A case review of Kajaks Estate, Re1
In Kajaks Estate, the deceased named his stepson as executor. There were no distributions for eight years. At that point, pursuant to a court application, the executor was ordered to make interim distributions of $100,000 to each of the applicants. While the residuary beneficiary received an interim distribution, the applicants did not. The applicants went back to court and sought to find the executor in contempt of the previous order and to remove him for delay.
Before canvassing the finding of the judge hearing the Kajaks Estate case, let’s review the law.
Removal of Executor – Generally
The court has the inherent jurisdiction to remove trustees.2 Section 37(1) of the Trustee Act permits the court to remove executors on any grounds upon which the court may remove any other trustee.3 Likewise, s. 5 of the Trustee Act permits the court to substitute a new trustee. An application to remove the executor may be made by any person interested in the estate of the deceased.4
The court considers several common-law principles when determining whether to remove an executor. These principles were considered in Radford v. Radford Estate, and distilled in Bergmann v. Amis:5
- the court should not lightly interfere with the testator’s discretion in choosing an executor for her estate;
- interfering with the testator’s discretion and choice in preparing her last will and testament must not be not only well justified, but must amount to a case of clear necessity;
- removal of an estate trustee should only occur on the clearest of evidence that there is no other course to follow;
- in deciding whether to remove an executor, the court’s main guide should be the welfare of the beneficiaries;
- it must be shown that the non-removal of the executor will likely prevent the proper execution of the trust; and
- the removal of an executor is not intended to punish for past misconduct; rather, it is justified on the basis that past misconduct is likely to continue and that the estate assets and the interests of the beneficiaries must be protected.
In common law, there is a centuries-old practice of giving executors twelve months from the deceased’s death to wind up the estate.6 This “executor’s year” is intricately related to the assessment of whether the executor has engaged in undue or unreasonable delay. However, while it is the practice to consider the executor’s year when determining whether unreasonable delay has occurred, some courts have not thought that such a rule served any purpose, particularly so where those complaining about the delay are also seeking to attack the validity of the will that grants the executor authority to act.7
Removing an Executor – Delay
Delay is a common basis for interested persons to remove an executor. In those cases, the question becomes whether the delay has compromised the estate in any manner and whether it will be repeated.8
Prejudice to beneficiaries may result simply because the executor has delayed distributions to the beneficiaries. For example, in Oldfield v. Hewson, 2005 CarswellOnt 405 (“Oldfield ”) the court removed the executor, partially due to the fact that the executor had not administered the estate for over 7 years since the deceased’s passing, which was coupled by a finding that a breach of trust occurred.9
Taken alone, however, delay is not necessarily sufficient to remove an executor where such delay was not willful or detrimental to the estate or beneficiaries. In Weinstein v. Weinstein,10 the British Columbia Supreme Court found that while the executor had procrastinated in his duties and delayed in his performance, the executor had not wilfully neglected the interests of the beneficiaries, nor did he jeopardize any part of the capital of the estate.11 The British Columbia Court of Appeal allowed the appeal of this decision and removed the executor for conflict of interest reasons after considering fresh evidence.
An executor may be removed preemptively where the disposition of the executor will necessarily delay the proper administration of the estate. In Leary v. Jewett, the deceased’s will appointed the deceased’s four children as executors. One of the children, then 48 years old, had a history of “aberrant behaviour” connected to substance abuse, and was diagnosed with significant mental illnesses.12 While the judge was unable to make any conclusions about the executor’s mental condition absent psychiatric evidence, it was clear that the executor’s consistent behaviour rendered hopeless any attempts for a proper administration of the estate.13
Consideration should also be given to whether the delays have been reasonably explained and, if so, whether they should be excused.14 In St. Joseph’s Health Centre v. Dzweikowski, the court found that the subject delay could be explained by a combination of mishaps and misfortunes by the executor.15
Removal of Executor – Non-Action
“Non-action” is a closely related but critically distinct difference from “delay”. In cases of non-action, the executor is unwilling or unable to carry out the terms of the estate.
