Wills Exception to Solicitor-Client Privilege

The general rule is that if a client gives her lawyer confidential information, the lawyer must not disclose it, and indeed cannot be compelled to disclose it, without the client’s permission. This is called solicitor-client privilege, and the purpose of this rule is to allow the client to speak or write freely to his or her lawyer to get advice without having to worry that the lawyer will disclose the communication between them.

As with most legal rules, there are exceptions. One exception is referred to as the “wills exception.”

Solicitor-client privilege applies when a client speaks with her lawyer for advice and to give instructions to her lawyer to prepare a will. The lawyer is required to keep the conversation with the client confidential. If the lawyer retains the client’s original will, the lawyer must not release it to anyone other than the client, nor divulge the contents, without the client’s permission.

After the client’s death, the lawyer releases the client’s last will to the client’s personal representative. The will itself is no longer subject to solicitor-client privilege. This makes sense; it would be pointless to make a will disposing of your property at death, if nobody can find out about it when you die.

But even after the client’s death, the discussions that the client had with her lawyer remain privileged. When you engage a lawyer to make a will, you may have very private discussions with your lawyer about your children and other family members, that you would not want others to find out about (including perhaps your children or other family). Furthermore, you may want advice about potential claims related to your estate, and you would not be inclined to speak freely if those who may make the claims can find out after your death what you have told your lawyer.  After the client’s death, her executor or personal representative may be able to give the lawyer permission to disclose the communications, but the general rule continues to be that the lawyer must keep the communications confidential.

So what is the wills exception?

Although the case was about a trust rather than a will, Madam Justice Wilson’s judgment in Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, explains the principle and purpose well.

In Geffen, the executor of his mother, Tzina Burnette Goodman’s will challenged a transfer made by her during her lifetime of a house to a trust. He claimed that her brothers procured the transfer to the trust by undue influence. Tzina Goodman had inherited the house from her own mother, and under the terms of the trust she retained a life interest in it, and following her death, the house, or proceeds of sale, would be divided equally among her children, nieces and nephews. (The case is also a leading authority on the presumption of undue influence, but perhaps I will save that for another post.)

At trial, the trustees of the trust called the lawyer who took instructions from Tzina Goodman, drafted the trust and handled the transfer, to testify at trial about his discussions with Ms. Goodman.  His evidence was important to the issues of whether she understood the trust and was acting freely on the basis of independent legal advice.

The trial judge, after considering the lawyer’s evidence held that Ms. Goodman was acting voluntarily and found that the trust was valid. The Alberta Court of Appeal allowed Ms. Goodman’s executor’s appeal, and the trustees then appealed to the Supreme Court of Canada, which restored the trial judge’s decision that the trust was valid.

One of the issues in the Supreme Court of Canada was whether the Ms. Goodman’s lawyer who acted for her in setting up the trust and transferring the house should have been permitted to testify on behalf of the trustees. Ms. Goodman’s executor argued that his evidence was subject to solicitor-client privilege, and that he breached that privileged when he testified about his communications with he client.

Madam Justice Wilson in her reasons for judgment (there were three separate judgments in the Supreme Court of Canada) addressed this issue. She noted the significance of the lawyer, Mr. Pearce’s evidence:

51.     The  trial judge's admission of the evidence of Mr. Pearce, the solicitor who drafted the trust agreement, is challenged by the respondents.  Mr. Pearce's evidence is crucial in this case for two reasons.  First, it may help to ascertain what the precise circumstances surrounding the deceased's entry into the trust agreement were.  And secondly, this evidence is vital to the determination of whether Mrs. Goodman received independent advice concerning the proposed transaction.

She explained the general rule that communications between a client and her lawyer are privileged:

56      It has long been recognized that communications between solicitor and client are protected by a privilege against disclosure. The classic statement of the rationale behind this rule was made over 150 years ago by Brougham L.C. in Greenough v. Gaskell(1833), 1 My. & K. 98 at 103, 39 E.R. 618 at 620-21:

The foundation of this rule is not difficult to discover. It is not (as has sometimes been said) on account of any particular importance which the law attributes to the business of legal professors, or any particular disposition to afford them protection, though certainly it may not be very easy to discover why a like privilege has been refused to others, and especially to medical advisers.

But it is out of regard to the interests of justice, which cannot be upholden, and to the administration of justice, which cannot go on, without the aid of men skilled in jurisprudence, in the practice of the Courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skilful person, or would only dare to tell his counsellor half his case.

 57      More recently, this court has described the privilege as a "fundamental civil and legal right": see Solosky v. Canada, [1980] 1 S.C.R. 821 at 839, 16 C.R. (3d) 294, 50 C.C.C. (2d) 495, 105 D.L.R. (3d) 745, 30 N.R. 380. Thus, while at one time it was thought that the privilege belonged to the solicitor and not to his client, there is now no doubt that the privilege belongs to the client alone. One consequence of this is that confidential communications between solicitor and client can only be divulged in certain circumscribed situations. The client may, of course, herself choose to disclose the contents of her communications with her legal representative and thereby waive the privilege. Or, the client may authorize the solicitor to reveal those communications for her. Even then, however, the courts have been cautious in allowing such disclosures, so much so that they have assumed for themselves the role of ensuring that without the client's express consent a solicitor may not testify. Thus, in Bell v. Smith, [1968] S.C.R. 664, 68 D.L.R. (2d) 751, this court held that there had been a violation of solicitor-client privilege when a former solicitor of the plaintiffs in a motor vehicle accident claim was subpoenaed by the defendants and testified as to the settlement discussions that had taken place. Spence J. said at p. 671:

It is rather astounding that Mr. Schreiber should be subpoenaed to give evidence on behalf of the defendants as against his former clients and that he should produce his complete file including many memoranda and other material all of which were privileged as against the plaintiffs and whether the plaintiffs' counsel objected or not that he should be permitted to so testify and so produce without the consent of the plaintiffs being requested and obtained.

 Lord Chancellor Eldon said, in Beer v. Ward (1821), Jacob 77, 37 E.R. 779, at p. 80:

... it would be the duty of any Court to stop him if he was about to disclose confidential matters ... the Court knows the privilege of the client, and it must be taken for granted that the attorney will act rightly, and claim that privilege; or that if he does not, the Court will make him claim it.

 58      So important is the privilege that the courts have also stipulated that the confidentiality of communications between solicitor and client survives the death of the client and enures to his or her next of kin, heirs, or successors in title: see Bullivant v. Attorney General for Victoria, [1901] A.C. 196 (H.L.); Stewart v. Walker (1903), 6 O.L.R. 495 (Ont. C.A.); and Langworthy v. McVicar (1914), 25 O.W.R. 297, 5 O.W.N. 345.

The underlying purpose of solicitor-client privilege is to protect the client. But where the validity of a will or a trust is challenged on the basis that it did not reflect the client’s true intentions, the interests of the client are furthered by allowing the lawyer to testify about the communications with the client to determine the clients’ true intentions. It is because allowing the lawyer to testify furthers the now deceased's clients interest that there is an exception to the solicitor-client privilege.

