Saskatchewan Estate Litigation Update: Leier v Probe, 2021 SKQB 41 – Removal of an executor for failure to account

A recent case from the Saskatchewan Court of Queen’s Bench reminds us of the importance to always account for transactions made acting as a power of attorney, or, as an executor.

Leier v Probe involved an application by Christopher Leier, to remove Barrie Probe, as executor of the estate of Christopher’s mother, Margaret Leier. Christopher also sought an order to compel Barrie to provide a full accounting of Barrie’s administration of the Estate to date.

The facts may be summarized as follows:

  1. On April 19, 2013, Margaret executed an Enduring Power of Attorney [POA] appointing Barrie Probe as the attorney;
  2. On April 24, 2013, Margaret executed a will, appointing Barrie as executor and naming her son Jonathan Leieras the alternate executor;
  3. Under the POA, Barrie managed Margaret’s personal and financial affairs from 2013 to her death in July 2019;
  4. After Margaret’s death, Christopher’s lawyer requested a final accounting of Margaret’s affairs and the decisions Barrie made in executing his duties under the POA. When Barrie did not respond, the Public Guardian asked him to provide an accounting;
  5. What documents Barrie did eventually provide by way of an accounting were muddled and incomplete;
  6. The documents appeared to show that Barrie had used Margaret’s funds for Barrie’s own gain. Further, Barrie was not adequately able to provide records explaining  these transactions:
  1. Barrie took money out of Margaret’s account as a loan to Barrie’s daughter for the purchase of a house and another withdrawal was to effect repairs and renovations to the property;
  2. There was another loan agreement dated November 27, 2016 for $15,000, executed by Barrie as POA in Barrie’s daughter’s favour;
  3. Barrie also paid his daughter’s legal fees by a cheque drawn on Margaret’s account;
  4. On June 6, 2017, Barrie wrote himself a cheque for $50,000 drawn on Margaret’s account and another on June 9, 2017 for $120,000;
  5. There were numerous examples of accounting haziness for which Barrie had not offered explanations:
  1. Margaret’s credit card statements show that from August 20, 2016 to February 19, 2017, Barrie charged over $17,000 in purchases at stores such as The Home Depot, Fries Tallman Lumber, Rona, Canadian Tire, Kal-Tire, and Regina Battery Depot;
  2. In addition, for this time frame, Barrie drew cash advances of at least $1,100 on Margaret’s credit card without explanation;
  3. Margaret also owned a home on Salt Spring Island in British Columbia. Barrie stated that he spent possibly $20,000 on water and sewer issues on the house but did not adequately explain those repairs. The August 24, 2020 order directed he do so, but Barrie only provided documentation for invoices totalling $7,198.82;

The Court characterized the above as only a “small sample of discreet transactions that I find concerning or questionable”. In total, Christopher deposed that from 2013 to Margaret’s death in 2019, Barrie caused over $1,358,000 to be withdrawn from her account in the form of debit transactions, cheques, cash withdrawals or transfers.

In addition to the above transactions, the Court found  that Barrie had not faithfully fulfilled the terms of the Will.  Margaret stipulated that three of her four children were to receive $25,000 for their use absolutely. However, in relation to the share of one son, David, Barrie did not give him the $25,000 bequest.

David deposed that Barrie told David his share would be invested but he did not provide details. David said Barrie told him he would receive “a sum” every month. Since April 2020, David said he had received only $800.00. Such conduct by Barrie was not a proper distribution under the Will.

Removal of Barrie as executor:

Christopher argued that Barrie should be removed, as his conduct as Margaret’s POA prior to her death showed a lack of reasonable fidelity.

The Court held that if this were a situation that could be resolved by a simple disclosure of accounting records, an application to have Barrie removed was premature.

However, Christopher had already sought an accounting, and obtained disclosure orders against Barrie. In response, Barrie had simply failed to properly account for his transactions.   As such,  it appeared that no further court orders for disclosure would assist anything. Barrie had already had his chance to “explain” his transactions, and the reality was  that he simply could not explain many large transactions.

The Court concluded that Barrie had shown incredibly poor insight into his responsibilities as a POA.

The Court therefore found an adequate basis on which to remove Barrie as executor:

[23]           Barrie’s abdication of his accounting responsibilities relating to Margaret’s bank and visa accounts, together with the amounts withdrawn from those accounts are enough to raise red flags. His declared understanding of his responsibilities as executor of Margaret’s will (that he could invest the bequests as he saw fit rather than distribute them as Margaret directed) are further indicia of a lack of proper capacity to execute his duties and a want of reasonable fidelity.

[24]           While most of the evidence of a lack of fidelity relates to Barrie’s responsibilities as a POA, I find that it is enough to cause grave concerns as to Barrie’s capacity to execute his duties as executor. I am satisfied that the evidence here reveals Barrie’s want of the proper capacity to execute his duties and/or a want of reasonable fidelity as in accordance with the legal principles set out above. In my view, I am satisfied it is in the best interest of the estate that he should be removed as the executor of the Estate and I so order.