Again, the court will largely consider the welfare of the beneficiaries when determining whether to remove an executor for non-action. The omissions of the executor must be such as to endanger the trust property, or to show a want of honesty, or a want of proper capacity to execute the duties, or want of reasonable fidelity.16
An executor’s failure to take any action, as opposed to delay, may be more likely to directly put the executor’s duties to the estate and beneficiaries in question. For example, in Derrick, Re,17 tthe widow of the deceased sought to remove the executor of the estate, who lived a few hours away from where the estate held significant properties. In that case, the court found that the nature of the assets of the estate is such as to need constant care and attention, but that the executor had not appreciated the responsibility of his position as executor, or the necessity of due and prompt fulfillment of the duties thereof.18
According to the court in Derrick:19
…Though living a distance from Toronto, there is nothing in the material to show that he has had anyone in Toronto in charge of the assets, except perhaps the succession duty department which is receiving payments on mortgages held by the estate. The executor has not appreciated, and does not appreciate, the responsibility of his position as executor, or the necessity of due and prompt fulfilment of the duties thereof….….
Non-action may also occur where multiple executors of an estate cannot agree, and may prompt a removal of one of the executors. In Virdo v. Virdo,20 tthe deceased appointed his four children as estate trustees of his estate.21 The estate remained unadministered after 5 years and 4 months due to children’s inability to agree on the sale of the deceased’s home.22 Anna, one of the executors, lived rent free in the home and refused to sell it.23
The court in Virdo ordered that Anna be removed as an executor of the estate. According to the judge, “[t]he evidence is clear that Anna has obstructed the proper administration of the Estate, favouring her own self interest in continuing to live rent-free in the house”.24 In this sense, the reasons behind the executor’s non-action to administer the estate reflected a conflict of interest between the executor and the beneficiaries.
Delays and Non-Action in the Estate Administration Process
Administering an estate involves numerous steps and, consequently, provides numerous opportunities for delay and non-action. These tasks include the following:
- Compiling preliminary materials (original will and affidavit in execution, proof of death certificate, other contracts affecting the will, contact information of the beneficiaries, etc.);
- Determining and appraising the assets of the estate (obtain list of assets and valuations if necessary, close the safety deposit box, and send letters to the deceased’s banks to enquire of other assets owned at death);25
- Prepare probate application;26
- File Terminal T-1 and T-3 Income Tax return, receive Notice of Assessment and apply for Clearance Certificate;27
- Pay necessary bills and invoices on behalf of the estate;28 and
- Make interim and final distributions to beneficiaries.29
It is quite possible that the failure to complete any of the above within a year could constitute unreasonable delay or non-action. This possibility decreases the more complex the estate. Now that we have reviewed the law let’s see what the judge decided in the Kajaks Estate case.
Decision of Sigurdson J. in Kajaks Estate
The court granted the application and removed the executor. The key issue was the welfare of beneficiaries. While the delay did not warrant a finding of contempt,30 there was no reason why the estate remained undistributed for the nine years since the deceased’s death. Clearly there was prejudice to the applicants – they were without their money unnecessarily for nine years. In fact, one of the beneficiaries had already passed. Key to the Court’s decision was the finding that the agenda of the executor was to hold back the distribution to persuade the applicants to vary the will so that his children would get ½ of the estate. This decision was not about punishment of an executor who refused to do his job. It was a recognition by the court that the executor would not properly administer the estate in the future.
Undue delay and non-action may be bona fide reasons for a court to utilize s. 37(1) of the Trustee Act and its inherent jurisdiction to remove an executor. The fact that significant delay has occurred can be enough to affect the welfare of the beneficiaries. The dispute may focus on a specific task that the executor has delayed or failed to take, or may be considered in light of the executor’s overall failure to administer the estate in a timely manner.
However, undue delay is not necessarily a sufficient basis to remove an executor if such delay has not adversely impacted the welfare of the beneficiaries. In this sense, the courts will consider whether the executor’s delay was due to willful neglect, and whether such delays can be reasonably explained.
