The last hurdle before final distribution of the assets of an Estate and the ability of an Estate Trustee to take compensation and be indemnified for expenses is the presentation of trust accounts and either an Order passing the accounts or a Release from the beneficiaries or both. As we all know, passing of account proceedings are summary and Judges are not inclined to allow precious court time to be spent in arguments over insignificant amounts. Unfortunately, contested passings of accounts often arise where documentation is simply not sufficient to prove Estate expenses or objections.

In Re Birkenbach Estate, 2017 ABQB 166, the beneficiaries settled a dispute in respect of a complex estate administration with the benefit of avoiding litigation in Alberta and in Mexico. Minutes of Settlement were executed with provisions provided respecting expenditures made in the litigation that might properly be regarded as proper estate expenses. Unfortunately the litigation continued in respect of the settlement and specifically claims for reimbursement respecting amounts spent in Mexico (where some realty belonging to the Deceased was located). Justice Mahoney gives us the flavour of the contested passing:

[11]           Based on the Settlement Agreement and the Consent Court Orders referred to above, I find the intention of the parties is that Angela would only be compensated for out-of-pocket expenses directly related to the Limoncitos resort project and the two San Blas houses paid prior to November 30, 2011.

[12]           In this claim for re-imbursement of expenses, Angela has the burden of proving the facts to support her expense claims. Having the burden of proof, Angela must present, through sworn affidavit evidence and exhibits, enough credible evidence to support her claim. The evidentiary standard she must meet is the “preponderance of the evidence.” A preponderance of evidence is just enough evidence to make it more likely than not that the amount Angela seeks to prove is true.

[13]           Despite Angela knowing, since at least 2011, that she was going to have to prove the expenses that she paid to maintain the assets as per the Settlement Agreement, she has provided mostly no documentation to support her expense claims. For example, where Angela says she paid cash to workers, she has refused to provide answers to undertakings that would provide bank statements that should show cash withdrawals being made to pay these workers.

…

[16]           It is also significant that Angela refused to allow the Personal Representative or any other person to assume administration of the Estate in Mexico. By doing so Angela assumed all financial and other responsibility for any existing or future debts or other claims against the Estate in Mexico, except those agreed to in paragraph 25 of the Settlement Agreement.

[17]           In addition to no back-up documentation or no reliable back-up documentation and no reference as to when or how the cash amounts were paid, Angela’s claims for taxes, other government assessed charges and legal fees are not claimable…

Obviously a dispute has to be taken in context and I expect that each side to the dispute had its own views as to the propriety of the expenses in question. However, where the point must be litigated, the Birkenbach Estate matter reminds one that proper proof is required. Obtain and retain vouchers seems to be the lesson here.

Have a nice day!

David