Executor’s failure to preserve assets alone unsuitable for summary judgment: Sask Court of Appeal

The Saskatchewan Court of Appeal upheld that mere failure to preserve assets does not automatically make an executor liable, making a case unsuitable for summary judgment.

In March 2017, Randy Johnson, Harvey Granatier, and respondents HDG Holdings Inc. obtained judgment against Peter Klaptchuk. Klaptchuk passed away shortly after.

The respondents sought enforcement of their judgment against Klaptchuk’s estate and Sylvia Klaptchuk, the executrix of the Estate. The judge granted summary judgment in their favor. The judge ruled that Sylvia breached her obligations as executrix of the state when she intermeddled its assets and converted them to her own use, despite knowing of the respondent’s unsatisfied judgment.

On appeal, Sylvia argued that it was error to decide her case by summary judgment and by improperly applying the common law doctrine of devastavit, among others.

The appellate court agreed.

In Klaptchuk v Johnson, 2023 SKCA 25, the appellate court ruled that there was material on record that required the chambers judge to determine whether Sylvia was personally liable for the judgment.

The appellate court held that an executor may be held liable for breach of their obligations where such breach resulted in loss or damage to the beneficiaries. One of these instances is devastavit, where an executor wastes the estate’s assets by “mismanaging, misapplying, squandering, or neglecting them,” said the court. However, devastavit is different from an executor’s failure to preserve assets, said the court.

In this case, Sylvia pleaded as a defense that she viewed certain shares as having no value since the company was losing money, said the court. This defense obligated the chambers judge to consider whether the provisions of the Trustee Act, 2009, applied, said the court.

Consequently, the appellate court ruled that it was error for the chambers judge to make a determination on the summary judgment. Thus, the decision in its entirely must be remitted back to the Court of King’s Bench.