2020 NBQB 85, 2020 NBQB 85

Court File No.: NP-57-2018 IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MIRAMICHI Williams v. Breau et al 2020 NBQB 085 B E T W E E N: Theresa Williams Applicant/Respondent - and - Yvon Joseph Breau Respondent/Applicant -and- Ryan Williams and Michael Breau Respondents (Added Parties) DECISION BEFORE: The Honourable Mr. Justice John J. Walsh AT: Miramichi, N.B. ON: December 11, 2019; April 17, 2020 (on consent by tele-conference)

DECISION April 28 th , 2020 COUNSEL: Stephen J. Doucet, for Theresa Williams Daniel Jardine, for Yvon Joseph Breau Jack Blackier, for Ryan Williams and Michael Breau Walsh J.: I. INTRODUCTION and OVERVIEW [ 1 ] Daniel Breau died on October 10, 2018, leaving a Will dated September 16, 2004. The named beneficiaries are his two sons, Ryan Williams and Michael Breau, and his brother, Yvon Breau. He appointed his sister Geraldine Breau as executrix. [ 2 ] Mere days after Daniel Breau’s death the testator’s ex-wife, Theresa Williams (mother of Ryan and Michael), filed a caveat in Probate Court questioning the Will.

Not long after that Geraldine Breau renounced her brother’s appointment of her as executrix. Theresa Williams then applied to a judge in Probate Court and was granted, on March 11, 2019, partial (limited) ‘Letters of Administration with the Will Annexed’. [ 3 ] When the testator’s brother Yvon Breau found out about the grant of Letters of Administration he filed a caveat in Probate Court.

He claimed that Theresa Williams was not entitled to be the Administrator because of the terms of a Separation Agreement made between her and his late brother in December 2003, wherein she released, inter alia , any right to act as administrator of Daniel Breau’s estate. As a result, the Probate Court Judge issued an Order dated July 5, 2019 preventing Ms.

Williams from taking any further action as Administrator until either a mutually acceptable Administrator was agreed upon or, failing an agreement, the Court appointed one. [ 4 ] This Order triggered two opposing Notices of Applications in the Court of Queen’s Bench, being the Province’s superior court. One is by Theresa Williams and the other by Yvon Breau. Both are brought under Rule 16 of the Rules of Court . ( I pause to note that the Applications were assigned the same file number, which is the original Probate Court number.

The Clerk will be directed to assign to each Notice of Application a separate Trial Division file number ). [ 5 ] Under the Applications, Ms. Williams seeks to continue as the estate’s Administrator. Mr. Breau, on the other hand, wants Ms. Williams removed as Administrator and replaced by a named third party.

The two adult sons filed affidavits in support of their mother’s position, or, alternatively, asking that one of them, Ryan Williams, be appointed in her place. [ 6 ] Procedurally, the adult sons were joined on consent as added party respondents on both Applications ( Rule 5 ) and on consent the Applications were heard together ( Rule 6 ). II. ISSUES

[ 7 ] Ms. Williams relies on Rule 16.04 (a) (

d) and (

i) of the Rules of Court and Mr. Breau relies on Rule 16.04 (c) . Together, then, the parties have invoked the following in support of the Court’s jurisdiction: Where

an Act or rule authorizes an application or motion without requiring the institution of an action, a Notice of Application (Form 16D) may be used and, in addition thereto, a proceeding may be so commenced where the relief claimed is (

a) For the opinion, advice or direction of the court on a question affecting the rights of any person in respect of the administration of the estate of a deceased person or in respect to the administration of a trust, (b) … (

c) For the removal or replacement of one or more executors, administrators or trustees, or for fixing their compensation, (

d) For the administration of the estate of a deceased person, or for the execution of a trust, by the court, (e) … (f) … (g) … (h) … (

i) For an injunction, mandatory order, declaration, the appointment of a receiver, or other consequential relief ancillary to relief claimed in a proceeding properly commenced by a Notice of Application, or [ 8 ] The parties agree that under those provisions of Rule 16 this Court has jurisdiction to consider whether Ms. Williams should continue as the Administrator of the estate and to remove her from that position if the circumstances warrant. However, Ms.

Williams and her sons take the position that this Court does not have the jurisdiction in the circumstances of this case to name her replacement; that, if necessary, this would have to be done by application in the Probate Court. To the contrary, Mr. Breau argues that Rule 16 (

c) is clear authority for this Court to replace Ms. Williams as Administer if her removal is justified. [ 9 ] There are, therefore, three issues at this stage of the proceedings: 1. Should Theresa Williams be removed as Administrator? 2. If so, does this Court have jurisdiction to replace her? and, 3. If so, should the Court exercise any such jurisdiction? III. FACTS and ANALYSIS A. Legal Principles Governing Removal of Estate Administrators

[10] The authority at common law, which has been adopted in this Province, is very old, being Lord Blackburn’s judgment inLetterstedt v. Broers (1884), 9 App. Cas. 371. He laid down that a court’s main guide in deciding whether to remove a trustee must bethe “welfare of the beneficiaries and of the trust estate”, describing the exercise of this jurisdiction as “delicate”: Probably it is not possible to lay down any more definitive rule in a matter so essentially dependant on details often of great nicety.

Butthey proceed to look carefully into the circumstances of the case. (Ibid, at p. 387; See: Re: Melanson Estate (1986) (NB KB), 69 N.B.R. (2d) 119 (Q.B.) (Daigle J.), Re: Black v.Gladstone Estate 2005 NBQB 244 (Rideout J.), MacLean v. Secord Estate 2009 NBQB 214 (Grant J.)) [11] The watchword, then, is caution.