Madam Justice Wilson wrote at paragraphs  62 through 65:

62      In the Law of Evidence in Civil Cases (1974), the authors, Sopinka and Lederman, argue that Canadian courts have approached the admissibility of this sort of evidence in a unique way, although the same result has been arrived at. For instance, inStewart v. Walker, supra, it was alleged that the testator had died intestate. The deceased's solicitor, however, had in his possession a copy of a will providing that he, the solicitor, was to be left the greater part of the deceased's estate and was appointed as sole executor. It was contended that the solicitor should not be permitted to give evidence as to the existence or validity of the will. The Ontario Court of Appeal, however, felt that the solicitor should have been permitted to testify, saying at pp. 497-98: 

The nature of the case precludes the question of privilege from arising. The reason on which the rule is founded is the safeguarding of the interests of the client, or those claiming under him when they are in conflict with the claims of third persons not claiming, or assuming to claim, under him. And that is not this case, where the question is as to what testamentary dispositions, if any, were made by the client. As said by Sir George Turner, Vice-Chancellor, in Russell v. Jackson (1851), 9 Ha. 387, at p. 392: "The disclosure in such cases can affect no right or interest of the client. The apprehension of it can present no impediment to the full statement of his case to his solicitor ... and the disclosure when made can expose the Court to no greater difficulty than presents itself in all cases where the Courts have to ascertain the views and intentions of parties, or the objects and purposes for which dispositions have been made." It has been the constant practice to apply the rule here stated in cases of contested wills where the evidence of the solicitors by whom the wills were prepared, as to the instructions they received, is always received. And the application of a different rule in this action would deprive the plaintiff of a considerable part of the proof of his case.

 63      Similarly, in Re Ott, [1972] 2 O.R. 5, 7 R.F.L. 196, 24 D.L.R. (3d) 517 (Surr. Ct.), where the issue was whether the testator by tearing it up intended to revoke a later will and revive an earlier one, Anderson Surr. Ct. J. held that the discussion that took place between the deceased and his solicitor at the time of the destruction of the will was admissible. At p. 11 he said: 

... since it is of essence to the case to find out the intention of the testator when he destroyed the will whether or not he was revoking his will unconditionally or whether he was only tearing it up on condition that an earlier will was thus revived, the whole issue turns on this question and it would seem to me that to invoke the privilege of the client, after the client is deceased would make it impossible for the Court to determine the intention of the testator in tearing up the will. In the interests of justice, it is more important to find out the true intention of the testator.

 64      In the present case the respondents argue that no analogy can be drawn between these wills cases and the situation here. I disagree. It is implicit in their argument that the common law has as yet only recog nized an "exception" to the general rule of the privileged nature of communications between solicitor and client when dealing with the execution, tenor or validity of wills and wills alone. Their argument is reminiscent of earlier days when the "pigeon hole" approach to rules of evidence prevailed. Such, in my opinion, is no longer the case. The trend towards a more principled approach to admissibility questions has been embraced both here and abroad (see, for example, in Canada, Ares v. Venner, [1970] S.C.R. 608, 73 W.W.R. 347, 12 C.R.N.S. 349, 14 D.L.R. (3d) 4 (hearsay), and R. v. Khan, [1990] 2 S.C.R. 531, 79 C.R. (3d) 1, 59 C.C.C. (3d) 92, 41 O.A.C. 353, 113 N.R. 53 (hearsay), and in the United Kingdom, Director of Public Prosecutions v. Boardman, [1975] A.C. 421, [1974] 3 W.L.R. 673, [1974] 3 All E.R. 887(H.L.) (similar fact)), a trend which I believe should be encouraged.
 

65      In my view, the considerations which support the admissibility of communications between solicitor and client in the wills context apply with equal force to the present case. The general policy which supports privileging such communications is not violated. The interests of the now deceased client are furthered in the sense that the purpose of allowing the evidence to be admitted is precisely to ascertain what her true intentions were. And the principle of extending the privilege to the heirs or successors in title of the deceased is promoted by focusing the inquiry on who those heirs or successors properly are. In summary, it is, in the words of Anderson Surr. Ct. J. in Re Ott, supra, "in the interests of justice" to admit such evidence.

Meier v. Rose

If you incorporate a company through which you run your business, or hold investments, it is important to keep in mind that your assets consists of the shares you own in the company, but not the underlying assets of the company. In law, a company is a separate “person” from it shareholders. In the case of a small company with only one or two shareholders, it is sometimes easy to lose sight of the distinction, but in estate planning it is essential to keep it in mind.

If you have shares in a company, you may leave those shares to beneficiaries in your will, but because you do not own the company’s assets, you cannot leave those specific assets in your will.

A recent decision in Alberta, in which a lawyer was sued in negligence, highlights the problem. In Meier v Rose, 2012 ABQB 82 (CanLII), Mr. Gary Meier asked his lawyer to draft a will for him. Because he was going on vacation, he wanted his will ready for the next day. He instructed his lawyer that he wanted to leave certain farmlands at Seba Beach to his brother. The lawyer asked him to advise of the legal description of the land, which Gary Meier did by telephone later that day. The lawyer promptly drafted the will, and Mr. Meier signed.

The will included the following clause:

To give my farmlands briefly described as NE 9-52-6-W.5th; NW 10-52-6-W.5th; SE 16-52-6-W.5th & SW 16-52-6-W.5th in the Province of Alberta, to my brother, ROBERT MEIER, of Provost, Alberta, excepting thereout all mines and minerals.

Unknown to the lawyer, the farmlands were owned by a company, the shares of which were owned by Gary Meier. The land was not owned by Gary Meier.

Unfortunately, no one realized the error, until after Gary Meier’s death.

In a previous proceeding, Re Meier (Estate of), 2004 ABQB 352 (CanLII), the Alberta Court of Queen’s Bench held that the gift of land to Gary Meier’s brother failed, because Gary Meier did not own the land. In his reasons for judgment, Associate Chief Justice Sulatycky wrote:

[16]           Few principles of law are better established than the proposition that corporate assets belong to the corporation, not the shareholder. The claimant points to a pattern of behaviour on the part of the testator that suggests that he frequently treated corporate property as his own, but the testator’s cavalier approach to the distinction between corporate and personal assets is not sufficient to establish a trust. A sole shareholder has an interest in corporate assets, but that interest does not operate so as to vest beneficial ownership of those assets in him: Kosmopoulos v. Constitution Insurance Co. of Canada., 1987 CanLII 75 (SCC), [1987] 1 S.C.R. 2. As Hollinrake J.A. points out in British Columbia (Assessor of Area No. 25 - Northwest/Prince Rupert) v. N & V Johnson Services Ltd., [1990] B.C.J. No.1964 (C.A.): “A company does not hold its assets in trust for its shareholders or any one of them.”

Robert Meier then made a claim against the lawyer.

Madam Justice J.H. Goss found that the lawyer had acted for over twenty years for Gary Meier, knew that he employed companies to hold title to some of his property, and that Mr. Meier often did not distinguish between company-owned property and his own. Accordingly, the lawyer ought to have made inquiries such as reviewing the title to ensure that the land was owned by Gary Meier. She wrote that the lawyer,

…was negligent in failing to determine that Gary Meier was not the registered owner of the lands to be gifted, and to advise Mr. Meier that the gift as stated in the will pursuant to his instructions would fail. He thereby failed to advise his client in all matters relevant to his retainer, to protect his client from making devises of his estate other than those which he actually intended, and to carry out his client’s instructions by all proper means.

