Decision Content
Megyes et al v Mercredi, 2020 NWTSC 30
IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES
IN THE MATTER of the Estate of TYSON EDGERTON, also known as SCOTTY EDGERTON, late of the Town of Hay River, in the Northwest Territories, deceased
BETWEEN:
JOELY MEGYES, CAROL EDGERTON, and LEIGH PATTERSON
Applicants
-and-
ARMELLA MERCREDI
Respondent
MEMORANDUM OF JUDGMENT
[1] This is an application to remove Armella Mercredi as trustee of Tyson Edgerton’s estate and to appoint Joely Megyes in her stead.
FACTS
[2] The facts below are derived from the affidavits sworn by Ms. Megyes and Ms. Mercredi, as well as the transcripts from their respective cross-examinations and documents on the Court’s file. I have read and considered them in their entirety, but I will refer only to the evidence required to give context to these reasons.
[3] Tyson Edgerton passed away on June 3, 2019. Joely Megyes and Leigh Patterson are his daughters. Carol Edgerton is his former spouse.
[4] On August 13, 2015 Mr. Edgerton executed a will in which he named Carol Edgerton as trustee. Joely Megyes was named as an alternate. The applicants were named as the beneficiaries of the estate, entitled to share equally in the residue.
[5] On May 31, 2019, shortly before he passed away, Mr. Edgerton executed a codicil. It amended the will to appoint Ms. Mercredi as the trustee, with Carol Edgerton as the alternate. It also added Ms. Mercredi as a beneficiary, to share equally with the applicants in the residue. The codicil was witnessed by Ms. Mercredi and Ms. Patterson.
[6] The Applicants dispute the codicil’s validity, but the parties are not asking for that issue to be determined within this application.
[7] Ms. Mercredi says she and Mr. Edgerton were common-law spouses at the time of his death. The codicil refers to her as such. The Applicants dispute this as well.
[8] Ms. Mercredi applied for a Grant of Probate on August 9, 2019. She did not include an inventory of the estate assets at the time. In her affidavit in support of the Grant, she stated she was bringing the application on an urgent basis because she had learned from Canada Post the previous day that Ms. Edgerton had requested Mr. Edgerton’s mail be redirected to her. Ms. Mercredi believed Ms. Edgerton was holding herself out as the estate trustee. Ms. Mercredi undertook to file a supplementary affidavit with a full inventory of the estate assets within two months of the Grant.
[9] The Grant was issued on August 23, 2019, along with an order which contained a clause prohibiting Ms. Mercredi from distributing assets without further order. On August 30, 2019 the order was amended, on consent, to prohibit both distribution and disposition of estate assets without further order.
[10] On September 22, 2019, Ms. Mercredi sold a boat and trailer by auction. She did so without further court order and without prior consents from the beneficiaries. She deposited the sale proceeds of $2,635.00 into the estate account.
[11] Ms. Mercredi did not file an inventory of the estate assets within two months of obtaining the Grant.
[12] The Applicants requested an accounting from Ms. Mercredi in December of 2019. Ms. Mercredi responded through counsel, indicating she would “endeavour” to provide the accounting by January 31, 2020. An accounting was not provided by that date.
[13] Ms. Mercredi provided a partial inventory of assets and accounting in the affidavit she swore in response to this application. It was filed on May 1, 2020.
ANALYSIS
[14] The key legal principles respecting removal of trustees are well known and have been repeated in a number of cases from various jurisdictions, including Figley v Figley, 2012 SKCA 36, 2012 CarswellSask 193:
[32] The leading case with respect to the removal of executors is Letterstedt v. Broers (1884), 9 A.C. 371 (P.C.). There, Lord Blackburn referred with approval, at pp. 385-86, to a passage from Story’s Equity Jurisprudence:
Story says, s. 1289, “But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But, the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”
It seems to their Lordships that the jurisdiction which a Court of Equity has no difficulty in exercising under the circumstances indicated by Story is merely ancillary to its principal duty, to see that the trusts are properly executed ... It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate . . .
In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on details often of great nicety. But they proceed to look carefully into the circumstances of the case. [Emphasis in original]
[15] A trustee appointed under a will should be removed only in the clearest of cases. The Court must be sensitive to the fact that if it removes the trustee, it is overriding the testator’s express wishes. As stated in Surminsky (Litigation Guardian of) v Ulmer Estate, 2000 SKQB 209 at para 2, 2000 CarswellSask 284:
[2] To override a testator’s choice of an executor is a sensitive exercise not to be lightly undertaken. Presumably, the testator has appointed those in whom he has confidence to give effect to his wishes and a court should interfere only where it is clear that the confidence was misplaced […]
[16] It is evident that there is friction and distrust between Ms. Mercredi and the Applicants. Conflict between the trustee and the beneficiaries is not grounds for removing a trustee unless it actually impairs the welfare of the estate or the interests of the beneficiaries. Smith v Lister, 2015 ABQB 420 at paras 26-27, 2015 CarswellAlta 1225, citing Forster v Davies (1861), 4 De GF & J 133, 45 ER 1134 (Eng Ch Div). Despite the conflict, Ms. Mercredi has been able to carry out some of her duties and it does not appear that either the welfare of the estate or the Applicants’ interests as beneficiaries has been impaired. Accordingly, this is not a basis upon which she should be removed as trustee.
[17] The Applicants have also expressed a number of concerns about Ms. Mercredi performance as trustee, including an alleged failure to sort through Mr. Edgerton’s personal effects and identify heirlooms, and her alleged failure to make timely inquiries about Mr. Edgerton’s insurance policies or outstanding debts. In my view, these perceived shortcomings do not form a sufficient basis to remove Ms. Mercredi. She has taken a number of steps to move forward and wrap up the estate, including filing Mr. Edgerton’s terminal income tax return, determining his financial holdings and attending to the maintenance of his real estate holdings.
[18] Ms. Mercredi’s failure to comply with the terms of this Court’s order of August 23, 2019 and her failure to fulfill the undertaking she provided the Court in her application for the Grant are significantly more problematic, however. In my view, each of these presents an insurmountable hurdle to Ms. Mercredi continuing to act as trustee.
[19] The Grant of Probate was issued to Ms. Mercredi on two conditions. The first was that there would be no distribution or disposition of assets without further order. The second was that, pursuant to her undertaking, she would file a supplemental affidavit with a full inventory of the estate without two months of her appointment as trustee. Ms. Mercredi breached the order and did not comply with the terms of the undertaking.
[20] To put it plainly, court orders must be obeyed. They represent the Court’s pronouncement on parties’ rights and responsibilities, in relation to each other and in relation to the Court. Non-compliance represents serious misconduct and is something which must attract consequences. The parties are entitled to rely on the order and moreover, they are entitled to expect that its terms will be enforced. Otherwise, the order is meaningless. As stated in Larkin v Glase, 2009 BCCA 321, 2009 CarswellBC 1780:
7. A court order must be obeyed until and unless it is reversed. Refusal to obey court orders strikes at the heart of the rule of law, at the core of the organization of our society. If court orders can be disregarded with impunity, no one will be safe. Our free society cannot be sustained if citizens can decide individually what laws to obey and what laws to disregard. Madam Justice McLachlin, as she then was, stated in U.N.A. v. Alberta (Attorney General), [1992] 1 S.C.R. 901 (S.C.C.), at 931:
Both civil and criminal contempt of court rest on the power of the court to uphold its dignity and process. The rule of law is at the heart of our society; without it there can be neither peace, nor order nor good government. The rule of law is directly dependent on the ability of the courts to enforce their process and maintain their dignity and respect. To maintain their process and respect, courts since the 12th century have exercised the power to punish for contempt of court.
[21] Similarly, an undertaking must be scrupulously honoured. An undertaking given to the Court is a solemn promise upon which the Court and the other parties are entitled to rely. This is especially so where, as here, it is given in place of evidence or other material which would normally be required for the Court to issue a Grant to an executor who will then have significant power over property held for the benefit of others. Unilaterally altering the terms of an undertaking, including the time within which it must be fulfilled, is not an acceptable alternative.
[22] There can be no question that Ms. Mercredi knew about the order and that she understood its terms. If she did not, it was incumbent upon her to ask her lawyer to explain it.
[23] In her affidavit, she set out her reasons for selling the boat and trailer in breach of the order. The boat was very old. Both items were stored at a friend’s business premises. She was advised that she had to remove them and she had very little time to do so. She did not have a place to store them and she did not want the estate to incur the storage costs. She had to make the decision quickly. Ms. Mercredi deposed that she sold the items in good faith, with the intention of preserving their value.