It is fair to say that courts are slow to remove a trustee, especially in estate cases where thequestion of removal might involve a person or persons named as executrix or executor by a testatrix/testator: And while the welfare of the beneficiaries must be paramount, the wishes of the testatrix must be taken into account. Here, the testatrixhas appointed her executors and it must be assumed that these are the people she would wish to look after her affairs rather than astranger or some court-appointed trustee … (Bartel v. Bartel [2005] M.J.

No. 367 (Q.B.) at para. 9) [12] Indeed, if that were the situation the testatrix’s/testator’s wish “carries a great deal of weight” (MacLean v. Secord Estate, supraat para. 9). But, this is not the factual matrix here. The appointment of Ms. Williams would not have been the testator’s wish – quite thecontrary. B. Grounds for Removal? [13] At common law, apart from deliberate misconduct (e.g. breach of trust), the authorities reflect that there can be any number ofcauses (grounds) which might (not shall) result in the removal of an executor/executrix or administrator of a person’s estate.

Theseinclude lack of capacity to act, conflict of interest, and friction/hostility, although the latter is not itself considered a stand-alone ground(See: Timothy C. Matthews, Q.C., The Appointment, Retirement, Removal and Replacement of Trustees in the Atlantic Provinces (2009)28 Estates, Trusts & Pensions Journal 302 at p. 305). Given the pleadings and evidence, I propose to address the request to remove Ms.Williams based on those other grounds. a. Lack of capacity to act [14] “Lack of capacity to act” is but a convenient umbrella heading to deal with two related concerns here.

The first is the affect of a“Separation Agreement” made between Ms. Williams and Daniel Breau in which they reciprocally released, inter alia, any right to “actas an executor or administrator of the will or the estate of the other”. The second is whether there was a requirement to comply withSection 39 of the Probate Court Act at the time of the granting of Letters of Administration to Ms. Williams and, if so, its affect. i.) Affect of Separation Agreement [15] Recall the Separation Agreement was entered in December 2003 and Daniel Breau made his last Will in September 2004 and heand Ms.

Williams were divorced in 2007. The pertinent clauses of their Agreement are as follows:

14. Releases …

(4) Except as provided in this agreement, and subject to any right given by the other in his or her will, the husband and the wife each release and discharge, in favour of the children of the marriage , all rights that he or she has or may have under the laws of any jurisdiction in the estate of the other and in particular: (a) … (

b) to act as an executor or administrator of the will or the estate of the other. … 18. General …

(2) The husband and wife each warrant that there are no representations, collateral agreements or conditions affecting this agreement other than as expressed in this agreement. (3) …

(4) The provisions of this agreement are binding on the respective heirs, executors, administrators or assigns of the husband and the wife ( Emphasis added ) [ 16 ] Counsel for the mother and counsel for the adult children initially pleaded, and addressed it extensively in their respective Briefs, that the testator’s brother was not privity to the Agreement and therefore does not have standing to enforce it, only the children or the Administrator of Daniel Breau’s estate.

However, during oral argument this ground was rendered moot since it was accepted by all counsel that the Separation Agreement was properly before the Court and the Court had jurisdiction to determine its affect in these proceedings. In my opinion this was a proper concession in the context here. Moreover, I would not have acceded to the ‘privity’ claim in any event. Briefly, I will explain. [ 17 ]

Section 4 of the Law Reform Act , “ which abrogates the common law rule in defined circumstances ” ( Harrity v. Kennedy 2009 NBCA 60 at para. 4 ) , states:

(1) Unless the contract provides otherwise, a person who is not a party to a contract but who is identified by or under the contract as being intended to receive some performance or forbearance under it may enforce that performance or forbearance by a claim for damages or otherwise. (2) …

(3) For the purposes of subsection (1), a person who is identified by or under a contract as being intended to receive some performance

or forbearance under it includes

a) A person who is intended to receive the performance or forbearance only in certain circumstances, if those circumstances occur,and b) …

c) A person who is not named in the contract but a member of a class of persons intended to receive the performance or forbearance [18] This provision is to be liberally construed (Interpretation Act, s. 17). Frankly, the Court would not have been at all enamoured bythe argument that since the testator is now deceased the promise made to him by his ex-wife, not to act as Administrator of his estate, canonly be enforced by the children or by the Administrator of the estate, when the very issue is who should be the Administrator of theestate. Indeed, this fact situation distinguishes Robinson v.

Morell 2009 NSCA 127 relied upon by Ms. Williams, which case involvedthe renunciation of a testamentary gift. Moreover, that case was not required to address the applicability of any exceptions to the doctrineof privity of contract, either as carved out at common law (See: Marble (Litigation Guardian of) v. Saskatchewan 2003 SKQB 282 atparas. 38-43) or by statute, as done in New Brunswick through the Law Reform Act. Which brings me to the Separation Agreement. [19] The parties to the Separation Agreement made it binding on, inter alia, their “heirs”. Contrary to the position of Ms.

