Case Brief: Halstead v Selock, 2021 ABQB 1026

By Saul Benary

Primary Takeaway
A Notice to Claimants published in a newspaper pursuant to Surrogate Rule 38 may not be effective as notice to a beneficiary. The duties of an executor may be applied more strictly when the executor has a conflict of interest with another beneficiary.

Facts
Parties

• Applicant: Neal Halstead (Counsel: Predrag Tomic)

• Respondents: Lance Kenneth Selock (Counsel: C. Michael Smith), Wood’s Homes Society (Counsel: Cassidy Bishop)


Court

• ABQB

• John T. Henderson J.

• Heard: 30 November 2021; Judgment: 29 December 2021


Action

• Neal applied for advice and direction to transfer title to certain land to the Respondent, Wood’s Homes Society.


Background
The testator, Sydney Wales Metcalfe, died 5 September 1968, survived by wife Frances Metcalfe, daughter Barbara Selock, grandson Lance Selock (and his wife Kathleen Higgins), and granddaughter Sharon Selock. Sydney’s estate’s primary asset was an apartment building in Calgary.

Neal Halstead was a director of the Wood’s Homes Society. 

Sydney’s will directed:

• • Of the income earned from the building

  ◦ 1/3 to the Society, 

  ◦ 1/3 to Barbara for life, but on Barbara’s death:

    ▪ 1/6 to the Society, and

    ▪ 1/6 to Sharon for life,

  and
  ◦ 1/3 to Sharon life,

• On the death of Barbara and Sharon, title to the building would go to the Society, and

• Residue would go to Frances, unless she did not survive Sydney by 30 days, then to the Society. 


Timeline:

• 5 September 1968:
  ◦ Sydney dies, appointing Barbara as his executrix, Barbara begins managing the primary asset: an apartment building in Calgary

• 4 May 1969:
  ◦ Frances dies, possibly intestate, but there is no evidence a grant of probate or letters of administration were applied for or obtained,

• 20 May 1969:
  ◦ Barbara is granted probate over Sydney’s estate, counsel for the estate writes shortly after to the Society to advise it is a beneficiary of the estate,

• 11 May 1972:
  ◦ Title to the building is transferred, the Certificate shows the owner “Barbara Frances Selock of R.R. 8 Calgary Alberta Executrix for Sydney Wales Metcalfe”,

• 1974-1975:
  ◦ Despite receiving T3’s, the Society likely receives none of its entitled income, the Society takes no further steps and has no further communication with the estate under late 2018, it is implied the Society receives income of some kind from 1976 onward,

• 1999:
  ◦ Sharon dies, the death is not disclosed to the Society

• 20 November 2009:
  ◦ Barbara dies, an obituary is published shortly after, Barbara’s will appoints Lance as her personal executor, Lance takes control of administration of Sydney’s estate, the death is not disclosed to the Society,
  ◦ Lance at soon begins paying his wife Kathleen $2100/month to manage the building,
  ◦ At around the same time, Lance stops paying the Society its entitled income,

• 10 March 2010:
  ◦ A Notice to Creditors and Claimants is published, giving notice of Barbara’s death but not mentioning Sharon’s death,

• 28 April 2010:
  ◦ Lance is granted probate over Barbara’s estate,

• 2013:
  ◦ Lance retains a law firm to assist him regarding the building, an employee of the law firm is the fiancé of a person named Zaakir Karim,

• Late 2018:
  ◦ Zaakir Karim independently somehow does some “due diligence”, approaches the Society, informs them he works in real estate, and tells them of Barbara’s death and its entitlement to ownership of the building,

• October 2018:
  ◦ The Society does due diligence and discovers Sharon’s death, confirming its entitlement to the building,

• 26 April 2019:
  ◦ The Society commences action against Lance and others for breach of trust, breach of fiduciary duties, knowing receipt, and negligence.
  ◦ The Society seeks accounting of all revenues generated from the building since Sydney’s death, disgorgement of net income generated since Barbara’s death, damages, and title to the building or damages in the alternative.
  ◦ Statements of Defence are later filed raising defences, including the claims being time-barred by the Limitations Act,

