Haug v Haug (Estate), 2017 SKCA 92

Court of Appeal for Saskatchewan Docket: CACV2726 Citation: Haug v Haug (Estate) , 2017 SKCA 92 Date: 2017-10-23 Between: Daryle Haug Appellant And Estate of Edith Haug Respondent Before: Ottenbreit, Caldwell and Ryan-Froslie JJ.A. Disposition: Appeal allowed in part Written reasons by: The Honourable Mr. Justice Ottenbreit In concurrence: The Honourable Mr. Justice Caldwell The Honourable Madam Justice Ryan-Froslie On Appeal From: Q.B.S. No. 360 of 2008, Saskatoon Appeal Heard: September 19, 2017 Counsel: Daryle Haug on his own behalf Patrick H. Loran for the Respondent Ottenbreit J.A. I.

Introduction [ 1 ] Daryle Haug appeals against a decision of the Chambers judge dated July 14, 2014, granting the application by Larry Haug, executor of the estate of Edith Haug and administrator of the estate of Oswald Haug, for a passing of accounts on the respective estates. For the reasons hereinafter set forth, the appeal of Daryle Haug is allowed in part. II. Facts and Background [ 2 ] The background to this case is fairly straightforward. Oswald Haug died on October 20, 2005, intestate, and was survived by his wife, Edith, and four children, Larry, Marilyn, Darlene and Daryle.

Larry was appointed the administrator of his father’s estate. The administration of their father’s estate was approved and consented to by Marilyn and Darlene but has been consistently opposed by Daryle, who has challenged the activities of Larry as administrator. [ 3 ] Edith Haug died testate on January 6, 2007. Larry was appointed executor of her estate. Her will provided an equal distribution of the estate between her four children. Due to concerns raised by Daryle about the administration of both his father’s estate and his mother’s estate, he made various court applications.

Eventually a viva voce hearing was conducted before Acton J. to deal with Daryle’s complaints. Justice Acton delivered a judgment dated May 29, 2009, which dealt with the significant issues raised by Daryle up to that point. That decision dismissed all claims made by Daryle at the time and awarded substantial costs against Daryle, which were taken from Daryle’s share of his father’s and mother’s estates. [ 4 ] On February 13, 2014, Justice Keene ordered that there should be a formal passing of accounts for both parents’ estates. III.

The decision of the Chambers judge [ 5 ] The Chambers judge, on the application for passing of accounts, dealt with five major issues raised by Daryle. Only four are the subject of Daryle’s appeal to this Court. [ 6 ] The first issue concerned Daryle’s objection to being charged $3,066 for storage locker fees for personal property claimed by him from his parents’ farm. Daryle argued he did not agree to payment of those costs, that the costs were in any event inflated and that Larry had mismanaged the storage of these items thereby creating unnecessary fees.

The Chambers judge determined that Daryle had by letter requested that the estate cover the storage costs from August 5, 2008, to the date of settlement and authorized the estate to recover any of those costs from his portion of the estate upon settlement. The Chambers judge concluded that Larry had dealt with the costs Daryle had agreed to pay and deducted them from his share of the estate of Edith Haug. [ 7 ] The second issue concerned the order of Acton J. that court costs be deducted from Daryle’s distributive share of the two estates.

The Chambers judge concluded that such a deduction had been done, there was no basis for Daryle’s complaint and that any revisiting of such order would amount to an appeal of that order. [ 8 ] The next issue concerned Daryle’s claim that Larry had received the sum of $9,444.95, as a surviving joint bank account owner with their mother, to buy a columbarium for the ashes of their parents. Daryle submitted that Larry had neither bought a columbarium nor accounted for that money. Daryle submitted the money should be placed in the estate for distribution.

The Chambers judge concluded that Daryle had not led any credible evidence that would suggest Larry was holding any money personally for the purposes of buying a columbarium.

[9] The last issue was a claim that money in five joint bank accounts that his mother held with each of his sisters and with Larrywas subject to a resulting trust and was part of the estate. On the death of Edith Haug, the money in the accounts was paid by the bank toLarry and his sisters respectively as the surviving joint account holders. The Chambers judge determined that a rebuttable presumption ofresulting trust may exist with respect to the money, but did not think it appropriate to hold up the final passing of accounts andadministration for a potential determination of that issue.

He concluded that any claim by Daryle against his siblings for the moneyshould be made separate from the administration of Edith’s estate and that it was open to him to take such action as he deemedappropriate to recover the money. [10] The Chambers judge passed the accounts of Larry with respect to the estates of Oswald Haug and Edith Haug. IV. Analysis [11] As a preliminary matter, Daryle applied pursuant to Rule 59 of The Court of Appeal Rules to adduce fresh evidence regardingthe storage locker fees and the columbarium monies.

The fresh evidence consisted almost entirely of letters and other documents datedNovember 7, 2013, or prior thereto. Daryle submits he did not have access to these documents at the time of the hearing before theChambers judge. He also acknowledges that the fresh evidence proffered with respect to the storage locker and the columbarium is notpivotal to a decision but is more informative. [12] The principles with respect to the introduction of fresh evidence are well known.

They are referred to as the Palmer criteria(Palmer v The Queen, (SCC), [1980] 1 SCR 759; see also Maitland v Drozda, (SK CA), [1983] 3WWR 193 (Sask CA) at para 18). Applying these criteria, I note that all of the documents referred to by Daryle as fresh evidence were inexistence at the date of the hearing before the Chambers judge. I am not satisfied that with some diligence these documents could nothave been adduced for that application. Moreover, the documents, as acknowledged by Daryle, are not potentially decisive of the issuesfor which they were proffered and fail on that ground as well.

I conclude that the application for the introduction of fresh evidence mustbe denied. [13] Turning to Daryle’s grounds of appeal, I conclude that those grounds concerning the storage locker, costs and thecolumbarium must fail.

I will explain. [14] With respect to the storage locker, in his written argument Daryle makes several submissions: some of them reiterations of hisarguments made before the Chambers judge and some raised for the first time in this Court – Larry failed to uphold the contract that hehad entered into with respect to the storage locker, Larry engaged in misrepresentation and deceit in communicating with him withrespect to the locker and the costs thereof, and Larry mismanaged the handling and storage of his property.

In his oral submissions,Daryle also makes a new argument not found in his written argument and not argued in the court below: costs of the storage locker wererecoverable out of his share of the Oswald Haug estate and not his share of the Edith Haug estate.

He submits that because his father’sestate was insolvent and there were no monies to cover that expense, Larry was therefore responsible for the storage fees. [15] New arguments raised for the first time in this Court will not be entertained where it might have been necessary to adduceevidence in the court below: see Hawkeye Tanks & Equipment Inc. v Farr-Mor Fertilizer Services Ltd., 2002 SKCA 44, 219 Sask R 148;or Perka v The Queen, (SCC), [1984] 2 SCR 232.

To the extent that Daryle’s arguments are new, they require thatfurther evidence as to the intention and conduct of the parties be adduced to properly address the issues raised and, therefore, it is notappropriate for this Court to entertain such arguments. To the extent that Daryle’s arguments are not new, I see no merit in them.

I cansee no error made by the Chambers judge in determining that the costs of the storage locker were properly deducted by Larry and agreewith the Chambers judge’s reasons in regard to this issue. [16] With respect to costs, Daryle submits that the Chambers judge misinterpreted the order of Acton J.: see Haug Estate (Re),2009 SKQB 200. Daryle argues that the order, properly interpreted, did not allow costs to the extent they were incapable of beingdeducted from his father’s estate, to be deducted from his mother’s estate instead. I disagree.

