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Vancouver Estate Litigation: Removal of Co-Executor Due to Inaction and Delay

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Where the administration of an estate has been brought to a standstill by the inability of co-executors to carry out their duties, it may be necessary to bring an application for removal of a co-executor to break the stalemate. A successful application to remove a co-executor was brought in Levi-Bandel v. McKeen, 2011 BCSC 247 after an 18-month delay in the administration of an estate to the prejudice of the beneficiaries. Administration of the estate had been paralyzed by the tension between the two executrixes. Mr. Justice Butler concluded that the only way to resolve the impasse for the welfare of the beneficiaries was to remove the co-executor who was responsible for the delay.

Vancouver estate litigation arises out of co-executors’ stalemate

The deceased passed away on May 11, 2008, leaving a will that appointed Ms. Levi-Bandel and Ms. McKeen as co-executrixes and co-trustees of her estate. The will provided for a bequest of $25,000 for the care of the deceased’s cats (the “Cat Bequest”) and divided the residue of the estate equally among 12 beneficiaries. The deceased had a relatively small estate, and the initial administration of the estate moved forward reasonably quickly. The deceased’s main asset was a condominium which was sold January 26, 2009, shortly after the grant of letters probate on November 3, 2008. However, after the sale of the property, matters came to a grinding halt due to disputes that arose between the co-executrixes, leading to a communication breakdown between Ms. Levi-Bandel and Ms. McKeen. As a result of their differences, for an almost 2-year period nothing had been accomplished to move the administration of the estate forward. Approximately $260,000 sat in the estate bank account awaiting distribution to the deceased’s beneficiaries.

Application to remove a co-executor or co-trustee of an estate

Vancouver litigation was commenced by Ms. Levi-Bandel by way of application for the removal of Ms. McKeen as co-executrix and co-trustee of the estate. Ms. Levi-Bandel took the position that Ms. McKeen was responsible for the delay in the administration of the estate, to the prejudice of the beneficiaries. The residuary beneficiaries all consented to the removal of Ms. McKeen and for the continuation of Ms. Levi-Bandel as the sole executrix and trustee. Ms. McKeen took the position that the fault for any delay rested with both co-executrixes and that the court should not favour one trustee over the other. Given all of the circumstances in this case, Mr. Justice Butler was satisfied that the removal of Ms. McKeen as executrix and trustee was necessary and expedient to protect the interests of the beneficiaries.

Jurisdiction and test for removing an executor or trustee

Section 30 of BC’s Trustee Act authorizes the court to remove a trustee on the application of a beneficiary, but it does not authorize the court to do so on the application of a co-trustee. However, as was noted in Levi-Bandel, the court possesses an inherent jurisdiction to remove a trustee – even if the application is not brought by a beneficiary – and can do so without appointing a replacement trustee. The main test for removal of an executrix or trustee is the welfare of the beneficiaries. An executor or trustee can be removed for misconduct that endangers the trust property or shows “a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”

Failure to act can form the grounds for removal

A failure to act can also amount to grounds for removal of an executor or trustee. In Levi-Bandel, Ms. McKeen’s inaction and her refusal or reluctance to proceed with the administration of the estate caused unnecessary delay and amounted to a want of reasonable fidelity and a failure to carry out her duties. The cause of the difficulties was Ms. McKeen’s request for reimbursement of expenses from the estate, along with her perceived difficulties implementing the Cat Bequest. Emails and records of correspondence showed that Ms. McKeen’s delays in responding to requests for information and her refusal to meet to discuss legitimate issues unnecessarily impeded the administration of the estate. Matters were further complicated by Ms. McKeen’s threatened claim against the estate for an alleged personal injury she sustained while working at the property. 

Result in Levi-Bandel Vancouver estate litigation

Ms. McKeen’s suggestion that the court should direct the executrixes to work matters out between themselves was not practical; they had been attempting (or at least Ms. Levi-Bandel had been attempting) to do that for almost two years, and it had not worked. The only practical way to deal with the impasse was to remove one of the executrixes or appoint a new executor and trustee. Given the support of the residuary beneficiaries for the removal of Ms. McKeen, there was no reason to consider the alternative of a new trustee, and in Justice Butler’s view, appointing a new trustee did not make sense given how little remained to be done in order to finalize and distribute the estate.

Costs of the Levi-Bandel Vancouver estate litigation

Normally an executor involved in litigation which involves the construction of a will is entitled to costs of the litigation paid from the estate as special costs. Ms. Levi-Bandel sought special costs against Ms. McKeen on the basis that Ms. McKeen’s conduct was deserving of reproof or rebuke and that special costs should be awarded against her. That application was dismissed, as Ms. Levi-Bandel did not point to any conduct of Ms. McKeen that occurred within the Vancouver estate litigation that was deserving of reproof or rebuke. Thus, while Ms. Levi-Bandel was entitled to her special costs from the estate, she was not entitled to special costs from Ms. McKeen.

What about Ms. McKeen’s litigation costs, as she too was an executor? An exception to the rule that an executor is entitled to costs of the litigation to be paid from the estate is where the costs are improperly incurred. Further, where a trustee incurs legal costs defending herself rather than the trust, she is not automatically entitled to be indemnified. And of course, when a matter proceeds to litigation the general rule is that costs follow the event, which means that the losing party is not entitled to recover her costs. For those reasons, Ms. McKeen was not entitled to recover her costs of this litigation from the estate.

Bottom line on Vancouver estate litigation to remove a co-executor

Where the administration of an estate has been brought to a standstill by the inability of co-executors to carry out their duties, application to the courts may be necessary to resolve the stalemate for the benefit of the beneficiaries. The court can either remove one co-executor or appoint a new executor and trustee.  

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