Beneficiary Actions on Behalf of the Estate
Section 151 of the Wills, Estate and Succession Act (WESA) allows a beneficiary or intestate successor (someone who may inherit if there is no Will) to apply to the Court for leave to bring an action or defend legal proceedings on behalf of an estate when, for whatever reason, the personal representative has declined to act. Those proceedings are brought in the name of the personal representative, not in the name of the beneficiary.
When Might Section 51 Prove Useful?
The personal representative (the executor of the will or the administrator where no valid will exists) legally steps into the shoes of the deceased to deal with the deceased’s estate. Prior to Section 151, the personal representative is the only individual who has legal standing to take action to claw back assets they consider ought to be included in the estate. There is a fundamental problem where the personal representative refuses to initiate proceedings or is perceived by the beneficiary to be the person at fault, or to have a conflict of interest.
Before Section 151 came into being disgruntled beneficiaries would be forced to try to remove the personal representative and appoint an alternative that they anticipated would be sympathetic to their cause, even though the cause of dissatisfaction may be limited to a discrete issue. Section 151 permits the personal representative to decline to initiate proceedings that are considered ill-conceived or not in the interests of the estate while allowing the disgruntled beneficiary to take on the risks of pursing the action. If the beneficiary can convince the court that they have made reasonable but unsuccessful efforts to cause the personal representative to commence or defend the action, the court may grant leave for the beneficiary, or another person, to commence or defend the action in the name of the personal representative.
In considering the beneficiary’s application for the court’s permission to initiate or defend proceedings the court will consider the merits of the proposed action, specifically whether there is a “good arguable case”. This can be difficult to establish where the necessary information is in the hands of the personal representative who refuses to share. The court will also consider the motives behind the application. In Bunn v Bunn 2016 BCSC 2146 the court dismissed the deceased’s daughter’s claim against the estate administered by her brother on the basis that it was born of animosity rather than a good arguable case.
Section 151(3) states that leave will be granted when it is “necessary or expedient” for the protection of the estate or the interests of the beneficiary. A proceeding may be “necessary” when the personal representative is unwilling or unable to proceed. It may be “expedient” if it is the interests of the estate.
In Gordon Estate 2018 BCSC 487 the deceased’s will left the entire residual estate to UBC to fund research for eye disease. The executor had been the deceased’s friend and gardener for many years. Prior to her death the deceased transferred the majority of her assets (approximately $2m) to the gardener, leaving very little to go to UBC. The court granted relief under Section 151 to allow UBC to bring an action in place of the executor, to set aside the asset transfers prior to death so as to bring those assets back into the estate to be distributed in accordance with the will. The success of such an application is highly fact dependent. A key fact in this case was the evidence of the deceased’s long-term lawyer who knew her client well and, shortly before the testator’s death, had refused to prepare a new will on the basis that the deceased lacked the necessary capacity. The second lawyer, retained to draft the new will, did not have the benefit of such knowledge of the deceased and had not made adequate notes of the consultation with the deceased to establish steps taken to reach the apparent conclusion that the deceased was competent.
Where the court grants relief under Section 151 it may impose restrictions on the scope of the action, set a timetable for the proceedings and give other directions for the efficient and cost effective management of the proceedings. The court may grant permission for the beneficiary to use estate monies to fund the proceedings, or may direct the beneficiary to personally fund the proceedings.
There are strict time limits to initiate a claim or counter-claim and it is essential not to delay in seeking legal advice. A Section 151 application is bound to fail if appropriate efforts have not been made to have the executor bring the action. This effort needs to be made even where it is apparent that to bring such an action would be contrary to the personal interests of the executor. Part of this effort will necessarily include providing sufficient detail of the proposed action to enable the executor to make an informed decision.
Angela Price-Stephens is an English and Canadian lawyer who has 25 years’ experience as a litigator of complex and challenging claims. Whether you are disinherited, a personal representative contemplating litigation or facing a claim brought by a beneficiary, Angela is here to provide cost effective, practical legal advice.
For more information on this article, or for confidential discussion of your claim, contact Angela Price-Stephens at 250 869 1124, or send her a confidential email at email@example.com.