Will and Estate Practice Provisions in the New Code of Professional Conduct for British Columbia

The Law Society of British Columbia has published a Code of Professional Conduct for British Columbia, which will be effective on January 1, 2013. The new Code replaces the Professional Conduct Handbook.

I have come across a couple of parts that deal specifically with will and estate practices.

The most significant one in my view is in the commentary on joint retainers, that is circumstances where a lawyer acts for more than one client jointly. Many will and estate practitioners will act for both spouses jointly in providing estate planning advice, and drafting wills and trusts. Often both spouses will make wills under which they leave substantial gifts to each other. What should a lawyer do if only one of them later contacts the lawyer who acted for both requesting changes in a will? 

The new Code addresses this in the commentary to rule 3.4-5 dealing with joint retainers. Rule 3.4-5 says:

Joint retainers 

3.4-5 Before a lawyer is retained by more than one client in a matter or transaction, the lawyer must advise each of the clients that:

(a) the lawyer has been asked to act for both or all of them; 

(b) no information received in connection with the matter from one client can be treated as confidential so far as any of the others are concerned; and 

(c) if a conflict develops that cannot be resolved, the lawyer cannot continue to act for both or all of them and may have to withdraw completely.

The Commentary then includes the following paragraphs:

[2] A lawyer who receives instructions from spouses or partners to prepare one or more wills for them based on their shared understanding of what is to be in each will should treat the matter as a joint retainer and comply with rule 3.4-5. Further, at the outset of this joint retainer, the lawyer should advise the spouses or partners that, if subsequently only one of them were to communicate new instructions, such as instructions to change or revoke a will:

(a) the subsequent communication would be treated as a request for a new retainer and not as part of the joint retainer; 

(b) in accordance with rule 3.3-1, the lawyer would be obliged to hold the subsequent communication in strict confidence and not disclose it to the other spouse or partner; and 

(c) the lawyer would have a duty to decline the new retainer, unless:

(i) the spouses or partners had annulled their marriage, divorced, permanently ended their conjugal relationship or permanently ended their close personal relationship, as the case may be; 

(ii) the other spouse or partner had died; or 

(iii) the other spouse or partner was informed of the subsequent communication and agreed to the lawyer acting on the new instructions.

[3] After advising the spouses or partners in the manner described above, the lawyer should obtain their consent to act in accordance with rule 3.4-7.

3.4-7 provides:

3.4-7 When a lawyer has advised the clients as provided under rules 3.4-5 and 3.4-6 and the parties are content that the lawyer act, the lawyer must obtain their consent. 

Commentary
[1] Consent in writing, or a record of the consent in a separate letter to each client is required. Even if all the parties concerned consent, a lawyer should avoid acting for more than one client when it is likely that an issue contentious between them will arise or their interests, rights or obligations will diverge as the matter progresses.

Rules 3.4 -37 through 3.4-39 deal with gifts from clients to their lawyers including gifts in wills.

Testamentary instruments and gifts

3.4-37 A lawyer must not include in a client’s will a clause directing the executor to retain the lawyer’s services in the administration of the client’s estate. 

3.4-38 Unless the client is a family member of the lawyer or the lawyer’s partner or associate, a lawyer must not prepare or cause to be prepared an instrument giving the lawyer or an associate a gift or benefit from the client, including a testamentary gift.

3.4 39 A lawyer must not accept a gift that is more than nominal from a client unless the client has received independent legal advice.

Although for the most part I think this common sense, I am concerned about what the words "gift or benefit” in 3.4-38 may mean. If a lawyer acts as executor, is a clause in the will allowing the executor to charge fees for professional services as well as executor fees a "gift or benefit?" Such a clause is often referred to as a charging clause. If so, then a lawyer is not permitted to draw a will for his or her client under which the lawyer is an executor and the will contains a charging clause. I can see value to requiring a lawyer to refer his or her client to another law firm for independent legal advice before the client signs a will appointing the lawyer as executor, and allowing the lawyer to charge both executor and professional fees. But prohibiting the lawyer from drafting such a will goes too far. The client may have special confidence in the lawyer to draft the will and act as executor. Why should the client be deprived of those services if the lawyer wishes to have a charging clause? Requiring the client to get independent advice should be sufficient to ensure that the client is making an informed and considered decision.

Death-bed Will: Machander v. Drader

Perhaps the most difficult circumstance an estate-planning lawyer may encounter is a telephone call advising that someone dying in the hospital wishes to make a new will. The call usually comes from a family member or friend, who may be a potential beneficiary of the dying person’s will. Does the lawyer have a couple of weeks, a couple of days, or a few hours to get instructions, draft and get the new will signed? Does the dying person have the mental capacity to make a new will? Is he or she vulnerable to undue influence?

In less pressing circumstances, a lawyer can arrange a full interview with the will-maker alone, ask detailed questions to determine if there is any reason to be concerned about capacity or improper influence, and draft a will for the will-maker to review before a later appointment at which the will can be signed. If the lawyer has any reason to be concerned about capacity, he or she can with the will-maker’s permission speak with the will-maker’s physician. Those are steps a lawyer can take when the will-maker is not near death.

But in the case of a death-bed will, the lawyer who takes all of these steps runs a significant risk that his or her client will die before the will is signed, leaving the dying person either without a will or one that no longer reflects his or her wishes.

Mr. David Mulroney, an experienced lawyer in Victoria, British Columbia, received such a call. Marlys Drader telephoned him on November 15, 2010, and advised him that David Machander was seriously ill in hospital and wanted to make a will. She was living in a marriage-like relationship with Mr. Machander, who was legally married to, but separated from, Mary Machander. Mr. and Mrs. Machander’s divorce was nearing completion.

Mr. Machander had been trying for several months to contact a lawyer who had acted for him previously for several months in order to change his will.

After trying to contact Mr. Machander’s former lawyer, Mr. Mulroney arranged to meet with Ms. Drader in the hospital later that same day. He asked her to wait for him before seeing Mr. Machander. Mr. Mulroney went to the hospital with his legal assistant taking some documents, including a draft will that was ultimately signed. Ms. Drader introduced Mr. Mulroney to Mr. Machander. As had been discussed, Ms. Drader left the room so that Mr. Mulroney could speak with Mr. Machander without her being present.

Mr. Mulroney video taped the meeting. Before showing Mr. Machander the draft will, Mr. Mulroney asked him open-ended questions about who he wanted to benefit in his will. Although there was some ambiguity in his answers in that he referred at times to Ms. Drader receiving half of his assets, Mr. Mulroney understood and confirmed that his intentions were to be to leave everything to Ms. Drader.

Mr. Mulroney asked Mr. Machander about who he would want to benefit if Ms. Drader did not outlive him. He said “just her.”

He asked a few other questions such as what year it was and where Mr. Machander lived, both of which Mr. Machander were able to answer.