• 22 August 2019:
  ◦ Title to the building is transferred, the Certificate now shows the owner as “Lance Kenneth Selock…Executor for Sydney Wales Metcalfe”,

• 6 November 2019:
  ◦ The Society applies to remove Lance as executor regarding the building and appoint Neal for its administration, to direct Land to pass accounts regarding the lands, disgorge gross income since Barbara’s death, costs, and other relief,

• 20 February 2020:
  ◦ The Chambers judge finds Lance’s conduct as administrator “very troubling”, breaches of duties under Estate Administration Act ss 5 and 7 for not notifying the Society, not distributing the estate, not administering the estate in a timely manner, and not passing accounts. The Chamber’s judge found Lance not capable of performing his role as executor and in a conflict of interest by paying his wife to manage the building since Barbara’s death,
  ◦ The Chambers judge orders Neil the Limited Administrator of the estate regarding the building, while leaving Lance the Executor of the rest of the estate

• 24 April 2020:
  ◦ Limited Grant of Administration is made to Neil,

• 22 December 2021:
  ◦ The Chambers judge’s decision is affirmed (Wood’s Homes Society v Selock, 2021 ABCA 431).


Issues

• Is there anything stopping the building being transferred to the Society?
  ◦ Is any aspect of the Society’s claim time-barred by the Limitations Act?


Law

• Estate Administration Act, SA 2014, c E-12.5,

• Limitations Act, RSA 2000, c L-12,

• Weir-Jones Technical Services Incorporated v Purolator Courier Ltd., 2019 ABCA 49,

• Wood’s Home Society v Selock, 2012 ABCA 431
  ◦ If Sydney’s will did create a testamentary trust, it did not end at Barbara’s death. If Lance did not become trustee formally, he took on the role of de son tort or de facto trustee.


Analysis
Neil’s appointment as Limited Administrator was affirmed. Sydney’s will was clear and uncontradicted. Neil had no discretion not to transfer title to the building absent Court direction.

Since deciding this action would amount to partial summary judgment of the Society’s other action, principles of summary judgment were considered and the Society was required to address the limitations issue. Any limitations issue regarding the income was not before this application, only the limitations issue concerning transferring the property at all.

On Barbara’s death, Lance’s only obligation as executor was to transfer the building to the Society. Whether through duty as executor, trustee, or as otherwise a fiduciary, whether beginning at Barbara’s death or the transfer of title to Lance as executor, Lance had fiduciary obligations to the Society. 

Lance’s duties were ongoing and breached. Therefore, Lance was not entitled to remain silence for the purposes of the Limitations Act. Further, as an ultimate residuary beneficiary that might inherit the building, Lance had a significant conflict of interest “which demanded full disclosure”.

Concerning actual knowledge of the injury, the Society lost all knowledge of its entitlement over time, likely in the 1970s (though a record was still in storage). Regardless, the Society was entitled to rely on Lance to properly discharge his duties as executor. The publication of the obituary did not satisfy the obligation of Lance as executor and did not come to the attention of the Society until 2018. The publication of the Notice to Creditors and Claimants did not come to the Society’s attention until after litigation began. The Notice did not discharge the executor’s duty as it would be unreasonable to require the Society to monitor newspapers over 40 years to determine when they became entitled.

The limitation period only began to run when the Society gained actual knowledge of Barbara and Sharon’s deaths in October 2018. The Society commenced action within that period.

Therefore:

• Beneficial ownership of the building vested in the society on 20 November 2019,

• The building was held for the sole benefit of the Society, first by Lance from 20 November 2019 to 20 February 2020, and then by Neal from 20 February 2020 onward,

• The building and any income earned since 20 November 2009 in Neal’s possession could be transferred to the Society,

• After transfer of the building and any income possessed, Neal would be discharged as Limited Administrator.


Conclusion
No, the claim was not time-barred or barred by any other defence.