Author: Sydney Osmar

12 Dec

Seniors’ homes, trespass orders, and the Residents’ Bill of Rights

Sydney Osmar Elder Law Tags: 0 Comments

Recently, Marketplace has released the results of an investigation into seniors’ homes using trespass orders to ban family members from visiting.  The investigation reviewed over a dozen cases across Canada where family members believe they were banned from visiting their loved ones by retirement homes and long-term care homes as a method of silencing them from advocating on behalf of their loved ones.

In Ontario, one’s entry to a premises can be prohibited through the issuance of a notice under  the Trespass to Property Act.

Marketplace spoke with counsel at the Advocacy Centre for the Elderly (“ACE”) in Toronto, who explained that with regard to retirement homes in Ontario, case law has established that residents who pay to live on the property have a right to receive visitors they choose, without interference.

With regard to long-term care, the Long-Term Care Homes Act (the “Act”) provides residents with statutory protection, setting out that “[e]very resident has the right to communicate in confidence, receive visitors of his or her choice and consult in private with any person without interference.” This particular protection can be located at section 3(14) of the Act, which forms part of the Residents’ Bill of Rights (the “Bill of Rights”). The Act also provides for a reporting and complaints procedure set out from sections 21 to 28.

The Bill of Rights statutorily mandates licensed care homes under the Act (“licensees”) to fulfill certain duties and obligations to their residents, including unhindered visitation and communication with family members and friends, the right to be protected from abuse, the right to exercise the rights of a citizen, and the right to be treated with courtesy, respect and in a manner that fully recognizes the residents’ individuality and respects their dignity.

Importantly, section 3(3) of the Act sets out that a resident may enforce the Bill of Rights against the long-term care home “as though the resident and the licensee had entered into a contract under which the licensee had agreed to fully respect and promote all of the rights set out in the Residents’ Bill of Rights.” While I have been unable to locate a reported decision where a resident (or a litigation guardian of a resident) has attempted to enforce the Bill of Rights vis-a-vis section 3(3), arguably, a resident pursuing such enforcement would have access to relief available in any other breach of contract case, including the specific performance of the contract and monetary damages.

In response to the Marketplace investigation, Ontario MPPs have called for a full investigation into the use of trespass orders against visitors and family members in retirement homes.

To learn more about the Residents’ Bill of Rights, take a listen to Stuart Clark and Doreen So’s recent podcast located here.

Thanks for reading!

Sydney Osmar

10 Dec

The T3 trust return: change in reporting obligations

Sydney Osmar Estate & Trust Tags: 0 Comments

Pursuant to the 2018 Federal Budget, there will be new trust reporting requirements coming into effect for taxation years ending after December 31, 2021.

Prior to the implementation of the forthcoming changes, a Trustee would only have to file a T3 trust return if the trust generated income or distributions were made to beneficiaries during the year.

In addition to this expanded filing requirement, certain parties to the trust (such as trustees, beneficiaries and settlors) will soon be required to provide personal identification information including: names, addresses, dates of birth, social insurance numbers (or in the case of a business, a business number), as well as their jurisdiction of residence.

These requirements will apply to express trusts resident in Canada. The new proposed provisions of the Income Tax Act (the “ITA”) would extend the application of these new requirements to include express trusts that are deemed to be resident in Canada pursuant to section 94 of the ITA.

Express trusts can be loosely defined as those created “on purpose,” that is, the trust is set in express terms, usually in writing, and can be distinguished from trusts that are implied by conduct.

There are exceptions to the application of these changes, including, among others:

  • Trusts that have been in existence for less than three months at the end of the tax year;
  • Employee life and health trusts;
  • Graduated rate estates;
  • A lawyer’s general trust account (but not specific client accounts);
  • Qualified disability trusts; and
  • Trusts that are governed by registered plans such as RRSPs and RRIFs.