After questioning Mr. Machander, Mr. Mulroney took out the will and reviewed it with him. The draft will was quite simple, and included a gift of the residue of Mr. Machander’s estate to Ms. Drader if she survived him by 14 days, with a provision that if she did not survive him by 14 days, his estate would go to his parents. Because he did not confirm the gift to his parents, Mr. Mulroney crossed that provision out.

Mr. Machander then signed the will in the presence of both Mr. Mulroney and his assistant, both of who also signed as witnesses in the presence of Mr. Meander and each other.

David Machander died three days later.

Mary Machander and other beneficiaries of a previous will Mr. Machander made in 2003 challenged the validity of the 2010 will. They argued that Marlys Drader, as his executor had not met the burden of proving the validity of the 2010 will in light of what they claimed were suspicious circumstances surrounding the preparation of the will, and his capacity to make a will.

Mr. Justice Savage in Machander v. Drader, 2012 BCSC 1492 (CanLII), summarized the legal principles:

[37] The propounder of a will has the burden of proving that the testator knew and approved the contents of his or her will. In doing so, the propounder is aided by a rebuttable presumption. 

 [38] Once it is established that the will was read by the testator, or the contents otherwise brought to his or her attention, and that he or she appeared to understand it, the testator will be presumed to know and approve of the will: see for example Vout v. Hay, [1995] 2 S.C.R. 876 at para. 26, 125 D.L.R. (4th) 431, in the context of a testamentary gift; Barkwill v.Parchomchuk, 2011 BCCA 207 at para 15; Maddess v. Estate of Johanne Gidney, 2009 BCCA 539 at para. 29; and York v. York, 2011 BCCA 316 at para. 36, 335 D.L.R. (4th) 292. 

 [39] The will was read in the presence of Mr. Machander and he appeared to understand it, therefore the presumption in favour of the will would normally apply. 

[40] The presumption in favour of a will can be rebutted by evidence which, if accepted, would tend to negative knowledge and approval. This is known as the suspicious circumstances doctrine. If the presumption is rebutted, the propounder of the will is required to prove the will on a balance of probabilities. 

[41] As often happens with the elderly or infirm, a will may be prepared, or its preparation is obtained, by a person who takes a benefit under it. While the beneficiary may not have procured the will under coercion or fraud, which is not alleged here, these are circumstances that may arouse the suspicion of the Court: Barry v. Butlin, (1838) 2 Moo. P.C. 480 at 482-83.

[42] In Vout v. Hay, Sopinka J. at para. 27 referred to the doctrine:

Where suspicious circumstances are present, then the presumption is spent and the propounder of the will reassumes the legal burden of proving knowledge and approval. In addition, if the suspicious circumstances relate to mental capacity, the propounder of the will reassumes the legal burden of establishing testamentary capacity. Both of these issues must be proved in accordance with the civil standard. There is nothing mysterious about the role of suspicious circumstances in this respect. The presumption simply casts an evidentiary burden on those attacking the will. This burden can be satisfied by adducing or pointing to some evidence which, if accepted, would tend to negative knowledge and approval or testamentary capacity. In this event, the legal burden reverts to the propounder.

[43] As noted by Garson J.A. in York, the testamentary capacity test is set out in the leading English case: Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 at 565, which was adopted by Wilson J.A. in Re: Rogers (1963), 39 D.L.R. (2d) 141 (C.A.) at 148-49, 42 W.W.R. 200:

It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties — that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

Mr. Justice Savage found that the will was valid. With respect to the argument that there were suspicious circumstances, he wrote:

[45] Do the circumstances surrounding preparation of the will raise the spectre of suspicious circumstances? In my view they do not, for the following reasons, which I find established on the evidence:

a) Mr. Machander had long held the view that the 2003 Will was outdated and did not reflect his current circumstances. The will was outdated and inappropriate. It gave the residue of his estate to an estranged spouse with whom he had divided assets and was on the eve of obtaining an order absolute of divorce; 

 b) Mr. Machander advised others of his intention to change his will, including third parties other than the beneficiary of the 2010 Will. He tried to act on that intention but was frustrated by being unable to locate his former solicitor; 

 c) Mr. Machander revoked the 2003 Will and replaced it with the 2010 Will which made the woman with whom he was in a marriage-like relationship his beneficiary. There is nothing in the details of that relationship that give rise to a suspicion that it was anything but genuine and loving; 

 d) The change in the will was entirely appropriate from the standpoint of his current relationship and the lack of a close relationship with his parents and siblings, i.e., the absence of there being any other moral claim on his beneficence; 

 e) Although the beneficiary contacted the solicitor regarding the contents of the 2010 Will, Mr. Machander’s condition did not allow him to make direct contact. Ms. Drader was the logical choice to convey his wishes; and 

 f) The taking of the will was by an experienced solicitor. The solicitor had no significant relationship to any person in the proceeding. The solicitor was entirely forthright in his evidence. A video record of the proceeding was made of the events for the court or any interested person to view.

Mr. Justice Savage found that Mr. Machander did know and approve of the contents of the will. Mr. Machander also had capacity to make a will. He understood that he was making a will, and had expressed a continuing intention to make one. He understood the property he intended to dispose of, which consisted primarily of a bank account with funds from the division of his matrimonial property. He comprehended whom he wanted to benefit, having expressed his intention to benefit Ms. Drader to at least one other person. He understood the manner in which his assets would be distributed.

Often in these cases, the court needs to rely on the evidence of the lawyer who drew the will. In this case, the court found Mr. Mulroney’s decision to video tape the interview quite helpful. Mr. Mulroney was able to give the court a complete and accurate record of what occurred.

I suggest that there are at least two other aspects of the process Mr. Mulroney followed that are important. First, after the introductions, he excluded Ms. Drader from the room during his interview with Mr. Machander. Had she been present, it would have been more difficult to confirm that what Mr. Machander said he wanted reflected his own wishes, or whether he said he wanted to benefit her because she was present and he didn’t want to offend her. Secondly, Mr. Mulroney asked him questions about his wishes before showing him the draft will. Had Mr. Mulroney shown him the will first, or relayed the instructions that Ms. Drader had given to Mr. Mulroney before questioning him, it would be more difficult to determine if Mr. Machander truly comprehended those he wished to benefit or consider, or if, instead, he was merely repeating what he read or was told.

Estate Planning for Law Practices

As I review my own estate plan, I have been considering some matters that don’t affect most of my clients, but are important to other lawyers in private practice. Specifically, if I become mentally incapable of making decisions or die while I am still practicing law, how will my clients be looked after, and who will wind-down my practice?

These issues affect lawyers who practice on their own the most, but I think that those of us in a partnership also need to plan.

If you are a lawyer, here are a few things you need to consider:

1.                  Your clients. Someone will need to take over your active files. If you have other lawyers in your firm they may be able to look after your clients. But if you are a sole practitioner, have a specialized practice, or if the other lawyers in your firm are too busy to attend to your clients’ immediate needs, your clients will need to have to be referred to other lawyers. 

2.                  Storage of any original wills or other documents you hold for clients. Someone will have to notify your clients if the documents are going to be moved to a different firm.