The order of Acton J. was clear that allcosts would be paid out of either or both estates. The Chambers judge appropriately found that Daryle’s argument required him to sit inappeal of the costs order. [17] With respect to the argument concerning money from the joint account allegedly held by Larry for the purpose of purchasinga columbarium, this must fail as well.

It was open to the Chambers judge to find on the material presented to him that there was nocredible evidence that would suggest Larry was holding additional money personally for that purpose and he made no error in thatrespect. [18] Daryle’s last argument concerns the joint bank accounts of his mother.

It is clear that there were five of them, one with each ofDarlene and Marilyn each in the amount of $25,051.78, and three held with Larry, valued at $17,781.96, $15,714.77 and $1,000.00. [19] On the application before the Chambers judge, Daryle raised the case of Pecore v Pecore, 2007 SCC 17, [2007] 1 SCR 795[Pecore], which held that a presumption of resulting trust is created in favour of the parent where a gratuitous transfer of property ismade to an adult child by the parent.

Daryle argues the effect of the application of this principle in this case is that it creates a rebuttablepresumption that money held in the joint accounts between Larry, Marilyn, Darlene and their mother belonged to Edith’s estate onEdith’s death. [20] It appears that the Chambers judge did not disagree that this was an outstanding issue. However, he chose to deal with it bygranting the order passing the accounts of Larry in respect of his mother’s estate and requiring Daryle to sue Larry and his sisters for adetermination of the issue of the resulting trust.

Such an approach was an error. [21] Larry was appointed executor and trustee of the will of Edith Haug. As such, he is governed by the following law respectingexecutors. An executor is a trustee and fiduciary (Re Gibson, (MB CA), [1931] 1 DLR 159 (Man CA); Figley v Figley,2012 SKCA 36 at paras 32–33, 393 Sask R 44). He or she holds title to and control of property for the exclusive benefit of the

beneficiaries of the trust (Jennifer J. Jenkins and H. Mark Scott, Duties of Estate Trustees, Guardians and Attorneys (Aurora, Ont: Canada Law Book, 2000)). [ 22 ] One of the well-known obligations of an executor is to identify the assets of the estate and to call in and recover those assets. In managing the estate, the executor must, as soon as possible, acquaint him or herself with the nature and circumstances of the estate property.

In administering the estate of the deceased, an executor must consider all kinds of property held by the deceased, including whether the deceased had an interest in any property held upon express, implied, constructive or resulting trusts. [ 23 ] Another well-known duty of an executor is to account. An executor has a duty to pass accounts when required to do so. This duty is set forth in The Administration of Estates Act , SS 1998, c A-4.1: Duty to account 35

(1) An executor or an administrator must render a just and full account of the executorship or administration within two years after the grant of letters probate or letters of administration.

(2) The oaths to be taken by executors and administrators, the bonds or other security to be given by administrators, and the letters probate and letters of administration must set out the duty of the executor or administrator described in subsection (1).

(3) An executor who is also a trustee under the will must account for the trusteeship in the same manner as the executor must account with respect to the executorship. [ 24 ] An order passing accounts gives court approbation to the management by the executor of the estate funds and property dealt with on the application to pass accounts, subject only to fraud or mistake. It is binding on the beneficiaries and takes the place of a release by the beneficiaries in favour of the executor.

This is set forth by s. 37 of The Administration of Estates Act , which reads as follows: Approval of accounts binding 37 Except to the extent that mistake or fraud is shown, the approval by the court of the accounts of an executor or an administrator with respect to the dealings of the executor or the administrator with the estate is binding on: (

a) each person who was notified of the proceedings, present at the proceedings, or represented at the proceedings; and (

b) each person who claims through a person described in clause (a). [ 25 ] Upon a passing of accounts, there is usually an order discharging the executor or administrator and, in the case of an administrator, cancelling or releasing the administration bond by virtue of s. 3(1) of The Administration of Estates Act : Powers of the court 3

(1) The court may: … (

d) on passing the accounts of an executor or administrator or on dispensing with the passing of those accounts: (

i) order that the executor or administrator be discharged; and (ii) in the case of an administrator, order that the bond be cancelled or delivered to the administrator. [ 26 ] By granting an order passing accounts, the court gives approval to the activities of the executor or administrator in calling in the assets of the estate and in otherwise dealing with the estate. The legal consequence of such an order is that the executor or administrator is discharged from liability to the extent of those activities, save only as to fraud or mistake.

