Braich Estate

2017 BCSC 1140 Braich Estate IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Braich Estate, 2017 BCSC 1140 Date: 20170705 Docket: S163762 Registry: Vancouver Between: James Greer Carphin, Q.C. Petitioner And Herman Singh Braich Jr., deceased, in his personal capacity and in his capacity as Trustee of the Estate of Herman Singh Braich Sr., Surjeet Kaur Braich, in her capacity as Trustee of the Estate of Herman Singh Braich Sr., and Erwin Singh Braich in his capacity as Trustee of the Estate of Herman Singh Braich Sr., H.S. Kenny Braich in his capacity as Administrator of the Estate of Herman Singh Braich Sr., and Herbishan Singh Braich in his capacity as Administrator of the Estate of Herman Singh Braich Sr. Respondents Before: The Honourable Madam Justice Maisonville Reasons for Judgment Counsel for the Petitioner: B.E. McLeod Counsel for the Respondents, H.S. Kenny Braich in his capacity as Administrator of the Estate of Herman Singh Braich Sr. and Herbishan Singh Braich in his capacity as Administrator of the Estate of Herman Singh Braich Sr.: M.S. Kerwin Respondent, Erwin Singh Braich, appearing on his own behalf: E.S. Braich Counsel for Canada Revenue Agency: K. Khalsa Herman Singh Braich Jr., deceased, in his personal capacity and in his capacity as Trustee of the Estate of Herman Singh Braich Sr. and Surjeet Kaur Braich, in her capacity as Trustee of the Estate of Herman Singh Braich Sr.: No appearance Place and Dates of Hearing: Vancouver, B.C. June 1-2, 2017 Place and Date of Judgment: Vancouver, B.C. July 5, 2017 introduction [1] This case is about whether a lawyer, without having obtained any form of judgment, and in the absence of a review pursuant to the Legal Profession Act, S.B.C. 1998, c. 9, and no passing of accounts by the administrators of an estate having occurred to determine whether the legal costs are proper expenses of an estate, can claim payment for legal services by proceeding against property of an estate. [2] It also concerns whether the Court can declare that legal counsel is entitled to payment and a charge or equitable lien in the amount owing on estate property. [3] For the reasons that follow, I have determined that, in addition to a passing of accounts by the administrators of this estate, to ensure that the amounts are properly attributable to the estate, there must be a judgment or a Registrar's certificate obtained in favour of counsel before the court can consider placing any form of charge on property. Background [4] The petitioner, James Carphin, Q.C. (the "petitioner"), was formerly a partner at Fasken Martineau DuMoulin LLP ("Faskens") and for many years, he had acted on behalf of Herman Singh Braich Jr. ("Herman Braich Jr."). The retainer was with Faskens, although his former firm and the petitioner have entered into an agreement whereby he is seeking payment directly in respect of these outstanding legal bills. [5] Forty-one years ago, in May of 1976, Herman Braich Jr.'s father, Herman Singh Braich Sr. ("Herman Braich Sr.") passed away, leaving his wife, Surjeet Kaur Braich ("Surjeet Braich") and his six children, Herjiwan Singh Braich ("Jim"), Herman Braich Jr., Reita Kaur Braich ("Reita"), Erwin Singh Braich ("Erwin"), H.S. Kenny Braich ("Kenny"), and Herbishan Singh Braich ("Bobby"). Herman Braich Sr. also left a will dated February 1, 1963. [6] One of the respondent administrators, Kenny, one of the children of Herman Braich Sr., is a businessman and resides in Mission, B.C. and is an administrator of the estate of Herman Braich Sr. ("the Estate"). [7] The other respondent administrator, Bobby, one of the children of Herman Braich Sr., is a businessman who resides in Abbotsford, B.C. and is also an administrator of the Estate. [8] Throughout these reasons, I will refer to Kenny and Bobby individually by their first names and collectively as the respondent administrators. [9] The respondent, Erwin, one of the children of Herman Braich Sr., is a businessman who resides in Abbotsford, B.C. [10] Both the respondent administrators were appointed administrators of the Estate in January 2017 by order of Justice Smith. At that same time, Erwin and Surjeet Braich were removed. [11] At the time he died, Herman Braich Sr. was the owner of certain property located at 32607 - 32641 Fraser Crescent, Mission, B.C. (the "Property"). Pursuant to the will, Herman Braich Sr. appointed his wife, Surjeet Braich, and his brother, Kehar Singh Braich, as the executors. A grant of probate was issued to Surjeet Braich and Kehar Singh Braich on August 1977. [12] By a court order dated August 1981, Kehar Singh Braich was removed as personal representative. Herman Braich Jr. was appointed as substitute personal representative in May 1988. Erwin was appointed as a substitute personal representative in December 1989. [13] Herman Braich Jr. died intestate in 2012. No personal representative was appointed to administer his estate. Nor has there been an application to appoint a litigation representative for his estate. Erwin and Surjeet Braich were left as the trustees of the Estate. By order of Smith J. made in January 2017, Erwin and Surjeet Braich were removed as executors of the will and trustee of the Estate. Instead, the respondent administrators were granted administration of the Estate. Devolution of assets [14] In 1989, a settlement was reached with the first wife of Herman Braich Sr. and their children from a prior marriage who would receive certain assets. Pursuant to a court order pronounced November 6, 1989 and the Trust and Settlement Variation Act, R.S.B.C. 1996, c. 463, a further agreement was reached such that the remaining Estate was to devolve as follows: (a) Surjeet Braich, the wife of Herman Braich Sr., would be entitled to a life interest in the Property and a life interest in 37.5% of the residue of the Estate, including all income derived therefrom; (b) the remaining 62.5% of the residue of the Estate would devolve to his children in the following proportions: (i) 3/16 to Herman Braich Jr.; (ii) 3/16 to Erwin; (iii) 3/16 to Jim; (iv) 3/16 to Bobby; (v) 3/16 to Kenny; (vi) 1/16 to Reita; and (c) upon the death of Surjeet Braich, the residue of the Estate would devolve in the same manner as described in