2014 MBCA 15, 2014 MBCA 15

Citation: Bereskin Estate, Re, 2014 MBCA 15 Date: 20140128 Docket: AI 13-30-08034 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Madam Justice Diana M. Cameron Mr. Justice Christopher J. Mainella BETWEEN : MARVIN SHEPPY ZINDLER ) ) (Plaintiff) ) - and - ) ) S. Green, Q.C. ARTHUR LEON SCHELLENBERG ) for the Appellant ) (Defendant) ) - and - ) T. E. Bock ) for the Respondents BETWEEN : ) ) MARVIN SHEPPY ZINDLER as Executor ) A. L.

Southall of the late ISABELLE ALICE BERESKIN ) on a watching brief ) (Applicant) Appellant ) - and - ) Appeal heard: ) December 3, 2013 THE SALVATION ARMY, ) THE JEWISH FOUNDATION OF ) MANITOBA, HEART AND STROKE ) Judgment delivered: FOUNDATION OF MANITOBA INC. ) January 28, 2014 AND CANCERCARE MANITOBA ) FOUNDATION INC. ) ) (Respondents) Respondents ) BEARD J.A. I. THE ISSUES [ 1 ] The appellant, Mr. Zindler, has appealed the order of the motion judge, made pursuant to s. 9(1) of The Trustee Act , C.C.S.M., c.

T160, removing him as executor of the estate of the late Isabelle Alice Bereskin (the estate). [ 2 ] In his factum, Mr. Zindler sets out one ground of appeal, being: The only issue in this case is whether or not [the motion judge] was correct in accordance with governing jurisdiction to remove an executor chosen by a testat[rix] to administer her estate. [ 3 ] Within that ground of appeal, Mr. Zindler is arguing that the motion judge: (

i) erred in concluding that Mr. Zindler attempted to resile from the mediation agreement (as defined in para. 6 herein); (ii) erred in stating that Mr. Zindler was delaying his requirement to complete an accounting; (iii) erred in referring to the fact that Mr. Zindler accepted the power of attorney from the testatrix while, at the same time, challenging her capacity to have made the last will, both documents having been signed on the same date; and (iv) erred in making several negative comments about Mr. Zindler which, no doubt, affected his decision, while not considering

and virtually ignoring Mr. Zindler’s positive attributes, which should have caused him to dismiss the motion to remove him as executor. II. THE FACTS [ 4 ] Isabelle Alice Bereskin (the testatrix), who died on October 27, 2005, executed several testamentary documents: a will dated December 5, 1990 and a codicil dated July 25, 1995 (the 1990/1995 will); a second will dated October 26, 1999; and a third will dated April 4, 2000, which contained very minor changes to the 1999 will (the 1999/2000 wills). She also executed a power of attorney dated October 26, 1999, appointing Mr. Zindler as her attorney.

At some point, she became incompetent and was unable to manage her affairs, so Mr. Zindler took over that management pursuant to the power of attorney. [ 5 ] Once the testatrix passed away, there was a disagreement as to which of the documents were valid.

Litigation was commenced on the question of the validity of the 1999/2000 wills, but, before trial, the parties agreed to attempt to resolve some or all of the issues by way of mediation. [ 6 ] Schulman J. conducted a judicial alternate dispute resolution conference (the mediation) on May 16, 2011, at the end of which the parties were of the view that they had resolved the outstanding issues on the following basis (the mediation agreement): - Mr. Zindler would apply to probate the 1990/1995 will, and the others parties would not pursue probating the 1999/2000 wills; - Mr.

Zindler would retain accountants at the firm of Meyers, Norris, Penny LLP (MNP), to review and report on Mr. Zindler’s administration of the estate both under the power of attorney and following the testatrix’s death; and - the estate assets would be divided into two shares, such that the beneficiaries under the 1990/1995 will would receive 55 per cent and the beneficiaries under the 1999/2000 wills would receive 45 per cent. [ 7 ] Very shortly after the mediation, when counsel attempted to draft a written agreement to incorporate these provisions, Mr.

Zindler took the position that the testatrix’s shares in a private corporation, Margbell Holdings Ltd., had been left to him and, according to the mediation agreement, were exempted from sharing. A number of the beneficiaries (now represented by the Four Charities) and their counsel did not agree. There were discussions to try to resolve the impasse, but they were complicated by the fact that Mr. Zindler was, then, represented by a lawyer who had not been present for, and had not participated in, the mediation. [ 8 ] In a voicemail message on November 22, 2011, Mr.

Zindler’s counsel advised the Four Charities that he would not sign any form of mediation agreement unless it contained a provision that he receive all of the Margbell Holdings Ltd. shares. Following this, he continued to manage the estate assets but refused to cooperate with the accountant to complete, or even further, the accounting. [ 9 ] As matters were at a standstill, the Four Charities filed a motion on April 11, 2012, for an order to enforce the mediation agreement and to remove Mr. Zindler as executor.

A written mediation agreement was finally concluded in November 2012, according to which the Four Charities were able to proceed with their motion to have Mr. Zindler removed as executor, which was the motion heard by the motion judge and now before this court. This agreement was attached as terms of settlement to a consent order. [ 10 ] Mr. Zindler applied for, and obtained, an order from the motion judge staying his order pending the hearing of the appeal. He has obtained a grant of probate of the 1990/1995 will and has been administering the estate.

In fact, he states that there has been an initial distribution of assets to the beneficiaries and that all that remains to be done is the resolution of his court motion to determine the disposition of the shares of Margbell Holdings Ltd. and, following a decision in that regard, the distribution of the remaining assets according to that decision. III. STANDARD OF REVIEW [ 11 ] The parties are in agreement that the motion judge set out and based his decision on the correct legal principles. Further, Mr.

Zindler agrees that the errors that he is alleging all relate to the application of those principles to the facts of this case. This type of error is one of mixed fact and law. [ 12 ] This being a civil case, the applicable standard of review is that set out by the Supreme Court of Canada in Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235: where the ground of appeal raises a question of mixed fact and law, that is, applying a legal standard to a set of facts, the standard of review is that of palpable and overriding error. That is the standard of review to be applied to the issues in this case. IV.

THE LAW [ 13 ] The applicable legal principles, as they were set out by the motion judge, are as follows (at para. 14): .... (i) “[a]n estate trustee is a fiduciary and he or she holds title to and control of property for the exclusive benefit of the beneficiaries of the trust. The duty is often described as one of utmost good faith or uberrima fides” (excerpt from Jennifer J. Jenkins & The Late H. Mark Scott, Compensation and Duties of Estate Trustees, Guardians and Attorneys , Looseleaf (Canada Law Book, A division of Thomson Reuters Canada Limited, 2006), p. 12-2);

(ii) a court will not lightly remove an executor chosen by a testator. The onus is on the party seeking removal to show that it is a clearnecessity and that the welfare of the beneficiaries requires it. See Stern Estate, Re (2010), 2010 MBQB 68 , 250 Man.R. (2d)293; 2010 MBQB 68, at para. 15; (iii) an executor may be removed where the executor is in a conflict of interest, where the executor fails to put the interests of thetrust and the beneficiaries first in his thinking, and ahead of any other interest, or where the attitude and conduct of the executor is“purely obstructive”.

See Stern, at para. 13; Beatrice Watson-Acheson Foundation et al. v. Polk et al., [2006] O.T.C. 542; [2006]O.J. No. 2518 (Sup. Ct.) (QL), at para. 53; Somerset Estate, Re, (BC SC), [1928] 2 W.W.R. (2d) 697 (Man. C.A.),pp. 698-9. [14] The motion judge then correctly set out the issue to be resolved (at para. 15): The central issue before me is whether the evidence (or at least that evidence which I accept) is sufficient to satisfy the onus whichlies on the Four Charities to [establish] a conflict of interest or other conduct sufficient to warrant his removal as the executor/trustee. V. ANALYSIS (

i) The motion judge erred in concluding that Mr. Zindler attempted to resile from the mediation agreement. [15] On this issue, the motion judge stated (at paras. 17-18): …. The central issue is Mr. Zindler’s apparent inability and (or) unwillingness (whether guided by advice that he has received, hisown long-standing personal relationship with the deceased, his personal view of the deceased’s intentions and abilities at any particularpoint in time, or all or some of these factors) to provide the necessary “due regard for the interests” of the beneficiaries, specifically thoseof the Four Charities.

Rather, he has delayed administration in the zealous pursuit of his own interests. …. I am unable to accept the submission of Mr. Zindler to the effect that he was not “backtracking” in any way on the settlementagreement that he made (with the advice of competent counsel), as reflected in the consent order of Schulman, J.

On the evidence beforeme, I can only conclude, absent any evidence from the counsel who represented him during the mediation, that by resiling from theagreement he was simply trying to negotiate or leverage a better settlement with respect to his entitlement from the estate. …. [16] The following evidence is relevant to this issue and not disputed by Mr. Zindler.

When it became clear that there was adispute as to the disposition of the Margbell Holdings Ltd. shares, the Four Charities made a proposal in November 2011 to agree to allmatters that were settled at the mediation except the disposition of the shares, which could be resolved by litigation. This would permitMr. Zindler to immediately obtain a grant of probate and to commence the accounting and administration of the estate. [17] Mr.

Zindler’s response was to reject that proposal, taking the position that, if the Four Charities would not agree to himreceiving all of the shares, he would not complete any written agreement as to any aspects of the mediation settlement. [18] It was only after the Four Charities retained litigation counsel and filed a motion to both enforce the mediation agreementand remove Mr. Zindler as executor that he finally completed the written mediation agreement in November 2012 and a correspondingorder was issued.

That completed agreement was on the same terms as had been proposed by the Four Charities in November 2011. [19] This evidence, alone, amply supports the motion judge’s conclusions that he was “unable to accept the submission of Mr.Zindler to the effect that he was not ‘backtracking’ in any way on the settlement agreement” and that “by resiling from the agreement[Mr. Zindler] was simply trying to negotiate or leverage a better settlement with respect to his entitlement from the estate” (at para. 18). Had Mr.

Zindler been concerned for the interests of the estate and the other beneficiaries, he would have proceeded with the agreementin November of 2011, to permit the administration of the estate, rather than delaying for a year before finally agreeing to those veryterms. [20] The finding that Mr. Zindler resiled from the agreement was a conclusion or inference of fact, which is to be reviewed onthe standard of palpable and overriding error.

There was ample evidence on which to draw such an inference and no basis on which tofind that the motion judge committed any palpable and overriding error in so doing. (ii) The motion judge erred in stating that Mr. Zindler was delaying his requirement to complete an accounting. [21] The motion judge stated (at para. 17): …. His honesty and (or) capability to administer an estate of this size is a matter which cannot be determined absent production ofthe accountings (which Mr.

Zindler and his counsel have delayed subsequent to the appointment of MNP by quibbling over theaccounting costs, unduly delaying payment of MNP’s interim account, and attempting to have MNP perform some sort of “summary”type of accounting). ....

[22] Mr. Zindler argues that he stopped giving information to MNP because the accounting was to proceed pursuant to themediation agreement, which was in dispute, and, on the advice of counsel, he withheld further information pending a resolution of thatdispute. He also took the position that he had received a bill for $15,000 from MNP which he thought was significant and required anexplanation. [23] Mr. Zindler does not challenge the motion judge’s finding that he delayed in completing the accounting.

While heprovides explanations for having done so, the first reason, being the dispute, clearly benefits his interests as a beneficiary, but does nottake into account his common law obligations as an executor to administer the estate without delay and to both accurately account andfully disclose information whenever required to do so by the beneficiaries. (See Gibson, Re, (MB CA), [1931] 1D.L.R. 159 at 164 (Man.

C.A.).) The second reason, regarding MNP’s bill, should have been resolved quickly by discussions with MNP,not by refusing to cooperate for a year. [24] The motion judge did not err, and certainly did not make any palpable and overriding error, in stating that Mr. Zindlerwas delaying his requirement to complete the accounting, as that fact is clearly supported by the evidence and by the admissions of Mr.Zindler, himself. (iii) The motion judge erred in referring to the fact that Mr.

Zindler accepted the power of attorney from the testatrix while, at the sametime, challenging her capacity to have made the last will, both documents having been signed on the same date. [25] The motion judge referred to this fact in setting out a brief history of the litigation and in explaining the difficult positionin which Mr. Zindler found himself. It was part of the background to help understand the context of the motion. A review of the motionjudge’s reasons shows that it was not a factor on which he relied in coming to his decision to remove Mr.

Zindler as the executor, so it isirrelevant to this appeal. (iv) The motion judge erred in making several negative comments about Mr. Zindler which, no doubt, affected his decision, while notconsidering and virtually ignoring Mr. Zindler’s positive attributes, which should have caused him to dismiss the motion to remove himas executor. [26] While the motion judge came to conclusions about Mr. Zindler that led to his removal as executor, in doing so he referredto the evidence setting out Mr.

Zindler’s positive attributes. (See, for example, paras. 2, 11 and 17.) Thus, it cannot be said that he didnot consider that evidence. [27] In the end, the issue was not whether Mr. Zindler was a good person and a loving nephew but whether he couldadminister the estate impartially and on a neutral basis, given that it was clear that there was a conflict between his interests as abeneficiary and the interests of other beneficiaries like the Four Charities.

Whether he should be removed as an executor is to bedetermined by looking at his actions as an administrator and not on the basis of whether some people thought that he was an honest andreliable person or a loving nephew. I find that the motion judge did not commit any error, and certainly no palpable and overriding error,in his treatment of this evidence. [28] As an aspect of his positive attributes, Mr. Zindler argues that it is unchallenged that he has worked diligently andhandled the testatrix’s affairs prudently over the years.

It is trite to note that one of the purposes of the accounting is to clarify hishandling of the estate. As the accounting is not yet complete, it is premature to voice any opinion on his administration of this estate. (iv) Conclusion [29] Mr.

Zindler argues that, applying the governing legal principles, the motion judge erred in removing him as executor. [30] According to the legal principles set out by the motion judge and accepted by both parties, “an executor may be removedwhere the executor is in a conflict of interest, where the executor fails to put the interests of the trust and the beneficiaries first in histhinking, and ahead of any other interest” (at para. 14). [31] The motion judge concluded as follows (at paras. 25-26): … [E]ven if Mr. Zindler is honest and integral as he and Ms.

Cramer depose, the fact remains that he is, at best, misguided. He wasput in the difficult position of being both the executor and a significant beneficiary of a portion of a large and to some extent complicatedestate burdened by two “difficult” wills that are not clear. He also found himself in the position of asserting that the more recent will orwills were not valid because the testatrix was not competent to execute a will when the very power of attorney which he was acting underprior to her death was executed at the same time and place and before the same lawyer who prepared these later wills. …. … Mr.

Zindler’s handling of his position as both an executor and beneficiary, particularly over the last couple of years,demonstrates that he has been unable (or unwilling) to give due regard to the claims of the beneficiaries (and in particular the FourCharities) while advancing his own interests and resiling or attempting to resile from the settlement agreement. [32] The motion judge concluded that Mr. Zindler was in a conflict of interest and that he failed to put the interests of the trustand the beneficiaries first in his thinking, and there was ample evidence to support this finding.

Considering all of the evidence and theabove-noted inferences drawn by the motion judge, it cannot be said that he made any error, let alone a palpable and overriding error, in

coming to this conclusion. [ 33 ] Mr. Zindler argues quite strenuously that he has a right to protect his interest in the estate, as do the Four Charities, and that he has done nothing wrong in so doing. He argues that he should not be removed as executor, thus overriding the testatrix’s choice of executor, where he has not done anything wrong. [ 34 ] It is correct that, as a beneficiary, Mr. Zindler is entitled to advance a position that protects his interests even at the expense of other beneficiaries.

Where, however, his actions in advancing his beneficial interests result in him failing in his duty as an executor and trustee to put the interests of the trust and other beneficiaries first, his own interests have come into conflict with those of the trust and he may, then, be removed as executor in favour of another executor who can act in a neutral manner. While a court will not lightly remove an executor chosen by a testatrix, the right to act as an executor is not absolute. In this case, the motion judge found that Mr.

Zindler crossed the line, such that it became necessary to remove him as executor to protect the estate and the other beneficiaries. I find that he made no palpable and overriding error in so finding. [ 35 ] One other issue was advanced quite forcefully by Mr. Zindler, being that most of the estate has now been administered, such that it would be a waste of estate funds to appoint a trust company to complete the administration at this late date.

While much of the administration may have been completed, what remains are the most contentious parts – the accounting and the litigation regarding the Margbell Holdings Ltd. shares. Many decisions will have to be made as to the conduct of those proceedings – proceedings in which Mr. Zindler’s interests will be in direct conflict with those of the estate and many of the beneficiaries, including the Four Charities. Mr.

Zindler has already demonstrated that, on contentious issues, he will act in his own interest rather than that of the estate and the opposing beneficiaries. [ 36 ] Further, there is important administration work to be done to wind up the estate, including the accounting, the winding up of two corporations, the taxation of legal fees and the passing of accounts. Mr. Zindler’s past delays support the motion judge’s lack of confidence that he can complete the administration efficiently and expeditiously.

These are sufficient reasons to substitute a neutral executor to oversee these proceedings, even at this stage of the litigation. VI. DECISION [ 37 ] For these reasons, I would dismiss Mr. Zindler’s appeal with costs of the appeal to the Four Charities payable out of the estate. With the dismissal of the appeal, the stay of proceedings of the motion judge’s order, as confirmed by this court, is now terminated. J.A. I agree: J.A. I agree: J.A.