Veronica Brien v. Francis Walsh, 2018 NLSC 232

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Brien v. Walsh , 2018 NLSC 232 Date : November 21, 2018 Docket : 201701G6001 Between: Veronica Brien and Francis Walsh Plaintiffs/ Respondents in this matter And: Mary lou Walsh First Defendant And: Marie Coombs Second Defendant/ applicant in this matter And: Jacqueline Walsh Third Defendant/ Applicant in this matter And: Helen Walsh Fourth Defendant/ applicant in this matter And: Gary Walsh Fifth Defendant

Before: Justice Kendra J. Goulding Edited Reasons for Judgment Given Orally Place of Hearing: Grand Falls-Windsor, Newfoundland and Labrador Dates of Hearing: June 27 and October 19, 2018 Date of Oral Judgment: November 2, 2018

Summary: The application of the Second, Third and Fourth Defendants to have the Plaintiffs removed as Administrators Ad Litem in the Estate of Helen Walsh was denied. Appearances: Catherine J. Perry Appearing on behalf of Veronica Brien and Francis Walsh Mary Lou Walsh Appearing on her own behalf Daniel Boone, Q.C. Appearing on behalf of Marie Coombs, Jacqueline Walsh and Helen Walsh Gary Walsh Appearing on his own behalf Authorities Cited: CASES CONSIDERED: Fleming v. Fleming , 2006 NLTD 112 ; Sinnott v. Regular , 2014 NLTD(G) 73. STATUTES CONSIDERED: Judicature Act , R.S.N.L., 1990, c.

J – 4; Lands Act , S.N.L. 1991, c. 36; Trustee Act , R.S.N.L., 1990, c. T- 10; Corporations Act , R.S.N.L. 1990, c. C-36. RULES CONSIDERED: Rules of the Supreme Court , 1986, S.N.L. 1986, c. 42, Sch. D. REASONS FOR JUDGMENT

Goulding, J. : INTRODUCTION [ 1 ] The Applicants, Marie Coombs, Jacqueline Walsh and Helen Walsh seek an order that the Respondents, Veronica Brien and Francis Walsh be removed as Administrators Ad Litem of the Estate of Helen Walsh pursuant to

section 123 of the Judicature Act , R.S.N.L., 1990, c. J – 4. background [ 2 ] Helen Walsh died on February 4, 2016 having first made her Last Will and Testament on April 11, 2013 which was prepared by her solicitor, John Kelly, Q.C. and executed in the presence of Mr. Kelly and his legal assistant, Ms. Hurley. [ 3 ] Letters of Probate in the Estate of Helen Walsh were granted to the Respondents on March 18, 2016 and revoked by me in a decision filed April 28, 2017 (see 2017 NLTD(G) 83). [ 4 ] In

summary, I found there was a genuine issue to be tried as the Applicants had provided probative evidence relating to the material issues of testamentary incapacity, undue influence and lack of knowledge of Helen Walsh as to the extent and nature of her Estate. I ordered that the Will be proven in solemn form. I clearly recognized that the Respondents had offered contradictory evidence and it was necessary for a trial judge to make crucial assessments of credibility. Further, there was a lack of evidence as the full medical file and the solicitor’s file had not been produced.

The responses did not fully and satisfactorily answer the allegations and the matter could not be resolved at the first stage of the proceedings. [ 5 ] Helen Walsh was predeceased by her husband, John Walsh, who died on January 1, 2013. She is survived by seven children who are the Applicants and the Respondents as well as Mary Lou Walsh (the Fourth Defendant) and Gary Walsh (the Fifth Defendant). [ 6 ] Letters of Probate in the Estate of John Walsh were granted to the Respondents on May 24, 2013. The Will of John Walsh dated November 29, 2012 bequeathed, (

a) a garage and land at Signal Hill to the Respondent, Francis Walsh, (

b) gold coins to both Respondents, Francis Walsh and Veronica Brien, (

c) a sum of money ($10,000) to a friend, Donald Mercer, (d) 51 percent of the interest held by him in the company, Urban Contracting (J.J. Walsh) Ltd. to the Respondent Francis Walsh and the remaining 49 percent of his share of the company to the Respondent, Veronica Brien, and (

e) all the rest and residue of his Estate to his wife, Helen Walsh. [ 7 ] If his wife had predeceased him, John Walsh bequeathed, (

