Daughter Used Power of Attorney to Sell Mother's Home Before Probate - Estate Vested in Brother as Alternate Trustee

Browne v. Brown Estate, 2015 BCSC 28

Mr. Browne and Ms. Nicholson are the son and daughter of the deceased, Winnifred Elizabeth Brown.  Mr. Browne brought an application for an order that the Estate assets of his mother vest in his favour as executor and trustee.  The will had initially appointed his sister, Ms. Nicholson, as executrix and he as the alternate.  The will had divided the residue of the Estate equally between them, but the matter was complicated by the fact that Nicholson, using her Power of Attorney, sold the Estate's major asset, their mother's home, without obtaining probate (~$725,000).  Nicholson then took the net proceeds from the sale and placed them in her own bank account, paid off her husband's line of credit and deposited the balance in two investment accounts.  Mr. Browne disputed the actions of his sister.

Mr. Browne obtained orders that she be removed as executrix, based on a conflict of interest (she made a claim as creditor of the estate), and froze her investment accounts.  Mr. Browne was appointed as executor and trustee of the will and was issued a grant of probate, but Ms. Nicholson had not transferred the assets of the Estate to him.  

HELD:  The court granted Mr. Browne's application and dismissed that of Ms. Nicholson.  

The court provided an order vesting all property of the Estate in Mr. Browne's name as executor and trustee.  No further vesting order was strictly required and it was granted given Nicholson's refusal to transfer the Estate assets to him.  The freezing order on the accounts was accordingly lifted with the assets of the Estate in the investment accounts in Nicholson's name transferred to Brown as executor and trustee of the Estate.  

The freezing of the accounts by the previous judge was to remain in place until a final determination of the identity of the executor was made.  As Mr. Browne was identified as the executor and trustee, the matter was resolved.  It would be inconsistent with Mr. Browne's status as executor and trustee to allow Ms. Nicholson to continue to retain the Estate assets in accounts under her name.  Accordingly, the freezing order was lifted and an order put in place to transfer the assets of the Estate to Mr. Browne.  The purpose of the orders were to put Mr. Browne in a position in which he would be able to discharge his responsibilities.  

Nicholson was also ordered to produce all accounts related to her dealings in the proceeds of the sale of their mother's property.  Mr. Browne received a grant of probate in his favour.  

Vesting Order

[21]        By virtue of the decision of Gropper J., Mr. Browne is the executor and trustee of the Will. Under the terms of the Will, all property of the Deceased is bequeathed to the Trustee upon stipulated trusts.

[22]        At common law the executor derives title from the will: Sustrik Estate v. Floyd, 2005 ABQB 880 (CanLII)Section 102 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 provides:

102      …

(2)        The estate of a deceased person vests in the person’s personal representative when the personal representative assumes or is appointed to that office.

[23]        I would have thought that no further order was required to effect the vesting of the assets of the Deceased. However in the present case, notwithstanding the decision of Madam Justice Gropper, Ms. Nicholson has refused or neglected to transfer the assets of the Estate to Mr. Browne. In the circumstances the vesting order sought is appropriate.

Order of Chief Justice Hinkson

[24]        The freezing order of the Chief Justice, by its terms, was to remain in place until a final determination of the matters at issue in the petition. The matter at issue in the petition was the identity of the executor and trustee under the Will. That matter has been determined. Therefore, it would appear to be consistent with the terms of the freezing order that it be lifted.

[25]        By virtue of the decision of Gropper J., Mr. Browne is the executor under the Will. As noted above, a necessary implication of that determination is the vesting of the assets of the Estate in Mr. Browne. For Ms. Nicholson to continue to retain Estate assets in accounts registered in her name is, in my view, inconsistent with Mr. Browne’s status as executor and trustee.

[26]        Ms. Nicholson has submitted that the freezing order should remain in place until such time as her claim as a creditor of the Estate has been resolved. However, in my view that would be inconsistent with the terms of the Chief Justice’s order since a determination of Ms. Nicholson’s claim as a creditor of the Estate was not a matter at issue in the petition.

[27]        Accordingly, the order of Chief Justice Hinkson dated November 18, 2013 is lifted. The assets of the Estate in the name of Linda Nicholson at BMO Nesbitt Burns in the accounts named in the freezing order are to be transferred to Wayne Browne as executor and trustee of the Estate.

[28]        The application of Ms. Nicholson to continue the freezing order is dismissed.