Williams,the Court views that as conveying both an obligation and a conditional benefit. In my opinion, the Agreement was intended in all thecircumstances for not only their children but also the “heirs” of the parties to benefit from the forbearance agreed to by the partiesregarding the administration of each others’ estates. And, by any legal definition Yvon Breau is an “heir” for the purposes here. In otherwords, I find that

Section 4 of the Law Reform Act applies. Yvon Breau would have had ‘standing’ to enforce the contractual forbearancein any event. [20] I now turn to the live issue regarding the Separation Agreement. It is Yvon Breau’s position that Theresa Williams is estoppedfrom acting as his brother’s estate Administrator because she released the right to do so in the Separation Agreement. In response, thecombined position of Ms. Williams and the adult children is that as a matter of contractual

interpretation Ms. Williams did not release theright to act as Administrator in all situations. [21] A separation agreement is a contract, it being recognized that “parties should generally be free to decide for themselves whatbargain they are prepared to make” (Rick v. Brandsema 2009 SCC 10 at para. 45). Bargaining power issues aside, these types ofagreements are governed by the normal rules of contractual

interpretation. This means that the words in issue in the contract are to beread in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the contract, the object of thecontract and the intention of the parties (See: Robichaud et. al. v. Pharmacie Acadienne de Beresford Ltée 2008 NBCA 12, at para. 19;referencing Rizzo & Rizzo Shoes Ltd. (Re) (SCC), [1998] 1 S.C.R. 27 at para. 21). The end purpose “is to ascertain theobjective intent of the parties -- a fact-specific goal -- through the application of legal principles of

interpretation" taking intoconsideration the “surrounding circumstances” (See: Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53; See also: Zecha v.Zecha Estate [2017] O.J. No. 1653 at paras. 42-43). [22] As mentioned, the position of Ms. Williams and the children is that she did not release the right to be appointed theAdministrator of her ex-husband’s estate for all purposes. They argue that both the Separation Agreement and the later Will must be readtogether. As I understood the arguments, there is no provision in the Will expressly prohibiting Ms.

Williams from being appointed as anAdministrator of the estate, particularly in the circumstances of a renunciation by the named executrix, and that the now adult children asbeneficiaries under the Will have consented to the appointment of their mother. This argument of the children is framed as follows: The 2nd last paragraph of the Last Will references an administrator as well as an executor of the Estate. That being the case, it can beargued that Daniel contemplated the possibility that his Estate would not be administered by Geraldine in her capacity as the [Executrix].

That is, that an administrator might need to be appointed in the place of Geraldine as [Executrix].

Given the short time span between the execution of the Separation Agreement and the Last Will, and in full recognition that Ryan and Michael were minors at the time of the execution of those documents, it may very well be that Daniel recognized, at least implicitly, that Theresa could possibly become the Administrator of his Estate given that his then minor children were the residual beneficiaries under his Last Will. … The thrust of Section 14 (4) of the Separation Agreement is directed towards the best interest of the children … Ryan and Michael.

It is not inconceivable that Daniel, when executing the Last Will, left open the possibility that Theresa might one day be appointed as Administrator of his Estate in order to protect and promote the best interest of his then minor children. It cannot be overlooked … the Last Will does not expressly preclude Theresa from being appointed as Administrator of the Estate. In

summary, it is respectfully submitted that there is a lack of clarity and some considerable degree of confusion relative to the intention of Daniel when Section 14 (4) of the Separation Agreement is evaluated against the back-drop of the Last Will. (Emphasis in text) (Supplementary Brief on Law at paras. 63, 64, 66 and 67) [ 23 ] Their mother’s argument piles on that the mutual waivers under the Separation Agreement were made “ in favour of the children of the marriage”. Therefore, even if the waiver under the Separation Agreement prevented Ms.

Williams from being the estate Administrator in her own right, it did not preclude her from being appointed on behalf of the children, either acting as agent for the adult child (Ryan Williams) or, at the time, as guardian for the minor child (Michael Breau), who has since attained the age of majority. Counsel for Ms. Williams put it this way: The discharge and release … at paragraph 14 (4) of the Separation Agreement, which was agreed to by the Applicant and deceased, was in favour or for the benefit of the children.

If the children waive that right to be administrator as per section 14 (4) (b), then there is no breach of the Separation Agreement and then either party to the separation agreement would have been free to be the executor or Administrator to each other’s estates. Again, based on section 4 (1) of the Law Reform Act , the children have the right to enforce and show forbearance to a clause that is intended to be a benefit for them. ( Pre-Hearing Brief at para. 53) [ 24 ] Having considered those arguments and recognizing that “the

interpretation of contracts has evolved towards a practical, common sense approach not dominated by technical rules of construction” ( Sattva Capital Corp. v. Creston Moly Corp , supra at para. 47), the Court has settled on the following

interpretations as most closely matching the objective intent of the parties. [ 25 ] Contextually and plainly viewed, I find that Ms. Williams renounced any right she would have to act regarding Daniel Breau’s estate, just as he did in relation to her estate. Indeed, the evidence of the “surrounding circumstances” shows that this was no amicable separation. And, it is reasonable to infer that neither wanted the other involved in the affairs of their lives thereafter, including acting through their children regarding the others’ estate.

I make that last observation because even though the children were underage at the time of the making of the Separation Agreement the parents both renounced the right to act for each others’ estates “in favour of the children of the marriage” . And, even though the children remained underage at the time Daniel Breau later made his Will, and even

though the “Release” provision under the Separation Agreement was made subject to any right given to each other in their respective Wills, he made no alternative provision to the appointment of his sister as executrix. [ 26 ] However, public policy (here the influence of parental and societal obligations to protect children) drives the Court to a narrower

interpretation of an aspect of their Agreement; an exception of sorts. The parties did not provide for what would happen if one or both children were not of the age of majority at the time of the death of one parent and there was either no Will or a failed appointment of an executor/executrix under a Will, as in this case. As a result, the Court finds that for estate purposes the parties intended to waive the right to act personally or through or on behalf of their adult children, but the waiver was not to apply if a child was a minor at the time of a parent’s death.