subparagraph (b). [15] The only asset remaining in the Estate now is the Property. [16] By the terms of Herman Braich Sr.'s will, the Property was to be held in a manner that permitted Surjeet Braich to remain living at the Property after her husband's death: I DEVISE to my Trustees in fee simple any dwelling house, and premises owned by me and used and enjoyed by me as my home at the time of my death UPON TRUST to permit my said wife during her life so long as in the opinion of my Trustee The Royal Trust Company she makes the same her principal place of residence to have the use and enjoyment thereof free of all duties estate tax and probate fees After the death of my said wife or after she shall in the opinion of my Trustee The Royal Trust Company have ceased to make any such dwelling house her principal place of residence my shall sell the same and the net proceeds of sale shall form of my said Trust Fund PROVIDED however that my Trustees shall at liberty in the exercise of their uncontrolled discretion to postpone such sale for such period as they think proper and in [indistinguishable] interval to permit any children or child of mine with their his or her guardian in the case of infants or an infant to have the use and enjoyment of any such dwelling house and premises free of all duties estate tax and probate fees or to rent or lease the same in which case the net revenue therefrom shall form part of my said Trust Fund. It should be noted that The Royal Trust Company never became a trustee of the Estate and this responsibility of determining Surjeet Braich's interest feel to the Administrators of the Estate. [17] By September 2003, as noted above, almost all of the assets of the Estate, except for the Property, had been distributed. Involvement of Faskens and the petitioner [18] Herman Braich Jr. retained legal counsel, Faskens, to represent him and to provide legal advice in this matter as well as other matters he was dealing with. During the course of his representation of Herman Braich Jr., the petitioner rendered numerous legal bills. However, after a period of time, Herman Braich Jr. ceased paying on his account. The petitioner never had the legal bills reviewed before the Registrar. [19] The petitioner argues that Faskens and Herman Braich Jr. made an oral agreement that Faskens would provide legal services on behalf of the Estate and that the principal lawyer would be the petitioner. [20] By a document entitled "Irrevocable Assignment" to Faskens dated September 3, 2004, Herman Braich Jr. personally guaranteed payment of Faskens' bills by written assignment to Faskens of all his interest in the Estate. This interest was registered with the Personal Property Registry in November 2007. [21] The petitioner has put before the Court, in addition to his outstanding legal bills to Herman Braich Jr., a chart which he submits represents the original amount of invoices owed in respect of advice rendered to Herman Braich Jr. concerning his role as trustee. According to this accounting, the invoices issued and delivered to Herman Braich Jr. from 2003 to 2010 total $479,953.07. Herman Braich Jr. has paid $210,530.52. Of that amount, the petitioner submits that $369,202.includes some unspecified interest. This chart also includes calculations based on the original amount of his legal fees including interest owing after payments and, separately, additional interest calculation at 8% compounded annually on the outstanding amount calculated up to May 31, 2017. With the additional 8% compounded interest, the total provided and amount sought is $676,123.56. [22] The interest rate at 8%, compounded annually, is being claimed by the petitioner pursuant to the retainer letter dated March 31, 2006, in which the terms of the retainer document between Faskens and Herman Braich Junior were confirmed as including the following: If our accounts are not paid within 30 days of their date, interest is charged from the date of the account on the outstanding balance at the annual rate of 8%, compounded annually, until paid. Interest will be charged on all accounts outstanding as at January 31, 2006 commencing February 1, 2006. [23] The copy of that letter was signed by Herman Braich Jr. [24] All of the legal bills named Herman Braich Jr. in his personal capacity. The petitioner was not the solicitor for the "Estate" per se. There is evidence before the Court that indicates that the petitioner represented Herman Braich Jr. in regards to matters other than his duties as personal representative and trustee of the Estate, including representing Herman Braich Jr. in his capacity as director of Herman Enterprises Ltd. ("HEL"). [25] Kenny deposes: I had many specific discussions with my brother Herman Braich Jr. over the years in which he confirmed that Faskens was also performing work related to HEL, as well as other business not related to the Deceased's estate. He confirmed to me on multiple occasions that HEL was responsible for at least 50% of the legal costs. [26] Notably, certain of the petitioner's legal bills divide the legal services into two-halves, one-half to HEL and other half to Herman Braich Jr. as executor and, yet, those are before the Court here as forming part of the legal bills being claimed. Orders Sought [27] The petitioner seeks an order that all the respondents pay him the outstanding balance owing on bills for legal services. The amount sought in the Amended Petition is $621,284.60 as at April 25, 2016, which includes interest in the agreed rate of 8% per annum, compounded annually. The new accounting current to May 31, 2017 asserts the amount owing is now $676,123.56 which includes the 8% interest as noted above. The petitioner also seeks an order that all the respondents pay him interest of the agreed rate of 8% per annum, compounded annually, until the date of judgment, or, in the alternative, an order that he is entitled to payment for legal services on a quantum meruit basis. [28] The petitioner also seeks a declaration that he is entitled to payment of the legal bills and a charge or equitable lien on the Property in the amount claimed to be owing by Herman Braich Jr. [29] The petitioner, in his Amended Petition, also sought a certificate of pending litigation ("CPL") against the Property. Following the filing of the petition in this matter, the petitioner registered CPLs against the two titles to the Property. The respondent administrators, in their capacity as administrators of the Estate, have brought an application to cancel those CPLs. I will consider whether these CPLs should remain on title or be removed later in these reasons. [30] The petitioner further seeks any ancillary orders that may be required to give effect to the orders he seeks, including an order that the Property be sold on any terms and conditions the Court deems just. [31] To effect the sale of the Property, Surjeet Braich's interest would have to be addressed. The petitioner also submits that Surjeet Braich, who has since become ill and now resides in a care facility, no longer has an interest in the Property and, therefore, the Property should be sold by the administrators of the Estate. It is submitted that the wording of Herman Braich Sr.'s will does not grant a life estate and is simply an interest Surjeet Braich has if she lives at the Property. [32] The respondent administrators oppose the granting of these orders and seek a removal of the CPLs registered against the Property. The respondent administrators also allege that a petition is not the appropriate forum to decide these claims and that the petitioner is not entitled to pursue remedies directly against the Property of the Estate. liabilities of The estate [33] At present, the Estate has a number of liabilities and potential liabilities. At the outset of the hearing of this matter, counsel for the Canada Revenue Agency appeared and it was agreed by the petitioner that his claims would come second in priority to the tax liability owing, which, as of July 2016, was asserted to be approximately $730,000. [34] Surjeet Braich has also not received all of the income from the 37.5% share of the residue of the Estate and approximately $1,360,000 plus interest remains owing to her. Administration of The Estate - passing of accounts [35] There were passing of accounts in relation to the Estate from the date of death of Herman Braich Sr. in 1976 to May 1987. The next passing of accounts took place in 1995 and it covered the period from June 1, 1987 to May 31, 1994. There has been no further passing of accounts of the Estate despite outstanding previous court orders requiring it to be done. [36] As noted, Master Donaldson in October 1995 recommended the passing of accounts for the Estate every two years. [37] On January 24, 2017, Justice Smith similarly ordered that Surjeet Braich and Erwin pass their accounts as executors of the will and trustees of the Estate from 1994 to the date of the order. That has not been done. [38] Because there has been no passing of accounts in relation to the Estate since May 31, 1994, there has been no determination that legal costs incurred by Herman Braich Jr. have been "properly incurred" in his capacity as personal representative and trustee of the Estate. Nor has there been determination of which portion of the legal bills claimed by the petitioner actually involved representing Herman Braich Jr. in other capacities. relief sought [39] The petitioner claims against the respondents, seeking: i) a declaration that he is entitled to payment of bills for legal services from the trust property of the Estate; ii) a declaration that he is entitled to a charge or equitable lien on the trust property of the Estate in the amount owing to him; iii) more specifically, a declaration that he is entitled to a charge or equitable lien as against the Property in Mission, B.C.; iv) a CPL against the Property, which, as noted, he later registered against the Property; v) an order that the respondents pay him the balance owing which he submits is $676,123.56 as of May 31, 2017; vi) an order that the respondents pay him interest on the legal bills at the agreed rate of 8% per annum, compounded annually, until the date of judgment; vii) in the alternative, an order that he be entitled to payment for legal services on a quantum meruit basis; and viii) any ancillary orders to give effect to the other orders that he seeks, including an order that the Property be sold. issues [40] The issues before the Court are: a) whether the petitioner can seek remedies directly against the Property of the Estate without (i) a passing of accounts of the Estate and (ii) without any judgment or Registrar's Certificate in respect of the legal fees; b) whether the CPL should be removed; and c) whether the claim is properly brought by petition; erwin's position [41] Erwin made submissions in this matter. He sought to argue that, while, indeed, the petitioner may be owed funds, the matter has to be properly examined before money is paid. Erwin was also concerned that the present trustees did not pay rent and lived on the Property. He also argued that there was other litigation that was relevant to this matter including the matter of his bankruptcy, although I note there has already been a determination of matters between Erwin and Clock Holdings Ltd.: see Clock Holdings Ltd. v. Braich Estate, 2008 BCSC 1697. [42] Erwin also argues that the estate of Herman Braich Jr. has not been probated even though he passed away in 2012 and, therefore, that must be dealt with and properly examined before the petitioner can proceed in this matter. [43] Erwin also submitted that it would not be helpful to force his mother to pass her accounts when she is presently unwell. [44] Although mindful of Erwin's submissions, I do not find Erwin's submissions with respect to this matter had a bearing on the relief sought in this particular petition and the issues within that. Can the petitioner Seek Remedies Directly Against the Estate or the Property of the Estate? [45] Furthermore, the petitioner seeks remedies directly against the Property of the Estate. [46] In order to ascertain whether the petitioner's claim should be granted by this Court, it is necessary to review certain basic principles. Who is the petitioner's and/or Faskens' client? [47] The client of Faskens was Herman Braich Jr. The "Estate" was not an entity that could enter into a contract with the lawyer. Nor could it be said that Herman Braich Jr. was the sole trustee such that even notionally he was the only trustee that would be seeking legal counsel. Indeed, Herman Braich Jr. was not the sole administrator at the time that the legal bills were rendered. Erwin was appointed in 1989 as a substitute personal representative. [48] Given that an estate cannot enter into a retainer agreement with counsel, the personal representative who retains counsel or trustee is personally liable to the solicitor for his or her fees. See Bott Estate (Trustee of) v. Macaulay, [2005] O.J. No. 3493 (S.C.J.) at paras. 