The Ontario Superior Court of Justice recently released a decision that provides a helpful and comprehensive overview of the case law regarding solicitor’s negligence claims brought by non-clients.

Within the estate litigation context, this issue sometimes arises where a claim is brought by a disappointed beneficiary as against the drafting solicitor of a testator’s will. The generally accepted origin and definition of a “disappointed beneficiary” is White v Jones, [1995] 1 AII E.R. 691, which sets out that those who may bring a claim against a lawyer as a “disappointed beneficiary” are those individuals whom the deceased had intended to include as a beneficiary in their Last Will and Testament, but, as a result of an error or negligence on part of the drafting lawyer, such a bequest was not carried out.

The “disappointed beneficiary” is therefore an exception to the general rule that the only individual a lawyer owes a duty of care to in a retainer is the client.  However, the extension of a duty of care to a “disappointed beneficiary” applies solely as it relates to those beneficiaries that a solicitor can reasonably foresee that as a result of their negligence, the beneficiary may be deprived of his or her intended legacy, and where the testator nor the estate would have a remedy against the solicitor.

The Alberta Court of Appeal has held that a drafting solicitor does not owe a duty of care to beneficiaries named under a prior will, as to do so would create inevitable conflicts of interest for the solicitor. Furthermore, the court held that beneficiaries named under prior wills have other options available to them, such as challenging the validity of the will.

General Principles Applying to Solicitor’s Negligence Claims

In the ONSC’s recent decision, 2116656 Ontario Inc. v Grant and LLF Lawyers LLP, 2016 ONSC 114, the particular claim arose in the context of mortgage fraud, however, the general principles that are confirmed by the court are applicable generally to solicitor’s negligence claims. Some of the salient points discussed by the court are summarized below:

• In order for a solicitor to be liable to a non-client, the solicitor must know – from placing him or herself in a position of sufficient proximity with the non-client third party – that the particular non-client is relying on his or her skill. Therefore actual knowledge is a prerequisite for a finding of care, such that it is not sufficient that the solicitor “ought to have known” of the reliance;
• The non-client third party’s reliance must have been reasonable;
• The existence of “red flags” or “warnings” alone will not be sufficient to give rise to a duty of care on the solicitor’s part, unless a duty of care is first established under the ordinary principles;
• The imposition of a duty of care on a solicitor to a third party non-client raises numerous concerns, including:
  • it makes a solicitor responsible to someone who has not retained and does not pay him or her;
  • It is illogical to impose such a duty on a solicitor where the solicitor’s client themselves do not owe a duty to the third-party;
  • It is usually not possible to disclaim or limit liability to such a non-client third party; and
  • Making a solicitor assume such a duty to a non-client third party may place the solicitor in a conflict with the interests of the solicitor’s own client;
• The court held that due to the above concerns, it will “only be under “narrow”, “exceptional”, “very limited” and “well defined circumstances” that a lawyer can be held to owe a duty of care to a non-client third party to protect his, her or its economic interests”; and
• The court outlined the various indicia of a solicitor-client relationship, including, inter alia, a contract, retainer agreement or letter of engagement, an open file, the giving and taking of instructions, the creation of legal documents, and the rendering of bills.

This decision provides a comprehensive summary of the existing jurisprudence and reiterates the principle that: but for exceptional and rare circumstances, a solicitor will only owe a duty of care to his or her client. This may be “disappointing” news to non-client, third party claimants.

Thanks for reading!

Sydney Osmar

Please feel free to check out the below related blog:

When Might a Solicitor be Negligent in Preparing a Will?