IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	Estate of Joan Maki,
	2007 BCSC 1034

Date: 20070711
Docket: P070268
Registry: Vancouver

RE:  The Estate of Joan Maki, Deceased

Before: Master G. Taylor

Reasons for Judgment

Counsel for Kristy Pauline Maki Gouldsmith	M. Booker
Counsel for Karen Patricia Maki	W.D. Mussio
Date and Place of Hearing:	June 22, 2007
	Vancouver, B.C.

[1]                The cross applications of Kristy Gouldsmith and Karen Maki arise out of the estate of their late mother, Joan Maki, who died on August 29, 2006.  Kristy and Karen are twin daughters of Joan and Arvid Maki (also deceased).  Karen and Kristy are both named executors and trustees of the estate and are the residual beneficiaries under the will of Joan Maki. There are four other daughters of the union of Joan and Arvid Maki, namely Hazel McGladdery (“Hazel”), Heather Barlett (“Heather”), Barbara Farries (“Barbara”), and Linda-Lee Turner (“Linda”).  These four somewhat older daughters have not been provided for in the will of Joan Maki dated June 2, 1989.

[2]                Kristy Gouldsmith (“Kristy”), the applicant, seeks to have the caveat of February 7, 2007 filed by Karen Maki, set aside, together with a grant of probate made to Kristy and an order that Karen Maki be passed over as an executor of the estate.  Kristy also seeks an order that the only asset of the estate, a condominium in White Rock, be listed for sale.

[3]                Karen Maki (“Karen”), the respondent, seeks an order that the caveat of May 7, 2007 filed by Kristy, be set aside and that a grant of probate be issued to Karen reserving the right of Kristy, the other named executor, to apply for a grant of probate at a later date.  In a separate notice of motion, Karen also seeks an order that Kristy be removed as executor of the last will and testament of Joan Maki; that Karen be appointed as administrator of the estate; or alternatively, Chris Dupuis be appointed as administrator of the estate of Joan Maki.

[4]                While twins, the applicant and respondent have been estranged for some time.  Kristy lives in the United Kingdom.  Karen resides in White Rock, B.C.  Both are trained lawyers, although neither one currently practices law.  Both graduated from the faculty of Law at the University of Victoria in 1991.  Kristy was called to the bar in 1992 and practiced in private practice until 1994 when she joined the Crown Counsel office where she practiced until her move to the U.K. in 2001.

[5]                Karen practiced law for six years following law school, primarily in the area of family law.  Thereafter she became an executive search consultant for two years and is now the Associate Director of Research at the University of British Columbia where she has worked since 2001.

[6]                From approximately 1968 until a few weeks before her death, the testatrix resided in Salmon Arm where the family had owned and operated a jewellery store.  She sold the home in June, 2006 and purchased a condominium in White Rock which she and Karen owned as tenants in common.  Prior to the sale of the house in Salmon Arm, Karen had been a joint tenant on the Salmon Arm property since 1999.

[7]                Karen claims to have helped her mother, the testatrix, make the move and get settled into the condominium.  Karen also claims to have attended to all the necessaries upon her mother’s death, including selling the car, paying the strata fees on the condominium and looking after payment of the insurance on the contents, returning overpayments of CPP and OAP to the government, and the like.  Karen complains that she has done this to the exclusion of her sister who resides in the U.K.

[8]                Kristy questions how and why it is that Karen came to be a joint tenant with their mother on the family home in Salmon Arm.  She also questions how it is that Karen was a tenant in common with the testatrix when the contract of purchase and sale made it apparent that the title to the condominium would be registered solely in the name of Joan Maki.

[9]                The four older daughters also wonder how it is that Karen seems to have an entitlement to more of the estate than do the other five daughters.  In fact, the older four daughters, Hazel, Heather, Barbara and Linda, support Kristy in her application to have Karen passed over as an executor of the estate of their late mother.  As well, the same four have commenced an action against Kristy and Karen as executors and trustees of the estate as well as in their personal capacities pursuant to the Wills Variation Act.

Should Karen be Passed Over as Executor of the Estate?

[10]            Kristy maintains that Karen should be passed over as an executor of the estate as there is evidence of a claim against Karen for breach of trust and that this claim extends to the one-half legal interest held by Karen in the condominium as well as joint bank accounts and other assets, properly belonging to the estate, and, accordingly, Karen is in a conflict of interest and cannot act as an executor.