19-20. [49] A right to indemnity or reimbursement is a matter between the personal representative and the beneficiaries of the estate and is to be determined either by agreement with them or on the passing of accounts: see Allen v. Allen Estate (1991), 57 B.C.L.R. (2d) 351 at 359 (S.C.): (2) Remuneration by the estate for legal services rendered It is well established that a personal representative, such as a trustee or an executor, is not entitled to an allowance, at law or in equity, for personal trouble and loss of time in the execution of his duties. This rule is so strict that even if a trustee or executor has sacrificed much time to carrying on a business as directed by the trust, he will usually be allowed nothing as compensation for his personal trouble or loss of time: Brocksopp v. Barnes (1820), 5 Madd. 90, 56 E.R. 829; Guinness plc v. Saunders, [1990] 2 W.L.R. 324 at 332, [1990] 1 All E.R. 652 at 659 (H.L.). Only out-of-pocket expenses for work performed in relation to the estate are recoverable: Re Barber; Burgess v. Vinicome (1886), 34 Ch.D. 77. The only exceptions to this general principle are: (1) an express agreement to allow remuneration; (2) an express authority in the will; (3) the express authority of the court; and (4) statutory authority: Re Sullivan Estate (1954), 12 W.W.R. 461 (B.C.S.C.); Williams, Mortimer and Sunnucks, Executors, Administrators, and Probate, 16th ed. (London: Stevens & Sons, 1982) at p. 47. Also, Allen confirms the solicitor is the lawyer of the executor, not the estate. (a) Solicitor's Remuneration . An executor is entitled to employ and charge for the services of a solicitor but not for doing work which he might properly have done himself. The solicitor is the solicitor of the executor, not of the estate, and costs incurred by him can be charged to the estate only if he shows that they are necessary and proper charges against the estate, but not for services which the executor should properly have performed himself: Mott v. Roemer, [1928] 2 W.W.R. 566, 23 Sask. R. 55, [1928] 3 D.L.R. 860 (C.A.). If the solicitor is paid for services which the executor should have performed, the payment should be deducted from the executor's compensation: Re Lloyd, 12 W.W.R. 445, [1954] 3 D.L.R. 834 (Man. C.A.). Since the executor-solicitor cannot charge for solicitor's fees, it follows that the firm of which he is a partner cannot charge, even if he will receive nothing himself: Re Gates; Arnold v. Gates, [1933] Ch. 913. See also Bott at paras. 19-25; DeLorenzo v. Beresh, 2010 ONSC 5655 at para. 15. [50] Mr. Justice Cullity described how the lawyer is not the lawyer for the estate -- the client is the administrator. He in Bott held at paras. 19-21: [19] Mr. Bott, and not his mother's estate, was the Solicitor's client. Although references to an estate solicitor are deeply ingrained in estate practice in this jurisdiction, they are descriptive only of the work a solicitor is retained to perform for his client. An estate is not a juridical person and cannot retain anyone, or incur liabilities. An estate solicitor is one performing services to a personal representative acting as such. [20] It follows that the estate trustee, and not the estate, is personally liable to the estate solicitor. Such liability exists whether or not the estate trustee is entitled to an indemnity - or to be reimbursed - from the estate (i.e., from its assets) for the amounts owing to the solicitor. Whether a right to indemnity or reimbursement exists is a matter between the estate trustee and the beneficiaries of the estate and is to be determined either by agreement with them, or on a passing of accounts. In itself, the existence - or non-existence - of such a right does not affect the liability of the estate trustee to the estate solicitor. [21] If the estate trustee wishes to challenge the fees or disbursements charged by the estate solicitor, the appropriate procedure is by an assessment pursuant to the Solicitors Act unless, on a passing of accounts, the beneficiaries have challenged the reasonableness of the fees as an expense incurred by the estate trustee in administering the estate, or unless the estate trustee wishes to have an order approving the right to an indemnity or reimbursement. In either event, the court may order an assessment or, in some cases, may review the reasonableness of the accounts at the passing. This jurisdiction was formerly explicit in -- but its existence was not, I believe, dependent on -- the provisions of section 62 of the surrogate court rules. Neither approach involves any recognition that the solicitor rendered services to the estate or to the beneficiaries -- or that either has rights or obligations to the other or others -- but, rather, that the estate trustee is entitled to charge the estate only for expenses and liabilities reasonably incurred. As Leach Surr. Ct. J. stated in Re Smith, [1972] 2 O.R. 256 [at p. 261 O.R.]: "The solicitor is solicitor for the executor and not of the estate; and costs recoverable by him against the executor can be charged against the estate by the executor only if he shows they are necessary and proper charges against the estate." [51] The trustee or personal representative of an estate is personally liable for the legal costs incurred based upon the terms of the retainer. If the legal costs incurred are necessary and are proper charges against the estate, the trustee or personal representative of an estate may be reimbursed from the estate. Whether the costs incurred are necessary and are proper charges may be determined on a passing of the accounts. Further, the precise amount owing in legal bills could be determined at a review pursuant to the Legal Profession Act. If there is a difference or shortfall between the lawyer's account and what the court considers proper indemnification for legal costs payable by the estate, the personal representative will be personally liable for the difference: Feth (Estate of), 2014 BCSC 970 at paras. 