The Court embraces certain American authorities referred to by Ms.

Williams’ counsel (no Canadian cases having been found), where: …courts have interpreted waiver clauses contained in settlements agreements narrowly to apply only to the party’s individual right to receive letters of administration not to that party’s right to act in a representative capacity for the child or children of the marriage. … Therefore, we hold that the waiver of estate claim provision in the marital settlement agreement applies only to respondent’s individual right and does not extend to her representative capacity as guardian of the couple’s minor child. ( Estate of Zenkus (2004) 805 NE 2d 1257 (App.

Ct. 2 nd Dist. Illinois) at para. 19; See also: In re Estate of Williams (1958) 153 N.E. 2d 727 (Probate Ct. Ohio) ; Estate of Leopold Porrata (1997) 89 Misc. 2d 663 (Surr. Ct., NY) at paras 8-9; Estate of Jeffrey Lamore (2009) 989 A. 2d 486 (Supreme Ct. of Vermont) at para. 12 ; Matter of Piotrowski (2018) 62 Misc. 3d 683 (Surr. Ct., NY)). [ 27 ] Consequently, the Court finds that the parties to the Agreement did not waive their respective right to act on behalf of a child if not of the age of majority at the relevant time.

Therefore, since their son Michael was underage when his father passed and remained underage during the relevant period here (but has since become an adult), theoretically his mother was not estopped by the Separation Agreement from applying for Letters of Administration on Michael’s behalf at that time. Whether she did apply in that capacity and whether she was granted Letters of Administration in that capacity and whether she would have been granted Letters in any event are much different questions, to which I now turn. ii.) Affect of

Section 39 of the Probate Court Act [ 28 ] The other concern raised by Yvon Breau regarding Ms. Williams’ alleged lack of capacity to act is whether there was non- compliance with

Section 39 of the Probate Court Act when she was granted Letters of Administration?

Section 39 of the Probate Court Act reads: Application by person not next-of-kin Where application is made for letters of administration by a person not entitled to a grant thereof as next of kin of the deceased , an order shall be made requiring the next of kin, or others having or claiming to have an interest in the property of the deceased, resident in the Province, to show cause why the administration should not be granted to the person applying therefor; and if neither the next of kin nor any person of the kindred of the deceased resides in the Province a copy of the order shall be served or published in the manner prescribed by the rules. (Emphasis added)

[29] In my opinion, the imperative language of

Section 39 of the Probate Court Act dictates that notice for purposes of showing causeis mandatory not discretionary (See e.g. Reqnier Estate (Re) [1964] S.J. No. 43 (Surrogate Ct.)), if the person applying is not entitled toa grant of letters of administration as next of kin of the deceased. Since the notice requirements were not complied with here, twoquestions are raised. The most obvious one is whether Ms. Williams can be considered “next of kin” for those purposes?

If not, what isthe effect of non-compliance? [30] The weight of authority is that the phrase “next of kin” found in a like context means the closest blood relative. (See: Fasken v.Fasken Estate (SCC), [1953] 2 S.C.R. 10 at pp. 14-15; Thomann v. Armgardt Estate [2003] O.J. No. 982 (C.A.) at para.14; Miller v. Miller [2018] ONSC 6625 at para. 6). The testator’s children, Ryan and Michael, are therefore the “next of kin” for thepurposes of

Section 39 of the Probate Court Act. Following up on that meaning, Ms.

Williams says in the present proceedings that sheapplied for Letters of Administration with the consent and full knowledge of the children; and her counsel argues that “implicitly orexplicitly, [she] was acting for the children as a guardian and Attorney” because, as put in oral argument, “the children were firstentitled”. [31] Counsel for the children wrote in support: It is respectfully submitted that Theresa Williams, acting as agent for and on behalf of Ryan Williams and as guardian to Michael Breauwas, in essence, standing in their shoes as next-of-kin to Daniel Breau when she filed the Application for Letters of Administration andwhen she filed the Williams Application. (Supplementary Brief at para. 24) [32] I find that those are ex post facto claims of the mother and children.

Simply put, Ms. Williams was not granted Letters ofAdministration in either capacity because she did not apply for Letters of Administration in either capacity. [33] Ms. Williams’s actual Application for Letters of Administration before the Probate Court reveals it was made in her own right.The closest she comes to referring to her status vis a vis the children is a clause in the Application where she deposed that she is “aformer spouse of Daniel Breau and mother of Ryan Isidore Breau and Michael Daniel Breau, who are the sons and heirs of DanielBreau”.

Nor, in her concurrent application at the time seeking a citation directed at the renouncing executrix to bring in an inventory, didshe mention in her supporting affidavit of having applied for Letters of Administration in any other capacity than personally – “I haveapplied for letters of administration”; “I am the applicant for letters of administration”. [34] More specifically, even if this Court had not found Ms.

Williams waived the right to Administer her ex-husband’s estate onbehalf of an adult son, she did not make her application as “Attorney” or “Agent” for Ryan (assuming that this would even be authorizedby New Brunswick law) and, in any event, no ‘power of attorney’ or supporting affidavit of Ryan was filed with the Probate Court at thetime. Likewise, Ms.

