At the conclusion of estate litigation, the mandate of an estate trustee during litigation (an “ETDL”) will typically end and a succeeding estate trustee will be appointed. When this transition occurs, questions may arise as to what legal documents the succeeding estate trustee is entitled to review. For example:
- Is a succeeding estate trustee entitled to see all of the estate’s legal files? Even communications created during the litigation that are protected by solicitor-client privilege?
- Do the disclosure obligations of the ETDL depend on who is appointed as succeeding estate trustee?
The Court of King’s Bench of Alberta had an opportunity to explore these questions recently in Collins Estate (Re), 2024 ABKB 721, after a party adverse in interest during the estate litigation was appointed to administer the estate.
Background
Over a period of approximately five years, the estate in this case had four different estate administrators. Initially, two administrators acted together as the personal representatives of the estate pursuant to the deceased’s final will. After the deceased’s son, JMC, challenged that will, Royal Trust was appointed to serve as a litigation administrator (or administrator pendente lite) while the litigation was ongoing.
The will challenge was eventually resolved, with the court finding that the deceased’s final will was invalid. The court then permitted JMC to apply to probate an earlier will which included him as a beneficiary. Eventually, JMC was appointed as the fourth estate administrator.
Before his appointment, not only had JMC challenged his father’s final will – during the estate administration, he was also involved in several litigious disputes concerning the estate assets. For example, there were disputes as to whether JMC should be added to the boards of directors of several private companies in which the estate had an ownership interest, whether corporate audits should be conducted, and whether corporate valuations were necessary. Royal Trust took positions adverse to JMC in these disputes, opposing his appointment to boards due to perceived conflicts of interest, and resisting corporate audits and valuations on the basis that they would be expensive and needless.
The Disclosure Dispute
Following his appointment as estate administrator, JMC sought access to all solicitor-client files related to the administration of his father’s estate and its assets, arguing that:
- solicitor-client privilege does not exist between estate trustees and beneficiaries, or between predecessor and successor estate representatives; and
- access to the files would enable him to efficiently administer the estate and avoid the duplication of legal work.
In support of his position, JMC relied on the Superior Court’s decision in Ontario (Attorney General) v. Ballard Estate (Re), 1994 CanLII 7513, for the general principle that solicitor-client privilege does not apply between an estate executor and the estate’s beneficiaries when they share a joint interest in the subject matter of the legal advice.
In response, the former estate administrators argued that solicitor-client privilege is nearly absolute and extended to all communications between counsel and the estate administrator, including routine estate administration. They also argued that JMC was not entitled to review privileged communications regarding the estate, as he had previously been adverse in interest to the former estate administrators.
Disclosure Obligations Between Estate Administrators
After discussing the court’s inherent supervisory jurisdiction over the administration of the estate, in light of the disclosure dispute, Justice Eamon accepted the general proposition that estate records ought to be “kept complete and in the hands of the current personal representative in the event they are needed, for example in a taxation audit,” recognizing that it would be “impracticable and inefficient” to require the successor trustee to reconstruct estate records by contacting their predecessors.
When it comes to privileged records, however, Justice Eamon made it clear that “[t]he Court cannot override solicitor-client privilege by invoking its inherent jurisdiction to supervise estates.” Accordingly, a prior estate administrator will only be required to disclose privileged records to a successor administrator if either an established exception to the privilege applies, or there has been a waiver of privilege.
The Court also reaffirmed that only three exceptions to solicitor-client privilege are recognized in Canada – a common interest exception, a joint retainer exception, and a joint interest exception.
Relying on the Supreme Court of Canada’s decision in Pritchard v Ontario (Human Rights Commission), 2004 SCC 31, Justice Eamon confirmed that the common interest and joint interest exceptions to solicitor-client privilege can apply between estate beneficiaries and the estate’s representative, and also accepted that solicitor-client privilege may not apply against estate beneficiaries where they have a joint interest in the subject matter of counsel’s legal advice, as per Ballard Estate.
Nevertheless, JMC failed to establish that the joint interest exception was applicable whenever a successor estate representative seeks solicitor-client privileged communications from their predecessor. Moreover, the court held that this exception would not apply under the circumstances in Collins Estate – if the successor estate administrator was adverse in interest to their predecessor during estate litigation, the privilege will remain intact. Justice Eamon’s remarked that “[l]eaving open the potential for an adverse beneficiary to later obtain solicitor-client privileged records if appointed as a successor personal representative would be contrary to the purposes underlying the privilege,” and could also have a chilling effect on the “free and frank flow of information” between an estate representative and counsel, in addition to potentially eroding public confidence in the administration of justice.
Ultimately, the Court directed that no privileged information be disclosed to JMC without a court authorization. As the successor estate administrator, however, JMC was entitled to review legal advice relating to routine or day-to-day estate administration where no adversity existed.
The Takeaway
The Court’s decision in Collins Estate reinforces the fundamental nature of solicitor-client privilege, confirming that this right is not dispelled once a succeeding estate trustee is appointed, particularly if the succeeding trustee had an interest adverse to the prior estate trustee during estate litigation. Solicitor-client privilege remains intact unless a recognized exception to the privilege applies.
Thank you for reading, and enjoy the rest of your day,
Suzana.