65 and 68. [52] At present, there has been no Legal Profession Act review of any of the petitioner's accounts as rendered to Herman Braich Jr. Nor is the estate of Herman Braich Jr. represented in this proceeding given that there has been no administrator appointed for his estate. Therefore, the amount of legal costs owing to the petitioner by Hermain Braich Jr. is as yet undetermined. I reiterate that there has not been a passing of accounts to determine which of the legal costs incurred by Herman Braich Jr. are properly chargeable against the Estate. [53] As for a charge against the estate, Herman Braich Jr. is currently entitled to a 3/16 share of 62.5% of the residue of the Estate and has a vested 3/16 interest in the remaining 37.5% of the residue. His remainder interest is subject to the life interest of his mother, Surjeet Braich, in both the 37.5% of the residue and the Property. Capital beneficiaries of a trust and residuary beneficiaries of an estate do not have any beneficial interest in the underlying assets of the trust or estate. Beneficiaries only have the right to enforce the due administration of the trust by the trustee executor: see McShane v. Eusanio, 2011 BCSC 553 at para. 88: [88] Counsel for the Woods also argued that the plaintiffs had no legal standing to make this claim against the Woods. Counsel argued that the plaintiffs had no specific interest in the cabin, except as beneficiaries of the residue of the estate, of which the cabin formed a part. It was said that, in law, the plaintiffs only had the right to enforce the proper carrying-out of the functions and duties of administration of the estate by the executor. The authorities relied on were: Curlett Estate (Re), [1996] 3 W.W.R. 545 per (Wachowich J.) at paras 7 - 9 and 14; Duetschmann (Guardian Ad Litem of) v. Fallis 2010 BCSC 952 per Voith J. at paras 34-35; and Burke v. Hudsons Bay Co. 2010 SCC 34 at para. 58. These authorities seem to support the proposition advanced on behalf of the Woods. [54] See also Deutschmann (Guardian Ad Litem of) v. Fallis, 2010 BCSC 952, where Mr. Justice Voith held at paras. 34-38: [34] Two matters arise from this. First, apart from Olga being provided with a qualified life interest in the Property, the Property is in the nature of residue and is subject to full liability for the payment of debts, taxes and like obligations. Second, under the Will, Hilda Schiel had no interest in the Property. Rather, she was granted an interest in the proceeds of sale if she was alive when the Property was sold. Thus, Hilda Schiel was provided with an interest in the residue and not with a specific devise. [35] The legal consequence of this conclusion are expressed in Curlett Estate (Re), [1996] 3 W.W.R. 545, 11 E.T.R. (2d) 18 (Alta. S.C.), where the court, at paragraph 8, said: 8 A residual beneficiary has no beneficial interest in residual property in the Estate except to items which were specifically devised or bequeathed to him or her (and then the interest exists only in relation to those specific items): Megarry and Wade, The Law of Real Property, 5th ed., (London: Stevens & Sons Limited, 1984), at pp. 559-565. The interest of a residual beneficiary in the Testator's unadministered Estate is limited to "a right to enforce the proper carrying-out of the functions and duties of administration by the executor": Commissioner of Stamp Duties (Queensland) v. Livingston, [1965] A.C. 694 (P.C.). This principle has been repeated by the Supreme Court of Canada in Minister of National Revenue v. Bickle, [1966] S.C.R. 479 at 484-5: "It is not disputed that until the trusts under a will have been performed, a residuary beneficiary cannot put his hands on a specific piece of property and claim ownership with all the consequences of ownership." . [37] Finally, both under the terms of the Will which I have described and as a general legal proposition, the residue of an estate is not to be paid out until its various outstanding obligations are addressed. Those expenses include reasonable costs, including legal fees, which the Administrators are required to incur. In Jackson v. King, 2003 BCSC 328, 49 E.T.R. (2d) 19, Burnyeat J. said: [12] As Executors, the Respondents are entitled to be indemnified out of the Estate for all proper expenses incurred in relation to the Estate and this right of indemnity is a first charge upon the capital and the income of the Estate: Halsbury's Laws of England, vol. 17, 4th ed. (London: Butterworths, 1976) at 612, paragraph. 1190. The Respondents are also entitled to be indemnified for all costs including legal costs which are reasonably incurred: Geffen v. Goodman (1991), 81 D.L.R. (4th) 211 (S.C.C.). As well, the Respondents are entitled to full indemnity for all costs and expenses properly incurred in the due administration of the Estate: Thompson v. Lamport [1945] S.C.R. 343. See also Clock Holdings Ltd. v. Braich Estate, 2008 BCSC 1697 at para. 149. [55] While Herman Braich Jr. may have assigned his interest over, exactly what that interest is at present is unknown. [56] While the petitioner asks this Court to determine Surjeet Braich no longer has an interest in the Property, given that she is not residing there at present, that matter has not been finally determined and cannot be determined simply by stating on the statement that she is residing in a care facility at present. [57] A residual beneficiary cannot deal with the specific piece of property and claim ownership until the trust under the will have been performed: see Minister of National Revenue v. Bickle, [1966] S.C.R. 479. [58] Accordingly, it remains unclear exactly what property constitutes residue until all debts are paid and the administration of the estate is completed: Burke v. Hudson's Bay Co., 2010 SCC 34 at para. 58. [59] At present, it is unclear what property will constitute the residue of the Estate until all debts of the Estate are paid and the administration of the Estate is complete. The