a) the sum of $50,000 each to his children, Gary Walsh, Helen Walsh and Jacqueline Walsh, (

b) the sum of $75,000 to his daughter Mary Lou Walsh, and (

c) all the rest and residue of his Estate amongst Mary Lou Walsh, Veronica Brien and Francis Walsh. Marie Coombs was not named in John Walsh’s Will. [ 8 ] At the time of his death, John Walsh was involved in a Quieting of Titles proceeding commenced in 2009 involving approximately 44 acres of land at Torbay which included 11.09 acres expropriated by the Crown. In response, the Province filed an adverse claim stating that Mr. Walsh did not meet the requirements of the Lands Act , S.N.L. 1991, c. 36. Justice O’Regan concluded that Mr.

Walsh had proved adverse possession and was entitled to a certificate less the expropriated portion for which the Estate was to be compensated by the Province (see 2014 NLTD(G) 120). [ 9 ] The Respondents were very involved in the legal proceedings and the subsequent negotiations with the Province. During the application to revoke the Letters of Probate in the Estate of Helen Walsh, counsel for the Applicants advised the Court they were consenting to the continuation of the Respondents as Administrators Ad Litem with the condition that the Respondents not disburse any monies to the beneficiaries.

It was evident that a pressing and immediate concern to all parties was that the lengthy negotiations undertaken by the Respondents not be disrupted and delayed which would have happened if the Respondents were removed. Even though a Justice of this court raised the issue of whether the Public Trustee should be appointed, counsel for the Applicants did not agree that this would be “the best idea for the Estate”.

As reflected in my order which is consistent with the record, the consent that the Respondents continue as Administrators Ad Litem did not restrict the duration or duties except for the prohibition on disbursement to the beneficiaries. [ 10 ] In late July 2017, the Respondents and the Province successfully concluded the issue of compensation.

The value of the inventory in the Estate of John Walsh increased from $339,356 to $1,484,353.10 which also included a value of $580,000 for the remaining land at Torbay. [ 11 ] Thereafter, the Respondents concluded their duties with respect to the Estate of John Walsh and pursuant to

section 52 of the Trustee Act , R.S.N.L., 1990, c. T-10, the Respondents were jointly awarded $86,324 as remuneration for their services as Executors (see court order dated 1st of February 2018 in file 201301E11859). Notice of this application for remuneration was given to the Applicants. [ 12 ] The Statement of Claim seeking that the Will be proven in solemn form was issued from this Honourable Court on September 7, 2017. Defences and Lists of Documents have now been filed. The parties have been given a date for a settlement conference in early December 2018.

Failing resolution, the parties estimate the trial will be 20 days in duration. issue [ 13 ] Should the Respondents be removed as Administrators Ad Litem and the Public Trustee appointed in their stead. the law and analysis [ 14 ] In addition to its inherent authority, the Court has the authority to remove an estate trustee pursuant to

section 123 of the Judicature Act . The grounds for removal are set out by Chief Justice Green, (as he then was), in Fleming v. Fleming , 2006 NLTD 112 at paragraph 12 :

The grounds upon which a trustee, and hence an executor or administrator, may be removed include: positive misconduct amounting to abuse of trust; endangerment of the estate or trust property; want of honesty or reasonable fidelity; lack of proper capacity or ability to execute the duties of office; and conflict of interest. [ 15 ] In Sinnott v. Regular , 2014 NLTD(G) 73, Goodridge, J. (as he then was) summarized in paragraphs 8 and 9: 8 Lord Blackburn stated in Letterstedte v. Broers (1884), [1881-85] All E.R.

Rep. 882 (South Africa P.C.) at 887 (a case cited consistently by courts in this province) that the court's "main guide must be the welfare of the beneficiaries". At paragraphs 10-16 of Fleming v. Fleming , 2006 NLTD 112 (N.L. T.D.), Green, J. discussed the legal principles relating to removal of an executor. I summarize the main points: (

a) the removal of a trustee or executor will not be lightly undertaken; (

b) the court has to be satisfied that it is in the interests of the beneficiaries generally that removal should occur; (

c) if it is clear that the continuance of the trustee or executor in office would be detrimental to the execution of the trusts or the administration of the Estate, the court may remove him or her; (

