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. 

Jennifer D. Pereira, Q.C. and Sean M. Sinclair recognized as Benchmark Litigation Future Stars

Jennifer D. Pereira, Q.C. and Sean M. Sinclair have been recognized as Benchmark Litigation Future Stars!

Benchmark Litigation is the definitive guide to the leading litigation law firms and lawyers around the world.

Research is conducted through extensive interviews with litigators, dispute resolution specialists and their clients to identify the leading litigators and firms.

Congratulations, Jennifer and Sean!

 

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.

 

Binding Pre-trial Conferences in Family Law Proceedings

In October, 2020 the Queen’s Bench Rules were amended to enable parties in Family law proceedings to participate in “Binding Pre-trial Conferences.”

For background, a typical Pre-trial Conference is intended to facilitate the resolution of a family law matter, or if that is not possible, to manage the action until the matter is set down for trial. A Pre-trial is essentially a mandatory mediation session with a judge, where parties can exchange settlement offers to try to resolve matters to avoid a trial.

The difference being with a Binding Pre-trial Conference, however, if a negotiated settlement is not reached, that the presiding judge may step in and make a binding decision for the parties. The practical result is that the parties are able to avoid a trial if they cannot agree on a resolution.  The judge may determine that they are unable to make a binding decision on all of the issues, for whatever reason, and may direct that those issue(s) be set for trial.

It is important for the parties to Binding Pre-trial Conferences to be aware of the risks of submitting to such a process, as there are no rights to appeal the decision of the judge, except with leave from the Binding Pre-trial Conference Judge on an application. This means a party asks the Judge who made the decision to overturn their own decision. In addition, the parties are required to agreed in advance of the Binding Pre-trial that they will not make any collateral attack on any determination or decision made by the presiding judge.  The result is that the Binding Pre-trial Judge has broad powers with no judicial oversight.

Practical Steps – How can my Family Law matter proceed to a Binding Pre-trial Conference?

To begin, in order for a family law matter to be eligible for a Binding Pre-trial Conference, both parties must agree upon the process.

If agreement is reached, to obtain a Binding Pre-trial Conference, the following steps must be completed:

  1. The parties must submit a Joint Request for Binding Pre-trial Conference (Family) in Form 4-21.3 to the Court; and
  2. The parties must enter a Binding Pre-trial Conference Agreement (Family) in Form 4.31 4B.

The Binding Pre-trial Conference Agreement (Family) identifies the issues to be resolved, those issues the parties wish to be directed to a Binding Pre-trial Conference, and acknowledgments respecting the choice of process. The parties in a family law matter may limit the scope of issues for the Judge to determine.

A party to a Binding Pre-trial Conference (Family) Agreement must receive independent legal advice, and a Certificate confirming same is to be appended to the Agreement.

Parties submit Binding Pre-trial Briefs detailing the issues, the law that relates to the issues, and summaries of the evidence they rely upon, including medical and expert reports, financial documents, etc. and may include a settlement proposal.

Unlike Pre-trial Briefs, which are due 10 days prior, a Binding Pre-trial Brief is due to be filed with the Court 15 days prior to the date scheduled for the Binding Pre-trial Conference.

Binding Pre-trial Judge

The parties are informed of the Judge assigned to conduct the Binding Pre-trial Conference 30 days before the Binding Pre-trial Conference.

How do I get out of a Binding Pre-trial Conference?

If a party should wish to withdraw from a Binding Pre-trial Conference, they may do so at any time up 10 days before the start of the Binding Pre-trial Conference by serving a Notice of Withdrawal From Binding Pre-trial Conference in Form 4-21.7.

If a party should change their mind less than 10 days before the Binding Pre-trial Conference is scheduled to begin, they need to seek leave of the Court to withdraw their consent.

If consent is withdrawn, the Binding Pre-trial Conference simply proceeds as a Pre-trial Conference and if the parties’ settlement efforts are unsuccessful, the matter would proceed to trial.

PROS/CONS

The pros of a Binding Pre-trial Conference primarily relate to efficiency and cost. It will undoubtedly be more efficient and cost effective to have all of your family law issues dealt with at a Binding Pre-trial Conference rather than having to wait and pay for an expensive trial, when it can still take months for a decision to be rendered.