3.                  Storage of closed files.

4.                  Bank accounts and trust accounts. If you do not have other lawyers in your firm to sign cheques, you will need to arrange for another lawyer to be able to get signing authority.

5.                  Arranging for someone to run the business while your practice is being wound-down or sold. Someone needs to pay your employees, and sign the rent cheques.

6.                  Billing out your work-in-progress, and collecting receivables.

7.                  Selling your practice.

8.                  Your law corporation. If you practice through a law corporation in British Columbia, only lawyers licensed to practice in B.C. may hold voting shares or act as directors. On your death, the voting shares will need to be transferred out of your name, and a new director appointed.

In a partnership, many of these issues may be dealt with in your partnership agreement.

If you are a sole practitioner, the best approach is to enter into an agreement with one or two lawyers to manage your practice if you become incapable of doing so.

You may appoint another lawyer in an enduring power of attorney to manage your practice during your incapacity and to wind-down or sell it if you are unlikely to recover.

In your will, in addition to appointing your executor and trustee, you can appoint one or more lawyers as your “practice trustees” who will receive your voting shares in your law corporation, and wind-down or sell your practice. If your practice trustees realize more revenue than expense, they then pay the surplus to your executor and trustee to administer with your other estate assets. 

The Law Society of British Columbia has some resources on its website, including precedent agreements, powers of attorney and will clauses here. 

Release of an Original Will to an Applicant for Letters of Administration

Ameena Sulton at Walley Estate Litigation Blog has written about a case in Ontario, Hope v. Martin, 2011 ONSC 5447, in which the Superior Court of Justice considered when a lawyer holding an original will may release the will to a person who was not named in the will as an executor (referred to as an estate trustee in Ontario), but who wishes to apply to court to be appointed as an estate trustee. You can read her post here.

In that case, the will-maker had named an estate trustee and an alternate, but both renounced. A family member wished to apply to be appointed as trustee by the court to administer the estate, but required the original will to file in court with the application. The lawyer who held the original will would not release the original will to the applicant. He was concerned that the applicant, not being named as the estate trustee in the will, and not yet having been appointed by the court, did not have authority to direct the lawyer to release the will. He was also concerned that releasing the will to someone other than the named would be a breach of his duties of confidentiality and solicitor-and-client privilege to the now deceased will-maker who had been the lawyer's client.

The applicant applied to court for an order that the lawyer release the original will, and Justice Brown granted the order. Justice Brown said that in the circumstances--there not being any dispute about the will, and the beneficiaries all consenting to the release of the will--a court order should not be necessary for the lawyer to release the original will. Justice Brown said,

[23] As identified by Mr. Rabinowitz in his paper, the real issue facing solicitors who are asked to produce the original of a will is whether the person making the request possesses the authority to do so. The appropriate response will depend upon the particular circumstances of the case and the application of practical judgment and common sense. Where a named executor makes the demand, production should be made. Where a solicitor is faced with conflicting demands, he can legitimately require the conflicting parties to obtain a court order. However, where, as here, the solicitor knew that both executors had renounced and there was no evidence of conflicting demands to assume the administration of the estate, the solicitor should have exercised some practical judgment to ensure that the testatrix’s intentions were performed without imposing unnecessary costs on the estate.

I like the practical approach suggested by the Ontario Court, but I suggest that a lawyer holding an original will must exercise caution before releasing it to someone who is not named as an executor. A lawyer who agrees to hold an original will takes a significant responsibility for safekeeping the document.  At minimum a lawyer, or anyone else holding an original will, should be satisfied that the person requesting the will has a genuine intention to apply to court to be appointed as an administrator or trustee of an estate. This can generally be satisfied when the request is being made by another lawyer, and conditions can be placed on that lawyer to hold the will until it is filed in court.

In British Columbia, if a lawyer or anyone else holds an original will, and refuses to release it, you can apply for a citation to be issued requiring the person holding the original will to deposit it with the Registrar of the Supreme Court of British Columbia. I wrote about citations to bring in a will here.

Law Firm Restrained from Acting Against Their Client in Another Suit

In a decision released last month, Mr. Justice Hinkson restrained the law firm of Owen Bird in Vancouver from acting for the named executors of the will of Jack Lawrence Cewe.

In Cewe Estate v. Mide-Wilson, 2009 BCSC 975, the plaintiffs are seeking to prove a will and alter-ego trust, under which they are substantial beneficiaries as well as executors and trustees. They are opposed by Mr. Jack Cewe’s granddaughter, Kirsten Mide-Wilson, and by her father (Mr. Cewe’s son-in-law), Carsten Mide, who allege that the will and alter-ego trust are invalid, having been procured by undue influence. Ms. Mide-Wilson will receive a substantial portion of her grandfather’s $100 million estate under an earlier will if the later wills and the trust are found to be invalid. The main issues have not gone to trial yet.

Ms. Mide-Wilson and her father, Carsten Mide asked the court to remove Owen Bird, for the following reasons:

1. The law firm is acting for Mr. Mide and a related company in another matter in Alberta;
2. Mr. Mide and his late wife had consulted with a lawyer at Owen Bird years ago on estate planning matters that included some discussion of Mr. Cewe’s estate;
3. One of the lawyers at Owen Bird had drafted Mr. Cewe’s previous will, and might be called as a witness.

The plaintiffs argued that Owen Bird were not in a conflict. They took the following positions:

1. There is no real issue in dispute between the plaintiffs and Mr. Mide. Although they were required to name him as a defendant because he is a beneficiary of the disputed will, they did not have an interest adverse to his. He is really opposing the claim in support of his daughter.
2. The lawsuit in Alberta is not related to the estate dispute. Furthermore, the law firm set up internal ethical walls, pursuant to which the lawyers handing the Alberta dispute were not allowed to discuss their file with the lawyers acting for the plaintiffs.
3. The consultation Mr. Mide and his wife had with Owen Bird regarding estate planning took place before the disputed will and trust documents were signed and did not give rise to a conflict.
4. With respect to the lawyer who drew up the earlier will, the plaintiffs agreed that they would call him as their witness, so that other lawyers in his firm would not cross examine him.

Mr. Justice Hinkson rejected the plaintiffs’ arguments. After considering the leading Canadian cases as well as the Law Society of British Columbia Profession Conduct Handbook and the Canadian Bar Association Code of Professional Conduct found that Owen Bird’s representation of the plaintiffs breached their duty of loyalty to Mr. Mide. He wrote at paragraphs 89 and 90:

[89] I am unable to accept that Owen Bird can or have fulfilled their duty of loyalty to their client Mr. Mide. He has been and remains a client of the firm in significant litigation matters, and he and his company have paid significant fees to the firm. Even if the requirements placed upon members of the Law Society of British Columbia are not binding upon me, the provisions of the Handbook, and of Chapter IX, Commentary 5 of the Code of Professional Conduct of the Canadian Bar Association, are some indication of what a reasonable person is entitled to expect from their lawyer.
[90] In my view a reasonable member of the public, informed of Mr. Mide’s relationship with Owen Bird, would not accept that Owen Bird’s duty of loyalty to him could permit them to act against him in even unrelated litigation.