trusts under Herman Braich Sr.'s will have not been performed. Therefore, the estate of Herman Braich Jr. remains a residuary beneficiary of the Estate and is not entitled to any beneficial interest in the underlying assets of the Estate. The petitioner, as a creditor of Herman Braich Jr. and subsequently his estate, cannot seek to gain access to that which Herman Braich Jr. or his estate has no entitlement. [60] I find, accordingly, that Herman Braich Jr.'s interest in the Estate will not be conclusively known until after Surjeet Braich dies and the trustees have fully administered the Estate. [61] Further, as noted, no claim can be asserted by the petitioner directly against the Estate or its underlying assets simply because of the debt owing by Herman Braich Jr. has not been finally ascertained by a proper review under the Legal Profession Act. [62] While Herman Braich Jr. would have been entitled to seek indemnification for legal costs incurred as personal representative of the Estate, there has never been a determination of whether the legal costs as set out by the petitioner were properly incurred. As noted, the proper form for determining that is a passing of accounts. [63] The interest rates alone and the quantum of costs that would be claimed by Herman Braich Jr. would likely be disputed as to whether those are properly incurred by the trustee and in the interest of the Estate. In this regard, delay in relation to the Estate can be a consideration in whether the expense is properly incurred: see Collett Estate, 2017 BCSC 473 at paras. 5-8 and 37. Where it has taken longer than it should have to distribute the Estate, this may be a factor in whether the fees claimed are proper or necessary. It is not enough to simply allege the debt without a proper determination of these issues respecting whether the legal fees are properly incurred and properly payable by the Estate. [64] The petitioner claims that he has a right of subrogation in respect of Herman Braich Jr.'s claim. It is important to note, respecting the right of subrogation, that it is a right of indemnity, not a right to the trust property itself: see Octavo Investments Pty. Ltd. v. Knight (1979), 144 C.L.R. 360 at 367 and 370; Custom Credit Corporation Limited v. Ravi Nominees Pty Ltd. (1992), 8 W.A.R. 42 at 59 (W.A.S.C. - Full Court); Zen Ridgeway Pty Ltd v. Adam & Anor, 2009 QSC 117 [Zen Ridgeway]. [65] In Zen Ridgeway, the Supreme Court of Queensland considered the issue where a creditor of the trustee obtained a judgment under a particular Queensland statue dealing with construction matters. Accordingly, the judgment was in the nature of a debt. The creditor then lodged a caveat against real properties owned by the trustee as part of the trust. The trustee applied to have the caveat removed and the Supreme Court of Queensland reviewed the nature of debts incurred by trustee, including the right of subrogation of a creditor. [66] Justice Wilson, for the Supreme Court of Queensland, noted that a trustee is personally liable for debts incurred as trustee, but that a right of indemnity out of the trust estate arises concurrently with the incurring of such a liability. A lien arises over the trust property to enable the creditor to enforce the right of indemnity: see Zen Ridgeway at paras. 11-13: [11] Under s 31 of the Building and Construction Industry Payments Act 2004 the judgment against the applicant is a judgment for a debt. In General Credits Limited v Tawilla Pty Ltd [[1984] 1 Qd R 388 at 389,] McPherson J said of a simple common law judgment for a money sum or debt - "It is well settled that such a judgment cannot be enforced by execution levied upon trust assets even though the judgment against the trustee is founded on a debt incurred by him in the capacity of trustee: see Jennings v Mather; Savage v Union Bank of Australia Ltd.; Octavo Investments Pty Ltd v Knight." His Honour explained why this is so in an essay The Insolvent Trading Trust - "The reason is that fi fa does not extend to equitable assets unless the whole beneficial interest is in the judgment debtor. In the case of trust assets, that will be the case only where the balance on a final account is in favour of the trustee, so that nothing at all is due to the beneficiaries. Generally that will not be known to the creditors until the account is taken." [12] A creditor to whom the trustee has incurred a debt in the administration of the trust may be subrogated to the trustee's right of exoneration or lien. A creditor's right of subrogation is explained in Lewin on Trusts - "Although unsecured creditors and other claimants do not have a direct claim against the trust property in respect of unsecured liabilities incurred by trustees in the administration of the trust, and cannot levy execution upon the trust property they may by subrogation have a right to stand in the place of the trustee and enforce their liabilities against the trust property to the extent that the trustee would be so entitled. The trustee's right of indemnity is an asset of the trustee, and the trustee's creditors are entitled by subrogation to reach this asset and so enforce their claims against the trust property." The creditor's right is derivative of the trustee's, and cannot exceed the extent of the trustee's legitimate claim on the trust estate. Further, it is subject to whatever interests in the trust assets the trustee has lawfully created in favour of third parties. [13] However, the right of access to the trust assets by way of subrogation is inchoate unless the trustee is insolvent or it is otherwise reasonable to assume that obtaining a judgment against the trustee would be pointless. The following passage from Deancrest Nominees Pty Ltd v Nixon [2007 WASC 304 at para. 49] is apposite to this case - " it has been held that a creditor does not have a right of subrogation simply by virtue of the existence of a debt owed to it by a trustee, but it must reasonably appear, at least, that any attempt to recover the debt from the trustee would be fruitless. That is, the right of subrogation does not exist simply as an alternative means by which a creditor may recover a debt owed by a trustee. In the present case, there is nothing to suggest that the