trustee and the beneficiaries leading up to the commission of the breach; whether the breach was merely technical or a minor error in judgment; whether the trustee is a lay person or a professional; whether the trustee has received remuneration; and the quantum of the loss: Fales; Laird v. Lyne Estate (2004), 5 E.T.R. (3d) 132, 2004 BCSC 39; Re: Potter (2000), 32 E.T.R. (2d) 256, 2000 BCSC 628; Linsley v. Kirstiuk (1986), 28 D.L.R. (4th) 495 (B.C.S.C.); Re Heuvels Estate, 2001 MBQB 73; Verma v. Chopra, [1994] O.J. No. 111 (Ont. Ct. Gen. Div.); Re Stoyko Estate, [1992] M.J. No. 587 (Q.B.); Duthie et al. v. Gallagher and Duthie, [1930] 2 D.L.R. 582 (B.C.S.C).
[139] The executrix seeks the maximum capital fee of 5% being $16,204.20 and a care and management fee for the years December 13, 2004 through October 5, 2016 totaling $7,578.47. The executrix’s total claim for remuneration is $23,787.67.
[140] Maximum remuneration is not awarded as a matter of routine. An executrix is entitled to the remuneration that is appropriate, fair, and reasonable in all the circumstances. In Goldman v. Alder, (19 September 1991), Vancouver Registry CA014168 (B.C.C.A.), the B.C. Court of Appeal stated:
Maximum remuneration does not go as a matter of course and it is to be expected that there will be disputes over the quantum of remuneration. Section 90(1) does not prescribe an adversarial process. There are no plaintiffs, no defendants, no pleadings, no discoveries, no provisions for offers of settlement or payment into Court, and no other trappings of an adversarial nature. All interested parties are entitled to be heard but in the end the officers of the Court must decide what is fair and reasonable in all of the circumstances.
[141] Having considered all the circumstances surrounding the administration of the estate, including the factors enumerated in both Re Toronto General Trust Corp., supra, and Re Pedlar, supra, I award the lump sum of $12,500 to the executrix as remuneration. This amount includes both the capital fee and the care and management fee.
[142] Supreme Court Civil Rule 25-13(7) provides that:
Special costs
(7) Unless the court on an application otherwise orders, if costs are payable under an application under subrule (1), those costs
(a) must be assessed as special costs, and
(b) may be assessed without an order of the court,
and Rule 14-1 (3) and (5) applies.
[143] I see no reason to depart from the usual order that the estate pay the executrix’s costs of the passing of the accounts as special costs. However, a formal passing of the accounts may not have been necessary if full and timely disclosure had been made well in advance of the hearing. I am of the view that it would be unfair for the plaintiff beneficiaries to bear the bulk of the costs of the passing of the accounts. In the circumstances the plaintiff beneficiaries will also have their costs, paid by the estate, assessed as special costs.
[144] The accounts of the executrix as stated in the P40 affidavit are passed as presented, with the exceptions of the interim distribution to Barbara and Gerald and the remuneration of the executrix. The total remuneration awarded to the executrix is $12,500. Barbara and Gerald are entitled to the full interim distribution in the amount of $10,000.
[145] The costs of the passing of the accounts is awarded to both the executrix and the plaintiff beneficiaries to be assessed as special costs.
“District Registrar Nielsen”