Estate Litigation Removal of Executor

Estate Litigation Removal of Executor cases involve the removal of an executor for good reason. Generally speaking, a will-maker’s discretion to appoint an executor of his or her choice will not be lightly interfered with by the Courts. However, there are certain circumstances in which a Court will step in and remove an executor of an estate. In all such cases, the primary guiding principle is the welfare of the beneficiaries. Our Vancouver probate dispute and Surrey estate litigation lawyers handle all kinds of estate disputes and in today’s blog, Joty Sandhu explains the grounds for removing an executor of a BC estate.

In Estate Litigation Removal of Executor cases, Courts may remove an executor -trustee under the following three authorities:

1. Section 158 of Wills, Estates Succession Act;
2. Section 30 of the Trustee Act; and
3. the inherent jurisdiction of the court.

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Section 31 of the Trustee Act also gives the court authority to appoint an executor -trustee if the executor-trustee is removed.

Test for Removal of an Executor-Trustee

Not every act of misconduct by the executor will result in removal in Estate Litigation Removal of Executor cases. The test to be applied on applications to remove an executor-trustee is found in the BC Court of Appeal case, Conroy v. Stokes, (1952), 6 W.W.R. (N.S.) 204 (B.C. C.A.). In Conroy, the issue was whether trustees appointed under a will should be removed from office and a new trustee appointed under the Trustee Act. The Court held that to warrant such an intervention there must be a finding that the conduct of the named trustee has:

1. endangered the trust property, or has shown a
2. want of honesty, or
3. want of proper capacity to execute the duties of the office, or
4. want of reasonable fidelity.

This Conroy test was adopted from Letterstedt v. Broers (1884), 9 App. Cas. 371 (South Africa P.C.). In addition to the legal test, at p. 386 the Court in Letterstedt states, “It must always be borne in mind that the trustees exist for the benefit of those to whom the creator of the trust has given the trust estate”, and at p. 387, “In exercising so delicate a jurisdiction as that of removing trustees, their lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries.”

Therefore, in all cases of this nature, the fundamental guide must be the welfare of the beneficiaries (Letterstedt).

Grounds for Removal – Examples:

1. Conflict of Interest

If there is a conflict of interest between the executor’s duty to the estate and his/her personal interests, a beneficiary may have grounds to remove the executor as it amounts to “want of reasonable fidelity” in Estate Litigation Removal of Executor disputes. For example, in the context of a trust, in Miles v. Vince, 2014 BCCA 289, in making a loan, a trustee was in a conflict of interest because if she demanded payment on the loan, it would put real estate development of the trust at risk.

2. Unreasonable Delay and Failure to Distribute an Estate

Where an estate is relatively straightforward and a significant amount of time has passed, a beneficiary could remove an executor for failing to distribute the Estate promptly. For example, in Dirnberger Estate, 2016 BCSC 439, the estate did not include any real property or any companies. There were only two European bank accounts that had been closed and the funds were in Canada. The testator (will-maker) had died four years ago and the estate had yet to be distributed. The Court concluded in this Estate Litigation Removal of Executor case that the named executor lacked the necessary capacity to act as trustee and clarified that this did not mean legal capacity, but rather, the named executor demonstrated an inability to perform his duties as administrator of the estate and was therefore removed.

5. Misconduct

The main guide in exercising the Court’s discretion to remove trustees in Estate Litigation Removal of Executor disagreements is the welfare of the beneficiaries. It is not the interests of a particular beneficiary that are to be considered, but rather the benefit of the beneficiaries collectively. For example, in Nieweler Estate, 2019 BCSC 401, there are several instances in which the co-executor misconducted herself, warranting her removal. The co-executor (a) withdrew substantial amounts of cash from bank accounts without authorization or disclosure to the other 2 co-executors and beneficiaries (her brothers); (b) refused to  sell one of the estate properties unless the other executors agreed to unreasonable and unrelated conditions; (c) intentionally sabotaged a sale of the property; (d) moved into a property and changed the locks and refused to provide keys to the other co-executors; and (e) lied to the bank who granted a mortgage and essentially invited them to foreclose on the property.

6. Endangering Trust Property

An executor of an estate has a statutory obligation to act as a prudent investor of estate property. If an executor wastes an asset or imprudently invests the Estate’s assets, the executor may be removed. In Miles v. Vince, the trustee made a loan from one trust (the Insurance Trust) to another related trust (the Family Trust). She did not assess the appropriate level of risk for the Insurance Trust or whether diversification of investment of assets of the Insurance Trust was necessary to preserve trust assets. Therefore, in her capacity as the trustee of the Insurance Trust, she failed to protect the interests of all of the beneficiaries of that trust. By investing all the property in the Family Trust, she put the Insurance Trust at risk. Therefore, the Court of Appeal removed her as a trustee.

7. Executor not responsive or unwilling to carry out duties unless compensated first

If an executor makes his/her compensation a prerequisite to their response, or duty to act, it demonstrates a want of reasonable fidelity because the Executor is putting their interests ahead of the interests of the beneficiaries. In Estate of Forbes McTavish Campbell, 2015 BCSC 774, the Court removed the named co-executor and found that in insisting on compensation from his co-executors as a prerequisite to communication, the named co-executors behaviour constituted a serious breach of his duties as a trustee in this Estate Litigation Removal of Executor application.

8. Hostility Between Co-Executors

Courts are generally less reluctant to remove a co-trustee where unanimous decision making is required among co-executors in Estate Litigation Removal of Executor contests. In cases where there is conflict among the trustees themselves by which the trust administration grinds to a standstill or otherwise hampers the proper administration, the courts will tend to remove one or more of them. In those instances, misconduct is not an essential prerequisite, therefore hostility between the co-executors will suffice as a ground for removal (Consiglio, Re (1973), 36 D.L.R. (3d) 658 (Ont. C.A.) cited in Wilson v. Heathcote, 2009 BCSC 554 (B.C. S.C.).203).

9. Hostility between the Executor and Beneficiary

Generally, the existence of dissension or friction between the trustee and one or more of the beneficiaries is usually not sufficient, of itself, to justify the removal of the trustee. There must be evidence of positive misconduct on the part of the executor-trustee, or evidence that the executor-trustee acted in a manner that endangers the estate or that the executor acted dishonestly, without proper care, or without reasonable fidelity (thus meeting the Conroy test). That said, an executor’s hostility towards a beneficiary may be relevant in cases where the trustee has broad discretionary powers. For example, in Sheppe v. Harlingten, 2018 BCSC 1460, the trustee had powers that allowed him to deal with trust property in almost every respect as if it was his own. The Court took this into account when making its decision to remove the executor of the estate. Moreover, the existence of animosity between an executor and a beneficiary will not be ignored where the executor’s hostility is express and overt. The Executor in Sheppe v. Harlington made several inappropriate comments in an email to a beneficiary. Although the Court appreciated that the comments may have been made in the heat of anger, it found that they are likely to have damaged the relationship between the trustee and the beneficiaries beyond repair and thereby interfere with the proper administration of the Trust. Therefore, the removal of the trustee was necessary.

The above-mentioned cases demonstrate that if an Executor of an Estate is not properly administering the estate and acting in the best interests of the beneficiaries, there may be grounds for removal. If you’re concerned about an Executor’s management of an estate in which you have an interest, call the respected Surrey estate litigation lawyers at MacLean Law to determine how best to address the issue.

Our Estate Litigation Removal of Executor lawyers act across BC and in Calgary Alberta.