The ethical walls were insufficient. Mr. Justice Hinkson wrote at paragraph 94,

There is no evidence that Owen Bird appointed independent counsel to review the situation so as to set up appropriate screening measures. Mr. Mide also was neither informed by Owen Bird of their decision to address the “conflict issues” nor afforded any opportunity to address them before the firm made its decision to accept the retainer in this case.

Mr. Justice Hinkson did not decide whether the potential for one of Owen Bird’s lawyers to be called as a witness would also have been grounds to disqualify the firm from acting for the plaintiffs.

Lawyer Not Liable for Declining to Make a Will For a Person He Believed Did Not Have Capacity

Lawyers are sometimes called upon to take will instructions from a person who is terminally ill, with little time to live. The lawyer might be meeting for the first time with the ill person, who may be heavily medicated. What if the lawyer has some concerns that the person does not have the mental capacity to make a new will? There may or may not be time to consult with the person’s doctor. Time is of the essence.

A lawyer has a duty to take steps to determine if his or her client meets the legal criteria for mental capacity. I have written about the tests for capacity before. They are easy to state, but often difficult to apply. An estate-planning lawyer must sometimes make a difficult decision of whether he or she should go ahead with a new will, or decline to act. It is a judgment call.

About a dozen years ago, a social worker telephoned an Ontario lawyer, Mark Frederick, and asked him to see a terminally ill patient about a will. Mr. Frederick went to the hospital that very morning to meet with Mr. Bruce Bennett, who was then 79 years old. They met for a little over an hour. Mr. Bennett told Mr. Frederick that he wanted to give each of his grandchildren $100, a couple of his employees $20,000 and $10,000. He wanted to give another $10,000 and a car to a cousin, and $10,000 to another relative. He also wanted to give the store he owned to his friend Peter Hall. Mr. Frederick had a tough time getting information from Mr. Bennett, who drifted in and out of consciousness. Mr. Bennett appeared to be unable to answer questions about the nature and extent of his assets. He did not provide Mr. Frederick with any instructions concerning what he wanted to do with the rest of his estate.

Mr. Frederick declined to draft a will for Mr. Bennett. The lawyer concluded that Mr. Bennett’s health was such that he could not give complete instructions.

Mr. Bennett died later that day, without having completed a new will.

When Mr. Hall found out that Mr. Bennett had intended to leave him his store, but that Mr. Frederick had not done the will, he sued Mr. Frederick for failing to carry out Mr. Bennett’s instructions.

The trial judge found that Mr. Bennett had the testamentary capacity to make a will. The trial judge found that Mr. Frederick had a duty to complete the will, and ordered Mr. Frederick to compensate Mr. Hall for the value of the store Mr. Hall would have received under a new will.

Mr. Frederick appealed to the Ontario Court of Appeal.

Madam Justice Charron, then of the Ontario Court of Appeal, in Hall v. Bennett Estate, (2003), 227 D.L.R. (4th) 263, said that the standard required to make a will is a high one. It is not enough for the person who wishes to make a will to be able to communicate those wishes. He or she must also have a “sound and disposing” mind, that meets the criteria for testamentary capacity.


Madam Justice Charron cited an article by M.M. Litman & G.B. Robertson G.B on “Solicitor’s Liability for Failure to Substantiate Testamentary Capacity,” setting out some errors lawyers have sometimes made in previous cases:

• the failure to obtain a mental status examination;
• the failure to interview the client in sufficient depth;
• the failure to properly record or maintain notes;
• the failure to ascertain the existence of suspicious circumstances;
• the failure to react properly to the existence of suspicious circumstances;
• the failure to provide proper interview conditions (e.g. the failure to exclude the presence of an interested party);
• the existence of an improper relationship between the solicitor and the client (e.g. preparing a will for a relative); and
• failing to take steps to test for capacity.

In this case, Madam Justice Charron held that the main issue was not whether Mr. Bennett had capacity, but “whether a reasonable and prudent solicitor in Frederick’s position could have concluded that he did not.”

She found that Mr. Frederick had not accepted a retainer to prepare a will. He agreed to meet with Mr. Bennett, but when it became apparent Mr. Bennett could not give him sufficient instructions, he properly declined to do the will. Madam Justice Charron wrote at paragraph 58:

In this case, it cannot be disputed that, at the very least, Frederick had undertaken to interview Bennett with a view to obtaining instructions to prepare a will. He therefore had to bring the skill of a reasonably prudent solicitor to this task. As discussed earlier, his first obligation was to inquire into Bennett’s testamentary capacity before undertaking to do a will. It is my view that the evidence in support of Frederick’s opinion that he did not have sufficient instructions to prepare a will and that Bennett lacked testamentary capacity was overwhelming. Indeed, in the circumstances, it is my view that his duty was to decline the retainer. I can only conclude that the trial judge’s conclusions to the contrary were based on his mischaracterization of the issues, and his misapprehension of the test on testamentary capacity, both errors of law that are subject to review in this court on a standard of correctness. On the latter question, it is my view that this is yet another case where apparent lucidity has been mistakenly equated with testamentary capacity.

Accordingly, the Ontario Court of Appeal reversed the trial judge’s decision, and Mr. Frederick was not required to compensate Mr. Hall.

How I Decide Whether to Take on a New Case

I don’t take on every potential lawsuit that comes my way. As time goes on, I am becoming more selective about which matters I will act on. I started out as a generalist, but my litigation practice has become more focused on estate and trust litigation, although I occasionally handle other types of lawsuits.

I have developed some criteria I use for deciding whether I am interested in taking on a new case.

First, I must have a sense that there is some legal merit in my client’s (or prospective client’s) case. I get many inquiries from people who feel that they should receive an inheritance or greater inheritance. Unless I can find both a legal and factual basis for a claim, I won’t take it on. This does not mean that I know the case will succeed at trial (results are never certain), or that I won’t take on a novel case. But it is not enough, for example, to challenge a will in British Columbia because you believe that the testator who has since died, wanted you to get an inheritance, but left you out of the will.

On the other hand, if you are looking for a lawyer, just because one lawyer tells that you do not have a case does not mean that another lawyer can’t find an approach that will work. In some cases, it is necessary to explore a variety of possible claims. For example, if you are a step-child seeking who has been disinherited by your step-parent in British Columbia, you will not be able to apply to vary the will under the Wills Variation Act. But you might have some other claim, such as a claim in unjust enrichment if you provided your step-parent with substantial care with the reasonable expectation that you would be left something. Accordingly, sometimes it is worth asking more than one lawyer, especially if the first lawyer you consult does not have significant experience in the area of law for which you need advice.

Second, I won’t take on a case if doing so is inconsistent with my values. I sometimes get inquiries from people who tell me that they want to make it as difficult or painful as possible for someone else, usually another family member. Lawsuits are stressful enough without going out of your way to hurt somebody else in the process. Life is too short.