Williams did not seek either an appointment as guardian of Michael for probate purposes or apply to beAdministrator as guardian for Michael, the latter known at common law as a grant durante minore aetate, i.e. “during minority” (See:Bell Estate (re) 1929 Can LII 206 (SKQB); See also: Probate Court Act, ss. 49-50). Nor, even more importantly, was the partial Lettersof Administration granted to her in that fashion. [35] This is not to deny that the children were the mother’s motivation for applying for Letters of Administration, for, as will be seen,it surely was. However, that is not the point here.

The point here is that because on its face she made application in her personal capacityfor Letters of Administration she was not a “next of kin” of the testator within the meaning of

Section 39 of the Probate Court Act.Consequently, notice had to issue, “requiring the next of kin, or others having or claiming to have an interest in the property of thedeceased, resident in the Province, to show cause why the administration should not be granted to” her. Had this been done it would have

been well within the discretion of the Probate Court Judge to require notice, not only to the children, but also to Yvon Breau as a beneficiary under the Will. And, in my opinion, it is more likely than not that such a broader notice to show cause would have been required, for this Court would have almost certainly done so in those circumstances. [ 36 ] I also note that Ms. Williams did not disclose in her Application for Letters of Administration the existence of the relevant terms of the Separation Agreement. As for that, she says it was not intentional.

She had forgotten about those terms because they were not her main concern at the time she entered into the Agreement and because of the lapse of years. I accept that explanation for it is plausible in all the circumstances. However, it was a negligent omission, which failure highlights the significance of non-compliance with

Section 39 in this case. [ 37 ] Yvon Breau became aware after the fact of Ms. Williams appointment as Administrator. He filed a caveat; in doing so he raised an objection based on his knowledge of her purported waiver in the Separation Agreement. Put differently, if

Section 39 of the Probate Court Act had been complied with it is probable or at least highly arguable that she would not have been appointed the Administrator of her ex-husband’s Will (See: Reqnier Estate (Re) , supra, at para. 35). Whether failure to comply with

Section 39 renders the appointment of Ms. Williams void ab initio I need not decide given the issue before me, i.e. whether she should be replaced now. [ 38 ] I conclude that Ms. Williams was estopped from applying for Letters of Administration because of the terms of the Separation Agreement and, in any event, there was fatal statutory non-compliance in her grant of partial Letters of Administration. For these reasons Ms. Williams does not have the capacity to act as Administrator any further. b. Conflict of interest [ 39 ] As a separate ground for removal, conflict of interest has been raised.

It is important to note though that not just any appearing conflict of interest suffices. Understandably, in estate cases a personal relationship alone would be one example where removal would not be called for. Another is where the conflict is actually “built in”, as for example a testator appointing someone who is also a beneficiary (See: Matthews, The Appointment, Retirement, Removal and Replacement of Trustees in the Atlantic Provinces , supra at p. 306). Rather, it is the nature and extent of the conflict of interest that is of concern. My colleague Glennie J. wrote in Lecavalier v.

Forbes Estate : I would note at this juncture that it is unusual for an executor of a will to take an advocacy position in an application of this nature and in this case to argue that the gift contained in the residuary clause of Mr. Forbes' Will is invalid. It is accepted that an executor as a fiduciary administrator may only seek advice and direction. Counsel for the Sussex Area Community Foundation Steering Committee argues that an executor has a duty to remain neutral as to beneficiaries and not to favour one over the other and that an executor's primary duty is to enforce the wishes of the testator.

I agree . (Emphasis added) ( 2003 NBQB 430 at para. 8 ) [ 40 ] In Fleming v. Fleming, it is explained that: … A conflict of interest occurs whenever the personal interest of the personal representative conflicts with the interests of others for whom he or she has a duty to act. Clearly, whenever a person who is entitled to a share in an estate is appointed an administrator of that estate, there is a possibility that he or she will act improperly to favour himself or herself over other beneficiaries. Yet, the rules of court

expressly contemplate that such persons may serve and, indeed, have a right of priority to appointment, as administrator. See, Rule 56.02.That fact alone, therefore, will often not be sufficient to constitute a conflict of interest justifying removal.

Where, however, the nature ofthe personal interest of the administrator is such that he or she will inevitably, or even will likely, be placed in a conflict situation withrespect to specific decisions involving the administration of the estate that may have the effect of the administrator not maintaining aneven hand between beneficiaries or place him or her in a difficult situation with respect to maintaining impartiality, that will be enough.In Re Walter W.

Shaw Co., (SK KB), [1922] 3 W.W.R. 119, MacDonald J. said at p. 120 that "The question is whetherit would be difficult for the trustee to act impartially, not whether, in fact, it would or would not do so". (Emphasis added) (2006 NLTD 112 at para. 14 (Green C.J.)) [41] In my opinion, the evidence is overwhelming that Ms. Williams is in a conflict of interest of such a nature and extent that sheshould be removed for this reason alone. The totality of the evidence points to one not surprising conclusion – above all else she is thechildren’s advocate.

This was made clear at the very outset, when she filed the caveat against the Will and then in what she wrote in hercorrespondence to the named executrix of the Will, which included a not so veiled threat of legal action if she did not think her childrenreceived their fair share. On any objective reading of the Record in these proceedings she could not possibly be impartial as between hersons and Yvon Breau or as regard the Estate itself. Indeed, it is quite simply unanswerable if not unfathomable why Ms. Williams deniessuch a conflict.

