KIMBERLEY REITER APPLICANT - v. -, 2016 SKQB 100

QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2016 SKQB 100 Date: 201 6 03 23 Docket: SUR 171 of 2015 Judicial Centre: Swift Current IN THE MATTER OF THE ESTATE OF MICHAEL PETER REITER, DECEASED BETWEEN: KIMBERLEY REITER APPLICANT - and - YVONNE POWELL and YVETTE MacLACHLAN RESPONDENTS Counsel: Jeff Taylor for the applicant Jack Hoffart for the respondents JUDGMENT DAWSON J.

MARCH 23, 2016 [ 1 ] The applicant, Kimberley Reiter, seeks an order that the respondents, Yvonne Powell and Yvette MacLachlan, renounce their right to probate the last will and testament of Michael Peter Reiter, or in the alternative, an order that Yvonne Powell and Yvette MacLachlan be terminated as executors of the estate for Michael Peter Reiter. BACKGROUND FACTS [ 2 ] The respondents, Yvonne Powell and Yvette MacLachlan, were appointed as powers of attorney for their father, Michael Peter Reiter, on October 4, 2007. The applicant is the sibling of the respondents.

[ 3 ] On December 1, 2008, their mother, Anne Reiter, executed a will appointing Yvonne Powell and Yvette MacLachlan as the executors of her estate. In the event that the respondents were unable to act, Anne Reiter appointed her son, Michael William Reiter, as the alternate executor.

The sole beneficiary of the estate was Anne’s spouse, Michael Peter Reiter. [ 4 ] Anne Reiter died on January 17, 2015. [ 5 ] In 2015, a dispute arose in respect of Yvonne Powell and Yvette MacLachlan’s conduct as powers of attorney for Michael Peter Reiter. [ 6 ] On June 4, 2015, this Court ordered that Yvonne Powell and Yvette MacLachlan provide an accounting of their conduct as powers of attorney within 60 days for the period of January 1, 2014 to June 4, 2015 (QB 33 of 2015). [ 7 ] On September 4, 2015, Yvonne Powell and Yvette MacLachlan withdrew as powers of attorney for Michael Peter Reiter. [ 8 ] The respondents provided the accounting for the period of January 1, 2014 to June 4, 2015, but it was an incomplete accounting.

It did not include the uses of funds expended nor did it provide an explanation for a significant number of cash withdrawals and Interact e-transfers. Some particular concerns in respect of the accounting include the following: a. That on January 28, 2015, there was a $1,500.00 payment to Standard Motors from the account of Michael Peter Reiter. Michael Peter Reiter did not own a car and had not had a driver’s licence since around 2005 or 2006; b. That on February 28, 2015, there was a $10.49 payment to Pet Valu but Michael Peter Reiter did not own a pet; c.

That on April 27, 2015, there was a $79.25 payment to Regal Nails Salon while Michael Peter Reiter did not leave the Palliser Care Home and one of his children did his nails and cut his hair; and c. That there were thousands of dollars in cash withdrawals and Interact transfers that had no explanation. [ 9 ] Bryce Miller, Trust Officer with the Public Guardian and Trustee for the Province of Saskatchewan [Public Trustee] deposed that he was advised that on September 10, 2015, Yvonne Powell visited the Swift Current Innovation Credit Union and withdrew $4,000.00 cash from the account of Michael Peter Reiter.

This was six days after Yvonne Powell withdrew as power of attorney for Michael Peter Reiter. [ 10 ] On September 28, 2015, this Court ordered that the assets of Michael Peter Reiter would from that point forward be managed by the Public Trustee.

This Court ordered on that same date that the respondents provide to the Public Trustee an accounting with respect of the estate of Michael Peter Reiter for the period from October 2007 to January 1, 2014 and for the period May 25, 2015 to September 28, 2015 within 90 days (QB 33 of 2015). [ 11 ] Michael Peter Reiter passed away on October 14, 2015. [ 12 ] Under the terms of Michael Peter Reiter’ will, Yvonne Powell and Yvette MacLachlan were named as the executors of his estate.

Michael William Reiter was named as an alternate executor in the event Yvonne Powell and Yvette MacLachlan were unable to act as executors. The beneficiaries of the estate are Michael Peter Reiter’s children which include the applicant, the respondents, Michael William Reiter and six other children. [ 13 ] On January 6, 2016, the Public Trustee wrote to the solicitors for the respondents and the applicant herein and advised that the respondents had not provided the accounting ordered by this Court on September 28, 2015 on QB 33 of 2015.

