A British Columbia Supreme Court judge has ordered the removal of a man as the executor of his late mother’s estate after finding he engaged in impermissible self-dealing by transferring a valuable Langley property to his own company for below market value and without the knowledge of his sister, a fellow beneficiary1. The decision, delivered by Justice Tammen on July 29, 2024, is the latest development in a prolonged and acrimonious legal dispute between the siblings over the administration of the estate of Lily Diane Barbieri.
The family conflict began shortly after the death of Lily Barbieri on November 7, 2018. Her 2007 will appointed her son, Ricardo “Rick” Barbieri, and her daughter, Teresa Diane White, to act as joint executors. The will stipulated that the residue of her estate was to be divided equally among her three children: Rick, Teresa, and their brother, Steven Barbieri. The initial harmony between the co-executors was short-lived. By July 2019, Rick had filed an application to have Teresa removed as executor, alleging she had improperly transferred money and real property, including a Langley property on 54 Avenue that was held in joint tenancy with their mother, into her own name. That dispute was resolved by a consent order in September 2019, which saw Teresa step down, leaving Rick as the sole executor of the multi-million dollar estate. The court also ordered Rick to provide his siblings with a detailed accounting of the estate every two months.
With Rick in sole control of the estate, he commenced a lawsuit against Teresa seeking a declaration that the estate owned 75% of the 54 Avenue property she now occupied. He registered a certificate of pending litigation against the property, effectively encumbering it. It was Rick’s own actions as executor, however, that brought the parties back to court. Teresa discovered that Rick had conducted two significant real estate transactions involving estate assets without informing her. In February 2020, Rick transferred a property on Old Yale Road in Langley to a numbered company of which he is the sole director. The transaction was recorded at a sale price of $1,293,500. More than a year later, in March 2021, he transferred another Langley property on 240 Street to their brother, Steven, for a sale price of $2,118,000. Teresa was not notified of either transfer and only learned of them after conducting her own title searches.
These transactions prompted Teresa to file the current application to have Rick removed as executor. She argued that Rick had placed himself in a severe conflict of interest by transferring the Old Yale Property to himself in a clear act of self-dealing that benefited him personally at the expense of the estate. Her application asserted that Rick had shown preference for himself and Steven over her, failed to act with the honesty and fidelity required of a fiduciary, and demonstrated that he would continue to administer the estate for his own benefit. The core of her argument was that Rick, as a trustee, was prohibited from purchasing assets from the very estate he was tasked with protecting.
In his defence, Rick argued that the will granted him “sole and uncontrolled discretion” to manage estate assets, including the power to value and allocate assets to any beneficiary as he saw fit. He contended that the property transfers were not sales but were instead in specie distributions, meaning they were in-kind transfers of assets to beneficiaries as part of their share of the inheritance. He maintained that the court should not lightly interfere with his mother’s choice of executor and that his removal was not in the best interests of the beneficiaries. He further submitted that there were sufficient assets remaining in the estate to reapportion the final distribution and ensure each beneficiary received their rightful share, regardless of the values used in the transfers. Their brother, Steven, supported Rick’s position, expressing concern about the additional costs that would be incurred by appointing a third-party trust company to manage the estate.
Justice Tammen systematically dismantled Rick’s arguments, focusing on the critical distinction between a permissible interim distribution and impermissible self-dealing. The judge found that Rick’s claim that the transfers were in specie distributions was an “ex post facto attempt to justify his actions.” The court pointed to Rick’s own affidavit evidence, where he repeatedly referred to his intention to “buy” or “purchase” the Old Yale Property, never once mentioning a distribution. His affidavit stated, “I told our probate lawyer… that I would like to buy the Old Yale Property to one of my companies,” and later, “I have always intended to pay a fair value for the Old Yale property.”
The judge highlighted the secrecy surrounding the transactions as further evidence that they were not legitimate distributions. “If he were actually making interim distributions from the estate to the beneficiaries, there would have been no reason to keep that secret from Teresa,” Justice Tammen wrote. The significant delay of over a year between the transfer to himself and the transfer to Steven also undermined the notion of a coordinated distribution plan. The court noted that a proper distribution would have been memorialized with formal valuations, notice to all beneficiaries, and a clear accounting of the remaining entitlements, none of which occurred. Rick now concedes that the price his company paid for the Old Yale Property was less than an updated appraised value of $1,743,000, while Teresa has an appraisal valuing it at over $4 million.
The judge also found Rick’s conduct regarding the properties to be inconsistent. Rick had justified the transfers by stating that each of the three siblings had a “sentimental” attachment to a specific property. However, while he and Steven now held clear title to their desired properties, Rick continued to pursue legal action against Teresa to force the partition and sale of the 54 Avenue property she considered hers, on which he maintained a certificate of pending litigation. Justice Tammen concluded that Rick’s actions amounted to a clear case of an executor purchasing estate property without the consent of the beneficiaries and for less than fair market value.
Having found that Rick engaged in impermissible self-dealing, Justice Tammen concluded that his removal was necessary for the proper administration of the estate. The judge stated that while a testator’s choice of executor is to be respected, that choice had already been altered when Rick successfully had Teresa removed as co-executor. The court found that Rick had “clearly favoured certain beneficiaries over others, himself and Steven over Teresa,” and that his conduct was not in the best interests of all beneficiaries. Citing Rick’s adversarial conduct and the animosity apparent in his affidavits, the judge expressed a lack of confidence in his ability to continue, stating there was a “more than moderate risk” to the remaining assets if Rick remained in charge. The court rejected the argument that sufficient assets remained to settle accounts later, noting that without a proper, independent accounting, the true value of the estate was unknown.
Ultimately, Justice Tammen granted Teresa’s application, ordering Rick Barbieri removed as both executor and trustee. In his place, the court appointed Solus Trust Company Limited as the administrator of the estate pending the resolution of the ongoing litigation. The judge directed that all estate assets be vested in Solus Trust and further ordered that Rick personally pay Teresa’s legal costs for the successful application.
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