d) positive misconduct amounting to abuse of trust; endangerment of the Estate or trust property; want of honesty or reasonable fidelity; lack of proper capacity or ability to execute the duties of office; and conflict of interest can justify removal; (

e) friction or hostility between the executor and one or more of the beneficiaries will not normally be enough, in itself, to ground the removal, nor will mere suspicions that the executor will favour one beneficiary over another; (

f) an isolated mistake or a technical breach of trust may not be enough, if done in good faith with the best interests of the beneficiaries in mind; and (

g) consistent administration of the Estate in a manner than does not maintain an even hand between beneficiaries will often be enough to justify removal. 9 The court has an inherent power to effect removal if the executor is in a conflict of interest. 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. This is a potential issue here because the executor is a creditor to the Estate relating to legal services rendered prior to the testator's death.

To address whether the conflict is such as to disqualify the executor, one must examine if the executor has placed himself in a position where his personal interest and his duty conflicted conflict, such that he could no longer be impartial vis-à-vis the beneficiaries. [ 16 ] In

summary, in the case before me, the Applicants submit that (

a) the Respondents are in a conflict of interest in their roles as Administrators Ad Litem and as directors of Urban Contracting, (

b) the Respondents have demonstrated a lack of ability to execute the duties of the office of Administrator Ad Litem and (

c) a debilitating dissension exists between the Respondents and some beneficiaries. [ 17 ] The Respondents assert that they have at all times fulfilled their duties in good faith, honestly, diligently and in accordance with advice from legal counsel and accountants. [ 18 ] Mary Lou Walsh and Gary Walsh strongly support the continuation of the Respondents as Administrators Ad Litem and submit that the Applicants are attempting to delay the proceedings and waste the resources of the Estate of Helen Walsh. [ 19 ] Generally, the Will of Helen Walsh provided for two scenarios which depended on the outcome of the Quieting of Titles application. If successful, she bequeathed, (

a) the sum of $40,000 to each of Gary Walsh, Marie Coombs and Jacqueline Walsh, (

b) the sum of $50,000 to Helen Walsh, (

c) the sum of $100,000 to Mary Lou Walsh, and (

d) all the rest and residue of the Estate to the Respondents. [ 20 ] The Inventory of this Estate has also increased in value due to compensation received with respect the expropriation of the land in Torbay and the declared ownership of remaining land. [ 21 ] The Applicants claim that Helen Walsh died having a 50 percent interest in Urban Contracting Ltd., a viable company operated by the Respondents. Urban Contracting filed share lists for the years 1984 – 1987 on December 30, 1988, apparently in connection with the continuance of the Company under the Corporations Act , R.S.N.L. 1990, c. C-36.

These final share lists name only two shareholders, John Walsh (67 percent) and Helen Walsh (33 percent). The Respondents do not dispute that their mother was actively involved in the business and had a share in the company.

[ 22 ] Francis Walsh acquired 51 percent of the John Walsh’s interest in the company while Veronica Brien acquired 49 percent of her father’s interest. The Respondents had worked in the business with their parents for many years. The Respondents claim they also acquired Helen Walsh’s interest in the company during a meeting on August 8, 2013 with the company’s solicitor John Kelly, Q.C. who has since passed away. [ 23 ] The Applicants allege the only record arising from the August 8, 2013 meeting was a Notice of Change of Directors removing John Walsh and Helen Walsh and appointing the Respondents.

Mary Lou Walsh states that her mother related to her how the lawyer told Francis Walsh to give her $1.00 so the share transfer would be legal. [ 24 ] If the Applicants are successful at trial and the Will is not proven in solemn form, the shareholdings in the company may be an issue if the Respondents are not able to satisfy the Applicants that they own 100 percent of the shares.

At that stage, the Respondents will be in a conflict of interest as they cannot claim Helen Walsh’s share of the company as an asset of her Estate and also claim she transferred her interest to them during her lifetime. [ 25 ] An independent person or entity such as the Public Trustee acting on behalf of the Estate would then have to decide if there is sufficient evidence to pursue a claim of partial ownership of the company by Helen Walsh at the time of her death and if the risk and inherent costs of doing so are beneficial or detrimental to the Estate. [ 26 ] If the Applicants are not successful at trial, the issue of whether Helen Walsh transferred her interest in the company to the Respondents is not relevant as they own her interest under the terms of the Will. [ 27 ] There is no suggestion that the Respondents are in any way devaluing the company.