The Public Trustee indicated that the respondents had sent to the Public Trustee two file boxes, a shopping bag and a large envelope containing bank and investment statements, credit card, care home, utilities, insurance invoices and a number of years prior income tax returns. [ 14 ] In the same correspondence, the Public Trustee advised both counsel that a cursory review of the materials sent by the respondents to the Public Trustee raised concerns. The Public Trustee stated: … This office has not received the accountings in the format pursuant to The Powers of Attorney Act, 2002 .

The former attorneys and their legal counsel have provided two file boxes, a shopping bag and large envelope containing bank and investment statements; credit card, care home, utilities and insurance invoices and a number of prior years of income tax returns. The above-mentioned contain various dates from 2007 to 2015.

A preliminary review has revealed the following: • a number of large value e-transfer of funds from Michael Reiter’s bank accounts to an unknown account; the source of the unknown bank account was not provided. • numerous potential inappropriate charges incurred on Ann[e] Reiter’s CIBC Dividend VISA and MBNA MasterCard accounts; these charges occurred before and after Ann[e] Reiter’s death; it was confirmed by a review of the bank statements that all invoices were paid through Michael Reiter’s bank accounts.

These charges amongst others include the following: • Paypal – various vendors • WestJet in the name of MacLachlan, Yvette • West Jet in the name of Powell, Yvonne

• Phantasic Nails in Swift Current • Babble Maternity Baby • Zulily • Wen by Chaz Dean • L.H.L. Easy Colon Cleanser • Apple I-Tunes Store • Budget Blinds of Moose Jaw • Clarke Chiropractic • Paradise Inn Motel, Swift Current • MacBean Tessem Law Office • Flixattic.com • PM Singleparentmeet.com • Grocery purchases were charged to the Co-op account held by Michael Reiter and paid through his bank accounts. These charges continued after Ann[e]’s passing. • a number of potential inappropriate Interact direct purchases i.e.

Boutique Gigi, Regal Nail Salon, Photoworks by L, Rittinger’s Men’s, etc. and large ATM withdrawals occurred through Michael Reiter’s bank accounts both before and after the death of Ann[e] Reiter • the charges on the credit cards and withdrawals from the bank accounts ceased post issue of the Order of Mr. Justice Sandomirsky It is recommended that an independent reputable accounting firm be retained to conduct a forensic review of the accounts owned by Michael Peter Reiter and an accounting prepared.

This office has no authority to request the review and/or funds on deposit for the Estate of Michael Reiter to satisfy costs associated. [ 15 ] The Public Trustee identified that they were recommending an independent accounting firm be retained to conduct a forensic review of the accounts owned by Michael Peter Reiter for the period of the respondents’ attorneyship and to prepare the accounting. [ 16 ] It is important to note that both counsel for the applicant and counsel for the respondents took the position the court could rely on the above noted January 6, 2016 correspondence from the Public Trustee on this application. [ 17 ] The respondents, Yvette MacLachlan and Yvonne Powell, filed two affidavits in response to the application prior to the hearing date of March 1, 2016.

The respondents attested that the Mennonite Trust was assisting them with the administration of the estate of Michael Peter Reiter.

They further attested that because title to their parents’ residence was registered in the joint names of Anne Reiter and Michael Peter Reiter, it was not necessary to probate the estate of Anne Reiter. [ 18 ] The respondents attested that they were of the understanding that the Public Trustee’s office was going to do the accounting for Anne Reiter, the joint accounts of Anne Reiter and Michael Peter Reiter and the Michael Peter Reiter accounts (despite the court’s clear order that they prepare an accounting).

They indicated they sent the documents to the Public Trustee, but the documents were returned to them from the Public Trustee. They estimated it would take four to six months to do the full accounting as ordered by the court. [ 19 ] The respondents failed to provide any explanation with respect to the issues raised about the unexplained transfer of funds identified in the first accounting. [ 20 ] On March 15, 2016, Ms. Powell filed a further affidavit wherein she deposed: 2. That on September 10, 2015 I visited the Swift Current Innovation Credit Union Branch and made a cash withdrawal of $4,000.00. 3.

