Estate administrator's self-dealing is only permissible in certain circumstances, ruling says
The B.C. Supreme Court has recently dismissed an estate administrator’s application to purchase estate property without her co-beneficiaries’ consent.
This ruling highlights the importance of adhering to one’s fiduciary duties as an estate administrator and the court’s reluctance to allow self-dealing in estate matters.
In August 2016, a man passed away, leaving behind no will and no surviving spouse. His three daughters were equal beneficiaries under B.C.’s Wills, Estates and Succession Act, 2009. At the time of the death, mortgages totalling $70,000 encumbered the property.
Since October 2016, one of the daughters has served as estate administrator. Her role has entailed managing the estate’s assets, including a two-acre property in Port McNeill on Vancouver Island. She has lived at the property since 2017.
The property’s value appreciated from $155,200 in 2016 to $301,800 in 2024. The estate administrator tried numerous times to purchase the property for herself. However, her two sisters resisted these attempts. Litigation ensued.
A decision of the B.C. Supreme Court in July 2023 denied the estate administrator’s application to purchase the property for $179,000.
Self-dealing by an estate administrator was only permissible with the consent of all beneficiaries or with court approval, the judge said. An estate administrator, who should act in the best interests of all beneficiaries, could not compel them to agree to self-dealing transactions, the judge added.
The judge gave the estate administrator the opportunity to confirm whether she would be willing to purchase the property for $284,000, the appraised value at the time. The estate administrator made an offer worth $265,000, which her sisters rejected. Ultimately, the three siblings could not reach any agreement.
In October 2023, the estate administrator sought court approval to purchase the property for $284,000 without her sisters’ consent.
The B.C. Supreme Court again ruled unfavourably to her. The judge noted that she had failed to abide by the timelines set in the July 2023 decision and had failed to secure the necessary consent from her sisters.
The estate administrator filed an application seeking directions on the process that she should follow when selling the property. She requested an order authorizing her to buy the property in her personal capacity during or immediately after the expiry of the sale offer period.
In Dewberry Estate (Re), 2024 BCSC 1374, the B.C Supreme Court dismissed the application. The court emphasized that the estate administrator’s actions did not align with her fiduciary duties.
She failed to make a diligent or reasonable effort to sell the property after the release of the October 2023 decision, the court said. The facts of the case strongly suggested that she was instead focusing on reaching an outcome that would enable her to present her own offer to purchase as advantageous to the estate, the court explained.