I will illustrate. [42] In the Separation Agreement there is a clause pertaining to the parents’ reciprocal obligations for life insurance for the benefit ofthe children. The terms are not relevant here. What is relevant is Ms. Williams’s statements about it. But, before referring to them somemore background is required. [43] Recall Ms. Williams was granted partial Letters of Administration with the Will Annexed. In her Application she had requestedpursuant to

Section 55 of the Probate Court Act that the Letters of Administration exclude a Manulife Insurance policy in the amount of$250,000 payable to the estate from being received into the estate. Hence the issuance of partial Letters of Administration. According tothe terms of the Will, it is the testator’s wishes that those insurance proceeds form part of the funds received by his estate for thepayments of debts and then for investment in a trust for the two children.

The terms of the trust are for the payment of monies from theincome earned for the maintenance, education and welfare of the children or, if insufficient, authorizes encroachment on capital, andthen half paid to Ryan when he reaches 25 years of age and any balance remaining paid over to Michael when he reaches 25 years ofage. Further, counsel for Ms. Williams advised during argument that if Ms. Williams remains as Administrator she may have to apply forSupplementary Letters to bring the Manulife insurance policy into probate.

The Court would have anticipated this being a required stepby an Administrator in any case. Indeed, the children’s position in support of their mother is that the limited Letters of Administration bevacated, and new Letters of Administration be granted to her to bring in the Manulife policy, which resolution, they say, is central to theadministration of the estate. [44] Further, the testator also had a SunLife insurance policy ($30,000), but the beneficiary was designated to be his brother YvonBreau. This policy has now been paid out by the insurer to Mr.

Breau. [45] With that background I continue with the illustration of conflict. Recall that an Order dated July 5, 2019 had been issued inProbate Court stopping Ms. Williams from taking any further steps as Administrator. Ms. Williams then filed an affidavit sworn on July17, 2019 supporting the appointment of her son Ryan should she not be entitled to continue as Administrator. In it she not only revealedher strategic intentions but clearly expressed her unvarnished opinions about the legality of the testator’s designation of beneficiariesunder those insurance policies.

She deposed, inter alia, that: Daniel Breau breached the terms of the separation agreement by assigning his SunLife Policy … beneficiary designation to his brother,Yvon Breau on January 28, 2005. The said Sunlife Insurance policy was an existing policy in place at the time of the signing theSeparation Agreement. The Sunlife Policy … death benefit of the policy was $30,000. The policy was effective March 21, 1996. The actual amount paid was

$36,916.83 to beneficiary Yvon Breau, his brother. This included $6,144 of paid up additions (additional insurance purchased by dividends) and a partial premium refund. In addition, Daniel Breau breached the terms of the separation agreement by assigning his Manulife Insurance Policy … beneficiary designation to the Estate. The said Manulife Insurance policy was an existing policy in place at the time of the signing the Separation Agreement.

I will have no other option but to commence a claim against the Estate as a result of Daniel Breau’s breach of the terms of the Separation Agreement regarding the Sun Life Policy. In turn, the proper procedure of the Estate would be to third party Yvon Breau. If the Estate is required to pay damages of found liable, then the Estate can attempt to recover damages or share in the loss with the third party. As well, I will need to commence a claim against the Estate as a result of Daniel Breau’s breach of the terms of the Separation Agreement regarding the Manulife Policy.

There would be no third party named for the Manulife Insurance Policy. These breaches are serious violations of the separation agreement. Daniel Breau agreed to the terms of the Separation Agreement and the terms must be respected. The rightful beneficiaries to the Sunlife and Manulife Insurance policies are Ryan and Michael, to which the proceeds should be paid. ( Record on Application ,

Part 3, at p. 176, paras. 34-40) [ 46 ] To put this rhetorically blunt – what would the late Daniel Breau think of all this? For as this Court mentioned at the outset of these reasons, in matters of this sort the wishes of the testator carry great weight in the law. Ms. Williams could not possibly continue as Administrator of his Will that she would seek to effectively re-write and of his estate that she would seek to figuratively punish, let alone treat Yvon Breau with an even hand. Left in place as Administrator she could not possibly defend the estate against any likely action(

s) brought by the children in these regards? It would amount to a legal fiction. [ 47 ] The irony continues. Recall that Ms. Williams’ referenced affidavit was made in support of Ryan Williams being named the Administrator in her place, when it is obvious that he would be in an even worst conflict of interest. Nothing further need be said. c. Friction/Hostility [ 48 ] Coupled to all this, there is an atmosphere of elevated friction/hostility and mistrust between Ms. Williams (as the administrator) and Mr. Breau (as a beneficiary) that can be seen and sensed from the contents of their respective affidavits.

Although friction/hostility alone is not normally a ground for removal of a trustee (See: Re: Melanson Estate , supra; Frenette v. Frenette 2006 NBQB 395 ), it is an added element here (although quite frankly none is needed) in the global exercise of the Court’s discretion to remove Ms. Williams. d. Conclusion on Removal of Ms. Williams as Administrator [ 49 ]

Section 30 of the Probate Courts Act states that “Letters probate of a will and letters of administration granted by the Court shall remain in force until revoked”. The Probate Court Judge who had granted to Ms. Williams partial Letters of Administration with the Will

Annexed in March 2019, made, upon the filing of the subsequent caveat by Yvon Breau, an Order in July 2019 preventing Ms. Williamsfrom taking any further action as the estate’s Administrator and adjourned the matter “for the purpose of determining if the parties couldagree to a mutually acceptable Administrator, failing which the Court would appoint one”. As I view it, the Probate Court Judge had notrevoked the grant of Letters of Administration. Rather, Ms.

