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BC Estate Litigation: Can a Notice of Dispute Be Removed?

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  • BC Estate Litigation: Can a Notice of Dispute Be Removed?

When a will fails to make adequate provision for the direct family members, can the adult children bring a claim for division of family assets against the deceased parent, or a BC estate law claim for variation of the will?

Validity of the will

After a person’s death, if there is a dispute with respect to the validity of the will or there are concerns about the executor’s ability to administer the estate fairly due to a conflict of interest, for example, the grant of probate to permit the administration of an estate can be temporarily blocked by filing a notice of dispute. In a recent BC estate litigation matter, Mortimer v. Bender, 2020 BCSC 483, the court clarified issues relating to notices of disputes, and in particular, when the court may order the removal of a notice of dispute where its filing was not in the best interests of the estate.

BC litigation lawyers discuss filing a notice of dispute to thwart the estate grant

After a person’s death, the executor named in the will can apply to BC courts for a grant of probate under Part 25 of the Supreme Court Civil Rules. A grant of probate or “estate grant” is necessary to allow the executor to move forward with administering the estate. In the majority of situations, the application for a grant of probate proceeds without objection. If beneficiaries or other interested parties wish to contest the issuance of the estate grant, a Notice of Dispute under Rule 25-10 can be filed. Once filed, a Notice of Dispute effectively pauses any advancement of the administration of the estate, as the registrar is not permitted to issue an estate grant while a Notice of Dispute is in effect. A Notice of Dispute is valid for one year after it is filed, the idea being that the administration of an estate should not be unduly delayed – the parties must either settle disputes or commence BC estate litigation to deal with outstanding issues within that year.

Challenging an executor: Notice of dispute filed in BC estate litigation matter

In this recent BC estate litigation matter, a dispute arose following the 2018 death of Antonia, a widow with three adult children: Maria, Rita, and Mickey. In 1994, Antonia had begun to suffer memory loss. By 1997, her memory had worsened, and she had a probable diagnosis of Alzheimer’s disease. In 1997, Antonia executed an enduring power of attorney (“POA”), appointing Maria as her sole attorney. Antonia’s last will and testament, prepared in 1988, named Maria as sole executor and provided for the estate to be divided equally among Antonia’s three children. After Antonia’s death, Maria applied for a grant of probate to administer her mother’s estate. Shortly thereafter, Rita filed a Notice of Dispute, seeking to have Maria passed over as executor. Rita questioned the propriety of certain transactions done under the POA that benefited Maria and Mickey, and alleged that Maria failed to properly account for her dealings with Antonia’s assets in her capacity as attorney. Rita also commenced BC estate litigation against Maria and Mickey, alleging, among other things, undue influence and breach of fiduciary duty, and seeking to have Maria removed or passed over as executor due to conflict of interest arising from her position as both attorney and executor.

Application to remove notice of dispute in recent BC estate litigation matter

Maria applied under Rule 25-10(10) to remove the Notice of Dispute, taking the position that the notice of dispute was not in the “best interests of the estate” pursuant to Rule 25-10(11). In considering Maria’s application, Justice Tucker clarified several issues pertaining to Notices of Dispute in BC estate litigation:

  • The court has been given broad discretionary power to deal with the issues underlying a Notice of Dispute efficiently and to make related orders that will prevent notices from unduly inhibiting administration.
  • Proof of a will in solemn form is a basis for cancelling a Notice of Dispute, but that does not mean that Notices of Dispute are limited to situations where the validity of the will is contested. The relevant question is not whether the Notice of Dispute challenges the will, but whether it opposes the issuance of a representation grant.
  • While it is true that a personal representative can be “removed” after a grant of probate, the Rules also expressly contemplate “passing over” someone who is not yet a personal representative (in other words, before the certificate of appointment is issued).
  • In determining the “best interests of the estate” the court should consider anything relevant to the estate’s interests in the circumstances, including economic and non-economic issues. An economic issue is one requiring the weighing of the value of a decision or issue in dispute with the overall value of the estate. An example of a non-economic consideration that can be important to the best interests of the estate is an issue involving personal items or real property that has unique value.

Removing notices of dispute in BC: Weighing the economic issues

Justice Tucker determined that it was appropriate to order removal of the Notice of Dispute. It was not in the best interests of the estate to permit further delay in winding up of the estate. Antonia’s estate had a value of approximately $1.5 million, comprised of monies already held in a lawyer’s trust account and a parcel of vacant land assessed at about $1,280,000. The latter was incurring taxes and generating no income. Rita sought to pass over Maria in favour of a professional trustee, but that would involve a considerable cost and provide little of value to such an estate. Justice Tucker held that Maria was capable of doing the estate’s tax filings and capable of selling the property. Maria had every incentive to realize as much as she could for it given that she is the residual beneficiary of one-third of the estate. The same was true regarding the investment of estate monies. Justice Tucker granted Maria probate and the right to administer the estate subject to detailed terms and directions allowing Maria to call in the estate, but prohibiting her from distributing any of the estate without leave of the court pending the outcome of the related BC estate litigation commenced by Rita. Given that they were substantially successful, Mickey and Maria were also awarded the costs of the application in any event of the cause.

Bottom line on notices of dispute in BC: Estate litigation advice

A Notice of Dispute to oppose the issuance of an estate grant will, once filed, effectively pause any advancement of the administration of the estate. The Notice of Dispute can be removed on application if the court determines that the filing is not in the best interests of the estate. If the Notice of Dispute was not filed for valid reasons, the party who filed it may be ordered to pay legal costs.

If you have questions about filing or removing a Notice of Dispute, contact one of our team of BC estate litigation lawyers to schedule a 30-minute free consultation.

If you have any other Estate Litigation matter, our team of experienced lawyers can help. Contact our team of litigators today.

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