2023 MBKB 102, 2023 MBKB 102

Date: 20230615 Docket: PR 14-01-96367 (Winnipeg Centre) Indexed as: Re: Johnson Estate Cited as: 2023 MBKB 102 COURT OF KING’S BENCH OF MANITOBA IN THE MATTER OF: The Estate of Dennis Ralph Johnson B E T W E E N: ROBERT MYLES JOHNSON, ) ) Paul R. Kathler applicant, ) Counsel for the applicant ) ) -and- ) ) ) CHRISTOPHER MICHAEL JOHNSON as Executor of the Estate of MICHAEL DENNIS JOHNSON and HEATHER ALLISON KRISTJANSSON ) ) ) ) ) Kelly P.

Land Counsel for the respondent Christopher Michael Johnson as Executor of the Estate of Michael Dennis Johnson ) ) ) respondents. ) ) ) JUDGMENT ISSUED: ) June 15, 2023 MASTER BERTHAUDIN [ 1 ] This decision relates to an application to pass accounts for the estate of Dennis Ralph Johnson, who died on September 10, 2013. BACKGROUND [ 2 ] The applicant, Robert Myles Johnson (Robert), was granted probate on January 22, 2014. Robert was one of three beneficiaries of the estate; the other two being his brother Michael Dennis Johnson (Michael) and his sister Heather Allison Kristjansson (Heather).

Unfortunately, both Michael and Heather have since died. Thus, the beneficiaries are now Robert and the estates of Michael and Heather. [ 3 ] The respondent Christopher Michael Johnson is Michael’s son and the executor of his estate. He is opposed to the passing of Robert’s accounts, mainly due to the compensation sought by Robert. Heather’s estate did not participate in the passing of accounts.

[ 4 ] On application by Christopher, Rempel J. granted an order on December 18, 2018, requiring that Robert pass accounts within 45 days of the signing of the order. The order was not signed until April 23, 2021. For reasons not explained, the application to pass accounts was not filed until July 8, 2022. Once filed, counsel attended four teleconference hearings for direction prior to the hearing of this application for a full day on May 9, 2023. [ 5 ] At the final hearing for directions on January 10, 2023, it was agreed that the remaining issues to be determined in the passing of accounts were as follows: 1 .

Compensation/reimbursement to the applicant for his work as executor of the estate; 2 . The respondent’s allegation that wastage occurred in relation to the value of the cottage property and the home residence as a result of delays leading up to the sale of those properties; 3 . The legal fees incurred by the applicant in relation to the passing of accounts. [ 6 ] Despite there being three issues noted for determination, it became apparent during submissions by counsel at the conclusion of the hearing that the only issue in dispute was Robert’s compensation.

While Christopher continues to allege wastage related to delays in the sale of real property of the deceased, he argues that the effect of the alleged delays should be a reduction of the compensation claimed by Robert. Further, the third listed issue of legal fees incurred by the applicant in relation to the passing of accounts was not seriously contested. As such, the issue to be determined in this decision is the compensation due to Robert for his work as executor of the estate. [ 7 ] Robert and Christopher were the only witnesses at the hearing of this matter.

By agreement, their direct evidence was given by way of affidavit. Cross-examinations were conducted in court. MATERIAL FACTS RELATING TO EXECUTOR’S COMPENSATION [ 8 ] In the request for probate filed on January 22, 2014, the inventory of the deceased is stated to be immoveable property valued at $780,000, and moveable property valued at $1,054,023.22.

The immoveable property is comprised of the deceased’s home in Winnipeg, Manitoba, and his cottage in Sandy Hook, Manitoba. [ 9 ] The moveable property was comprised of certain shares in, and a shareholder’s loan to, the corporation D’Jay’s Pizza Ltd. valued at $646,515.00, funds in an investment account valued at $382,840.57, a Ford Expedition truck, various smaller amounts in bank accounts and a minor amount of furnishings and household effects. [ 10 ] With respect to the shares and shareholder’s loan, these were assigned equally to the three beneficiaries, Robert, Heather and Michael.

There was not a significant amount of work required by Robert for this to be accomplished. [ 11 ] With respect to the deceased’s home, at the time of his death he was residing with his common-law partner. With the consent of all beneficiaries at the time, she remained in the home until in or about January, 2014. No claim to the home was made by the common- law spouse. Home Property [ 12 ] After some cleaning and painting was performed on the home, it was first listed for sale on May 22, 2014. In the request for probate filed a few months earlier, Robert had valued the home property in the amount of $550,000.

When questioned as to how he reached this value, he said it was based on a personal estimate. He felt that the home was the nicest one on the street and thought it should sell for that much. As such, when he listed the home for sale with a realtor on May 22, 2014, the list price was $549,900. Only one offer was received during the three-month listing period, with an offered purchase price of $415,000.