[11]            Kristy relies, inter alia, on the case of Re Becker, [1986] O.J. No. 2980 (Surr. Ct.) (Stadelmier and Hoffman) as authority for suggesting that her sister, Karen, should be passed over as an executor in this case.  The facts of Re Becker are instructive and I quote from them as set out in the judgment of Kovacs Surr. Ct J.:

The events unfolded in short order, in a two-month period….The testator, aged 96, prepared his will on February 28, 1986.  At that time the value of his estate was $176,000.  He bequeathed $5000 to a niece (not a party), $15,000 to the respondent described as a friend in the will and the residue to Jean Stadelmier, a niece (who is one of the applicants).

Some 10 days after the will was executed it was placed in the testator’s safety deposit box.  A document, entitled “Gift” dated the same day (i.e., March 21, 1986) was signed by the testator and provided for “an absolute gift to my good friend Ralph Lewis Hoffman, one hundred and seven thousand dollars ($107,000) consisting of guaranteed investment certificates”.  The document was witnessed by a solicitor.  Thereafter 10 guaranteed investment certificates, totalling $139,000 were transferred by the testator to the respondent between March 21, 1986 and April 15, 1986.  The testator died April 27, 1986.

[12]            The applicants in Re Becker intended to bring an action against the respondent to set aside the transfer of the securities based on the exercise of undue influence by the respondent upon the testator.  They sought an order to pass over the respondent as executor, alleging that he would be in a conflict of interest position in such an action to be instituted against the respondent.

[13]            The court in Re Becker considered Re Weil, [1961] O.R. 888, 30 D.L.R. (2d) 91 (O.C.A.) where Laidlaw, J.A. said at pp 889-90:

The Court should not lightly interfere with the discretion exercised by a person in choosing the person or persons to act as his executors and trustees….There can be no doubt that the Court has power to remove a personal representative of the estate of a deceased person for cause, but the effect of the order now in appeal is to remove one of the executors before letters probate have been granted to him.  In substance the Court has declared that he should not be permitted to be a party to the administration of the estate, notwithstanding he was the choice of the testator.  It seems to me that such an interference with the discretion and choice of a person in preparing his last will and testament must be not only well justified but, as has been said before, must amount to a case of clear necessity.

[14]            In Re Weil the appeal court accepted the argument on appeal that the removal of the respondent as an executor was premature and set aside the original decision in the High Court for an order for administration by the court.  In essence, the Ontario Court of Appeal was unwilling to prejudge the case by upholding the decision to order administration by the court prior to the issuance of letters probate.

[15]            In Re Becker the issue of conflict of interest was canvassed by Kovacs Surr. Ct. J. at paragraph 8 of the judgment:

On the facts on this application it is clear the applicant will be in a conflict of interest position.  A conflict of interest in itself is not always sufficient to pass over a nominee as executor.  In the Weil case, it was not sufficient.  In the Weil case the conflict of interest was perceived to be between the executor and a close relative of the executor who was a beneficiary.  The potential conflict perceived in that case was that the executor might not deal even-handedly among the beneficiaries.  In the case at bar the perceived conflict of interest is between the executor and his interest in his personal capacity….It is self-evident that the respondent, in his capacity as executor, cannot conscientiously (as a plaintiff) attack the gift and the transfers of securities to himself while at the same time maintaining in his personal capacity that the gifts and transfers were proper.  That will not be a potential conflict; it will be actual.  In making such a finding I in no way prejudge the case.  I simply find the respondent cannot conscientiously act as a plaintiff (in his capacity as executor) in a case in which he will be the defendant.  I find I can make that finding now, and I so find: therefore the application is not premature.  The passing over of the respondent is therefore justified and clearly necessary.

[16]            And again at paragraph 14:

In considering the fitness of the respondent to act as an executor I have considered also the duties of an executor in a general way.  One duty of an executor is to bring in the estate for distribution among the beneficiaries.  If it is perceived, on good grounds, that that important duty is compromised by a personal conflict of interest because the executor will be asked to sue himself to recover what may be a large part of the estate property, he must be passed over.  That consideration is particularly important when the action against the executor is for a very significant amount in respect to the size of the estate.

