Can anyone else make a claim that someone owes the estate money, or that certain assets are estate assets?
The courts have considered this question in several cases in British Columbia in the last few years. In some cases, the courts have said, sometimes quite emphatically, that only an executor or administrator may make a claim on behalf of an estate. See, for examples, Larsen v. Larsen, 2004 BCSC 284, Engel v. Engel, 2005 BCSC 33, and Lloyd v. Bloomingdale, 2005 BCSC 1806.
In other cases, the courts have allowed a beneficiary, or even a person who was making a Wills Variation Act claim, to assert a claim that the estate is entitled to assets held by someone else. Examples of these cases, include Boltezar v. Roblin, (February 7, 1999) Vancouver Registry No.A963619, Nietsche v. Nietsche, 2007 BCSC 172 (which I wrote a post about here), and Doucette v. McInnes, 2007 BCSC 289.
Can these cases be reconciled? With the exception of Lloyd v. Bloomingdale, I think they are reconcilable.
The executor (or court appointed administrator if there is no executor) has the responsibility of gathering in the estate assets, paying the liabilities, and dealing with third parties in the administration of the estate. The usual rule is that only he or she may make claims on behalf of the estate. Were this not so, several beneficiaries could each start lawsuits purporting to make claims on behalf of the same estate. This rule is set out in section 14 of the Estate Administration Act, RSBC 1996, c. 122.
But, what happens if a beneficiary, or someone claiming a share of an estate under the Wills Variation Act, RSBC 1996, c. 490, says that the executor has received assets that belong to the estate? The executor cannot sue himself or herself. The person making the claim could apply to have the executor removed, and a different person appointed as administrator. But this is cumbersome, expensive, and in some cases there may be no one who is willing and able to act as administrator in the circumstances.
In Doucette v. McInnes, decided earlier this week, Wayne Doucette was claiming a greater share of his mother’s estate under the Wills Variation Act. His mother had joint accounts with each of her three other children, two of whom were his executors. Mr. Wayne Doucette claimed that the executors were holding the funds they received from joint accounts. The executors argued that, because Wayne Doucette was not the executor, he did not have the right to make a claim to the joint account on behalf of the estate. Madam Justice Dorgan allowed Wayne Doucette to proceed with the claim. She said at paragraph 21,
It seems to me that if only executors are allowed to bring claims to challenge joint tenancies, potential challenges may be compromised. An obvious conflict of interest exists where the executor and testator hold an asset in joint tenancy, as the executor would have little reason to treat the asset as a resulting trust rather than as a gift. Arguably, this conflict is not as significant where another person is a residuary beneficiary, because the executor would have a duty to account to that person for the whole of the estate. However, if a legatee’s challenge could be set aside even where brought under the Wills Variation Act, then an executor, rather than the courts, would effectively have the final word on whether a particular jointure was a gift rather than a trust.
This is not a new issue. In Beningfield v. Baxter (1886), L. R 12 H.L. 167, the Earl of Selbourne, in the Privy Council on appeal from Natal, wrote at pp. 178-89,
The first question which arises is, whether the plaintiff not being executrix, and not having any specific interest in the Equeefa estate, could sue to set aside that purchase. Their Lordships have no doubt that she could. When an executor cannot sue because his own acts and conduct, with reference to the testator’s estate, are impeached, relief, which (as against a stranger) could be sought by the executor alone, may be obtained at the suit of a party beneficially interested in proper performance of his duty: Travis v. Milne (1).
I am not aware of any B.C. cases that have expressly adopted the Earl of Selbourne's reasons, but I think he articulated the principle well.