While Robert counter-offered with a slight reduction, an agreement was not reached with the prospective purchaser. [ 13 ] A second listing contract was entered into by Robert on August 9, 2014, this time with a list price of $499,900. No offers were received by the time the listing agreement expired on October 15, 2014. [ 14 ] A third listing agreement was signed by Robert on October 26, 2014, with a list price of $464,900. Two offers were received during this listing period. The first, dated November 15, 2014, was in the amount of $450,000. Robert counter-offered but the counter- offer was not accepted.

A second offer was made on March 4, 2015, in the amount of $452,500 and this offer was accepted by Robert. The possession date for the purchase was April 1, 2015. [ 15 ] During the 15-month period between the grant of probate and the possession date, Robert was responsible for all maintenance for the home property. This included payment of the utilities for the property. One concern raised by Christopher is that Robert’s payment method was to attend the bank every time he paid the hydro bill for the home property and in person at the City of Winnipeg to pay the property tax.

As Robert compiled a log of his time spent working as executor, Christopher points out that paying bills in person rather than through online banking or automatic payments set up with the bank, significantly increased Robert’s time and was inefficient. Cottage property [ 16 ] The biggest source of dispute between the parties is Robert’s handling of the cottage property. On this topic, Robert’s evidence in

his supplementary affidavit affirmed August 8, 2022, is as follows: 20. At the time of his death, my father was the sole owner of a cottage property located at 9 Palmer Place, Sandy Hook Manitoba. 21. From the date of my father’s death (September 10, 2013) all beneficiaries and their families had free use of the Cottage. 22.

Because of the long family history at the Cottage, including being the site of annual Johnson family reunions and golf tournaments, and its ongoing use by various members of the Johnson family, including Heather and Michael, there was no immediate desire by the beneficiaries to sell the cabin and there was lingering hope that one or more of the beneficiaries would purchase the Cottage. 23. After Michael’s passing in 2017, the future of the Cottage was uncertain.

It was ultimately apparent that none of the beneficiaries were in a position to purchase the Cottage from the Estate and it was therefore listed for sale. [ 17 ] It is not in dispute that the three sibling beneficiaries (Robert, Michael and Heather) agreed after the deceased’s passing that they would keep the cottage for an unspecified period of time for the use of all beneficiaries and their families. Beginning in or around 2015, due to Michael’s illness, his use of the cottage diminished. Despite that, there is no evidence that the agreement was terminated.

Christopher suggested that at some point before his death, Michael told him that he had asked that the cottage property be sold. Robert does not agree that this occurred. [ 18 ] Michael died on December 26, 2017. Robert says that he and Heather were uncertain what to do with the cottage property at that point, but took some time to consider their options. It was hoped that one or both of them would be able to purchase the cottage property in order for it to stay in the family.

Unfortunately, this did not occur. [ 19 ] As noted earlier, Christopher filed a notice of application on November 26, 2018, seeking an order requiring Robert to pass his accounts. One of Christopher’s complaints in his affidavit filed in support of the application was that significant estate funds had been spent on the cottage property and it had not yet been sold. It should be noted that the significant renovation work done to the property occurred in 2015, during the period when the siblings had the agreement in place to keep the property for the use of the family, and while Michael was still alive.

There is no suggestion in this litigation that Robert used estate funds to complete the renovation work without the consent of his two sibling beneficiaries. [ 20 ] Upon reaching the conclusion that neither he nor Heather would be able to purchase the cottage property, and with Christopher’s application resulting in an order that he pass his accounts, the cottage property was listed for sale on July 15, 2019. [ 21 ] Robert’s actions leading up to the listing of the cottage property are also a source of complaint for Christopher, due to what he suggests is excessive time spent meeting with various realtors prior to choosing a realtor to handle the listing.

In part, this is because Robert resides in Winnipeg and the cottage property is in Sandy Hook, thus requiring significant travel time by Robert every time he had to attend the property. In June and July, 2019, Robert spent 24.5 hours meeting with or discussing the cottage property with four separate realtors. Ultimately, the cottage property was listed for sale on July 15, 2019, at the list price of $259,000. An offer to purchase for $220,000 was received on November 19, 2019, and after counter-offers it was sold for $235,000.

The possession date for the cottage property was April 1, 2020. [ 22 ] It should be noted that in the application for probate, Robert listed the value of the cottage property as $230,000 on January 14, 2014. Thus, one of the complaints of Christopher is that the significant renovations approximating $55,000 that were done in 2015 added little value to the cottage property.