However, agreeing to submit to a Binding Pre-trial Conference is not without risk. The risks involved with a Binding Pre-trial Conference include that the Court will not have the opportunity to hear all of the evidence you would otherwise present at a trial, prior to making its determination.

In addition, as noted above, there is no right to appeal the decision of the Binding Pre-trial judge. This is a significant limitation to the remedies typically available to parties when third party arbiters are involved in determining matters.

A Binding Pre-trial Conference could be a useful process for parties in family law proceedings. I recommend you seek legal advice in relation to your matter.

Contacting a Lawyer on this Subject

Siobhan Morgan’s primary practice area is family law. For more information on this subject, contact Siobhan at 1 306 933 1308.

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

The Deadbeat Debtor – Is it Worth it?

All too often, creditors are forced to face the realization that their debtor cannot, or simply will not, pay. Whether it be because of a tenant, purchase of goods or contractor, the creditor is faced with very few avenues to recover the debt. The creditor is forced to consider taking ten cents on the dollar and drawn-out payment plan or bringing a formal court action.

While suing a defaulting debtor can lead to a relatively quick judgment as some defaulting debtors simply do not defend, the creditor then faces the realization that the judgment they have obtained is not worth the payment it is written on. The creditor has spent time and money, including legal fees, to obtain a judgment that they will never collect on. To avoid this pitfall, there are ways for creditors to attempt to act quickly to ensure they obtain some form of payment.

First, focussing specially on the commercial landlord, landlords can attempt to distrain on their tenant’s property. In doing so, the landlord must act quickly as one can only distrain on property that remains on the leased property. The landlord must also avoid the common pitfall of terminating the lease and then attempting to distrain, as once a lease is terminated, the landlord’s right to distrain goes by the wayside.

Creditors may also attempt to register a lien in order to protect their interests. While the most well know lien is the builders’ lien, there are other lesser-known processes provided for in The Woodmens’ Lien Act, The Commercial Liens Act and The Threshers’ Lien Act. Any creditor who may have lien rights should act quickly to ensure the funds that are being held back under the lien legislation are not disbursed.

If you are one of those unfortunate creditors who cannot utilize a lien to enforce the debt, and do not have a security interest in the debtor’s property, you may be forced to consider whether pursuing the debt is worth while. If the debtor is unwilling to agree to a payment plan or other resolution, you will be forced to gamble on whether you can enforce your judgment through The Enforcement of Money Judgments Act. In making that decision, there are a few considerations worth noting:

  1. Does the debtor have land and if so, how many mortgages or judgments are registered against it? It is important to note that pursuant to the Bankruptcy and Insolvency Act and The Saskatchewan Farm Security Act, the debtor is entitled to certain exemptions for their homestead or home-quarter, as the case may be.
  2. Does the debtor own any vehicles and if so, more than one?
  3. Have you run a judgment search? If there are several judgments already registered against a debtor, the chances of you collecting are reduced as there are more people claiming a piece of the pie.
  4. If the debtor is a corporation, are they up to date on their taxes and payroll remittances? CRA holds a super priority interest on a debtor’s asset for unpaid remittances. Furthermore, the failure to remit to CRA is usually a strong indicator of financial health, or lack thereof.

In short, it is usually helpful to determine ahead of time if there is any meaningful chance of enforcing your judgment. This will help you save time, money and frustration in chasing a dead beat debtor who will not, and probably cannot, pay.

Contacting a Lawyer on this Subject

Should you require more information on how to efficiently and cost-effectively recover against your debtors, please contact Travis K. Kusch at (306) 933-1373

SCA Seminar: Understanding Employment Law Through COVID-19

Understanding Employment Law Through COVID-19

February 25 | 9-10am

Presented by Candice Grant

Are you uncertain about how to handle recent changes to employment law as a result of COVID-19?

Members of the Saskatoon Construction Association can join Candice Grant on February 25 as she discusses the recent changes to the employment law landscape and what employers should consider under COVID-19.

Register here.

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