J. Date: 19990531 Docket: CA154851 NOVA SCOTIA COURT OF APPEAL Glube, C.J.N.S., Chipman and Pugsley, JJ.A. BETWEEN: EDMUND SAUNDERS Edmund Saunders in person Appellant (appellant) and THE ESTATE OF DOROTHY BELLE CROUSE Rubin Dexter for the Respondent respondent Merilyn Hendry Michael Baker for the respondent Zion Evangelical Lutheran Church Appeal Heard: May 31, 1999 Judgment Delivered May 31, 1999 THE COURT: The appeal is dismissed per reasons for judgment given orally by Pugsley, J.A.; Glube, C.J.N.S. and Chipman, J.A., concurring. Pugsley, J.A.: [1] This appeal involves consideration of s. 31(1) of the Probate Act, C. 359 R.S.N.S.(1989). It also involves consideration of request from both counsel for the respondents that the appeal be dismissed with costs to be awarded on solicitor and client basis. [2] Dorothy Crouse, widow of Lunenburg, in her last will of September 16, 1995, appointed Edmund R. Saunders, the appellant, sole executor of her estate. She died on September 13, 1997. [3] Mr. Saunders had practised law for in excess of forty years before his retirement in the early 1990's. [4] The will was submitted to probate on September 15, 1997. Mrs. Crouse made number of specific bequests, including bequest of $50,000.00 to her niece, Merilyn Hendry, and bequest of $10,000.00 to the Zion Lutheran Church in Lunenburg. The residue of the estate was left to Ms. Hendry, and her brother, in equal shares. [5] On September 4, 1998, Mr. Saunders wrote the residuary legatees stating, in part: Enclosed please find copies of the account and citation. Kindly review the account carefully and advise of any errors. am confident that there are no errors, but would appreciate your review advice. [6] The account disclosed that the assets of the estate consisted of marketable securities of approximately $91,000.00 and cash of approximately $38,000.00. Bequests "paid" were listed at $88,000.00. schedule indicated that partial distribution, by way of advance, had been made to Ms. Hendry in the amount of $3,000.00 on September 16, 1997. [7] In fact, apart from this advance, no amounts had been paid on account of the bequests. [8] On December 18, 1998, Mr. Saunders applied to the Acting Registrar of Probate to have his executors accounts examined and approved. At the request of counsel for the main legatees, the Acting Registrar ordered, pursuant to s. 124 of the Probate Act, that all estate money be paid into an estate bank account. Apparently no funds were available to respond to that direction. [9] On January 14, 1999, at hearing to consider the citation to close the estate, Mr. Saunders advised Justice Carver, who had by then been assigned the file, that there was no money in the estate, but that he expected to receive funds shortly. [10] The matter was adjourned until January 28. Mr. Saunders then advised Justice Carver: still haven’t come up with the money. It is not there and have loaned it out, it may be questionable, don’t know whether have improperly done so, probably have, but can’t be certain of that whether I’ve improperly done it or not it’s not in accordance with the Trustee Act. [11] On March 2, 1999, Ms. Hendry filed petition, supported by her affidavit, setting out her concern that the estate property would go to waste under Mr. Saunders’ direction. She requested an order requiring Mr. Saunders to provide security. [12] The application was heard on March 12, 1999, before Justice Carver. [13] Upon being ordered to submit to cross-examination by counsel for the legatees, Mr. Saunders testified that in order to forestall foreclosure on real property owned by his daughter, in late September, 1997, he advanced approximately $64,000.00 from estate funds to the mortgage company. He testified further that his daughter was not aware of the advance he made on her behalf. His daughter subsequently lost the property on later foreclosure. [14] Mr. Saunders was asked: And did you get any security for the payment of the $64,000? He responded: None whatsoever, no. Didn’t ask for it, don’t want it. intend to pay it out of my own pocket. [15] On September 24, 1997, he had placed demand note in the estate file, promising to pay to the estate $64,998.42 "together with interest thereon at the rate of 5% per annum compounded annually". [16] In January and April, 1998, Mr. Saunders placed in the estate file, two additional demand notes, aggregating $51,000, representing additional funds he had taken from the estate for "personal purposes". He was not able to recall the nature of those purposes. He acknowledged that he has not advised the beneficiaries of his decisions as They would want to have answers for me to get this money, which couldn’t get in and they’d want answers faster than was prepared to give them the answers. [17] Mr. Saunders testified in part as follows: took my own personal responsibility to pay certain things which don’t think should have done, but did I’m personally liable know probably shouldn’t have done that didn’t do what should have done in the Estate agree But once it got out and couldn’t get it back in what was to do? ... perfect example of why xecutors shouldn’t do what I’ve done have done disservice, agree. Mr. Saunders also testified that he had taken out of estate funds "about five per cent, the usual commission withdraw". [18] After hearing submissions by Mr. Saunders and on behalf of the other parties, Justice Carver determined in part: Mr. Saunders had funds of the estate and he has converted those funds to his own use. Now it’s easy to say that it’s gone into mortgage or it’s gone for another estate, but plain and simple, the money has gone for his own use. And therefore Mr. Saunders either has to pay that back, which he promised he was going to have by this time. If I gave him a little extra time, or he’s going to have to post a bond. . . . Mr. Saunders I am making an order that you . . . pay $130,000.00 into the estate and failing that, that you provide $250,000.00 by way of a bond with two sureties . . . and the deposit must be made to Mr. Bolivar on or before the 25th day of March, 1999, at 3:00 o’clock in the afternoon or the bond must be completed and filed with him by that time . . . and if you have not paid the money in, if you have not provided the security that I have ordered, then you’ve got to be here, because at that time there will be an application made, I understand, from those parties to have you removed as the executor of the estate. [19] Mr. Saunders appeals from Justice Carver’s judgment, alleging that he erred in: 1. granting an order without first requiring proof of and making determination of whether Mr. Saunders was wasting the