Robert advised that some of the renovations were necessary due to the age of the home and the entirety of the renovations were done with the consent of the two other beneficiaries who were then alive. [ 23 ] Between the grant of probate in 2014 and the possession date of April 1, 2020, Robert was generally responsible for the maintenance and bill payment for the cottage property. For maintenance, this typically involved going once a month to the property to perform a check, cut grass, clear snow or whatever else was necessary. On a few occasions, Robert had someone else perform this task for him.

With respect to bill payments, once again Robert’s method was to attend in person at the bank to make utility payments and attend in person at the municipal office in Gimli, Manitoba, to pay the property tax annually. Given his residence in Winnipeg, the attendance to Gimli to pay taxes in person was again a source of complaint by Christopher due to the excessive time involved in making this payment with the travel time from Winnipeg.

Further, Christopher complains that Robert did not combine this task with other tasks at the cottage in Sandy Hook, which is roughly a 10-minute drive from Gimli. [ 24 ] In the pre-hearing process for the passing of accounts, Robert produced a number of documents, including a log setting out the time he spent working as executor. It was apparent on cross-examination that some of the hours worked were recorded by Robert concurrently and later reproduced in the log that was provided.

Other tasks he had to recreate by looking at other documents such as bank statements to determine when he would have attended the bank to pay bills and perform other tasks. In addition to work already described herein, there is significant time recorded by Robert to essentially supervise the renovation work to the cottage that was performed by contractors in 2015 and significant work clearing out and cleaning, packing and removing the contents of the cottage property once it was sold.

POSITION OF ROBERT [ 25 ] Robert requests that he be allowed the sum of $64,190.81 as his fair and reasonable allowance for his care, pains, trouble and time expended in administering the estate between September 10, 2013 and June 29, 2022. He calculates this amount to be 3.5 percent of the value of the estate. [ 26 ] As noted, Robert produced a log showing the time spent by him performing his duties as executor. The total time recorded on the document was 786.2 hours.

The document also lists a $40 fuel charge for every trip made between Winnipeg and Sandy Hook, with a total amount for fuel of $3,800. [ 27 ] Robert was cross-examined extensively on the log and acknowledges that there are errors therein. He also acknowledges that he could have been more efficient with his time on occasion. His counsel argues, however, the standard is not perfection. Robert was not charging an hourly rate to the estate and the log was produced simply to establish the significant time required for the work he performed as executor. He argues that his handling of the estate was a success.

He also points out that the delay in selling the cottage was with the full agreement and support of his two sibling beneficiaries, at least up until the time of Michael’s passing. POSITION OF CHRISTOPHER [ 28 ] Christopher argues that there was a distinct lack of success in Robert’s handling of the estate, mainly due to delays in selling the real estate. Aside from the real estate, Christopher points out that the skill required for the handling of the remaining assets was minimal.

Despite the significant value of the shares, much of the work required for transferring the shares in specie was done by legal counsel. [ 29 ] With respect to the home property, Christopher’s position is that Robert’s personal valuation in the Request for Probate and the initial listing agreement hampered the sale of the home. He should have obtained a realtor’s opinion of value at the outset such that an appropriate listing price was chosen, and the home sold more promptly. As it was, it took roughly one year for the home to be sold after several significant reductions in the listing price.

He also criticizes Robert for not having requested a refund of probate fees once the home was sold for a significant amount below that used when Robert paid for the probate fees. [ 30 ] With respect to the cottage property, Christopher alleges that too much time was taken after Michael’s passing in December, 2017, for Robert to list the property for sale.

He also complains that the significant renovation work performed on the cottage did nothing to increase its value and that Robert spent too much time meeting with realtors prior to listing the cottage for sale. [ 31 ] Christopher’s counsel spent significant time during cross-examination reviewing with Robert the time he recorded to perform certain tasks.

As Robert’s compensation request of $64,190.81 divided by his recorded time equals $89 per hour, Christopher’s counsel focused on how much Robert was charging the estate in time for each of the tasks performed. [ 32 ] Ultimately, Christopher does not deny that Robert is entitled to some compensation for the work performed by him as executor. It was suggested in closing submissions that $20,000 would be the appropriate compensation for Robert between the Grant of Probate until July, 2015. The latter date was chosen by Christopher as the date by which Robert should have completed his administration of the estate.

ANALYSIS AND DECISION [ 33 ] As noted by Christopher’s counsel in closing submissions, the leading authority relating to executor compensation is Re: Toronto General Trust v. Central Ontario Railway (1905), 6 O.W.R. 350, wherein the court set out that the five factors to be considered in assessing executor compensation are as follows:

a) The magnitude of the trust;

b) The care and responsibilities springing therefrom;

c) The time occupied in performing the duties;

d) The skill and ability displayed;

e) The success resulting from the administration. [ 34 ] In this case, the magnitude of the trust was fairly significant in that the estate’s value was over $1.8 million. That being said, and given that the shares and shareholder’s loan of D’Jay’s Pizza Ltd. were simply divided in specie, Robert did not have significant work relating to that asset. Robert’s most significant care and responsibility related to the cottage property and home property.