That attached as Exhibit “A” is a copy of a cover letter asking for a further Trust Deposit of $3,000.00 and a copy of the Legal Account from MacBean Tessem Law Firm dated August 26, 2015, showing a balance of $3,515.17. 4. That attached as Exhibit “B” is the receipt from MacBean Tessem Law firm for the $4,000.00 cash which I paid to them for the retainer and Legal Account. The receipt is signed by Teresa Neustaeter at MacBean Tessem, and is dated September 10, 2015. [ 21 ] This affidavit evidence confirms that Ms.

Powell did, in fact, withdraw $4,000.00 from the account of Michael Peter Reiter on September 10, 2015, when she no longer had the authority to do so (as she had withdrawn as the power of attorney for Michael Peter Reiter on September 4, 2015). The evidence indicates Ms. Powell used the $4,000.00 funds to pay the law firm that she and Ms. MacLachlan retained on May 26, 2015. That lawyer’s account is titled “YVONNE POWELL & YVETTE MacLACHLIN [sic] RE: ACCOUNTING FOR POWER OF ATTORNEY GRANTED FOR MICHAEL PETER REITER”.

There was no order made by this Court that the estate of Michael Peter Reiter would pay for the accounting.

[22] It is of note that there is a simultaneous application to remove the respondents as the executors of the estate of Anne Reiterbefore the court (SUR 172 of 2015). POSITIONS OF THE PARTIES [23] The applicant seeks to have the respondents removed as executors, so as to allow the named alternate executor, MichaelWilliam Reiter, to act as executor of the estate of Michael Peter Reiter.

All of the beneficiaries, other than the respondents, haveconsented to this application and consent to Michael William Reiter acting as the executor. [24] The respondents suggest that this application should be adjourned for four to six months to allow the accounting to becompleted in respect of Michael Peter Reiter as previously, with some type of order for the management of the estate of Anne Reiter inthe interim. The respondents do not wish to renounce their executorship. [25] I would note that none of the parties on this application suggested that a trial of the issue should be ordered.

Therespondents did not seek a trial, but simply sought an adjournment of the application for four to six months to give them time to providethe previously ordered accounting. ANALYSIS Governing Legal Principles [26] It is well established that the Court of Queen’s Bench has an inherent jurisdiction to remove executors (Re, Ocean ManTrust (1993), (SK CA), 113 Sask R 179; Figley v Figley, 2012 SKCA 36, 393 Sask R 44 [Figley]).

This is theappropriate jurisdictional basis from which to approach the applicant’s application. [27] The leading case with respect to the removal of executors is Letterstedt v Broers (1884), 9 AC 371 (PC) [Letterstedt].As noted in Figley, the court in Letterstedt said the following: 32 The leading case with respect to the removal of executors is Letterstedt v. Broers (1884), 9 A.C. 371 (P.C.).

There, LordBlackburn referred with approval, at pp. 385-86, to a passage from Story's Equity Jurisprudence: Story says, s. 1289, "But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who haveabused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts ofEquity to adopt such a course.

But, the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or awant of proper capacity to execute the duties, or a want of reasonable fidelity." [28] As reiterated by the court in Figley, this general approach appears to have been consistently applied by the courts of thisprovince and elsewhere (Re, Watson Estate (1997), (SK KB), 159 Sask R 275 (QB); Matiko v Matiko Estate, 2002SKQB 273; Re, Mitchell Estate, 2006 SKQB 267, 280 Sask R 151 [Mitchell Estate]). [29] In Re, Hazlehurst Estate, 2007 SKQB 343, 301 Sask R 121 [Hazelhurst], this Court dealt with a situation where theparties’ father had died and his three daughters were named as executors of the estate.

The daughters were also principal beneficiaries ofthe father’s estate. The daughters, however, were in conflict due to personal biases and beliefs. Hazlehurst, the applicant, brought theapplication to remove Cates and Ward (her two sisters) as executors leaving Hazlehurst as the sole executor. [30] Justice Mills, in Hazelhurst, cited Scott v Scott (1991), (SK KB), 92 Sask R 301 (QB) [Scott] whichindicated that trustee misconduct was not a necessary requirement for the court to act.

The court in Scott held that the court may bejustified in interfering with the administration of the trust by virtue of a “situation arising between the trustees rendering the continuedadministration of the trust impossible or improbable”. Justice Mills identified five points which need to be examined when a judge islooking to remove an executor from an estate. The points are as follows (para. 6): 6. … 1. The terms of the will as it relates to the obligations of the executrixes; 2. The terms of the will as it relates to the beneficial interest of the parties; 3. The nature of the assets to be administered; 4.