Third, the case must make financial sense for my client. Lawsuits are very expensive, even when they settle. If it is apparent that the costs of proceeding will outweigh any benefit to the client, it is not worth pursuing. This does not mean that there must always be a large amount of money involved in every lawsuit. Many, perhaps most, people are motivated to sue by something other than money. Sometimes disputes about relatively small estates can be resolved cost-effectively. But if I think that someone interested in retaining me will have to spend so much that there really is no benefit to him or her, I won’t accept the retainer.

Fourth, I won’t take on a new client unless I feel that I can meet their expectations. I like to ask during the first meeting what my client hopes to accomplish. In some cases prospective clients expect results that I consider very unlikely. Sometimes, they expect it to be resolved faster than I think can resolve it. Or they may expect it will cost less than what I charge.

Fifth, I must have the time to take on a new case. Occasionally, someone calls and needs something done immediately. If I have too many other commitments, I can’t take it on.

Sixth, I need to feel confident that I am the right lawyer to take the case on. I don’t need to have all of the answers to a client’s problems after the first interview (I usually don’t). But I have to be able to find solutions, if I am going to benefit my client. If I think another lawyer is more experienced in a type of dispute, or is a better match for the person consulting with me, I refer that person to the other lawyer.

Seventh, I want clients who respect what I do, and will respect my experience and judgment. I find the vast majority of people who consult with me want my advice, will always consider it, and will more often than not take it. It is not just a question of knowing the law; my job is to provide objective advice to my clients, who being humans may not be as objective about their own cases. The final decisions about whether to accept or make an offer to settle or to go to court always remains with the clients.

But on a few occasions, I have met with people who consider a lawyer to be their mouthpiece; they appear to want to run every aspect of their case, telling the lawyer exactly how to proceed, down to the minutia of how questions on cross examination or how arguments are phrased, without regard to the lawyer’s experience or judgment. To my mind, what is the point of hiring a lawyer, if you are not going to run every aspect of the case yourself?

Eighth, it must just feel like a good fit.

There is nothing more satisfying than representing someone with whom I have a great lawyer-client relationship in a case I believe in. The client and I should work well together, exchanging information and ideas to achieve the client’s goals. This kind of relationship is essential for both the client and the lawyer.

Suspicious Circumstances in Disputed Wills

Clarence Hay was murdered on June 26, 1988. He was 81 years old, single, and had no children.

His friend 29 year old Sandra Vout had nothing to do with his murder, but the police interviewed her as part of their investigation.

Mr. Hay had made a will on July 11, 1985 in which he left a farm to Ms. Vout, another farm to one of his nephews, some cash gifts to other relatives, and the rest of his $320,000 estate to Ms. Vout.

The circumstances concerning how the will came about are not entirely clear.

It is clear that the will was drawn by a legal secretary and signed at a lawyer’s office. Ms. Vout recommended the lawyer’s office. No lawyer was involved in preparing or signing the will. Mr. Hay signed the will in the presence of two legal secretaries, both of whom signed the will as his witnesses. It is also clear that Ms. Vout was present when Mr. Hay signed his will, and that she paid the bill.

Other aspects are less clear. The secretary who prepared the will said that Ms. Vout had told her what Mr. Hay wanted in the will. Ms. Vout denied that she was involved in giving any instructions to the secretary. Ms. Vout had told the police that she drove Mr. Hay to the appointment at the lawyer’s office to sign the will. At trial Ms. Vout said that she met him at the office.

The secretary who prepared the will said that she read the will to Mr. Hay in front of Ms. Vout. At one point, Mr. Hay hesitated, and Ms. Vout said, “Yes, that’s what we discussed. That’s what you decided….”

After Mr. Hay’s death, some of his relatives were unhappy with the will. They challenged the will, arguing that he did not have capacity to make a will, or that Ms. Vout had unduly influenced him.

After considering all of the evidence, Mr. Justice Byers concluded that the will was valid. He found that Mr. Hay “was old and eccentric, but alert, smart, independent, determined, and most important, not easily influenced.” He found that Mr. Hay had capacity, and was not unduly influenced.

Mr. Hay’s relatives appealed to the Ontario Court of Appeal, and the appeals court set aside Mr. Justice Byers’ decision.

Ms. Vout appealed to the Supreme Court of Canada.

Mr. Justice Sopinka, wrote the judgment of the Supreme Court of Canada, in Vout v. Hay, [1995] 2 S.C.R. 876. In doing so, he discussed the burden of proof in contested wills cases, and how courts should deal with suspicious circumstances.

In a contested will case, the burden of proof is on the person propounding the will (usually the executor). He or she must prove that the testator (in this case Mr. Hay) signed the will according to the formal requirements of provincial legislation, knew and approved of the contents of the will, and had capacity to make the will.

If the person propounding the will shows that the testator signed the will according to the formal requirements of a valid will, and that the testator read the will (or that someone read the will over to him), and he appeared understand it, the court may generally presume that the will is valid.

But if there are suspicious circumstances, then the person propounding the will must provide further evidence that the testator knew and approved of the contents of the will, and had capacity to make a will, to overcome the suspicious circumstances. The evidence required will be proportionate to the gravity of suspicion raised by the circumstances.

Suspicious circumstances may relate to the preparation of the will, to the capacity of the testator, or to whether the testator’s decision making was overborne by coercion or fraud.

But the onus of proving that someone procured the will by undue influence always rests with the person alleging undue influence.

In this case there were suspicious circumstances surrounding the preparation of the will, including the evidence that Ms. Vout instructed the secretary on what Mr. Hay wanted in his will, that her evidence was not believable, and that she stayed with Mr. Hay and coached him before he signed the will.

Mr. Justice Sopinka held that Mr. Justice Byers’ found facts that overcame the suspicious circumstances. The trial judge expressly found on all of the evidence that Mr. Hay knew what he wanted to do in his will, and had the capacity to make a will. Mr. Justice Byers’ also found that Ms. Vout did not unduly influence Mr. Hay.

The Supreme Court of Canada restored Mr. Justice Byers’ decision that the will was valid. Ms. Vout was entitled to keep her share of Mr. Hay’s estate.

When I first read this case years ago, I was surprised by the result. The lawyer's office did not take any precautions to make sure that the will did indeed reflect Mr. Hay's intentions. A lawyer should have met with Mr. Hay, taken the instructions from him, and Ms. Vout should not have been present when Mr. Hay gave the instructions or signed the will. Someone making a will may talk more freely when meeting alone with his lawyer, than when a potential beneficiary is present.

But the Supreme Court of Canada, as an appeals court, will defer to a trial judge's decision, unless the trial judge made a palpable and overriding error. I don't think that this decision should be interpreted as in anyway endorsing the manner in which the lawyer's office handled Mr. Hay's will.

Law Society Task Force Report on Unbundling of Legal Services

The Law Society of British Columbia has published Report of the Unbundling of Legal Services Task Force.

The report deals with lawyers acting on a limited basis in lawsuits. Some litigants are not able to afford to, or may not wish to, have a lawyer handle all aspects of their case. For example, a party to a lawsuit might ask a lawyer to draft court documents, and provide advice, but not appear in court.