In summary, the Court ordered the below:

  1. Barrie was removed as the executor of the Estate;
  2. The Court revoked the letters probate and granted administration de bonis nonwith will annexed. It was ordered that Jonathan Leier be appointed as executor of Margaret’s estate without bond, and failing him, Christopher would act;
  3. Barrie was to prepare a full accounting of his administration of Margaret’s estate from the date of her death to the date of this order; and
  4. Barrie was ordered to personally pay the costs of this action to Christopher.

Lesson learned:

Leier offers a valuable reminder of the importance to always act in the interest of the grantor, or the deceased. If you act as power of attorney, or executor, you should never use the assets of the estate for your own self-interest. Moreover, executors and powers of attorney should also avoid co-mingling of funds (that is, personal monies with monies belonging to the adult).

If you do the above, and cannot provide a legitimate basis for your actions, you may well be removed from your position, and face stiff costs penalties.

 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 j.steele@rslaw.com. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Robertson Stromberg announces the launch of the SK Estate Law blog

We are pleased to announce the launch of our new Estate Law 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.

Check out the blog here and join the discussion.

 

Estate Litigation Update – Thorne v Thorne

A recent case of the Saskatchewan Court of Queen Bench offers the following lesson: the Court’s power to “fix” clerical mistakes in Wills, may not necessarily be ordered if there are deeper concerns about the testator’s actual testamentary intentions.

Section 37 of The Wills Act, 1996,  SS 1996, c W-14.1, allows the court to “cure” Wills which have certain flaws in them. Such flaws may include the wrong number of witnesses or some other formality that is missing.

The provision is set out below:

37    The court may, notwithstanding that a document or writing was not executed in compliance with all the formal requirements imposed by this Act, order that the document or writing be fully effective as though it had been properly executed as the will of the deceased or as the revocation, alteration or revival of the will of the deceased or of the testamentary intentions embodied in that other document, where a court, on application is satisfied that the document or writing embodies:

(a) the testamentary intentions of a deceased; or

(b)  the intention of a deceased to revoke, alter or revive a will of the deceased or the testamentary intentions of the deceased embodied in a document other than a will.

[Emphasis added]

In Thorne, Keili Thorne had applied for a declaration, under s. 37 of The Wills Act, 1996,  SS 1996, c W-14.1, that a document signed by Richard  Thorne (in early October 2014) was fully effective as though it had been properly executed as the will of Mr. Thorne. 

The will had been signed in front of two witnesses, but only one of those witnesses signed the document to indicate that he witnessed Mr. Thorne’s signature. Ordinarily, this application would be a simple matter, and the Court would most likely have cured the Will under s. 37.

However, this particular application was opposed by Lia Tanit Thorne and Brendan Johnston Thorne. Tanit and Brendan argued that the Will had suspicious circumstances regarding Mr. Thorne’s testamentary capacity at the time that he signed the document.

The Court’s decision:

The Court acknowledged that the document looked and read like a will. However, the Court held that s. 37 also requires the court to be satisfied that the document actually sets out the testator’s final testamentary disposition.

The Court recognized that Tanit and Brendan had raised a number of concerns about the testator’s behaviour in 2014:

  1. Prior to signing the document, Mr. Thorne had intended to benefit all three of his children equally. The document he eventually signed did not do that;
  2. There was evidence (including evidence of people other than the parties) of Mr. Thorne’s positive ongoing relationship with Brendan;
  3. Gwenda (testator’s sister) recounted estate planning discussions with Mr. Thorne in which he planned an equal distribution of his estate among his three children.
  4. There was evidence suggesting that, around the time that he signed the document, Mr. Thorne faced challenges as to his mental acuity. In his November 14, 2014 email to Gwenda he wrote:

I’m beginning to think we never finished the POA. What we did when she was here was I made her co-administrator of my Honduran Corp. which owns all my assets here. She has the power to sell if she wants. She also has a bunch of signed cheques so she can access the money in my accounts.

But then again I’m not sure. I may have signed some stuff. Sheeeshhh..

  1. There was no evidence before the court (other than the document itself) as to Mr. Thorne’s testamentary capacity or intentions at the time that he signed the document;
  2. There was no evidence before the court as to the circumstances surrounding the preparation and signing of the document. The court does not know who prepared it, or on whose instructions.

The applicant provided rebuttal evidence, as to show that Mr. Thorne did manifest an intent to make the applicant his sole beneficiary. However, the Court felt faced with a conflict on the evidence as to just what Mr. Thorne truly intended. The Court felt that it was premature for the Court to make a binding determination on the basis of the affidavit evidence before it:

[19]       There remains, though, the evidence supporting the opposite conclusion. The respondents have provided good reasons for doubting that Mr. Thorne had testamentary capacity when he signed the document. In particular I note his long-term plan to benefit all three of his children, the unexplained circumstances surrounding the preparation and signing of the document, and Mr. Thorne’s own expressed uncertainty as to what he had signed.