Arranging for the sale of real estate, however, is a common task required of an executor. [ 35 ] Relating to the home property, I do not fault Robert for the delay of a few months in listing the home property for sale after the deceased’s common-law partner moved out of the home. Where there was a failing by Robert was in relation to the list price for the home. In short, rather than obtain a professional opinion of value, he relied on his own. His own opinion was inflated far above the actual value of the home.

This led to a series of listing agreements being required and an ultimate sale price approximately $100,000 below his opinion of value. During the time it took to sell the home, carrying costs were being incurred on a monthly basis. There is no doubt that there was a cost to the estate in Robert overvaluing the home property at the outset. [ 36 ] With respect to the cottage property, it is clear that Robert and his sibling beneficiaries agreed not to list the property for sale. Rather, it was to be used for the benefit of the family for an undetermined period of time.

For roughly four years until Michael’s passing in December, 2017, I do not find fault with Robert not having listed the property for sale. There is no evidence that any of the siblings resiled from this agreement, save for the hearsay evidence offered by Christopher. Further, given that the funds expended for renovation work occurred during the time that all siblings were alive and this agreement still in place, I accept that the renovation work was

performed with consent of the beneficiaries. Although the renovations do not appear to have increased the value of the cottage property, Robert suggested that they were necessary repairs and agreed to by him and his siblings. I do not find fault with the renovations having been performed. [ 37 ] There was no suggestion in the evidence, however, that the siblings agreed that Robert be compensated for his time travelling to and from the cottage during the time when the cottage was being held for use by the family.

Nor is there evidence that there was an agreement that he be compensated for time spent supervising the contractors who performed the renovation work.

While it must be remembered that Robert does not calculate his compensation based on an hourly rate, I do not view the repetitive trips to check on the property, the significant hours travelling to and meeting with realtors prior to the listing the cottage property, and the time spent supervising the renovation contractors, to be an effective use of Robert’s time as executor of the estate. [ 38 ] With respect to the skill and ability displayed by Robert, I find that his performance was average for a non-professional executor. As noted by his counsel, the standard expected is not perfection.

Taking a little too much time to perform a task or not starting early enough on a task are minor issues that might befall any non-professional executor. Significant skill and ability was not required for this estate in any event. Legal counsel handled the sharing of the corporate shares and Robert’s only significant role related to the two pieces of real property. His performance relating to those properties was somewhat variable, but it is acknowledged that he had family members to appease with respect to the cottage property.

Some skill was required to ensure the property was ready and available for family and checked frequently enough for insurance coverage to remain effective. [ 39 ] Finally, with respect to the success of his administration of the estate, once again I would classify it as moderate. There were some failings along the way, especially in respect of the home property and the inflated valuation. There was also considerable time recorded by Robert in relation to the cottage that was not effective use of his time.

That being said, Robert did not calculate his compensation request based on the number of hours recorded. [ 40 ] Were it not for the agreement between the sibling beneficiaries with respect to the cottage, I agree with Christopher that the administration of this estate should have been complete by the middle of 2015. That being said, the sibling beneficiaries consented to an extension of the administration of the estate past that time so that the family could benefit from use of the cottage. This extended Robert’s role as executor for several years more than would normally be necessary.

Whether or not the siblings were aware that that this would mean increased compensation would be due to Robert is not material. In my view, his period of compensation goes beyond July, 2015, for this reason. [ 41 ] There is no straightforward method of calculating an executor’s compensation, and each case is decided on its own facts. It is my view that Robert’s request for compensation based on 3.5 percent of the estate is substantially overstated. Robert is not a professional executor and did not perform as such.

His performance was in line with an average non-professional executor, with some success and failures along the way. In my view, the appropriate compensation for Robert’s work as executor is $30,000.00. This is more than Christopher suggested for compensation, and acknowledges that Robert’s work as executor continued past 2015.

It also recognizes that this was not an overly complicated estate, despite the time it took to administer it. [ 42 ] With no other issues remaining in dispute, Robert’s accounts are passed. [ 43 ] As noted earlier, the submissions made by counsel at the formal hearing suggested that legal fees of both Robert and Christopher were no longer seriously contested.

There was, however, a suggestion by Christopher’s counsel that if Robert’s compensation request was reduced, both parties should then be responsible for their own legal fees such that Heather’s estate was not then responsible for payment of any of the legal expenses. Should I be mistaken as to the parties’ positions, or should counsel need to discuss this further, an appointment may be made. S. D. Berthaudin Master