Sunday, January 20, 2008

Does a Lawyer Preparing a New Will Owe a Duty to Beneficiaries of an Earlier Will?

A lawyer makes a new will for his client. The new will purports to revoke the client’s previous will. It turns out that the client did not have capacity to make a will. After the client’s death, could the beneficiary of the client’s previous will successfully sue the lawyer for compensation?

The Alberta Court of Appeal considered this question in Graham v. Bonnycastle, 2004 ABCA 270.

Archie Graham had made a will in 1984 leaving his estate to his two children.

In 1994, he remarried and signed a new will. In his new will, Mr. Graham left each of his children $30,000 with most of his estate going to his new wife and his sister. By then he had been diagnosed with Alzheimer’s, dementia and an organic brain disorder.

After Mr. Graham’s death, his two children challenged the new will, as well as the marriage, alleging that he did not have capacity to make a new will or to marry. They settled their lawsuit out-of-court.

Mr. Graham’s two children then sued the lawyer who prepared and witnessed Mr. Graham’s will, and a second lawyer who also witnessed the will. The lawyers were of the opinion that Mr. Graham did have capacity to make a new will. (The courts did not make any finding about Mr. Graham’s capacity or of whether the lawyers had been negligent.)

The Alberta Court of Appeal held that Mr. Graham’s lawyers did not owe a duty of care to Mr. Graham’s two children. Madam Justice McFadyen, for herself and Justice Ritter, held that even if the lawyers had been negligent, there could not be a duty to the beneficiaries of the previous will.

If a beneficiary of a previous will believes that the testator did not have capacity when he made a new will, the beneficiary can challenge the new will in court.

The majority of the Alberta Court of Appeal distinguished this case from cases in which a lawyer is negligent in preparing or supervising the signing a new will, and as a result the intended beneficiaries do not receive their inheritance. In those cases, the intended beneficiaries would be without recourse if they could not sue the testator’s lawyer. Furthermore, the interests of the lawyer’s client and the intended beneficiaries are identical.

The majority were concerned that if the court imposed a duty on a lawyer to beneficiaries under the lawyer’s client’s previous will, this would put the lawyer in a conflict of interest.

Madam Justice McFadyen wrote, at paragraph 29,

There are strong public policy reasons why the solicitors’ duty should not be extended. The imposition of a duty to beneficiaries under a previous will would create inevitable conflicts of interest. A solicitor cannot have a duty to follow the instructions of his client to prepare a new will and, at the same time, have a duty to beneficiaries under previous wills whose interests are likely to be affected by the new will. The interests of a beneficiary under a previous will are inevitably in conflict with the interests of the testator who wishes to change the will by revoking or reducing a bequest to that beneficiary.

Mr. Justice Berger agreed with the result, but said that the majority went too far in holding that the lawyer could never have a duty to a disappointed beneficiary of a previous will. He reasoned that if an estate had been dissipated before the beneficiary of a previous will found out that the lawyer had been negligent in preparing a new will for an incapacitated testator, the beneficiary would be without any practical remedy if the beneficiary could not sue the lawyer. In those circumstances the testator’s interests would be identically to the beneficiary of the previous will because the new will would not reflect the testator’s true intentions.

I am not aware of any British Columbia cases in which the court has considered this case.

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