The Alberta Court of Appeal’s decision in McLelland v. McLelland, 2021 ABCA 102, provides valuable guidance on jurisdiction, inter vivos transfers, and the limits of duplicative estate litigation across provinces. The case underscores the tension between a beneficiary’s right to challenge questionable transactions and the court’s duty to prevent abuse of process.
Background
The deceased, Mr. McLelland, died in British Columbia in 2016. His will divided his $2.5 million estate equally among his three adult children: Shannon, Colleen, and Brian Jr. However, just days before his death, the Deceased executed deeds of gift transferring two condos in Calgary to Colleen and one to Brian Jr. These transfers significantly reduced the Estate’s value, prompting Shannon to question their validity. Notably, these transfers were not enacted by the Deceased’s regular counsel but arranged through his long-time accounting firm.
The estate trustee, TD Canada Trust, declined Shannon’s request to challenge the gifts. Shannon initially commenced proceedings in British Columbia under section 60 of the Wills, Estates and Succession Act, seeking a redistribution of the Estate, on the grounds that her father had not made adequate provision for her. This litigation was ultimately abandoned. Instead, she commenced a parallel action in Alberta, alleging undue influence, lack of capacity, unjust enrichment, and constructive trust, and sought to have the condos transferred back to the Estate.
A case management judge in Alberta appointed Shannon as administrator ad litem to pursue the claim on behalf of the Estate and ordered the estate trustee to fund the litigation. Colleen appealed and the Alberta Court of Appeal allowed the appeal.
The Majority Decision
The majority held that the Alberta action should be struck as an abuse of process. They noted that the Estate was already under the jurisdiction of the British Columbia courts, where probate had been granted. The central issues in Alberta, namely whether the Calgary condos were valid inter vivos gifts or should fall back into the Estate, could be addressed by the British Columbia court as part of its supervisory role over the Estate’s administration. Allowing Shannon to pursue duplicative litigation in Alberta undermined both judicial economy and the principle of comity between provinces.
The majority felt that Shannon’s appointment as administrator ad litem was not appropriate and placed her in an irreconcilable position of conflict. There was already an estate representative in BC and Shannon had not challenged their decision not to commence an action in that jurisdiction. Further, she was advancing a claim in which she had a personal interest, and her prior conviction for criminal harassment against Colleen underscored her inability to act impartially in this fiduciary role. Interestingly, the case management judge noted this concern but felt that Shannon’s counsel would provide the appropriate check on her conduct. The Court of Appeal disagreed with this rationale, stating that a solicitor acts on the instructions of their client unless those instructions are such that the solicitor cannot act and must therefore withdraw.
The Court of Appeal also found that requiring the Estate to pay Shannon’s costs effectively gave her a risk-free opportunity to litigate, a result contrary to the cost principles of modern estate jurisprudence which work to protect estates from bearing the cost of unmeritorious litigation.
The Dissent
Justice O’Ferrall dissented, finding the case management judge had the jurisdiction to appoint an administrator ad litem and it was a proper procedural step to allow the Estate’s interest to be advanced. He stated that resealing of the BC probate was not a prerequisite to this appointment.
In his view, the Alberta and BC proceedings were not duplicative, as one concerned testamentary provisions and the other addressed inter vivos transfers. Further, he noted that since the condominiums were registered in Calgary, only an Alberta court could rectify title if the transfers were found invalid.
Reminders to Take Away
This case highlights the challenges of jurisdiction in estate disputes and the importance of carefully considering where a dispute should be litigated. The decision is a reminder to carefully assess jurisdiction, avoid duplicative proceedings, and note the risks of transfers of property late in life, which almost inevitably invite scrutiny.
Thanks for reading!
Darien Murray