Trustees managing trusts that do not fall within one of the enumerated exceptions, may be reluctant to make the disclosure required by these changes, especially where there is a preference to keep personal matters related to the trust private. In such cases, the changes may encourage Trustees to take early steps to wind-up trusts.

Anyone who is subject to the new reporting requirements who fails to file a T3 trust return can be subjected to a penalty in an amount equal to the greater of $2,500 and 5% of the highest fair market value of the assets of the trusts in the year.

Given the risk of potentially significant penalties, estate practitioners should be careful to remind clients who are acting as Trustees that tax advice needs to be obtained, regardless of whether trust assets are generating income.

Thanks for reading!

Sydney Osmar

24 Sep

Staying or consolidating proceedings: the tests and factors

Sydney Osmar Litigation Tags: 0 Comments

In the recent decision of Rabba v Rabba, 2019 ONSC 5205, the Honourable Justice Dietrich provides a helpful reminder and summary of the tests applied and the relevant factors considered by the court in determining whether or not a temporary stay or a consolidation of proceedings is appropriate.

Pursuant to rule 6.01(1) of the Rules of Civil Procedure, where two or more proceedings are pending in the court and it appears to the court that,

  1. they have a question of law or fact in common,
  2. the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences, or
  3. for any other reason an order ought to be made.

Additionally, the court may order that,

  1. the proceedings be consolidated, or heard at the same time or one immediately after the other, or
  2. any of the proceedings may be stayed until after the determination of any other of them, or asserted by way of counterclaim in any other of them.

In addition to the parameters provided for in rule 6.01, there are overriding policy considerations aimed at:

  • avoiding the multiplicity of proceedings,
  • promoting the expeditious and inexpensive determination of disputes, and
  • avoiding inconsistent judicial findings.

Justice Dietrich then went on to highlight the factors considered by the court in determining whether to matters should be heard together, or one immediately after the other, as set out in Marchant (Litigation Guardian of) v RBC Dominion Securities, 2013 ONSC 2042:

  • will the order sought create a savings in pretrial procedure?
  • will the number of trial days be reduced?
  • will a party be seriously inconvenienced by being required to attend a trial where they only have a marginal interest?
  • will costs of experts’ time and witness fees be reduced?
  • is one matter at a more advanced stage of litigation than the other?
  • will the order result in delay in one of the actions?
  • are any of the actions proceeding in a different fashion?

In considering whether a temporary stay is appropriate, Justice Dietrich outlined the principles set out in Hathro Management Property v Adler, 2018 ONSC 1560, including, among others:

  • differences in the substantive scope and remedial jurisdiction of the two courts;
  • the comparative progress of the two proceedings,
  • whether the proceedings will proceed sequentially or in tandem,
  • the ability of the defendant to respond to both matters, apart from just the financial burden or inconvenience of having to do so,
  • the possibility for inconsistent results, and
  • the potential for double recovery.

Thanks for reading!

Sydney Osmar

12 Sep

Section 2(4) of the Substitute Decisions Act: Releases and Reverse Onuses

Sydney Osmar Capacity, Guardianship Tags: 0 Comments

Under the Substitute Decisions Act, 1992 (“SDA”), if a person is eighteen years of age or more, there is a presumption of capacity. However, pursuant to section 2(4) of the SDA, if a gift, or contract is made by a person either while the person’s property is under guardianship, or within one year before the guardianship is established, the onus shifts to the other person to prove that they did not have reasonable grounds to believe the person incapable.

In the recent decision of the Ontario Superior Court of Justice (Divisional Court), Foisey v Green, the Court provides clarification on the correct test to be applied under section 2(4).

In Foisey v Green, Ms. Foisey and Ms. Green were the co-beneficiaries of their brother’s estate, who had died intestate. Ms. Foisey and Ms. Green had been estranged for many years, however, through the use of a private investigator, Ms. Green was able to locate her sister at a retirement residence in Ontario. Ms. Green then met with her sister and arranged for legal representation. Ms. Foisey ultimately renounced her right to act as estate trustee of her brother’s estate and when the time came to distribute the assets of the estate, Ms. Foisey provided Ms. Green with a release.

Shortly after having provided the release, Ms. Foisey was found to be incapable of managing her own property, and the Public Guardian and Trustee (“PGT”) was appointed as her guardian of property. The PGT became concerned that Ms. Foisey had received significantly less than what was supposed to be a 50% share in the estate. The PGT made repeated inquiries for more information from Ms. Green and her counsel, but received little to no response. In result, the PGT brought an application seeking to compel Ms. Green to pass her accounts.

In applying section 2(4) of the SDA, the application judge concluded that because of the existence of red flags, Ms. Green had not satisfied that she did not have reasonable grounds to believe Ms. Foisey was incapable when she signed the release. The red flags identified by the application judge included the fact that Ms. Foisey had a long-standing mental illness, that Ms. Foisey lived in a retirement residence, that Ms. Foisey was part of a trusteeship program and that Ms. Green and her lawyer had failed to provide the PGT with any information to satisfy their concerns. For these reasons, the application judge ordered Ms. Foisey to pass her accounts.

On appeal, the Divisional Court held that the “red flags” test applied by the application judge was the incorrect test to apply, because in doing so, the judge failed to consider the extent to which each red flag was known by Ms. Green, and whether Ms. Green had reasonable grounds to believe that Ms. Foisey was incapable of providing the release.

The Divisional Court examined the meaning of “reasonable grounds to believe” looking to jurisprudence and dictionary definitions, concluding that it means a reasonable probability, or that there be an objective basis for the belief which is based on compelling and credible information.

The Divisional Court went on to hold that when assessing whether a person has capacity to enter into a contract, at the time of entering into the contract, they must understand the information relevant to deciding whether or not to enter into the contract. If they can do this, you must further ask if the person can appreciate the reasonably foreseeable consequences of entering into the contract.

After laying out the framework of section 2(4), the Divisional Court went on to consider the red flags identified by the application judge, holding that:

  • there was no evidence to suggest Ms. Green knew of her sister’s mental illness,
  • no one from the retirement residence suggested that Ms. Foisey was incapable,
  • Green had spoken with the case manager of the trusteeship program and had not been told that Ms. Foisey had severe mental health difficulties,
  • There was evidence from Ms. Green’s lawyer that Ms. Foisey had legal representation, and appeared to be lucid and understood the release that was properly explained to her by counsel. The Court further acknowledged that a person who suffers from a cognitive impairment is competent with respect to a specific act as long as the act in question takes pace during a lucid interval.

On balance, the Divisional Court concluded that the application judge erred in pointing to “red flags” without addressing what was actually known by Ms. Green, and whether or not that knowledge would lead to reasonable grounds to believe that Ms. Foisey lacked capacity to enter into the release. The Court noted that the most alarming of red flags was the failure of Ms. Green and her lawyer to provide the PGT with information to address his concerns. However, the Court found that the lack of cooperation of Ms. Green and her counsel was not relevant to whether or not Ms. Green had reasonable grounds to believe Ms. Foisey incapable, and, it occurred many months after the execution of the release.

In reaching this conclusion, the Court noted that there is nothing inherently unusual or sinister about an estate trustee requesting a release from a beneficiary – such releases have been commonly used by estate trustees for decades.

Thanks for reading!

Sydney Osmar

 

10 Sep

Court Status Certificates

Sydney Osmar Executors and Trustees Tags: 0 Comments

A common question encountered by estate practitioners is what happens if an estate trustee dies before completing the administration of an estate. In today’s blog, instead of focusing on the devolution of executorship, I look at procedural steps that can be taken to confirm the authority of surviving estate trustees, where one of multiple appointed estate trustees dies, during the administration of the estate.

In such an instance, the surviving estate trustees may experience difficulty in completing the administration of the estate, if third-party institutions require the consent and approval of each jointly appointed estate trustee listed in the Certificate of Appointment of Estate Trustee with a Will.

If this occurs, there is a fairly straightforward procedure for “confirming” the authority of the surviving estate trustees. This process is governed by Rule 74.14.2 of the Rules of Civil Procedure. This rule applies if:

  • there has been a change of estate trustees as a result of: (a) a devolution of executorship on the death of an estate trustee with a will, (b) the death of an estate trustee, if one or more surviving estate trustees continue to be authorized to act, (c) a court order, or
  • there has been no change of estate trustees.

The Rules set out that the confirmation of the status of a person as an estate trustee may be obtained by making a written request to the registrar of the court that issued the applicable certificate of appointment for a court status certificate providing confirmation.

In the example provided above, where the request for the status certificate results from the death of another estate trustee appointed by the same certificate of appointment, the request must be accompanied by an affidavit confirming the death of the estate trustee and the circumstances under which the surviving estate trustee(s) continues to be authorized to act, including proof of death of the deceased estate trustee.

Thanks for reading!

Sydney Osmar

09 Sep

Litigation and third-party funding

Sydney Osmar Litigation Tags: 0 Comments

It is not uncommon for people to find themselves in situations where they are facing a long legal battle, while simultaneously lacking funds to see them through to the finish line. In some instances, people may even seek out assistance from third parties.

Third-party litigation funding is a relatively recent and growing phenomenon in Canada. Canadian jurisprudence has recognized that the third-party litigation funding model can have a positive effect on access to justice. However, the model has raised concerns regarding strangers, involving themselves in the litigation of others’, improperly “stirring up strife.”

Historically, the common law has curtailed these concerns through the doctrines of champerty and maintenance. In McIntyre Estate v Ontario, the Ontario Court of Appeal has defined “maintenance” as being directed against those who, for an improper motive, become involved with the disputes of others, in which the maintainer has no interest whatsoever. Champerty is an egregious form of maintenance which carries with it the added element that the maintainer shares in the profits of the litigation.

Champerty is no longer a crime, and its strictures have been substantially loosened over time, recognizing that a bona fide business arrangement that did not “stir up” litigation was not necessarily champertous. In other words, the courts have recognized that a commercial motive is not necessarily an improper motive (see Buday v. Locator of Missing Heirs Inc.).

In Houle v St. Jude Medical Inc. the court summarized the current state of the law of champerty. Some of the main points are highlighted below:

  • the elements of a claim of champerty are: (1) the defendant for an improper motive (officious intermeddling) provides assistance to a litigant in a lawsuit against the plaintiff; (2) the defendant has no personal interest in the lawsuit; (3) the defendant’s assistance to one of the litigants is without justification or excuse; and (4) the defendant shares in the spoils of the litigation;
  • the law has evolved such that supporting another’s litigation is not categorically illegal, and thus, contingency fees and third-party funding of litigation has become a possibility;
  • to approve a third-party funding agreement, the court must be satisfied that:
    • (a) the agreement is necessary in order to provide access to justice;
    • (b) the access to justice facilitated by the agreement must be substantively meaningful;
    • (c) the agreement must be fair and reasonable;
    • (d) the funder must not be overcompensated for assuming the risks of an adverse costs aware; and
    • (e) the agreement must not interfere with the lawyer-client relationship.

In McIntyre Estate, the court held that it is the motive of the third party funder that is among the most relevant factors in determining whether maintenance is made out – if the motive is genuine and arises out of concern for the litigant’s rights, it is not maintenance.

In Houle, the court recognized that while the law no longer automatically treats third-party litigation funding agreements as unlawful, it does not follow -– in the class action industry –  that a third-party funding agreement is necessary or appropriate in all cases. Instead, the court predicts that the common law in this area will continue to evolve incrementally, as each case comes forward.

Thanks for reading!