Nor will courts overlook the principles enunciated in Radford or the common-law executor’s year. Courts will not lightly interfere with the testator’s discretion in choosing an executor, and will only remove the executor in the clearest of cases. Any delay or non-action within the executor’s twelve-month grace period is less likely to attract scrutiny, unless of course certain tasks must be completed within that year.
An executor’s blatant non-action in administering the estate is more likely to persuade a court that the executor should be removed. In these cases, the executor’s outright refusal to fulfill its duties, whether by willful neglect, disagreements between the executors, or otherwise, are more likely to affect the welfare of the beneficiaries and are less likely to be reasonably explained. Such non-action also appears more likely to put the executor’s duties to its beneficiaries directly in issue, and may reflect a conflict of interest that warrants the executor’s removal on a distinct basis.
Delay alone will not warrant the removal of an executor. The key will always be whether removal of an executor, as was found in Kajaks Estate, is in the best interests of the beneficiary. To that end Courts will not punish an executor because of the delay. Courts will remove an executor if the past performance is an indicator of future performance that will hurt the beneficiaries..
- 2016 BCSC 651, 2016 CarswellBC 1014 (“Kajaks Estate”). ↵
- St. Joseph’s Health Centre v. Dzwiekowski, (2007) O.J. No. 4641 (Ont. S.C.J.) (“Dzwiekowski”); Radford v. Radford Estate, (2008) O.J. No. 3526 (Ont. S.C.J.) (“Radford”); Waters’ Law of Trusts in Canada, 4th ed, (Toronto: Thomson Carswell, 2012) Ch. 16, s. III at 897. ↵
- Trustee Act, R.S.O. 1990, c. T.23, (“Trustee Act”) s. 37 (1). ↵
- Trustee Act, s. 37(3). ↵
- Bergmann v. Amis, 2009 CanLII 66389 at para 33. ↵
- Rivard v. Morris, 2018 ONCA 181 (“Rivard”) at para 22. ↵
- Radford. ↵
- Radford at para 108. ↵
- Oldfield at paras 26 and 27. ↵
- Weinstein v. Weinstein (1995), 9 E.T.R. (2d) 34 (B.C. S.C.) (“Weinstein”), reversed (1996), 13 E.T.R. (2d) 227 (B.C.C.A.). ↵
- Weinstein at para 22. ↵
- Leary v. Jewett, 2005 CarswellOnt 1212 (“Leary”) at para 2. ↵
- Leary at para 3. ↵
- Radford at para 109. ↵
- Dzwiekowski at para 33. ↵
- Bergmann v. Amis Estate, 2009 CarswellOnt 7436 at para 29. ↵
- Derrick Re, (1936) O.W.N. 223 (Ont. H.C.) (“Derrick”). ↵
- Derrick. ↵
- Derrick. ↵
- Virdo v. Virdo, 2013 ONSC 5877 (“Virdo”). ↵
- Virdo at para 1. ↵
- Virdo at para 2. ↵
- Virdo at para 11. ↵
- Virdo at para 25. ↵
- For example, see Radford at paras 52-53 and 69, where the applicant complained that the executor delayed in providing appraisals for real estate and a vehicle. ↵
- For example, see Marino v. Marino Estate, 2002 CarswellOnt 3705 at para 7, where the executors were removed in part for delaying the probate application for their deceased father’s estate. ↵
- Oldfield at paras 8 and 16. In that case, the deceased’s income tax returns, which should have been filed no later than April 30, 1998, were not filed until September 2000. Tax returns for subsequent years were also filed late resulting in penalties and interests. ↵
- Oldfield at para 8; ↵
- For example, in Oldfield at paras 8 and 26, as indicated earlier in this blog, the executor had not yet administered the estate and distributed the deceased’s property to the beneficiaries for seven years since the deceased’s passing. ↵
- The original order did not put a time frame for the distribution so it was not actually ignored. ↵