Limited retainers raise a whole host of issues. What are the lawyer's responsibilities to the client? To the opposing party? To the court? Many of the rules of court and ethical rules are based on the assumption that a lawyer will handle all aspects of the case. For example, lawyers get on the record in court, and the other side may then serve documents on the lawyer. Does a lawyer who is retained to handle only a few functions need to get on the record? A lawyer for one side may not communicate directly with the other litigant if he or she is representative by a lawyer. What happens when the lawyer is not retained to handle negotiations?

One interesting issue is the potential for conflicts when a lawyer is doing volunteer work in advising people through a clinic. The lawyer may not know in advance whom he or she will be advising and the lawyers only function may be to provide advice on one occasion. It may not be practical for the lawyer to check for conflicts of interest in each case. What if the lawyer's partner or associate is representing someone who has conflicting interests with the person the lawyer at the clinic has advised?

The report sets out 13 recommendations for the Law Society to consider.

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.

Referrals to Other Professionals

Yesterday, while I was speaking about estate planning to a group of people at the Seniors Safety Fair, one lady put up her hand, and spoke about her experiences in trying to have a will prepared for her. She said she has a disabled child who receives disability benefits. When she phoned one law firm, someone asked her if her estate was worth over $500,000. When she said “no,” the law firm advised her to get a stationer’s-form will kit.

She then went to a notary public. She said that the notary public advised her that if she left anything to the disabled child, the child would lose the disability benefits. This lady was left with the impression that she shouldn’t leave anything to the disabled child.

Even allowing for the possibility that there was a misunderstanding, I am concerned about the advice this lady apparently got. Advising a client, or prospective client, with a disabled child to do her own will, or to cut out the child from any inheritance is terrible advice.

She needs to retain a lawyer who does estate planning work. There are ways to provide benefits for a disabled child, without jeopardizing B.C. disability benefits, including using a discretionary trust in the will. (I have written about this issue here.) But, no stationer’s-form will is going to contain the clauses necessary to create the discretionary trust.

I have no idea what law firm this lady phoned. I would hazard a guess that she contacted a law firm that does not do a great deal of estate planning work, and is probably not that interested in this kind of work. I don’t have a problem with lawyers turning a way work they are not interested in doing. But, why not refer people who need legal assistance to another lawyer? There are plenty of us who do estate planning for people with assets of less than $500,000.

Similarly, it would be appropriate in these circumstances for the notary public to refer the client to an estate-planning lawyer. In British Columbia, a notary public is permitted to draw some types of wills, but not wills with discretionary trusts. In this case, the notary public apparently recognized that a simple will leaving an outright gift to the disabled child would jeopardize the disability benefits. But, he or she did not go the next step, and refer the client to someone who could assist.

It is good business, as well as good client service, for professionals to make referrals to other professionals. By taking the time to refer a client or prospective client to another lawyer who does the type of work the client needs, you make a good impression on the person you are dealing with. You are sending out a signal that you care, even if you do not take on the work. He or she may come back to you in the future for the type of work you do. Furthermore, referrals out, tend to generate referrals back.

I don’t give specific advice at these seminars, but I did talk briefly about trusts for disabled children, and gave her a copy of my article on this topic.

The Importance of Legal Advice on Joint Accounts

Two lawsuits. In each one, a father transferred investments into joint accounts with his daughter. In each case, after the father died the daughter ended up in a lawsuit with those who benefited under the father’s will. The daughter said she was entitled to keep the balance in the accounts on her father’s death by right of survivorship. Those who benefited under the will said, “No you’re not. You must pay the funds into the estate to be distributed under the will.” They fought it out in the trial courts in Ontario. In each case, the losing side appealed to the Ontario Court of Appeal. Finally, on May 3, 2007, the Supreme Court of Canada released its reasons for judgment in Pecore v. Pecore, 2007 SCC 17, and Madsen Estate v. Saylor, 2007 SCC 18. In Pecore, the daughter got to keep the balance in the joint accounts. In Madsen Estate, the daughter did not. (These cases have given me a great deal of fodder for my blog. This is my ninth post on these two cases.)

What facts distinguished Pecore from Madsen Estate?

One of the distinguishing features in Pecore is the testimony of the lawyer who took instructions and drafted the father’s will. When taking instructions the lawyer asked him about line insurance policy and Registered Retirement Savings Plan beneficiary designations. They did not specifically discuss joint accounts. The trial judge inferred from the lawyer’s evidence that the father considered when he did the will that he already had dealt with the funds in the joint accounts outside of his estate. The court inferred that he had intended the daughter to receive the investments in the accounts beneficially by right of survivorship instead of under the will. Mr. Justice Rothstein, in the Supreme Court of Canada, said that this evidence was an important indicator of the father’s intentions.

People do not usually consult with lawyers before opening joint accounts. Yet, in some cases the joint accounts may have hundred’s of thousands of dollars worth of investments in them. The law on joint accounts is subtle and complex. Front line employees of financial institutions are not qualified to give advice on the implications of joint accounts. In many cases, the contributor’s intentions are not documented.

Usually, the only opportunity a lawyer has to discuss and advise on joint accounts is when a client comes in to make or revise a will. I think it is important that lawyers take advantage of that opportunity. The lawyer should ask his or her client if there are joint accounts. The lawyer should ask with whom. What is the client’s intention? The lawyer should then give advice about any pitfalls, and offer alternatives.

Pecore and Madsen Estate illustrate the problems that can arise when a parent puts substantial assets in a joint account with one child, but then has a will that leaves part of the parent’s estate to others. There are usually better planning alternatives, including:
1. Using a power of attorney instead of a joint account if the parent’s intention is to allow the child to assist with management only;
2. Transferring the funds into a trust (after getting tax advice) if the parent wishes to save probate fees;
3. Or, if the parent does want to give the child the right of survivorship, signing a memorandum clearly setting out the parent’s intentions.

Of course, a client is free to reject a lawyer’s advice. But, when I discuss joint accounts with my clients, I make notes of what they tell me their intentions are. Even if a client chooses to keep a joint account instead of selecting what I consider to be a better alternative, at least I will have notes or a confirming letter on file reflecting what my client tells me are his or her intentions. A lawyer’s notes may assist a court in finding the contributor’s intentions, or may assist the parties in resolving a dispute out of court.

In any case, I think it is essential for lawyers and their clients to discuss joint accounts. The cost to the client is minimal when compared to the costs of lawsuits over joint accounts.

In my tenth, and (I think) last post, in this series, I am going to discuss what I think financial institutions could do better to avoid these disputes over joint accounts.

My previous in this series were as follows:

In my first post, I summarized the facts of these cases.
In my second post, I wrote about the presumptions of resulting trusts and of advancement.
In my third post, I wrote about how the Court dealt with the issue of whether a gift of a right-of-survivorship is testamentary, requiring compliance with wills legislation.
In my fourth post, I wrote about the Supreme Court of Canada has relaxed the rule against evidence of statement and acts after a transfer has occurred.
In my fifth post, I wrote about the joint account documents.
In my sixth post, I wrote about the relevance of whether the contributor of the joint account continued to use and control the account during his lifetime.
In my seventh post, I wrote about the significance of whether the contributor also appointed the other account holder as an attorney under a power of attorney.
In my eight post, I wrote about the relevance of who paid the taxes in joint account disputes.