[17]            In the case at bar, there is an action against both Karen and Kristy in their capacities as executors of the estate of their late mother and in their personal capacities.  The main component of the action seeks an order pursuant to the Wills Variation Act, RSBC, 1996, c.490 for such provision as the court thinks appropriate for the four plaintiffs who are the sibling sisters of Karen and Kristy.  However, the action also seeks a declaration that Karen holds her one-half interest in the property and bank accounts in trust for the benefit of the estate as well as an accounting of all estate assets she had control of both before and after the death of Joan Maki. 

[18]            Are the allegations and pleadings in the action commenced by the four older sisters sufficient to raise a question of conflict of interest against Karen such that she should be passed over as an executor of the estate of her late mother?  I believe they are.  Without prejudging the case, it appears that Karen is in no less a conflict of interest than was the respondent in Re Becker.  Karen requires a free hand to represent her personal interest in this matter without being fettered by also being an executor.  And the estate needs to be represented by someone not concerned about her personal interest in the estate.  I believe this to be a case of clear necessity.  Accordingly, I order Karen be passed over as an executor.

Should Kristy be Granted Probate as Sole Executor or Should an Independent Administrator be appointed?

[19]            Karen submits that S. 7 of the Estate Administration Act provides authority for substituting an administrator for the executor or executors.  Essentially, the court must find in this case that special circumstances exist where the executor at the time of death resided outside the jurisdiction to appoint some person to be the administrator of the estate of the deceased.  If the court exercises its discretion to appoint an administrator in these circumstances, it may require the person appointed to post security and may place limits on the appointment or conditions as the court thinks fit.

[20]            Karen’s justification for removing Kristy as an executor is that, according to Karen, Kristy has be obstructive in preventing Karen from probating the estate and doing what is necessary to tidy up their mother’s affairs.  Karen also insists that it will cost the estate money for Kristy to fly to B.C. to administer the estate, whereas it wouldn’t cost as much to appoint an administrator, although the latter is merely assumed since Karen does not suggest how much the administrator would cost the estate were one appointed.

[21]            On the other hand, Kristy has indicated to her four older siblings that she will not request or claim any remuneration for acting as executor and trustee of the estate.  One has to assume that she will keep this promise to her siblings, if she is appointed executor.

[22]            The affidavit of Hazel McGladdery, one of the four older siblings, is helpful in these proceedings.  In it she speaks for herself and her other 3 siblings.  She says that all four support Kristy as executor of their mother’s estate and, as well, all are opposed to the appointment of an administrator who is entitled to earn a fee for administration of the estate.

[23]            In support of her position, Karen relies on Conroy v. Stokes, (1952) 6 W.W.R. (N.S.) 204, [1952] 4 D.L.R. 124 (BCCA) for the proposition that removal of an executor is appropriate where the acts or omissions complained of shows that the conduct of the executor/trustee has endangered the trust property or shows a want of honesty or of proper capacity to execute the duties, or a want of reasonable fidelity.  Bird, J.A. quotes with approval from Letterstedt v. Broers (1884), 9 App. Cas. 371 where their Lordships of the Judicial Committee said at p. 389:

It is quite true that friction or hostility between trustees and the immediate possessor of the trust estate is not of itself a reason for the removal of the trustees.  But where the hostility is grounded on the mode in which the trust has been administered, where it has been caused wholly or partially by substantial overcharges against the trust estate, it is certainly not to be disregarded.

[24]            I do not believe the ratio of this case is of assistance to Karen’s position as I am of the view that while Kristy and her sister, Karen, do not get along, nothing Kristy has done to date has endangered the trust property or has she shown a want of honesty or fidelity.  By “endanger” I mean something more than the suggestion that Kristy’s reluctance to list the property caused the value of the property to have fallen since the death of the testator.  Rather I take “endanger” to mean, in these circumstances, to put at risk the entire trust property such that it’s whole value may be lost, not merely the slight rise or fall in value due to market fluctuations.  And there is certainly no suggestion that Kristy is lacking in capacity to perform the duties of executor.

[25]            In the result, I dismiss both notices of motion filed by Karen Maki in these proceedings and allow in full the notice of motion filed by Kristy Pauline Maki Gouldsmith, save and except the issue of costs in Kristy’s notice of motion, which is to be reserved until the other action has been concluded.   

“Master G. Taylor”