Recent Canadian court cases take action against executors

The first case, Thompson (Re) (2023 BCSC 1591), dealt with the court’s capacity to remove an executor who was seen to have a conflict of interest with the estate she was administering. Susan Thompson (the applicant) sought an order for the removal of her sister Gail Thompson (the executor) from a role administering the estate of their mother (the deceased). The applicant applied for the appointment of an independent trustee.

The applicant claimed that the executor’s actions “before and after [the deceased’s] death demonstrate that she cannot be neutral and act for the best interests of all of the beneficiaries…even now [she] continues to put herself in a conflict of interest and her actions in supporting one beneficiary…over the welfare of others does not allow her to be neutral.”

The Supreme Court of British Columbia (the Supreme Court) applied the considerations of the Wills, Estates and Succession Act 2009 and the Trustee Act 1996 to determine if it could remove the executor and appoint an independent trustee. It observed that, pursuant to existing case law, “the existence of friction between the executor and one or more beneficiaries is generally, in and of itself, not sufficient to warrant the removal of the executor.”

However, the Supreme Court added that “an executor’s conflict of interest may warrant removal…conflict of interest and a conflict of duty demonstrate want of fidelity.” It noted that the executor had previously commenced actions against the estate and so could be liable to pay costs to the estate. It therefore ruled that this was a disabling conflict of interest that could not be circumvented. Accordingly, the Supreme Court removed the executor and appointed an independent trustee.

In Queripel v Shaddock (2023 ONSC 3114), the Superior Court of Justice of Ontario (the Superior Court) was asked to award punitive damages against an executor and require them to pass all accounts and assets to the new executor.

Lorali Queripel (the respondent) was the executor of her mother’s estate. Following her mother’s death in 2002, the respondent had no communication with any of the estate beneficiaries or their solicitor. In 2022, the solicitor asked the respondent for a passing of estate accounts and her agreement to be removed as executor. In June 2022, a court order required the respondent to pass the accounts, but she failed to comply. In December 2022, the court removed the respondent as the executor and replaced her with her brother, Clifford Shaddock.

The Superior Court has now heard an application for relief, requesting that the respondent pay damages caused while they were executor and for failing to comply with court orders, as well as the costs of the motion on a full indemnity basis. The application also required the respondent to comply with the court orders to pass accounts, transfer all estate assets and advise in writing of estate assets and debt.

The Superior Court found that the respondent had breached her fiduciary duties as estate trustee by failing to communicate with the beneficiaries and their solicitor, failing to provide estate accounting and failing to properly maintain the estate assets.

Accordingly, it awarded costs against the respondent, noting: “An award of punitive damages will communicate to those named as Estate Trustees that breaches of fiduciary duty, and a continuing failure to account or communicate with beneficiaries will be considered conduct that should be the subject of deterrence.”

Sources

• BC Courts
• Disinherited blog
• CanLII
• Wel Partners