Williams’s authority to continue as Administrator was stayed pending a finaldecision. [50] That decision having now been rendered in this Court pursuant to the authority of Rule 16 of the Rules of Court, Ms. Williams isremoved as the Administrator under the grant of partial Letters of Administration with the Will Annexed made on March 11, 2019. C. Jurisdiction to Replace Ms. Williams? [51] The other penultimate question that the parties have joined issue over is whether this Court can name the replacement or whetherthe matter must be returned to Probate Court?

I have decided that this Court can and should name a new Administrator in replacement ofMs. Williams. My reasons follow. [52] I have not been made aware of a New Brunswick case where a court was called upon to decide the question. I note, though, twocases where removal of an executor/executrix was ordered in the Court of Queen’s Bench that resulted in opposite approaches toreplacement. In Black v.

Gladstone Estate, supra, Rideout J. went on to name a replacement, as well as Order the appointment of anadditional executor for which the learned justice would remain seized of jurisdiction to approve (See: at para. 20). On the other hand, inMacLean v. Secord Estate, supra, Grant J. directed that the person who had been put forward by the successful applicants apply forLetters of Administration with the Will Annexed, which obviously would entail going back to Probate Court. [53] Therefore, not being bound by higher authority or judicial comity I move to statutory

interpretation. Like in interpreting acontract, the words of an enactment are to be read “in their entire context and in their grammatical and ordinary sense harmoniously withthe scheme of the Act, the object of the Act, and the intention of [the Legislature]” (Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27 at para. 21). I begin with the Rules of Court. [54] As noted before, Rule 16 ostensibly provides the Court wide powers in the context here. A general power is found insubparagraph (d) – “For the administration of the estate of a deceased person”. Another is more specific. Subparagraph (

c) allows for“the removal or replacement of one or more executors, administrators or trustees” (Emphasis added). As to the latter, in my opinion tonot find jurisdiction in this Court to name the replacement for Ms. Williams would entail ignoring the grammatical and ordinary meaningof the italicized words and amount to reading-out those words contrary to another rule of construction: The rejection or excision of a word or phrase is permissible only where it is impossible to reconcile or give effect to the provisions of theAct. (Williams v. Box (1910) (SCC), 44 S.C.R. 1 (per Anglin J.)) [55] Simply put, Rule 16 (

c) is easily reconciled as ‘hand and glove’ authority to both remove and replace an Administrator, especiallywhen read with subparagraph (d). Moreover, such an

interpretation is in harmony with the object of the Rules overall, i.e. “to secure thejust, least expensive and most expeditious determination of every proceeding on its merits” (Rule 1.03 (2)). Consequently, I need notadditionally address whether this Court would have an inherent power of appointment and removal in these situations, such as isrecognized, for examples, in the Provinces of Ontario (See: Evans v. Gonder 2010 ONCA 172 at para. 42) and Newfoundland andLabrador (Fleming v. Fleming, supra, at para. 14).

This is because it has been recently determined by our Court of Appeal that “theinherent jurisdiction of the superior courts [in New Brunswick] is mostly dormant given its significant codification in the Judicature Act

and the Rules of Court ” ( Colon v. The Director, Business Corporations Act, Province of New Brunswick, and Greer 2019 NBCA 81 at para. 44 ). [ 56 ] The foregoing

interpretation is not to deny the statutory jurisdiction of the Probate Court to replace an Administrator. However, I do not accept the argument that the Probate Court Act and regulations “occupy the field” or “trump” Rule 16 of the Rules of Court . At most, there is only concurrent jurisdiction: Powers vested in Court 3

(1) Without derogating from the jurisdiction of the Court of Queen’s Bench and subject to the Judicature Act , all jurisdiction and authority in relation to matters and causes testamentary and all matters arising out of or connected with the grant, recall or revocation of grant of probate or administration are vested in the Court; and save as may be otherwise directed by this Act or the rules, such jurisdiction and authority shall be exercised in the manner hitherto in use. 3

(2) Without in any way derogating from the generality of the foregoing, but subject always thereto , the Court has exclusive jurisdiction and authority in the following items: (

a) over all of the estate of a deceased person, whether or not a resident of the Province at the date of death, which estate is located in the Province; and whether it consists of real or personal property or both; (

b) in respect of the grant, recall and revocation of letters probate of a will, letters of administration whether with or without a will annexed, and resealing as described in

section 73; (

c) subject to the concurrent jurisdiction of the Court of Queen’s Bench , in the issuance of any orders or directions in connection with the administration, passing of accounts and winding up of the estate of a deceased person as described in paragraph ( a ). ( Probate Court Act , s. 3 ) [ 57 ] Finally, there is an outlier jurisdictional argument that has also been raised. Recall that the Will made a trust for the children. Counsel for the children argues that the Trustee Act somehow subjects the Court’s jurisdiction here to that Act .

However, even if the Trustee Act could have been pleaded in the circumstances here (and it was not), the Act does not express exclusive jurisdiction, displacing either Rule 16 of the Rules of Court or the Probate Court Act , or are the latter made subject to the Trustee Act . Moreover, in my view, that Act is narrower in scope than either Rule 16 or the Probate Court Act, restricted in its application to the administration of the trust instrument under the Will and not the administration of the testator’s estate overall.

Even if it was not and the Trustee Act also applied, I note in passing that the nature and depth of conflict of interest that Ms. Williams is in here would, in my opinion, require her removal and replacement “in the best interests of the beneficiaries or purposes of the trust or its good administration” (See: Trustees Act , s. 21 (1) ). D. Should the Court Exercise its Jurisdiction? [ 58 ] Having concluded that this Court does have jurisdiction under Rule 16 to not only remove but to also replace Ms.