debt could not reasonably be recovered by Deancrest from the trustees concerned." Accordingly, there is no matured right of subrogation that can be expanded to give the petitioner a right to the trust property. Should the CPL Be Cancelled? [67] CPLs are covered in s. 215 of the Land Title Act, R.S.B.C. 1996, c. 250, which narrowly limits who is entitled to register a CPL. Section 215(1) of the Land Title Act provides: 215(1) A person who has commenced or is a party to a proceeding, and who is (a) claiming an estate or interest in land, or (b) given by another enactment a right of action in respect of land, may register a certificate of pending litigation against the land in the same manner as a charge is registered, and the registrar of the court in which the proceeding is commenced must attach to the certificate a copy of the pleading or petition by which the proceeding was commenced, or, in the case of a certificate of pending litigation under Part 5 of the Court Order Enforcement Act, [R.S.B.C. 1996, c. 78,] a copy of the notice of application or other document by which the claim is made. See also Khan v. Johal, 2006 BCSC 1547 at para. 9; Seville Properties Ltd. v. Coutre, 2005 BCSC 1105 at para. 7. [68] The petitioner must have an estate or interest in land or have a right of interest in the land under a statute. As reviewed above, the petitioner does not have a right of interest in the trust property but only a potential right of indemnification in an as yet undetermined amount, subject to a determination of the ultimate amount under a Legal Profession Act review and the amount that is properly attributable to the Estate pursuant to a passing of accounts. He is not a judgment creditor. [69] Accordingly, the petitioner does not satisfy the threshold issue of being entitled to register a CPL against the Property. I find that the petitioner's request for relief is ill-conceived in that the underlying action is really a debt action. Were the petitioner to be successful in the underlying action, he would still have no ownership interest in the Property. The mere fact that the claims made may relate to the Property as part of the Estate does not convert the matter into a proprietary claim: see Rissman v. Chen, 2012 BCSC 715 at paras. 10-14; Amero v. Fehner-Lee, 2012 BCSC 1411 at paras. 10-12; RodRozen Designs Inc. v. 0977168 B.C. Ltd., 2016 BCSC 834 at paras. 16-18. [70] I find, accordingly, that the CPL should be cancelled pursuant to s. 256(1) of the Land Title Act, which reads as follows: 256(1) A person who is the registered owner of or claims to be entitled to an estate or interest in land against which a certificate of pending litigation has been registered may, on setting out in an affidavit (a) particulars of the registration of the certificate of pending litigation, (b) that hardship and inconvenience are experienced or are likely to be experienced by the registration, and (c) the grounds for those statements, apply for an order that the registration of the certificate be cancelled. [71] Section 257(1) of the Land Title Act provides: 257 (1) On the hearing of the application referred to in section 256 (1), the court (a) may order the cancellation of the registration of the certificate of pending litigation either in whole or in part, on (i) being satisfied that an order requiring security to be given is proper in the circumstances and that damages will provide adequate relief to the party in whose name the certificate of pending litigation has been registered, and (ii) the applicant giving to the party the security so ordered in an amount satisfactory to the court, or (b) may refuse to order the cancellation of the registration, and in that case may order the party (i) to enter into an undertaking to abide by any order that the court may make as to damages properly payable to the owner as a result of the registration of the certificate of pending litigation, and (ii) to give security in an amount satisfactory to the court and conditioned on the fulfillment of the undertaking and compliance with further terms and conditions, if any, the court may consider proper. (2) The form of the undertaking must be settled by the registrar of the court. (3) In setting the amount of the security to be given, the court may take into consideration the probability of the party's success in the action in respect of which the certificate of pending litigation was registered. (4) On hearing the application referred to in section 256 (2) and on being satisfied that (a) the facts set out in the affidavit are consistent with the records of the land title office, and (b) there is nothing in the pleading or petition by which the proceeding was commenced or notice of application attached to the certificate that expressly or by necessary implication alleges that the owner is not a purchaser in good faith and for valuable consideration, the court may make an order declaring that the owner's indefeasible title or charge is not affected by the certificate of pending litigation or the outcome of the proceeding. (5) On receipt of an order made under subsection (4), the registrar must file it and cancel the registration of the certificate of pending litigation. [72] I do not find this is an appropriate case for requirement for security following cancellation of CPL, pursuant to Part 16 of the Land Title Act. [73] Here, the respondent administrators have set out that they are suffering hardship and inconvenience due to the CPL. Section 256 of the Land Title Act does not require the hardship to be significant: see Uppal v. Rawlins, 2008 BCSC 650, at para. 29: [29] The case authorities hold that the court should not be exacting in its analysis of hardship and inconvenience. Section 256(1)(b) requires the applicant to demonstrate hardship and inconvenience, but it does not require the hardship and inconvenience to be significant. [74] Here, the respondent administrators are prevented from refinancing the Property to satisfy substantial liabilities of the Estate. I find that this meets the requirements for establishing hardship and inconvenience under s. 256. The appropriate Form of Proceeding [75] The respondent administrators argue that a threshold issue in this matter is whether the petition