They continue to operate it as they always did for decades from the Walsh home at 2 Duckworth Street. It is certainly in the best interests of the Respondents to maintain the value of the company. [ 28 ] As for the second argument, the Respondents acknowledge that they have intermingled the assets of the Estates of Helen Walsh and John Walsh but for no dishonest or ulterior motive. The Respondents transferred the rest and residue of the Estate of John Walsh to their mother as per the terms of his Will.

The Respondents assert that despite numerous requests to the solicitor, the transfer of the Signal Hill property to beneficiary Francis Walsh was not completed. The matter was resolved by the preparation of a Deed by the partner of the late solicitor and the legal fees were paid from Helen Walsh’s Estate. Similarly, after the deaths of both Helen and John Walsh, compensation was received from the Province for the expropriated land which necessitated the payment of municipal and income tax. This payment was made from Helen Walsh’s Estate although the Torbay property was owned by John Walsh’s Estate.

As well, legal fees relating to advice regarding John Walsh’s Estate were paid from Helen Walsh’s Estate. [ 29 ] It appears that the Respondents should have held sufficient monies in John Walsh’s Estate to pay these contingencies. They may have acted too quickly in transferring all the rest and residue of John Walsh’s Estate to Helen Walsh. However, there is no evidence or even suggestion of any loss to either Estate.

The expenses had to be paid and the Respondents acting on professional advice, paid them out of Helen Walsh’s Estate, rather than transferring the appropriate amounts back to John Walsh’s Estate for payment out of that Estate. Therefore, the Respondents did not act dishonestly or for an improper motive based on the affidavit evidence before me. [ 30 ] With respect to the allegation of suspicious or improper conduct by the Respondents, the Applicants assert that Urban Contracting charged the Estate of Helen Walsh $31,549.44 for maintenance and labour performed at the Walsh properties from 2013 to 2016.

Urban Contracting then deducted the rental owed by the company for office space in the Walsh home at 2 Duckworth Street. The company has further claimed $5,589.78 from the Estate of Helen Walsh for maintenance on the properties since March 2016. [ 31 ] The Applicants argue (

a) the Respondents are in the awkward position of directing the billing and payment of this work, and (

b) some of the services described in the remuneration application for the Estate of John Walsh are also claimed from the Estate of Helen Walsh (for example, repairs to the fence and roof). [ 32 ] The properties in question are older and regular maintenance to preserve their value is reasonable and expected. Urban Contracting performed this work while John Walsh and Helen Walsh were alive. This practice continued after each of their deaths. There is no evidence the company is overcharging for the services.

The issue is whether Urban Contracting is charging the Estate of Helen Walsh for the same work that the Respondents as Executors charged the Estate of John Walsh. If so, the charge to the Estate of Helen Walsh can be adjusted accordingly. This is a matter of accounting and if not resolved, an application may be made to the Court. Again, this would only be relevant if the Applicants are successful at trial.

At that stage, the Applicants would have the right to challenge any amounts they believe are improperly charged by the Respondents to the Estate of Helen Walsh. [ 33 ] The Respondents deny any double recovery and state Urban Contracting charged the Estate of Helen Walsh for services performed by its employees as well as materials used. The Respondents listed their personal services to the Estate of John Walsh in overseeing the properties in the remuneration application. [ 34 ] The benefit to the Estate presently is that Urban Contracting pays rental which decreases the expenses to the Estate.

The company is occupying a portion of 2 Duckworth Street which is important for various reasons including insurance purposes. If the Public Trustee is appointed and Urban Contracting no longer performs the services and/or vacates the premises, the Estate will still incur considerable costs, for example, property management fees, insurance if it can be obtained, maintenance and other repairs. On the basis of the evidence before me, I am unable to find that the conduct of the Respondents with respect to the care of the Walsh properties is suspicious or improper.

This is an issue for another day, if the Applicants are successful at trial and request an accounting of any monies expended by the Respondents. If at some later stage, the Respondents are required to “pay back” monies in the event of any double charge or overcharge, it can be taken from their share of the Estate. [ 35 ] The Applicants are also concerned that the Respondents are paying their legal fees for the proceeding from the Estate of Helen Walsh. The Respondents were appointed Executors by the Letters of Probate.

