NLCA: Franklin Estate No-Contest Clause Triggered By Executrix Removal

• The Newfoundland and Labrador Court of Appeal ruled that a beneficiary's application to remove an executrix triggered a will's no-contest clause.
• The Court of Appeal set aside a lower court's decision to enforce the clause because it failed to apply the 'frivolous and vexatious' test.
• The case was remitted for a rehearing to determine if the beneficiary's executrix removal application was frivolous and vexatious, which is necessary to disinherit a beneficiary.
• The court emphasized that no-contest clauses aim to deter elective adversarial litigation, not legitimate judicial oversight of estate administration.
• If the application is found not to be frivolous and vexatious, the no-contest clause will be unenforceable in this instance.

The common law has long recognized that no-contest clauses are enforceable by the court to disinherit a beneficiary in circumstances where the court finds the proceeding brought by the beneficiary to be frivolous and vexatious.

The Newfoundland and Labrador Court of Appeal recently addressed a significant estate dispute in *Franklin Estate (Re), 2026 NLCA 30*, which centered on a beneficiary's attempt to remove an executrix and the subsequent invocation of a no-contest clause. The case originated from the will of a testator who passed away on August 6, 2019. This will designated his three children, including both the appellant and the respondent, as beneficiaries, with the respondent specifically named as the executrix. A key provision in the will was a no-contest clause, stipulating that any beneficiary initiating litigation related to a will provision would forfeit their entitlement, with exceptions only for judicial interpretation or directions during estate administration.

On August 15, 2024, the appellant filed an application with the Supreme Court of Newfoundland and Labrador seeking the removal of the respondent as executrix. The appellant alleged that the executrix had failed in her duties, specifically by not administering the estate properly, neglecting to provide adequate accounting, and non-compliance with an interim accounting order. In response, on November 27, 2024, the respondent filed her own application, aiming to enforce the will's no-contest clause against the appellant. The initial judicial proceedings saw a judge refuse the appellant's request to remove the executrix. Subsequently, a different judge enforced the no-contest clause against the appellant and ordered them to cover the estate's Column 3 costs.

The appellant challenged the decision to enforce the no-contest clause, leading to the matter being heard by the Newfoundland and Labrador Court of Appeal. The appellate court, applying a standard of correctness to the legal question and conclusion, affirmed the applications judge's initial finding that the appellant's executrix removal application did indeed trigger the no-contest clause. The court clarified that the clause was designed to deter elective adversarial litigation, not legitimate judicial oversight of estate matters. However, the appeal court determined that the appellant's application, which directly challenged the testator's express choice of executrix, did not fall within the two specified exceptions of the no-contest clause, which allowed for judicial interpretation or directions during administration. The court noted that the appellant could have pursued an application for directions regarding the executrix's administration instead of seeking her outright removal.

Despite affirming that the clause was triggered, the NL Court of Appeal identified a critical error in the lower court's enforcement of the Newfoundland and Labrador no-contest clause. The applications judge had failed to make necessary factual findings and apply the specific legal test required to determine if the appellant's proceeding was frivolous and vexatious. This omission led the Court of Appeal to set aside the lower court's decision regarding the no-contest clause and remit the case back to the NL Supreme Court for a rehearing. The purpose of this new hearing is to ascertain whether the appellant's application for executrix removal was, in fact, frivolous and vexatious. The appellate court did not award costs for the appeal.

The core of the Court of Appeal's ruling emphasizes the necessity of applying the 'frivolous and vexatious' test before a no-contest clause can be used to disinherit a beneficiary. Justice Glen L.C. Noel articulated this principle, stating that "The common law has long recognized that no-contest clauses are enforceable by the court to disinherit a beneficiary in circumstances where the court finds the proceeding brought by the beneficiary to be frivolous and vexatious." The appellate court underscored that enforcing a no-contest clause without first conducting this specific test and making factual findings would effectively prevent any beneficiary from ever applying to remove an executrix, regardless of the merits of their concerns.

This decision highlights the delicate balance courts must strike between upholding a testator's intent to avoid estate litigation and ensuring legitimate judicial oversight of estate administration. The rehearing has since concluded, and the application to remove the executor was dismissed in *Franklin v Franklin, 2026 NLSC 19*. This ruling provides vital clarification for estate litigation in Newfoundland and Labrador, affirming that while a beneficiary's challenge may trigger a no-contest clause, the ultimate decision to disinherit a beneficiary hinges on whether their actions meet the high bar of being frivolous and vexatious.

Lawyers advising beneficiaries or executors in Newfoundland and Labrador must note that a will's no-contest clause will only disinherit a beneficiary if their application to remove an executrix is found to be frivolous and vexatious. This ruling clarifies that courts must apply this specific test, balancing the testator's intent with the need for legitimate judicial oversight of estate administration, rather than automatically enforcing the clause.

Source: Original reporting via Canadian Lawyer