A B.C. estate won ownership of a disputed family home — but it also inherited a six-figure bill for the mortgage and other debts paid by the deceased’s father.
In Farwell v. Johnson, 2026 BCSC 1561, the B.C. Supreme Court ordered the estate of Steven John William Johnson to reimburse his father $123,770.13, plus interest, after an earlier ruling found the father held his interest in the family home in trust for his son’s estate.
The latest decision answers an important question left unresolved by that earlier ruling: if the home belonged to the estate, what happens to the mortgage payments, property taxes and other expenses the father had been paying?
The answer was that the estate could not simply receive the equity in the property without accounting for legitimate estate debts the father had paid.
Court Had Previously Found Property Was Held in Trust
The supplementary ruling follows an earlier decision in Farwell v. Johnson, 2025 BCSC 564.
In that case, the plaintiff, acting as administrator of her late husband’s estate, successfully sought a declaration that the estate was the sole beneficial owner of the property that had been their family home.
Although legal title to the property was held by the defendant, the deceased’s father, the Court found that the arrangement was not a true joint tenancy and that the defendant held his interest in the property in trust for his son’s estate.
The Court ordered that legal title ultimately be transferred to the estate, but left the parties to determine an accounting for debts and expenses the defendant had paid on behalf of the estate.
That accounting became the subject of the latest ruling.
More Than $116,000 in Mortgage Payments at Issue
The defendant sought reimbursement for several categories of expenses, including:
- $116,725.12 in mortgage payments;
- $9,565.01 paid toward the deceased’s line of credit; and
- $20,474.77 in other expenses related to the property.
The plaintiff argued that the estate should not be required to reimburse the full amount of the mortgage payments, alleging the defendant had failed to act reasonably when the mortgage was renewed and that this resulted in unnecessarily high interest costs.
Justice Thompson rejected that argument.
The Court found that any claim concerning the defendant’s handling of the mortgage renewal should have been raised and litigated at trial. The supplementary accounting process was intended to determine the amount of estate debts the defendant had actually paid, rather than reopen issues that could have been advanced earlier.
The Court did, however, reject some expenses incurred before the deceased’s death, finding that they could not properly be characterized as debts of the estate.
Ultimately, the defendant was found entitled to reimbursement of $123,770.13, plus court order interest.
Settlement Offer Did Not Justify Double Costs
The Court also considered whether the plaintiff should receive double costs after making a settlement offer in August 2024.
Under Rule 9-1 of the Supreme Court Civil Rules, the Court may consider whether an offer to settle was one that ought reasonably to have been accepted when determining costs.
The plaintiff had offered to pay the defendant $90,000 in exchange for transferring legal title to the property.
However, the proposed transfer would have been made directly to the plaintiff in her personal capacity rather than to the estate.
Justice Thompson found that this was a significant problem with the offer because the underlying lawsuit concerned property belonging to the estate.
As a result, the Court concluded the offer was not one the defendant ought reasonably to have accepted and declined to award double costs. The estate was awarded ordinary costs on Scale B, subject to several exceptions.
Estate Property Disputes Can Extend Beyond Legal Title
The decision illustrates two recurring issues in estate litigation.
First, the name appearing on legal title does not necessarily determine who ultimately owns the beneficial interest in property. Depending on the circumstances, courts may find that a registered owner holds property in trust for another person or for an estate.
Second, even after beneficial ownership has been determined, the financial consequences can require a separate accounting.
Mortgage payments, taxes, debts, maintenance expenses and other amounts paid by one party may need to be considered before property is transferred or distributed.
For executors, administrators and family members dealing with disputed estate property, the case is also a reminder of the importance of raising all available claims and arguments at the appropriate stage of the litigation. Issues that could have been pursued at trial may not be permitted to resurface later during an accounting.
Questions About an Estate or Property Dispute?
Disputes involving estates, trusts and property ownership can become complicated, particularly when legal title does not reflect the parties’ beneficial interests. If you need legal advice or assistance with an estate or property matter, contact the team at Clark Woods LLP to discuss your options.
