When someone dies, it falls to their personal representative, i.e. the executor or administrator of their estate, to commence legal claims on behalf of the estate that the deceased could have advanced during their lifetime. If the deceased’s estate has a strong claim against another party that would increase the estate’s assets, the personal representative would normally initiate that claim. However, in some circumstances, the personal representative may refuse or be unable to initiate proceedings in the name of the estate. Commonly, this occurs where a conflict of interest arises, such as where the personal representative is the proposed defendant to the claim. These situations might include:
- The deceased transferred property to the personal representative prior to their death, or the deceased held property in joint tenancy with the personal representative, and there is a claim that the property was meant to be held in trust for the deceased’s estate.
- The personal representative held a power of attorney for the deceased or was a committee for the deceased, and they appear to have misused their authority.
- The deceased has a claim against a person who is a friend or family member of the personal representative.
- The deceased has a claim against a corporation where the personal representative is a director or shareholder.
What to Do When a Personal Representative Refuses to Initiate a Claim
In situations where a beneficiary or intestate successor (someone who inherits when there is no will) believes the deceased’s estate has a legal claim against another person or corporation and the personal representative has refused to commence that claim, according to section 151 of British Columbia’s Wills, Estates and Succession Act (“WESA”), the court can grant leave to that person to bring an action on behalf of the estate of a deceased person.
Under s. 151 of WESA, the court may grant leave to bring an action in the name of the estate if the person seeking leave:
- has made reasonable efforts to get the personal representative to commence the proceeding,
- has given notice of the application to the personal representative and other interested parties, such as co-beneficiaries, and
- is acting in good faith (they are not initiating the claim out of animosity or with an ulterior motive).
Furthermore, WESA s. 151(3) stipulates that the proposed proceeding must be “expedient” or “necessary”. An “expedient” proceeding is one that is in the interest of the estate, and a “necessary” proceeding is one that the will’s executor cannot or will not bring. The executor, for example, may not wish to bring an action because they have a conflict of interest. Finally, the beneficiary seeking to bring an action must show that they have an arguable case and that the potential relief justifies the inconvenience to the estate. A recent case, Terezakis v. Ekins 2018 BCSC 249, serves as one example where each of the foregoing requirements was met.
The Case of Terezakis v. Ekins
Terezakis v. Ekins involved the application of a deceased’s son for leave to bring an action on behalf of the estate. A mother passed, leaving behind two sons and a daughter. The daughter was named as the executrix of the will, which provided equal shares of the estate to each of the deceased’s three children. The deceased had two properties: one in Vancouver and the other in Richmond. She owned the Richmond property jointly with her daughter. The deceased had paid a $100,000 down payment on this property, which the daughter claimed was a dowry gift. After her mother’s death, the daughter transferred the Richmond property to her own name by the right of survivorship.
One of the sons claimed that the down payment and resulting joint tenancy were not dowry gifts. Instead, he maintained that their mother had intended to use the property to create a trust. That way, each of the children could benefit equally from the property. The son sought to bring an action to advance the claim that the property was held in a resulting trust for the estate. In short, the daughter asserted that the deceased’s estate had no interest in the property (and therefore should remain solely in her possession), while the son claimed that the deceased’s estate did have an interest in the property and that this interest ought to be split evenly between the deceased’s children.
The Court’s Ruling
The court, in this case, found that the son had made reasonable efforts, as required by WESA s. 151, to have the daughter return the property to the estate. The court also found that the son had given notice to his sister and brother of his intention to bring the claim and that he made the claim in good faith, further requirements under s. 151. Additionally, the court found the son’s claim to be “necessary” because the daughter of the deceased had a conflict of interest; she was the executrix of the will, a beneficiary, and the owner of the property that her brother claimed was held in trust for the deceased’s estate. If she had agreed to pursue her brother’s claim, she would be challenging her ownership of the Richmond property. The daughter had no desire to bring an action that would undermine her ownership interest in the property.
Finally, the court found that the son had an arguable case in his proposed action. The law regarding gifts dictates that when a parent makes a gratuitous transfer to their adult child, the court must presume that the parent intended to create a trust. So the onus would be on the daughter to prove that her mother intended the down payment as a dowry gift. The son was, therefore, successful in his application for leave to bring an action on behalf of the estate.
If you are a beneficiary or intestate successor under a will and the executor or administrator is refusing to bring a claim on behalf of the estate, you should consult an experienced lawyer for assistance.
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