is suitable for a proceeding under Rule 2-1 of the Supreme Court Civil Rules and rely on McDonald v. Lau, 2016 BCSC 1651 at para.39: [39] As a threshold issue, the Court must determine whether it was appropriate for the petitioner to bring this matter by way of petition. If it was not, then the matter must be converted into an action. [76] Rule 2-1(1) directs that every proceeding is to be begun by notice of civil claim unless an enactment or the Rules themselves provide otherwise and then sets out a list of circumstances in Rule 2-1(2) which will require a proceeding to be begun by way of petition. The potentially applicable circumstances are as follows: (2) To start a proceeding in the following circumstances, a person must file a petition or, if Rule 17-1 applies, a requisition: (c) the sole or principal question at issue is alleged to be one of construction of an enactment, will, deed, oral or written contract or other document; (d) the relief, advice or direction sought relates to a question arising in the execution of a trust, or the performance of an act by a person in the person's capacity as trustee, or the determination of the persons entitled as creditors or otherwise to the trust property; The relief sought here extends far beyond simple questions arising in the execution of a trust or determination of a creditor. [77] The argument of the respondent administrators is that the petitioner is seeking to enforce a debt claim against Herman Braich Jr. on the basis of the retainer, written and oral, by way of an originating application. [78] The respondent administrators argue that it is ill-conceived to bring this matter by way of petition given that a proceeding begun by petition can involve interpretation of a contract but not the enforcement of it: see Yates v. Air Canada, 2001 BCSC 127 at para. 36; McDonald at para. 51. [79] The respondent administrators further argue that, while letters have been placed into evidence, there is no formal written retainer agreement put forward by the petitioner. Given that the onus remains on the solicitor to prove the retainer contract where there is a dispute, there must be evidence of the retainer put forward by the lawyer: see Cox Taylor v. Cochrane, 2007 BCSC 432; Walker v. Takhar, 1994 CanLII 697 (B.C.S.C.). [80] Accordingly, the onus is on the petitioner to prove his retainer contract with Herman Braich Jr. The respondent administrators caution that, given that Herman Braich Jr. is deceased, the retainer agreement must be examined with some care and scepticism, relying on Johl Estate v. Purewal, 2015 BCSC 2331 at para. 28; Hunt v. Kazmer, 2005 BCSC 1815 at para. 21. While Johl Estate was brought by petition, that case involved only the retainer agreement and not the enforcement of it or all the ancillary matters sought here by the petitioner. [81] Given that a declaratory judgment would not resolve all the issues between the parties, I find that proceeding by way of petition is inappropriate and agree with the argument of the respondent administrators in this regard: see also Yates at paras. 35-39, when Bauman J., as he then was, reviewed this point: [35] As to Rule 10(1)(b), Justice Skipp's decision in Three Stars Investments Ltd. v. Narod Developments Ltd. (1981), 33 B.C.L.R. 164, is cited. [36] After reviewing the law Justice Skipp concluded: From these cases it can be concluded that the R. 10(1)(b) petition is inappropriate where: (1) Serious questions of law or fact are raised; (2) A decision will not end the matter, but requires further proceedings to be pursued; (3) The application involves not the interpretation but enforcement of a contract. The petitioner has used an inappropriate procedure in its use of a petition. The role of declaratory judgments, as provided for under R.10, was commented upon by Dickson J. in Solosky v. R. (1979), 16 C.R. (3d) 294, 50 C.C.C. (2d) 495, 105 D.L.R. (3d) 745, 30 N.R. 380 (S.C.C.). In that case he adopted the view which asserted that the declaratory action is discretionary and should not be granted if it will not settle the questions at issue between the parties. In the present case, a declaratory judgment on the construction of the contract will not settle all issues between the parties. They must still proceed to trial to enforce whichever construction is presented. On that ground alone the R.10(1) petition is inappropriate. [39] He concluded (at 4): In my view, the test laid down in Three Stars still applies on a Rule 10 application. However, after Douglas Lake, the existence of disputed questions of fact alone will not defeat the application. If disputed questions of fact can be satisfactorily resolved by reference of the documentation between the parties such that the court can concluded that the respondent would be "bound to lose" if the matter went to trial, then the application can be allowed, provided it still meets the Three Stars test. In Douglas Lake, the issue was one solely of contractual interpretation and the decision on that point ended the matter. In this case, the respondent advances a misrepresentation claim in the approximate sum of $2,722,000. An interpretation of the contract will not end the mater [sic] and in my view further proceedings will have to be pursued. Finally, it is clear that the petitioner is seeking not only an interpretation of the purchase contract but also the enforcement of the promissory note free of any set-off claim. In my view, this does not fall within the purview of Rule 10 and this matter should be pursued by way of writ and statement of claim. Accordingly, given the relief sought, I find that proceeding by petition is ill-conceived for the case before me, which will not resolve all the issues between all these parties. No application or submission was made to the Court about converting this matter to an action and, as a result, in these circumstances, it would be inappropriate for the Court to do so pursuant to Rule 16-1(18). conclusion [82] Accordingly, I dismiss the relief sought by the petitioner in this petition. [83] In the event that parties are unable to reach an agreement respecting costs, they may, within 60 days of the release of this judgment, arrange to address costs by contacting the Registry. "Maisonville J."