Self-Dealing, Part II
Introduction
At the end of August, I addressed how the rule of self-dealing applied in the matter of the Estate of William Scott Dewberry : see Self-Dealing, When Is It Allowed?.
This month, the Supreme Court of British Columbia provided a supplementary reason, for the Dewberry Estate (Re)[1] judgment given on July 13, 2024, and indexed as 2024 BCSC 1374 (“First Decision”).
The Court addressed the concluding paragraphs of the First Decision which outlined that neither side addressed the terms of sale of the property.
Background
William Scott Dewberry (“Mr. Dewberry”) died on August 10, 2016, without a Will.
He was survived by his three daughters namely, Angela Dewberry (“Ms. Dewberry”), Tracey Friman (“Ms. Friman”) and Elaine Eaton. The sisters are entitled to equal shares in Mr. Dewberry’s estate in accordance with s. 23(2) of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13.
Supplementary Reasons
Ms. Friman seeks an order for the sale of the Property and an award of costs against Ms. Dewberry in her personal capacity, on terms allowing the amount owing to be deducted from the net sale proceeds of the Property.
Ms. Dewberry seeks that she continues to have conduct of the sale. In the alternative, she seeks she seeks a “right of first refusal” that would allow her to meet any acceptable offer, in the further alternative, terms that would give the conduct of the sale to a third-party lawyer and allow her to purchase the Property in her personal capacity should no offer be received within a period of time set by the Court[2].
The Court confirmed once again the reasons set out in the First Decision, which were for Ms. Dewberry not to conduct of the sale of the Property. Ms. Dewberry shall continue as the Administrator, but it is appropriate for someone other than her to have conduct of the sale of the Property on behalf of the Estate[3].
As a result, the Court ordered that Ms. Friman will have exclusive conduct of the sale on behalf of the Estate in accordance with its set terms and with respect to the costs of the application awarded cost against Ms. Dewberry in her personal capacity is fixed at $2,000.00.
Concluding Comments
Executors are fiduciaries and owe fiduciary duties to the Estate and the beneficiaries. The executor is responsible for ensuring each beneficiary receives their share of the Estate. The general rule is that executors can not purchase trust property without the consent of all beneficiaries or sale occurs at fair market value with the approval of the Court.
It is important for the drafting solicitor to explain to the client that general rule, as sometimes there is a misconception that being an executor is only merely about distributing assets. It is indeed a task with legal obligations.
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[1] Dewberry Estate (Re), 2024 BCSC 1695
[2] Ibid para 7
[3] Ibid para 9