Estate disputes can sometimes involve significant sums of money or valuable property. Many matters related to estate litigation involve parties disputing whether or not a specific person is entitled to receive property or money from an estate. If a party believes they were improperly excluded as a beneficiary, they may be concerned that the party who received property might sell the property and benefit from the proceeds of the sale. As such, a freezing order is something that can be put in place to prevent property from being sold while a dispute is ongoing. In a recent decision from the Court of King’s Bench of Alberta, the applicant sought to have a freezing order placed on the estate property in dispute. The Court’s decision provides insight as to how the courts assess such requests.
What is a freezing order?
A freezing order is a legal tool that can be employed to prevent individuals from dissipating or disposing of their assets during the course of a dispute. In the context of estate litigation, freezing orders become particularly significant when there are suspicions of fraud, mismanagement, or disputes among beneficiaries. Due to the complex and emotionally charged nature of estate disputes, freezing orders can act as a safeguard, ensuring that the assets within the estate remain intact and available for distribution according to the final court decision.
Partner of deceased says he was taken advantage of
In the matter of Parent, Executor of the Estate of Beverly Erickson v Axsen, the plaintiff (“DP”) was the respondent in the application. DP was the husband of the deceased and was also the executor of her estate. The defendants, “CA” and “JB”, along with the various companies they owned and were associated with, were subjected to a freezing order in a decision issued in May 2023. The freezing order prevented the defendants from dealing with the property in question and also required third party institutions to disclose financial records.
The parties disputed several of the facts of the case, but some important ones were agreed to by both sides. DP and the deceased had both struggled with addiction issues in the years leading up to her death, which DP said left them vulnerable and easily taken advantage of. DP said that the applicants were among those who took advantage of them while dealing with their addiction. DP claimed that CA had convinced the deceased to invest in a number of real estate schemes. In his Statement of Claim, DP indicated the deceased was worth approximately $9 million at the time of her passing, however, CA, who was trustee of a trust for DP following the death of the deceased, misappropriated the funds and used them for himself and JB. Accordingly, DP sought damages in the amount of $8,000,000 plus $400,000 in punitive damages.
Defendants ask for freezing order to be lifted
The Court noted that on an application to review an ex parte attachment order, the onus to establish the elements of the test for the order or injunction falls to the party that brought the original application. As such, the onus was on DP in this case. The applicable test is outlined in the Civil Enforcement Act and requires the following elements to be met:
“1. The claimant had or was about to commence proceedings to establish its claim,
2. There is a reasonable likelihood that its claim would be established, and
3. There are reasonable grounds for believing that the defendants are or are likely to be dealing with their exigible property in a manner that would likely seriously hinder the plaintiff in the enforcement of a judgment.”
Expanding on this, the Court explained that the Civil Enforcement Act also allows the Court to terminate an existing order if it is satisfied that the claimant failed to make “full and fair disclosure” of material information. When the defendants applied to have the order lifted, they asked to provide additional information. The new uncontested information indicated that CA was a friend of DP and the deceased.
Beyond their friendship, the parties also had previously been involved in various real estate projects together. The deceased’s will stipulated that DP would be the benefactor of a spousal trust which was to be managed by CA. The entire residue was to be dealt with in that spousal trust. When the will was probated and signed by DP, the value of the estate was $2,154,147.96 and consisted of three parcels of land.
In August 2022, DP filed a handwritten application for Advice and Direction stating that there had been “mismanagement of trust, fraud.” The Court acknowledged that the application was rambling and incoherent, stating that the spousal trust owned 18 properties, not three, and alleged that CA had not provided him with any accounting. CA told the Court that DP was actively involved in the day-to-day management of the properties that formed the trust. Accordingly, the application was dismissed.
When the matter came before the Court of King’s Bench, as a result of the defendants seeking to set aside the previously granted ex parte freezing order, the Court took the opportunity to look at the disclosure provided by DP in his application. There was no way to account for the error where DP stated the value of the estate was $9 million rather than the approximate $2 million the estate was valued at when the spousal trust was created. Ultimately, the Court found that the lack of accurate disclosure was sufficient to set aside the freezing order, and ruled in favour of the defendants.
Let the Litigation Lawyers at DBH Law Help You Resolve Your Estate Dispute
Estate disputes can be difficult to navigate, especially when it involves contention between friends or family members. If you are involved in an estate dispute, or have questions regarding wills, power of attorney, or trust, the knowledgeable estate planning and litigation lawyers at DBH Law can help. Whether you are looking to proactively prepare for your future, or you are involved in an ongoing dispute regarding estate distribution, our team will help you determine the most efficient and cost-effective strategy to meet your unique legal needs. To schedule a confidential consultation with a member of our team, contact us online or call us at 403.252.9937.