Those who grew up with siblings or large families know that disagreements can quickly escalate between family members. Often, arguments between siblings can be trivial, however, some disputes can have far-reaching impacts. When it comes to estate management and distribution, loved ones can find themselves involved in disputes about various issues relating to the validity of a will, asset distribution, and adequate estate handling. A recent decision from the Court of King’s Bench of Alberta highlights how courts might address a disagreement between siblings when it pertains to management of a late parent’s estate, particularly when the parent died intestate.
Siblings at odds over handling of parents’ estate
In the case of Kmech v Dorosh, the applicant (“SK”) was the sister of the respondent (“GD”). Each party was named as a beneficiary under their late mother’s estate, however, GD was appointed as the personal representative of the estate. In 2020, the parties were involved in litigation over GD’s handling of their mother’s estate, which was resolved through a Consent Order (the “Order”). However, the parties further disputed over the language used in the Order. As a result, the parties came before the Court seeking assistance resolving various outstanding issues, specifically:
- whether the Consent Order correctly stated that SK was entitled to 50% of the gross proceeds of the property sale rather than the net proceeds;
- whether GD was entitled to an assessment under the Rules of Court of SK’s full-indemnity litigation-related legal fees which must be paid from the sale proceeds;
- whether SK was required to reimburse the estate for a $10,000 legal bill related to the removal of a caveat filed by SK in respect of the sold property;
- whether GD was in contempt of the Order for failing to pay 50% of the gross sale proceeds and full-indemnity legal costs rendered to date; and
- who should be responsible for payment of the costs of the application before the Court, and whether GD’s lawyer should be personally liable for these costs.
The Court first explained that the estate had been in administration for 19 years preceding these events. The parties’ late mother died intestate in 2004 and was survived by her husband, who later passed away in 2018. In 2004, GD decided that SK would receive her share of the estate from the proceeds of the sale of the family home, however, he did not consult SK about this plan and by 2020, GD had paid cash portions of the estate to other beneficiaries, with SK having not received anything. Further, GD took no steps to sell the family home until the Consent Order was entered into in 2020. SK told the Court that during this time, GD allowed some people, including strangers, to stay in the home rent-free.
GD, on the other hand, denied any mismanagement of the estate and explained that the delay in selling the house was because the parties’ ailing father and sister, who also had health issues, needed a place to live. GD argued that he took appropriate steps to preserve the estate assets.
Due to her dissatisfaction with GD’s management of the estate, SK brought a motion seeking to remove GD as personal representative and appoint a third-party instead. She also filed a caveat on the land which comprised the former family home on April 21, 2020, and claimed an interest as a beneficiary under the Intestate Succession Act (now the Wills and Succession Act).
These actions led to the creation of the Consent Order, which stated that GD was required to sell the family home by March 1, 2021, and distribute 50% of the gross proceeds to SK. Under the Order, GD was entitled to retain $10,000 as compensation for his role as personal representative. The Court explained that this arrangement would have left him with another $23,068.50 as a beneficiary.
When it came time to make the payment to SK, however, GD took the position that only net proceeds of the house were payable to SK. He also claimed that SK’s legal fees which were ordered in the Consent Order would also be paid from the proceeds of the sale. Ultimately, SK received $98,177.58, which equaled 50% of the net sale proceeds.
Court finds personal representative was “careless”
The Court noted that the Consent Order stipulated that SK would be paid 50% of the gross proceeds of the sale. GD, on the other hand, argued that there must have been a drafting error in the Order and that the Court should exercise its discretion to amend the Order to reflect his understanding of what the parties agreed to. Conversely, SK sought for the Consent Order to be enforced without amendments as GD had ample time to review the order and request changes prior to the Order’s execution.
The Court understood that various offers had been negotiated in the leadup to the finalization of the Consent Order, but determined that a drafting error had not occurred and there was no deception involved in this case. Instead, the Court found that GD was “careless” in not realizing that he had agreed to pay SK half of the gross sale proceeds, rather than the net sale proceeds.
The Court emphasized the fact that GD had “eight days to carefully read the draft Consent Order or even consult legal counsel” but found that “[a]pparently, he did neither.” The Court also noted that there is a limit to the extent to which the lawyer representing the other side must also act as the keeper for GD, who chose to be a self-represented litigant. The Court also noted that there is “greater mischief in allowing a signatory to a Consent Order, even if self-represented, to escape an obligation in that Consent Order by simply saying that he didn’t notice it” as the “practice of resolving matters by Consent Order would collapse if this were allowed.” Accordingly, GD was ordered to pay the balance of $5,822.42 to SK.
The Court also found that GD would be responsible for paying costs to SK, as ordered in the 2020 Order. Despite GD’s arguments that the actual costs were higher than expected when resolving earlier issues, the Court highlighted that “being advised in advance of the probable amount of the legal costs does not amount to an acceptance of the final total rendered nor a waiver of the right of assessment under the Rules of Court.”
The Estate Litigation Lawyers at DBH Law Can Help You Resolve Your Estate Dispute
The exceptional estate planning and litigation lawyers at DBH Law in Calgary understand that estate planning can be a sensitive subject, however, adequate preparation for the future can help minimize the possibility for disputes between loved ones following your passing. Our team of estate litigation lawyers also appreciate the need for quick and effective dispute resolution when estate disputes arise, particularly when the disputes are between family members. Whether you are involved in an estate dispute, or are seeking advice on developing a strategic estate plan, contact us online or by phone at 403.252.9937 to learn how we can assist you.