Estate Litigation Update: Court refuses brother’s application for leave to recover estate assets

Estate litigation in British Columbia can be a complicated area. There are many procedural rules that govern the administration of and actions on behalf of an estate. The goodfirm Vancouver Estate Lawyers can help you navigate this confusing area.

In Fry v. Fry, 2018 BCSC 1018, a court refused to grant leave to a beneficiary to pursue a claim on behalf of the estate because the judge held that the applicant had not demonstrated he met the requirements under WESA.

Under section 151 of the Wills, Estates and Succession Act, SBC 2009 Chapter 13 a person who wants to start a court action on behalf of a deceased person to recover  assets that may have been wrongfully taken must get permission from the court. The brother had to seek leave to be of the court in order to pursue the claim against his sisters.

In order to be granted leave to start an estate litigation claim to recover assets or pursue action on behalf of the estate, the a person must have

(i)  made reasonable efforts to cause the personal representative to commence … the proceeding,

(ii) given notice of the application for leave to

            (A)  the personal representative,

            (B)  any other beneficiaries or intestate                                          successors, and

            (C) any additional person the court directs that                         notice is to be given, and

(iii) is acting in good faith, and

(b)  is necessary or expedient for the protection of the estate or the interests of a beneficiary … for the proceeding to be brought ….

A brother started an action against his three siblings alleging his sister mismanaged his parents affairs as his parents’ power of attorney and later as executrix of his mother’s estate. He brought an application to court for leave that was opposed by his siblings.

One of the preconditions for granting leave to commence estate litigation is that the person seeking leave must have made reasonable efforts to convince the personal representative/executor to commence the action. This is true even where the executor would be the intended defendant. Justice Milman found that “reasonable efforts” requires, at a minimum, that giving the executor notice of the request and the intended claim:

[54] Although I appreciate that an effort to cause the personal representative to commence an action against herself may not be a reasonable one, to paraphrase Wallace J., the WESA provision still requires, at a minimum, giving the personal representative reasonable notice of the request together with details of the nature of the claim that the applicant wishes her to pursue – even if the circumstances may be such as to make it impossible for the personal representative to commence the action herself.

[57]  In summary, I conclude that in a case such as this where the personal representative is an intended defendant, the applicant must, before commencing an action in the name or on behalf of the estate or seeking leave to do so:

(a)  inform the personal representative of the specific allegations being made; and

(b)  request that the personal representative take, or allow others to take, specific remedial action to address them.

Mr. Justice Milman found that by communicating with his sister through letters that he believed the estate had a claim against her and should take action was sufficient to meet the requirement of reasonable notice.

Mr. Justice Milman next considered the good faith component. He found that the brother’s evidence established that he was pursuing a claim in good faith and not out out of malice, despite the family history of acrimony. Like in many estate litigation claims, family relationships can be extremely emotionally charged.

He next considered the “necessary and expedient” requirement in accordance with the courts prior decision in Bunn v. Bunn Estate, 2016, BCSC 2146:

[50]      In my view, a proceeding may be “necessary” under s. 151 of WESA if the personal representative is unwilling or unable to proceed. It may be “expedient” if it is in the best interests of the estate.

[51]      In this case, the applicant is a beneficiary of the Estate and seeks the order under s. 151 of WESA on the basis that the claim, if successful, will increase the value of the Estate. In such a case, in my view, to satisfy the court that it should exercise its discretion to grant leave to commence litigation on behalf of the estate, the applicant must show not only that there is an arguable case, but also that the potential relief in the action is sufficient to justify the inconvenience to the estate of being involved in the action, and that proceeding is overall in the best interests of the estate. In my view, that must involve a consideration of the costs of proceeding, including the potential of a costs award against the estate if it fails. Further, in my view, in determining whether the proposed lawsuit appears to be in the best interests of the estate, the court can consider the strength of the proposed claim based on a limited weighing of the evidence.

The brother argued the action was necessary because his sister executor will not bring an action against herself to recover the assets and his claim will enhance the value of his mother’s estate. His sister argued that most of the allegations advanced by the brother should be dealt with at the passing of the estate’s accounts and that the only thing to be recovered are part of the proceeds of a sale for property.

Mr. Justice Milman held that the brother’s allegations against his sister were unsubstantiated and he had not adduced sufficiently compelling evidence to support them. The recovery prospects he held, were remote. Mr Justice Milman was also troubled by the lack of a workable litigation plan as the estate would incur unknown costs in litigating the matter. He also considered the fact that the 2 other siblings also opposed the application for leave to be compelling.

He concluded that the brother had not met the necessary and expedient component and refused the application for leave.

[90]        Another significant factor weighing against granting leave in this case is the fact that the two “neutral” beneficiaries adamantly oppose the application.  Although, as Michael argues, WESA allows for leave to be granted if the proposed action would be in the interest of “a beneficiary” rather than “all beneficiaries,” it would take a very compelling case to outweigh the opposition of the neutral beneficiaries, on whose behalf and at whose expense the action is proposed to be advanced.  This is not such a case.

[91]        I have therefore concluded that the condition in s. 151(3)(b) has not been satisfied.

If you need a lawyer to assist with an estate litigation matter, give the goodfirm Vancouver Estate Lawyers a call at 604.264.5550 to set up a free consultation.

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