The Applicants successfully sought revocation but agreed the Respondents would continue as Administrator Ad Litem. The Respondents were required to commence an action to have the Will proven in solemn form.

[ 36 ] Obviously, the Respondents will incur legal fees in doing so, the same as a Public Trustee or other entity would if appointed Administrator. Rule 55.11 of the Rules of the Supreme Court , 1986, S.N.L. 1986, c. 42, Sch.

D, provides that if the Respondents have acted unreasonably or have acted for their own benefit rather than in their representative capacity or have participated in the proceeding unnecessarily because their interest is small, remote or sufficiently protected by any other interested party, the Court may order the costs under Rule 55.11(1) not to be paid out of the fund. [ 37 ] Again, this is a matter for another day, should it be necessary.

The trial judge will be in the unique position to determine if the Respondents have incurred legal costs in a capacity other than as personal representatives that should not be paid from the Estate. [ 38 ] While I understand the Applicants’ heightened concerns especially given the considerable distrust amongst the beneficiaries which has escalated since Helen Walsh’s death, I agree with the Respondents that they as Administrators Ad Litem are obliged now to prove the Will in solemn form as its validity has been challenged by the Applicants.

At this stage, based on how the matter has proceeded thus far, there is no evidence they have charged the Estate improperly for legal costs and it appears the Applicants misapprehend the role of the Respondents. As well, the Respondents would be acting to their own detriment if they wasted or misused the Estate’s resources because if the Will is proven in solemn form, this would decrease the monies they would receive as residuary beneficiaries. [ 39 ] Before I conclude, Mary Lou Walsh and Gary Walsh are self-represented in this application and have filed materials and made submissions.

Therefore, I have also taken into consideration their positions. They wish the Respondents to continue as Administrators. They accept the Respondents are honestly and diligently handling the matters of the Estate. [ 40 ] They submit the Will is a valid one and they wish the bequests to them to be paid out in a timely manner due to serious health concerns. Mary Lou Walsh and Gary Walsh are very concerned with the delay and increased costs should the Respondents now be removed and the Public Trustee or other entity appointed. Their concerns are fair and reasonable.

However, delay and increased costs alone would not be sufficient reason for continued appointment of the Respondents if the Applicants had been able to satisfy the Court that valid reasons existed for removal. [ 41 ] The Applicants have failed to do so and therefore the Respondents shall continue as Administrators Ad Litem of the Estate of Helen Walsh.

The Statement of Claim was filed some 14 months ago and it is time to move this matter along expeditiously. [ 42 ] In the interests of transparency and to avoid further delay by filing of applications for disclosure, the appointment of the Respondents as Administrators Ad Litem will contain the following conditions: 1. To provide to the beneficiaries of the Estate of Helen Walsh (

a) a report of all disbursements and expenditures to date within 30 days from the date of the Order and every 90 days thereafter, (

b) a copy of invoices for labour and materials provided by Urban Contracting to the Estate of Helen Walsh. 2. They shall allow the beneficiaries to visit and inspect the properties of the Estate of Helen Walsh at times as may be approved by the Respondents who may be present or have other persons present on their behalf. This does not permit the beneficiaries to inspect the assets and records of Urban Contracting Ltd. 3.

The Respondents shall not liquidate any assets or distribute any bequests except by order of this Court or with the duly executed and witnessed consents of all beneficiaries. [ 43 ] The Respondents being the successful parties are entitled to their costs on a solicitor and own client basis although I am not satisfied that I had to make that Order but I do so for the purposes of clarity. I do agree with Ms. Perry that they could have taken their costs from the Estate of Helen Walsh. [ 44 ] The Applicants claims were not without merit and were not frivolous and vexatious.

For example, the Respondents admitted to intermingling of funds but for no improper purpose and with no loss to either Estate. The Respondents agreed they refused the Applicants an inspection of the properties of the Estate for what they believed were justifiable reasons. Although I understand that when the matter was heard on October 19, there had been a change in their position.

Further, it appears that the charges for maintenance of the properties of Helen Walsh for three years prior to her death were invoiced after her death causing concern to the Applicants. [ 45 ] For these reasons, I will allow the Applicants their costs on a party and party basis which is not full indemnification. I think this is an appropriate order of costs in the circumstances of this matter. Thank you to counsel and the parties. _____________________________ Kendra J. Goulding Justice