Document Production

[29]        One of the primary duties of an executor and trustee under a will is to schedule all of the deceased’s assets and ascertain their value.

[30]        In the present case, while Ms. Nicholson was the executrix and trustee under the Will she undertook several transactions with respect to the assets of the Estate. These transactions were referred to in the reasons of Gropper J., namely: depositing the net proceeds from the sale of the Deceased’s home into a bank account in her name, applying one-half of the net proceeds against her husband’s line of credit, and depositing the balance into two BMO Nesbitt Burns investment accounts registered in her name. In addition, Gropper J. referred to cheques totalling $62,000 payable to Ms. Nicholson which were drawn on the Deceased’s bank accounts at TD Canada Trust.

[31]        In my view, in order for Mr. Browne to discharge his duties as executor and trustee, he will need to have proper disclosure from Ms. Nicholson with respect to her dealings with the assets of the Estate during the time that she was the executrix and trustee. While Ms. Nicholson resisted this relief in her application response, she consented at the hearing to the order sought.

[32]        Accordingly, Ms. Nicholson will be required to produce:

(a)      all statements from any accounts into which the proceeds of the sale of the property at 190 South MacDonald Avenue, Burnaby, British Columbia, were originally deposited (the “Original Accounts”) from April 15, 2011 to the present; and

(b)      all statements from any accounts into which funds from the Original Accounts flowed subsequent to the transfer of the moneys referred to in (a) above from the date of transfer to the present.

Orders Sought by Ms. Nicholson Regarding Probate

[33]        Ms. Nicholson has sought an order deeming the materials she filed in support of the probate of the Estate to be the materials filed by Mr. Browne in support of his application for probate or, in the alternative, for an order that Mr. Browne provide his accounting of the Estate within 14 days.

[34]        As noted above, Mr. Browne has not been able to undertake his duties with respect to the assets of the Estate. The purpose of the orders discussed above is to put him in a position in which he will be able to discharge these responsibilities. A grant of probate has been issued to Mr. Browne. There is no reason to believe that once he is in a positon to fulfill his responsibilities he will not do so in a diligent fashion. I decline to make the orders sought.

Registrar’s Hearing

[35]        Ms. Nicholson seeks an order referring her claim against the Estate to the Registrar and that the Registrar’s determination be a binding determination of the claim against the Estate. Mr. Browne does not consent.

[36]        The executor has the duty to ascertain the liabilities of the estate. If the executor disputes a claim against the estate in whole or in part, the remedy of the creditor is to sue the estate. Mr. Browne submits that Ms. Nicholson has not produced sufficient documentation with respect to her claim as a creditor. Therefore, he is not in a positon to ascertain that claim as an executor. In addition, Mr. Browne notes that Ms. Nicholson cites no authority for a reference to the Registrar in these circumstances.

[37]        There has clearly been inordinate delay and considerable cost associated with the administration of this relatively modest estate. It is clear that Ms. Nicholson intends to advance a claim as a creditor of the Estate and that such claim must be resolved. It is also clear that the resolution of such a claim will result in further delay in the administration of the Estate.

[38]        However, while a reference to the Registrar holds the promise of a speedy and cost-efficient resolution to this issue, I have concluded that it is not appropriate to make the order sought in the circumstances. First, such an order represents an encroachment on the responsibility of the executor that is unwarranted in the circumstances. In addition, Gropper J. described the state of the accounting for the claim at the time of the hearing as “at best cursory”, stating at para. 51 that “the amount claimed by Ms. Nicholson from the estate is significant with only vague support.” In the circumstances I am not satisfied that a reference to the Registrar is the most appropriate way to deal with the claim.

Costs

[39]        Mr. Browne has been successful and is entitled to his costs.

Disposition

[40]        In the result, I have made the following orders:

(a)      The vesting order sought by Mr. Browne is granted;

(b)      The freezing order of Chief Justice Hinkson is lifted; and

(c)        Ms. Nicholson is required to produce:

(i)         all statements from any accounts into which the proceeds of the sale of the property at 190 South MacDonald Avenue, Burnaby, British Columbia, were originally deposited (the “Original Accounts”) from April 15, 2011 to the present; and

(ii)        all statements from any accounts into which funds from the Original Accounts flowed subsequent to the transfer of the moneys referred to in (a) above from the date of transfer to the present.

[41]        Ms. Nicholson’s application is dismissed.