The activities of the executrixes in carrying out their obligations under the will; 5. Any conflicts of interest that arise under the administration of the estate assets. … [31] Mills J. went on to say that if, after the above analysis is complete, the court is left with the conclusion that removal orreplacement of an executor is in the best interests of the trust and its beneficiaries, then the executor should be removed or replaced inorder to properly execute the will. [32] It is important to note that removing or replacing a trustee should not be taken lightly.

Unless there is a situation wheregood cause is shown based on the above five criteria, the wishes of the testator should be respected (para. 7). Justice Mills stated at para.

8: 8 The removal of an executrix will occur if a stalemate has arisen in the administration of the estate if that stalemate has been caused by the inactivity or negligence of an executor, or disagreement or dissension regarding the method of distribution of the estate in complying with the directions of the testator. [ 33 ] Ultimately, Justice Mills found that a stalemate had occurred in Hazelhurst and that the two sisters should be removed from the position of executor and Hazlehurst was left to be the sole executor (para. 27). [ 34 ] Counsel for the applicant here suggests that the respondents engaged in conduct which would warrant their removal from the position of executors.

The applicant alleges misconduct and a lack of fidelity on the respondents’ part, primarily evidenced from their conduct while acting as powers of attorney for Michael Peter Reiter, including: the inappropriate use of funds as identified in the accounting; the failure to explain the use of funds or to identify the recipient of e-transfers from Michael Peter Reiter’s account during their time as power of attorney; the withdrawal of money from Michael Peter Reiter’s account on September 10, 2015, when Yvonne Powell had no legal authority to take funds; the identification by the Public Trustee of the need for a forensic accounting the Michael Peter Reiter estate; and, the failure to comply with a court order, specifically the September 28, 2015 order, to provide an accounting for their attorneyship. [ 35 ] The most significant concerns as identified in the evidence indicates the following: 1.

The accounting provided by the respondents pursuant to the order of Justice Krogan of June 4, 2015 was incomplete; 2. There are concerns about the use of funds by the respondents while they were powers of attorney, including purchases for items not associated with Michael Peter Reiter and the failure to identify the uses of funds or an explanation for a significant number of cash withdrawals and Interact transactions; 3. On September 4, 2015, Yvonne Powell and Yvette MacLachlan withdrew as powers of attorney for Michael Peter Reiter.

On September 10, 2015, Yvonne Powell withdrew $4,000.00 cash from the account of Michael Peter Reiter at the Swift Current Innovation Credit Union. The purported use of these funds was to pay the solicitors the respondents had engaged to prepare the accounting ordered June 4, 2006. However, they had no authority on September 4, 2015 to utilize funds from the estate of Michael Peter Reiter, having withdrawn as attorneys. Further, the court had not ordered which party (the estate of Michael Peter Reiter or the respondents) was to pay the costs of that accounting; 4.

The respondents had failed to comply with the order of this Court dated September 28, 2015 that they provide an accounting for the period of October 4, 2007 to January 1, 2015 and May 25, 2015 to December 28, 2015 by December 31, 2015. 5.

The Public Trustee has expressed concern about the financial documents it reviewed and has recommended an independent accounting firm be retained to conduct a forensic review of the accounts owned by Michael Peter Reiter. [ 36 ] As stated, all of the beneficiaries of the estate, except Yvette MacLachlan and Yvonne Powell, have consented to and filed affidavits indicating that they are in favour of replacing Yvonne Powell and Yvette MacLachlan as the executors of the estate and allowing Michael William Reiter to act as executor pursuant to the terms of the will. [ 37 ] This situation involves concerns about the propriety of the respondents in respect of their administration of the estate of Michael Peter Reiter, including withdrawals and transfers for cash with no explanations, purchase or charges for items not apparently associated with Michael Peter Reiter, the failure of the respondents to abide by court orders in the matter respecting their conduct as powers of attorney for Michael Peter Reiter and the withdrawal of funds from the account of Michael Peter Reiter on September 10, 2015, when the respondents were without authority to use those funds. [ 38 ] The evidence here reveals the respondents’ want of the proper capacity to execute their duties and/or a want of reasonable fidelity as in accordance with the Letterstedt test.

I am satisfied it is in the best interest of the estate that the respondents should be removed as the executors of the Michael Peter Reiter estate and I order their removal. Michael William Reiter remains as the alternate executor. [ 39 ] The applicant shall have costs against the respondents. J. C. L. DAWSON