Sydney Osmar

13 Jun

Consent or contract: what governs the disposal of genetic material?

Sydney Osmar Estate Litigation, Ethical Issues Tags: , 0 Comments

In overturning a lower court decision, on May 31, 2019, the Ontario Court of Appeal held that neither contract law nor property law principles govern how to dispose of embryos, where neither party has a biological connection to the genetic material.

Instead, in S.H. v D.H, 2019 ONCA 454 the Court held that the governing legislation and regulations prevail: The Assisted Human Reproduction Act (“AHRA”) and the Assisted Human Reproductions (Section 8 Consent) Regulations (“Consent Regulations”).

In 2011, D.H. and S.H. purchased four embryos (created from anonymous donors) from a lab in the US. Two of the four embryos were viable, one of which resulted in the birth of the couple’s son. The second embryo is stored in an Ontario lab. The couple divorced shortly after the birth of their son, and a dispute arose around the fate of the second embryo.

At the time of purchasing the embryos, the couple entered into two contracts, one with the US based lab, and one with the Ontario based lab. The first contract set out that the frozen embryos would be donated, in the event that the parties are unable to make a decision as to their disposition in the future. The couple also acknowledged that in the event of a divorce, the legal ownership of any remaining stored embryos would be determined in a property settlement.

The Ontario based contract identified D.H. as the “patient” and the S.H. as the “partner”. It set out that in the event of divorce or legal separation, the lab would “respect the patient’s wishes”. When D.H. attempted to proceed with implanting the second embryo, S.H. withdrew his consent.

In the lower court decision, the court looked to the persuasive authority, M. (J.C.) v A. (A.N), 2012 BCSC 584, concluding that the embryos were to be treated as property, governed by the contracts, such that the “patients’ wishes” should be respected.

The Ontario Court of Appeal however, has concluded that Parliament has imposed a consent-based, rather than a contracts-based model through AHRA and the Consent Regulations. Under this legislative format, “donor” is defined to include a couple who are spouses at the time the in vitro embryo is created, even where neither person contributes reproductive material to the embryo. The Court also determined that separation or divorce does not change the donor status of the couple in instances where either both individuals are genetically connected to the embryo, or neither individual is genetically connected to it. Pursuant to s. 10(3) of the Consent Regulations, the donor status is only changed if there is only one genetically contributing former spouse – and it is that individual who will be deemed the sole donor.

The Court went on to consider that the principle of free and informed consent was a fundamental condition to the use of human reproductive technologies. The Consent Regulations reflects that consent is ongoing and is not frozen in time by specifically legislating that the consent of the donor may be withdrawn by either spouse. The Consent Regulations and AHRA criminalizes the use of genetic material without the written consent of the embryo’s donors.

In coming to its conclusion, the Court held that a consent-based model to reproductive technology is “fundamentally at odds with contract law”, and that an individual cannot simply contract out of criminal law, nor the protections that may be afforded to them under that law. Therefore, it was within S.H.’s right to withdraw his consent to the use of the embryo.

In the estate planning context, assisted human reproduction brings with it many considerations which should be taken by the drafting solicitor, such as whether or not the client, or their partner has any stored sperm or ova, whether there is consent to the use of the genetic material post-mortem, if there are any time limitations on its use, and whether or not there is an intention that children conceived with donated sperm/ova posthumously are to be included in the Will, among many others.

To learn more about the impact of assisted human reproduction within the estate planning context, and some practical tips for solicitors, see “Fertility Law Considerations for Estate Lawyers” by Suzana Popovic-Montag.

Thanks for reading!

Sydney Osmar

11 Jun

Aretha Franklin’s estate: are handwritten notes valid wills?

Sydney Osmar Estate & Trust, Estate Litigation, In the News, Wills Tags: 0 Comments

It has been almost one year since the music industry and fans around the world lost Aretha Franklin.  It was previously believed that Franklin died without a will, leaving an estate valued at approximately $80 million USD to be distributed under Michigan’s intestate succession laws.