Williams, the question remains whether it should exercise jurisdiction in the circumstances of this case or defer to the Probate Court. I recognize that there are provisions in the Probate Court Act that would prima facie benefit certain persons over others, in particular the notice requirements of

Section 39 and the next-of-kin appointment preferences set out in

Section 53 , but I am not convinced that sending the matter back to Probate Court is in the best interests of the administration of justice in this case. My reasons in enumerated form follow.

[ 59 ] First, the notice objective of

Section 39 has now been met.

Those interested are before the Court. [ 60 ] Second, despite the Probate Court Act preferences for a next-of-kin to be appointed in replacement ( Section 53 (1) and (2) ), a judge sitting in Probate Court would not be obligated to accede to any such a preference ( Section 53 (3) ), and, given what this inquiry to date has revealed, most probably would not. [ 61 ] Third, this Court has the power to remove any contentious cause or proceeding out of Probate Court and into the Court of Queen’s Bench if it was “necessary or desirable so that all matters of controversy between the parties may be completely and finally determined and multiplicity of legal proceedings concerning those matters avoided” ( Probate Court Act , s. 33 (1) ).

The issue of the estate’s Administrator was brought by the parties to the Queen’s Bench. Ostensibly, then, I do not see the need to invoke that provision here. However, since jurisdictional issues were raised, out of an abundance of caution I do so, regarding determinations of who should continue or act as Administrator of the estate. [ 62 ] Fourth, the related principle of proportionality (See: CUPE, Local 821 v.

Vitalite Health Network 2015 NBCA 3 ) codified in Rule 1.02.1 of the Rules of Court would also be applicable, which directs that in applying the Rules “the court shall make orders and give directions that are proportionate to what is at stake in the proceeding and the importance and complexity of the issues” (See e.g. Meldrum as Executor of the Last Will and Testament of Donald Lindsey Johnstone v. Johnstone 2020 NBCA 12 at para. 22 ). [ 63 ] For all those reasons, the Court intends to exercise its jurisdiction to appoint an Administrator(

s) to replace Ms. Williams. IV. DIRECTIONS [ 64 ] The results of the Court’s findings are that the Application of Ms. Williams to continue as Administrator is dismissed. Concurrently, the Application of Mr. Breau to have Ms. Williams removed as Administrator is granted. [ 65 ] The parties had agreed that should the Court decide to name a replacement a further hearing be held. Yvon Breau put forward in his Application a specific candidate for Administrator. In their response, the adult children offered one of them, Ryan Williams, as a candidate if their mother was to be replaced.

Alternatively, their counsel asked to be given the opportunity to make inquires of various trust companies as potential candidates. Given the circumstances, the fairest approach is to grant leave to Yvon Breau and to the testator’s children to file additional affidavits (or supplemental affidavits), if they choose, of a new candidate or of any existing candidate for Administrator, at least 45 days in advance of the scheduled hearing.

The parties are also granted leave to cross-examine such a candidate on their affidavit(s), upon providing notice to the other side at least 20 days in advance of the hearing. [ 66 ] Therefore, the Application of Yvon Breau is adjourned to a date and time for continuation, to be set by the Court Administrator on the “case recovery docket” created by the Court of Queen’s Bench because of the existing pandemic. The length of the hearing is to be determined in consultation with counsel.

[ 67 ] For clarity, Theresa Williams no longer has standing in these proceedings. V. COSTS [ 68 ] Yvon Breau has been successful at this stage. Counsel for all the parties were ad idem when it comes to costs of the proceedings to date. First, they agreed, for their own reasons advanced, that costs should not come out of the estate but should be paid personally. I find it is an appropriate remedy in the circumstances (See: Barry v. Estabrooks Estate 2016 NBCA 55 ). [ 69 ] Second, they agreed that costs should be paid on a party and party basis. Had the Court found that Ms.

Williams deliberately withheld from the Probate Court disclosure of the release provisions of the Separation Agreement at the time she applied for Letters of Administration, this Court would have unhesitatingly required her to pay solicitor/client costs. As it is, I view that to be a negligent failure to disclose and the root cause for the present proceedings; compounded by the very weak merits of her defence against the conflict of interest allegation.

And, the adult children too must bear financial responsibility because they chose to support the primary position of their mother to remain as Administrator, despite, especially, what they would have known about their mother’s intentions regarding their father’s estate. It is of course understandable why they did so, but this does not excuse personal responsibility for a cost award.

In the eyes of the law it was their choice to make, but also their responsibility to accept the financial consequences of a wrong choice. [ 70 ] Third, experienced counsel also agreed on quantum, being $10,000 as partial indemnification for, what I have been told, the significant legal costs of proceeding to date.

I have no reason to dispute that amount. [ 71 ] Therefore, at this stage of the proceedings the Court orders that Theresa Williams, Ryan Williams and Michael Breau forthwith personally pay to Yvon Breau one set of party and party costs, for which they are jointly and severally liable, in the amount of $10,000 plus reasonable disbursements and HST. [ 72 ] The Court reserves the right to make a further cost award to a party at the next stage, depending on success, length and nature of the anticipated continued proceedings. VI. ORDER [ 73 ] A corresponding Order accompanies this Decision.

DATED at the City of Miramichi, N.B. this day of April 2020 ____________________ Mr. Justice John J. Walsh