Including a majority rule clause in a will that appoints more than one estate trustee is good drafting practice, as noted in our Solicitor’s Tip from March 2023. Without such a clause, all decisions related to the administration of anestate must be unanimous, which can lead to gridlock during estate administration and result in the removal of one or more estate trustees if consensus cannot be reached.
If such a clause is included in a will, one may wonder – does it deprive the court of jurisdiction to issue directions as to the administration of the estate?
This question was recently addressed by the Alberta Court of Appeal in Brodylo Estate (Re), 2023 ABCA 314. The appellants argued that a majority rule clause in the testator’s will deprived the court of jurisdiction to give ancillary directions regarding the estate, and that the court could only intervene if the acts of the majority were illegal.
In a unanimous judgment, the Court of Appeal of Alberta confirmed that, even if a will contains a majority rule clause, the court retains its supervisory jurisdiction:
While such a clause may reflect a testamentary intention that the personal representatives avoid going to court if they do not agree, such intention cannot oust the supervisory role of the court.
However, the court declined to delineate “the precise circumstances where a court may intervene in the face of a majority rule clause”.
In the lower court decision, reported at 2022 ABQB 358, Justice Dario gave ancillary directions to the personal representatives of the estate to assist in determining the value of property held by the estate. An application for probate had already been rejected because only three of the four personal representatives named in the deceased’s will had signed the application. One of the representatives refused to sign because she did not agree with the value of a home and land that was included in the application, the value assigned to company shares, or the amount charged by the appellants for their work as attorneys under the deceased’s power of attorney. After the application for probate was rejected, the majority of personal representatives applied for an Order that would permit them to file the application in light of the majorityrule clause in the testator’s will, which provided that if the trustees were unable to agree regarding any matter in connection with the estate, the decision of the majority “shall govern and shall be binding on all persons concerned”.
Justice Dario found that the majority rule clause did not apply under the circumstances at hand and, more specifically, that the majority rule clause could not be used to:
- override the fiduciary duties that the personal representatives owed to each other;
- deny one personal representative of material information used by others to make decisions related to the estate; or
- oblige a personal representative to swear a document they believed to be false, particularly where supporting information was being withheld or there was insufficient information to substantiate an estate decision.
The lower court ordered the parties to meet again to try to resolve the outstanding issues, and directed them to apply to the court for a determination if they were unable to reach a resolution. The court also gave further directions regarding steps to be taken if the parties could not agree, including obtaining property appraisals with respect to the home and land either jointly (if they could agree on one appraiser) or separately (if they could not agree), and having an accountant review the financial statements to determine the value of the company shares.
Justice Dario’s decision was upheld in its entirety on appeal, with the Court of Appeal commending the lower court’s “practical and common-sense approach to the gridlock in the administration of the estate”.
I hope you enjoy the rest of your day,