[24] I accept that in selling these two assets, Ms. Mercredi had the best interests of the estate at heart and she did not intend to deprive the estate or the beneficiaries of these assets. I also accept that she was acting honestly and in good faith. Despite her intentions, however, Ms. Mercredi’s actions demonstrate a lack of appreciation for the binding effect of a court order and what her obligations are in the event that she feels she cannot comply with its terms. In short, it calls her judgment into question.
[25] Ms. Mercredi’s options were to find another place to store these items, obtain the other beneficiaries’ consent to sell them, or ask the Court to vary the terms of the order to permit the sale, before taking this action. She did not exercise any of these options, choosing instead to act unilaterally and sell the boat and trailer. That this happened mere weeks after this Court issued the Grant and the order is aggravating.
[26] Ms. Mercredi’s failure to fulfill her undertaking within two weeks of the Grant, more particularly the fact that she did not seek to amend the terms of the undertaking, is equally problematic. This has not been satisfactorily explained by the evidence.
[27] The evidence Ms. Mercredi gave when she was cross-examined on her affidavit suggests that the task of locating and identifying the assets proved more onerous than initially anticipated. I infer that this made it impossible to fulfill the undertaking within the two week deadline she initially promised. She did not take steps to seek an extension from the Court.
[28] Ms. Mercredi represented to the Applicants’ counsel in December of 2019 that she would endeavour to provide the information by late January of 2020. The inventory was not provided to the Court or the other parties until May 1, 2020, when she included it with other material in the affidavit she swore in response to this application.
[29] Again, I accept that Ms. Mercredi encountered difficulties in completing an inventory of the estate assets. As in the case of the order, however, it was not open to Ms. Mercredi to unilaterally extend the period for fulfilling her undertaking. It was incumbent upon her to seek to amend the initial deadline in the undertaking, either through a further order or the consent of the other beneficiaries and then to comply strictly with any new deadline.
[30] Trustees are clothed with significant discretion and authority, and they bear important responsibilities. They owe a duty of fidelity to beneficiaries and they must adhere to that duty strictly. That includes compliance with Court direction and the terms and conditions imposed upon them by the trust instrument. Ms. Mercredi’s actions are completely at odds with her responsibilities. Her conduct has undermined irreparably the Court’s confidence in her judgment and, in particular, her ability to appreciate her responsibilities to the estate, the beneficiaries and the Court. While the Court must be cautious in overriding a testator’s choice of trustee, it cannot endorse a trustee who has, without acceptable reason, breached both an order and an undertaking. This is so even where a trustee’s intentions are honest.
[31] Ms. Mercredi is therefore removed as executor and trustee of Mr. Edgerton’s estate. She is entitled to compensation for reasonable expenses incurred in acting as executor and trustee to this point.
[32] The Applicants’ collectively request that Ms. Megyes be appointed as the personal representative. Ms. Megyes has expressed a willingness to undertake this role. Ms. Megyes will be appointed as the personal representative of Mr. Edgerton’s estate. As Ms. Megyes is not resident in the Northwest Territories, she is required to provide a bond in the amount set out in Rule 30 of the Estate Administration Rules, R-123-2016. Alternatively, she may apply to the Court to reduce the amount of, or dispense with, the bond under Rule 31. Her appointment will become effective upon provision of the bond or determination of an application to dispense with or reduce the amount of it.
[33] If the parties wish to make submissions on costs, they may make arrangements to do so through the Registry.
Order accordingly
K. M. Shaner
J.S.C.
Dated at Yellowknife, NT, this
31st day of July 2020
Counsel for the Applicants: Christopher D. Buchanan
Counsel for the Respondent: Predrag (Peter) Tomic
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IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES
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IN THE MATTER of the Estate of TYSON EDGERTON, also known as SCOTTY EDGERTON, late of the Town of Hay River, in the Northwest Territories, deceased
BETWEEN:
JOELY MEGYES, CAROL EDGERTON, and LEIGH PATTERSON Applicants -and-
ARMELLA MERCREDI Respondent
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MEMORANDUM OF JUDGMENT OF THE HONOURABLE JUSTICE K. M. SHANER
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