Court Holds That Section 66 of the B.C. Estate Administration Act Only Applies to Debt Claims

I wrote a previous post "How to Shorten the Limitation Period for Disputed Estate Debts" in which I described Section 66 of the Estate Administration Act, RSBC 1996, c. 112. This section allows an executor or administrator to provided notice to a person claiming to be a creditor of the estate that the debt is disputed. The person making the claim must then start a court proceeding within six months of the notice, or if the debt is due later, within six months of when the debt is due. If the person making the claim does not sue in time, his or her claim is barred. This provision is quite useful in preventing people with questionable claims from holding up the estate administration for long periods of time.

The wording of section 66 refers to "creditors" and "debts," but does not refer to other types of claims. For example, if you are hurt in a car accident, and you sue the other driver for compensation, you are making a claim for "damages," and not for debt. On the other hand, if a bank lent the deceased money, its claim would be for a debt.

Until the Supreme Court of British Columbia decision last week in Battrum v. MacKenzie, 2008 BCSC 829, it was not clear--at least not to me--whether the ambit of section 66 was restricted to debt, or could be used to bar other claims after six months.

Mr. Justice Macaulay in Battrum held that section 66 notices only applies to debts. The Plaintiff in that case had sued the deceased, alleging that the deceased had acted negligently as a lawyer, and in a conflict of interest in receiving money from the plaintiff to buy shares of a company, which the plaintiff alleges, he never received.

After the deceased's death, his executor delivered to the plaintiff a section 66 notice. After the six months had elapsed, the plaintiff made an application to amend his claim to include additional facts that arguably supported different causes of action, including a claims based on fraudulent misrepresentation. The executor argued that the plaintiff could not raise new claims after the six months period had elapsed.

Mr. Justice Macaulay considered the wording of section 66, and the reference to "creditor" and "debt." He also noted that the Estate Administration Act at one time had a separate limitation period for other types of claims, but that provision has been repealed. He concluded that section 66 could only be used to limit claims for debt.

Although I can't find any fault in Mr. Justice Macaulay's reasoning, I think the result is unfortunate. Someone who makes allegations that the deceased had wronged him, but does not sue, can hold up the estate administration for years. Any executor who distributes the estate knowing that there is a claim, could be held personally responsible for paying the claim if it is successful. It is true most types of claims have limitation periods, but these can be for two, six or ten years. In the case of claims for damages for sexual assault, there is no limitation period in British Columbia.

As a practical matter, I have sent section 66 notices on behalf of executors to people with claims other than debt to press them to file their lawsuit in order to move things along. Usually, they file their claim within six months.

Section 146 of Bill 28, which was introduced in the Legislative Assembly this last session, but did not pass, would have replaced section 66 of the Estate Administration Act. The proposed new section was drafted more broadly to allow the executor or administrator to send a notice to "a person, other than a creditor, with a claim against the estate," as well as to a "creditor." The section uses the word "claim" in place of "debt." I hope this provision remains the same when the proposed new Act is introduced again in the Legislative Assembly.