[20]       Possibly it is simply a matter that Mr. Thorne had had enough of the respondents and had decided to leave everything to the applicant. There are, however, too many outstanding questions surrounding Mr. Thorne’s signing of the document for me to be satisfied with respect to s. 37(a). That is, while I recognize the possibility that Mr. Thorne had testamentary capacity, so that the document embodies his testamentary intentions, I am not satisfied that it is the case. The question cannot be determined only on the evidence that is before me. [emphasis added] 

Therefore, the Court ordered a trial of the issue of whether the document is Mr. Thorne’s will. The applicant, as proponent of the will, would bear the onus of proving the will. The Court awarded the costs of both parties, for this application, out of the Estate.

Lesson:

S.37 is a useful tool to help ensure that a document which embodied the testamentary intention of a deceased, will not fail simply due to an oversight of some formality (i.e. not enough witnesses, etc.)

However, Thorne reminds us that the s. 37 power is not a rubber stamp if there are underlying concerns with the testamentary intention of the testator. Thus, if the Court finds real doubts raised of incapacity or suspicious circumstances, the Court may refuse to “cure” the document until such issues are resolved at trial.  

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, issues surrounding executors, joint account disputes, etc. For more information on this subject, contact James Steele at 1 306 933 1338.

The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Adams Estate v Wilson: Who has standing to challenge a Will?

A recent case from the Saskatchewan Court of Appeal reminds us of the importance of first confirming you have standing to challenge a will.

“Standing” refers to the question of whether a person has a sufficient legal interest in a given dispute. In other words, will they be in a different position, depending on the outcome of the proceeding? If they do not have such interest, they cannot be a party in that  proceeding.

In Adams Estate v Wilson, 2020 SKCA 38, an elderly woman died with no children. She left a large ranching operation, and land holdings. A neighbour, Mr. Wilson, claimed that he had helped the deceased for decades, and in return, she allegedly had promised him two things:

  1. That she would pay him $1,000 per month to help cover expenses such as gas and use of his truck and tools; and
  2. That Mr. Wilson would inherit her ranching operation and all her land, cattle and equipment when she died.

This agreement was not in writing, and Mr. Wilson was further not named in the deceased’s will.

The deceased made the will in May of 2011. It made no direct mention of Mr. Wilson. The will was vague, and not specific. It said that her executor, a Mr. Staples, knew that certain persons were trustworthy and loyal and helpful to the deceased, and Mr. Staples was to use his best judgment to ensure that some portion of the estate is given to those persons.

Mr. Wilson was also not a family member of the deceased. Thus, he would not benefit in the case of an intestacy (i.e. a situation in which no will was found valid). Moreover, Mr. Wilson was not a beneficiary of any prior will made by the deceased.

The issue:

Despite the above, Mr. Wilson brought an application to prove the will in solemn form. Solemn form means that a will must go through a much more rigorous trial process to see if it is truly a valid will. Typically, a solemn form application is brought if someone thinks a given will is invalid.

Here, the issue on appeal was whether Mr. Wilson had standing to apply for solemn form.

The Court of Appeal held that he did not. In reality, Mr. Wilson’s claim was a debt claim, not a claim involving the validity of the will. Even if he did prove himself a creditor, the Court noted that creditors have no right to challenge the validity of a will. More practically, even if Mr. Wilson struck down the will as invalid, that outcome alone would place him no closer to obtaining monies out of the estate:

  • [79]           I have concluded, based on my previous analysis, that as a creditor or potential creditor of the estate, Mr. Wilson does not have the kind of interest that would entitle him to challenge the Will or require it be proven in solemn form. As well, Mr. Wilson does not have standing as a potential creditor in that, if his application to set aside the Will was successful and an intestacy were created, there would be nothing to be gained by him as a creditor. His claim against the estate would be the same. He has no stake in the outcome and, therefore, standing under Rule 16-46 cannot be established. [emphasis added]

Alternatively, Mr. Wilson also claimed that he had standing, in that he might eventually be proven (at a future trial) to be one of the persons who were considered “trustworthy and loyal and helpful”. However, this argument too did not explain why  Wilson was therefore applying to strike down the will. If Mr. Wilson succeeded in such an application, he would invalidate the “very bequest upon which he based his claim of standing,” and have “eliminated any chance that he would take under the Will” (para 84).

Mr. Wilson later sought to appeal this decision to the Supreme Court of Canada, but leave to appeal was not given.

Conclusion:

In short, anyone who wishes to challenge a will should ask if their legal, and practical, position will be improved by striking down a given will. In the case of someone like Mr. Wilson, it appears that another strategic path open to him would simply have been to:

 

  1. Avoid the expense of a will challenge;
  2. Instead, advance his claim as creditor to a determination, while considering interim measures to pause distribution of the estate assets.

 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 j.steele@rslaw.com. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Area of Expertise Wills, Estates, Trusts, Health Care Directives and Powers of Attorney