Murphy Estate v. McLean Estate et al., (1992) 131 A.R. 250 (CA)

• Judge: McClung, Stratton and Irving, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: April 08, 1992
• Citations: (1992), 131 A.R. 250 (CA)

Murphy Estate v. McLean Estate (1992), 131 A.R. 250 (CA);

    25 W.A.C. 250

MLB headnote and full text

In The Matter of the Estate of George Talbot Murphy, late of the City of Calgary, in the Province of Alberta

and

In The Matter of the Administration of Estates Act, R.S.A. 1980, Chapter A-1

(Appeal No. 12583)

Indexed As: Murphy Estate v. McLean Estate et al.

Alberta Court of Appeal

McClung, Stratton and Irving, JJ.A.

April 8, 1992.

Summary:

A lawyer and others guaranteed bank loans to Murphy. The lawyer gave guarantees for $5,000 and $30,000. Keith gave a guarantee for $5,000. Murphy died, appointing the lawyer as the executor of his estate. The bank successfully sued Keith on his guaran­tee. Keith brought third party proceedings against Murphy's estate and the lawyer. The lawyer mortgaged an estate asset to retire the guarantees. The lawyer applied to pass accounts and have his compensation fixed under s. 18 of the Alberta Surrogate Court Act.

The Alberta Surrogate Court held that the estate was liable to indemnify the lawyer and Keith. The court ordered, inter alia, the lawyer not to charge the estate any legal fee or executor's fees, to restrict disburse­ments to those approved by the clerk and to pay the estate a sum equal to the costs of the mort­gage and inter­est on $30,000. The lawyer appealed his entitlement to executor's fees. The beneficiaries cross-appealed the execu­tor's rights to indemnifi­cation.

The Alberta Court of Appeal allowed the appeal and cross-appeal.

Executors and Administrators - Topic 2803

Duties and powers of executors and ad­ministrators - Payment of debts - Per­sonal liability of executor - The Alberta Court of Appeal discussed the "rule" in Strong v. Bird stating that "... it has never been applied to allow a fiduciary to pay per­sonal obligations from the well of the estate he is administering, at least without the consent of his cestui ques, or court approval. ... Equity will not perfect an imperfect gift; certainly not by transferring the ownership of a commercial obligation to engineer its forgiveness" - See para­graph 28.

Executors and Administrators - Topic 2803

Duties and powers of executors and ad­ministrators - Payment of debts - Per­sonal liability of executor - [See Execu­tors and Administrators - Topic 5701 ].

Executors and Administrators - Topic 5700

Actions by and against representatives - Evidence - Claim by or against estate - Corroboration requirement - An executor mortgaged an estate asset to retire a per­sonal obligation - The executor alleged that the deceased had agreed to indemnify the obligation - The Alberta Court of Appeal reviewed the law relating to the requisite corroboration under the Alberta Evidence Act, s. 12, and stated that "... a healthy scepticism may not be wholly inap­propriate. ... In order for evidence to ap­preciably help the judicial mind believe some material fact ... it must be convincing on the civil standard of proof." - See paragraph 31.

Executors and Administrators - Topic 5701

Actions by and against representatives - Evidence - Claim by or against estate - What constitutes corroboration - A de­vel­oper orally assured guarantors, includ­ing Keith and a lawyer, that if they guaranteed a bank loan they could not lose - The developer died - The developer appointed the lawyer as his executor - The bank sued Keith on his guarantee - Keith brought third party proceedings against the lawyer and the developer's estate - The lawyer executed a mortgage on an estate asset to retire guar­antees from Keith, the developer and him­self - The Alberta Court of Appeal con­cluded that the law­yer breached his fiduciary obligations to the benefici­aries by profiting at their expense - There was insufficient evidence to esta­blish an en­forceable agreement to indem­nify under the Alberta Evidence Act, s. 12.

Practice - Topic 3604.3

Evidence - Affidavits - General - Con­sideration of - In deciding an appeal on affidavit evidence, the Alberta Court of Appeal, stated that affidavits drafted by the same person should be given requisite care, but not disregarded - See paragraph 46.

Cases Noticed:

Strong v. Bird (1874), 18 Eq. 315, consd. [para. 28].

Stephenson v. McLean (1977), 4 Alta. L.R.(2d) 197 (T.D.), consd. [para. 30].

Harvie v. Gibbons (1980), 12 Alta. L.R.(2d) 72 (C.A.), consd. [para. 30].

Bayley v. Trusts and Guaranty Co. Ltd. (1930), 66 O.L.R. 254 (C.A.), consd. [para. 31].

Mardsen, Re, L.R. 26 Ch. 783, refd to. [para. 39].

Frontenanc Loan Co. v. Morice (1886), 3 Man. R. 462 (C.A.), refd to. [para. 39].

Commander Leasing Corp. v. Aiyede (1983), 1 O.A.C. 135; 16 E.T.R. 183 (Ont. C.A.), refd to. [para. 39].

Proctor v. Bentley, [1930] 2 D.L.R. 6 (Sask. C.A.), refd to. [para. 50].

Statutes Noticed:

Alberta Evidence Act, R.S.A. 1980, c. A-21, sect. 12 [para. 17].

Evidence Act (Alta.) - see Alberta Evi­dence Act.

Interest Act, R.S.C., c. I-15 [para. 49].

Surrogate Court Act, R.S.A. 1980, c. S-28, sect. 18 [para. 1].

Trustee Act, R.S.A. 1980, c. T-10, sect. 41 [para. 49].

Counsel:

G.E. Price, for the appellant (respondent by cross-appeal);

D.J. Kelly, for the respondents (appellants by cross-appeal).

This appeal and cross-appeal were heard on April 8, 1992, before McClung, Stratton and Irving, JJ.A., of the Alberta Court of Appeal. The court delivered the following memorandum of judgment on September 28, 1992: