Generally speaking, when a resident of British Columbia dies, the deceased’s will name a person to act as the executor of the deceased’s estate. This means that the executor will carry out the wishes of the deceased in accordance with the terms of the will, which includes the distribution of any assets bequeathed therein and payment of any debts or judgments of the estate outstanding at the time of death. But what happens if the estate executor, instead of making the distributions required under the will, decides to keep all of the assets for themselves or otherwise depletes the estate before you have received the monies you are entitled to from the estate? What if the amount owed arises as the result of a court action and is subject to an order of the court to pay such judgment? Such is the topic of this blog, in which we explore what steps can be taken to protect your interests if a rogue executor steals or otherwise subverts payment due to you by an estate.

Legal Case Commenced Before Death Engenders Payment of Judgment by Estate

Epic Restoration Services Inc. v Fuller involved a dispute over the proceeds of an estate. Litigation had been commenced by several parties against the deceased while he was still alive. A judgment was eventually rendered in 2023, several years after the deceased had passed, and it dictated that the deceased was liable to pay the applicants a certain sum of money each. When the deceased passed away, his estate contained sufficient assets to satisfy the legal judgments. However, the named executor of the estate, who is the son of the deceased and the defendant in these applications, failed to pay the applicants any of the monies owed to them in accordance with the judgment of the court.

As such, the applicants, who were the intended beneficiaries of the judgment, filed a claim against the deceased’s estate for payment of the judgments owed. In February 2023, the BC Supreme Court issued an order requiring the deceased’s estate to pay the damages owed from the legal judgment. The defendant, who is the estate executor, has thus far failed to pay the judgments, as he claims that insufficient funds remain in the estate to do so.

Failure to Pay Court Judgments Owed by Estate Gives Rise to Legal Action

As a result of the defendant’s failure to pay the judgments owed, the two parties each brought an application before the court for an order that the defendant be held personally liable for all outstanding amounts that were ordered by the court to be paid to them in respect of the distribution of the estate of the deceased. The applicants alleged that, in his capacity as the personal representative of the estate in question, the defendant came into possession of a property that comprised a substantial asset of the deceased’s estate. The property “alone was enough to satisfy the Judgments.” However, instead of paying the judgments to the applicants, the defendant transferred the property into his own name for personal use, thereby preventing the applicants from collecting their court judgments.

The applicants alleged that the defendant had breached his fiduciary duty as an executor of an estate “to act in the best interests of the estate and its beneficiaries,” as a consequence of which they sought order and declaration that the defendant was “personally liable” to the applicants for the judgments, an order that the property in question came into the defendant’s possession as a direct result of his position as executor of the deceased’s estate, and an order and declaration to register the judgment against the estate on title to the disputed property. Should the applicants be granted the orders sought, it would enable the applicants to sue the defendant in his personal capacity then to recover the damages owed.

The Legal Framework Applicable to Executor Obligations and Liabilities

Section 149(1) of the Wills, Estates and Succession Act (“WESA”) dictates that “a personal representative is liable, to the extent of the assets belonging to the estate that come into the personal representative’s possession or control, for the wrongful acts and omissions or breaches of legal duty of the deceased person, subject to this or any other enactment to the contrary.” The applicants contended that the defendant had inappropriately transferred ownership of a significant asset of the estate to himself to subvert payment by the estate of the court judgments owed to the applicants. On this basis, they sought to rely upon section 149 to recover damages from the defendant personally.

Section 150 of the WESA “provides a structure for allowing existing claims and causes of action against a deceased person to continue”; indeed, it was by section 150 that the original action against the deceased was permitted to continue against his estate after his death. However, subsection 150(8) provides that “[a]ll proceedings under this section bind the estate of the deceased person, despite any previous or subsequent appointment of a personal representative,” which indicates “that the existing proceeding only implicates the” estate, and does not implicate any individual person such as the defendant.

The court considered both provisions of WESA in the larger context of the legislation as a whole. It determined that there are two mechanisms by which an executor may be held personally liable for the trial order against an estate: by adding the executor in their personal capacity as a party to an existing action and amending the Notice of Civil Claim to specifically plead relief under section 149(1) of WESA or by commencing a separate legal action against the executor in their personal capacity.

Application of the Legal Principles to the Facts of this Case

In this case, the applicants were prevented from applying to add the defendant as a party in his personal capacity to the estate action because that action had already been concluded and a final order had been entered. As such, the first option to recover damages from the executor in his personal capacity was unavailable to the applicants in this case.

However, the second option, to initiate a proceeding seeking personal liability of the defendant under section 149(1) of WESA, remained available. The applicants would be allowed to commence a claim against the defendant in his personal capacity, but that is not what they did in these applications; rather, in these applications, they sought declarations that the defendant was personally liable to them. As such, the applicants had taken the incorrect approach to seek recovery from the defendant since they should have commenced a claim against the defendant in his personal capacity rather than seeking a declaration of his culpability. The applicants had not commenced the correct proceeding, so their application was dismissed. However, the court noted that if the applicants decided to pursue a claim against the defendant personally per section 149(1) of WESA, “I anticipate the likelihood of [the defendant] succeeding in such a subsequent proceeding as being very low.”

Contact the Vancouver Estate Litigation Lawyers at Meridian Law Group Today to Discuss Your Estate Litigation Needs

If you are experiencing difficulty with a problem executor or otherwise have questions about estate administration, including the duties and obligations of trustees and executors, or a dispute over a will or a trust, then you need effective legal counsel to ensure that your rights are preserved and interests protected throughout the course of any legal proceeding. Fortunately, Meridian Law Group is here to help.

From our offices in downtown Vancouver, British Columbia, Meridian Law Group is proud to provide knowledgeable, friendly, and capable legal advice to British Columbians throughout the province. To schedule a confidential consultation, contact us online or by telephone at (604) 687-2277.