estate, as required by s. 31(1) of the Probate Act; 2. granting such order without determining that an executor has the same right and authority to control the assets of the estate as the testatrix would have if living, unless and until, there is proof that such executor is wasting the estate; 3. in failing to determine the issue of what was in the best interests of the estate whether the improper investments on the part of the executor should stand up until the closing of the estate and what interest rates would be proper against the executor in the circumstances; 4. and directing the registrar to confiscate Mr. Saunders’ estate file and thus hampering him in his further work on the estate. [20] Section 31(1) of the Probate Act, entitled "Executor wasting estate", provides: The court of probate, upon the summary application of anyone interested in the estate, if it is proved to the satisfaction of the court that an executor is wasting the estate, may order the executor to give security for the performance of his duty. [21] The term "wasting the estate" is not defined in the Probate Act. [22] The term usually arises in the context of real property, but according to Professor Feeney, author of The Canadian Law of Wills, it should be viewed in broader context. Professor Feeney wrote (Vol. 1, 3rd Ed., (1987) at p. 253: Where personal representative mismanages, squanders or neglects to get in the assets of an estate, he is guilty of wasting them or, as it is said, he has committed devastavit. [23] The evidence given by Mr. Saunders before Justice Carver is an acknowledgment of positive misconduct respecting the administration of the estate. [24] Justice Carver was not required, in these circumstances, to make an express finding that Mr. Saunders was "wasting the estate". It is implicit in his decision that such finding had been made, and that finding was based on Mr. Saunders’ testimony. Justice Carver concluded that Mr. Saunders converted estate funds "to his own use", and that those actions resulted in Mr. Saunders having "done a real disservice to this estate". These conclusions, as well, were based on Mr. Saunders’ evidence. [25] Mr. Saunders’ acknowledged actions constituted a flagrant breach of fiduciary obligations owed by him as executor of the estate. These actions constituted sufficient justification for his removal as executor (Macdonnell, Sheard, Hull, Probate Practice 4th Ed., (1996) pp. 161-167). Justice Carver directed Mr. Saunders on January 14, 1999, to reimburse the estate with the money he had taken in September, 1997 and January, 1998. As of the date of this appeal, no part of those funds had been returned. [26] In view of the actions of Mr. Saunders, and his professed ignorance respecting the personal uses to which he employed substantial part of the estate funds, Justice Carver was completely justified in ordering that his executor’s file be delivered to the court. In fact, Mr. Saunders expressed no opposition to yielding up his file. Okay. That’s fine I’ll add to it if you want anything else. [27] Mr. Saunders is entitled to view the contents of the file, in the presence of the Acting Registrar or his appointee, and would, as well, be entitled to receive copies of any of the materials in the file. [28] There is, in our opinion, no merit in any of the grounds advanced on this appeal. Justice Carver committed no error of law, or principle, with respect to the issues before him. We are further satisfied that he exercised his discretion in proper manner. Respondents’ Request for Solicitor and Client Costs [29] The order of March 18, 1999, provided that the issue of costs be determined on March 25, 1999. [30] In view of this appeal, which was filed on March 22, 1999, the resolution of that issue has not been determined. [31] Counsel for the two respondents have requested costs on this appeal "on solicitor/client scale, fixed and payable forthwith". [32] Solicitor and client costs are only awarded in this jurisdiction in rare and exceptional circumstances (Brown v. Metropolitan Authority et al (1996), 1996 CanLII 5608 (NS CA), 150 N.S.R. (2d) 43 (C.A.). [33] We leave the matter of costs respecting the hearing before Justice Carver, for the determination of Justice Carver. [34] With respect to costs on this appeal, it is relevant to consider the matters that gave rise to the appeal. Mr. Saunders’ actions amounted to serious dereliction of duty which we would class as unconscionable. Those actions go beyond what we might term as merely reprehensible. [35] The grounds of appeal are without merit, indeed, without any modicum of merit. We are of the view that the appeal was brought for the sole purpose of delaying the legatees from pursuing their legitimate rights. As such, this proceeding is an abuse of the appeal process. We would classify the matter before us as one of those rare and exceptional cases in which solicitor and client costs should be ordered. Conclusion [36] The appeal is dismissed with costs as between solicitor and client awarded to the respondent, Merilyn Hendry, as well as to the respondent Zion Evangelical Lutheran Church. These costs to be taxed are to be paid forthwith by the appellant, Edmund R. Saunders, personally. [37] We would further direct that Mr. Saunders file, on or before 12:00 noon, on Monday, June 7, 1999, with the Registrar of Probate in Bridgewater, Nova Scotia, sworn statement of his assets and liabilities as of Monday, June 7, 1999, and further file sworn list of all transactions of assets disposed of, directly or indirectly, by him since September 13, 1997. Pugsley, J.A. Concurred in: Glube, C.J.N.S. Chipman, J.A.
One of the residual legatees of the respondent estate filed a petition under s. 31(1) of the Probate Act. At the hearing on the application, the executor, under cross-examination, admitted that he had 'done a disservice to the estate' and that his actions were a 'perfect example of why executors shouldn't have done what I have done.' The Chambers judge found that the executor converted estate funds to his own use and ordered the appellant to post security pursuant to the Act. The executor appealed. He submitted that the Court had not explicitly determined that he had committed waste, and accordingly there was no basis or foundation for an order requiring him to post security. Dismissing the appeal, that the appellant's own admissions under oath were sufficient bases for the Court's finding. This was also one of those rare occasions where solicitor and client costs on the appeal were warranted, as the executor's actions amounted to a serious dereliction of duty which the Court termed reprehensible and unconscionable.