The order is confirmation by the court that the executor or administrator has properly performed his or her duties with respect to the items disclosed in the passing of accounts. [ 27 ] Of course, the activities of the executor or administrator can also be confirmed as proper by the beneficiaries giving a release or consent – in which case, no court application to pass accounts is necessary. However, this was not the case here. Daryle clearly objected to Larry’s handling of the joint accounts and, therefore, challenged whether Larry had done his duty as executor in relation to those accounts.

The joint accounts were properly disclosed by Larry in

Part II of the application for probate in July 2008. However, that disclosure also reflected Larry’s decision to treat those accounts as being outside of the estate. Accordingly, any order passing accounts for the estate of Edith Haug would have the effect of discharging Larry as executor with regard to his dealings with, and decisions made regarding, those accounts. [ 28 ] While it is true that a beneficiary can sue another beneficiary who holds putative estate assets to recover those assets, to require Daryle to take such a route is, in this case, fraught with some difficulty and possible prejudice.

Without deciding the issue, there is first the possibility of limitation issues with respect to any claim made by Daryle against his brother and sisters for the money in the joint accounts. Edith Haug died in January 2007. Larry disclosed his dealings and approach to the joint accounts to the court in July 2008. Larry’s activity with respect to the accounts and the receipt of the money by Larry and his sisters has taken place some substantial time ago. [ 29 ] Moreover, if Daryle were to sue Larry and his sisters personally, Daryle might be prejudiced.

Daryle would be bound by the order passing accounts and Larry’s discharge in regard thereto and would have to allege fraud or mistake to address the issue, which may require a higher degree of proof. As well, Larry and both of his sisters may be able to argue that the order passing accounts acts as res judicata or as an issue estoppel regarding whether the joint monies are part of the estate.

[ 30 ] In this case, Daryle has raised, on the basis of Pecore , the matter of resulting trust and it appears on the surface, and on the facts available to this Court, there is at least an arguable issue in that respect. In the absence of further evidence, and assuming Pecore applies, the money is presumptively treated as belonging to the estate.

The examination of whether such a trust exists is best done in the context of the application to pass accounts. [ 31 ] In short, Daryle has, by raising the issue of resulting trust, challenged whether Larry has properly fulfilled his duties as executor to identify whether monies that he and his sisters held jointly with their mother were estate funds or not. That this was the crux of Daryle’s argument was acknowledged by the Chambers judge.

The Chambers judge also implicitly accepted, by determining that he did not wish to hold up the passing of accounts, that a further hearing or at least further evidence was required on this issue. An order to that effect would have been the appropriate one in these circumstances. V. Conclusion [ 32 ] Accordingly, the appeal is allowed insofar as it concerns the estate of Edith Haug regarding any monies received by Larry and his sisters as a result of the right of survivorship on those joint accounts disclosed in the application for probate.

With respect to any other aspect of the passing of accounts of Larry concerning the Edith Haug estate and the estate of Oswald Haug, the order of the Chambers judge is affirmed. [ 33 ] The matter shall be remitted to the Court of Queen’s Bench to determine whether the monies in the aforementioned joint accounts were the subject of a resulting trust and therefore part of the estate of Edith Haug, and to make such orders as the court may find necessary in regard thereto. [ 34 ] In the circumstances of the case, there will be no order as to costs. “Ottenbreit J.A.” Ottenbreit J.A.

I concur. “Caldwell J.A.” Caldwell J.A. I concur. “Ottenbreit J.A.” for Ryan-Froslie J.A.