However, recent reports indicate that three handwritten notes, which may be wills, have been located. Two are reportedly from 2010 and were found in a locked cabinet, with the third dated March 2014, found under cushions in Franklin’s living room.

The three handwritten notes have been filed, and a hearing will take place on June 12, 2019 to determine their validity.

From a cursory review of the applicable Michigan authorities, it appears that a will is a holograph Will (referred to as “holographic wills” in Michigan), whether or not it is witnessed, if it is (1) dated, and (2) the testator’s signature and the document’s material portions are in the testator’s handwriting. It appears that in Michigan, a holograph will may remain valid, even if some portions of the document are not in the testator’s handwriting, but the testator’s intent can be established by extrinsic evidence.

In contrast, pursuant to Ontario’s Succession Law Reform Act (“SLRA”), to be a valid holograph will the document  must be (1) “wholly” in the testator’s own handwriting, (2) signed by the testator and (3) constitute a full and final expression of the testator’s intent regarding the disposition of his or her assets, on death. The SLRA does not require the document to be dated, as is required in Michigan, however both jurisdictions do not require the formal presence, attestation or signature of a witness for a holograph will to be found valid.

In Ontario, and Canada generally, steps are being taken within the legal community in attempts to solve ongoing issues of identifying missing or competing wills. Online will registries are being created so that lawyers and trust companies can upload basic information about the wills they are storing.

The Canada Will Registry’s website indicates that when a user is looking for a will, the site will publish a Knowledge of Will notice, and the lawyer or trust company storing the will (if it has been registered) will be automatically alerted. According to the website, the intent behind the registry is to replace the various search tools currently available with one comprehensive tool.

While such a tool would not have assisted in locating Franklin’s handwritten notes, it represents how the advance of technology can be used to simplify necessary steps regularly taken by estate practitioners, such as the process of locating missing or competing wills.

Technology aside, it will be interesting to see whether or not the Court will find any of Franklin’s handwritten notes to be valid holograph wills.

Thanks for reading!

Sydney Osmar

27 May

Ontario’s Cuts to Legal Aid

Sydney Osmar Uncategorized Tags: 0 Comments

Ontario first implemented an organized legal aid plan in 1951, with Legal Aid Ontario (“LAO”) becoming an independent agency in 1998 with the introduction of the Legal Aid Services Act, 1998.

Since this time, LAO’s services have grown to include:

  • Duty Counsel – lawyers who can quickly assess a client’s legal problems in court (or in some instances at tribunals) who would otherwise go unassisted or unrepresented;
  • Over the Phone Services – Toll free services where clients can access information, referrals, legal aid applications, and advice from a lawyer;
  • Certificates – those who are financially eligible can apply for certificates for representation by a private lawyer; and
  • Community Clinics – LAO funded clinics assist low-income communities meet their most basic needs and provides a point of access to justice.

LAO’s Annual Report for the 2017-2018 fiscal year indicates that:

  • 102,873 certificates were issued to fund private representation for individuals and families across Ontario. This broke into 56,777 certificates for criminal law, 27,049 certificates for family law, 13,687 for immigration and refugee law and 5,360 for civil law matters;
  • LAO’s client service centre fielded over 450,000 calls; and
  • Duty counsel in criminal court alone provided services to 504,636 clients.

In addition to the above, LAO is the primary funder of 74 community legal aid clinics across Ontario, which provide a wide range of legal services, including: housing and landlord and tenant matters, issues with entitlement to income supports and social benefits, criminal injuries compensation, criminal law, immigration and refugee law, family law as well as employment law.

During law school, I had the opportunity and privilege to work at the Community and Legal Aid Services Program (“CLASP”) located at York University. Like many of my colleagues, who also spent time either working or volunteering with community based clinics, I saw the direct impact CLASP has had on its surrounding community, providing essential legal and social work services to marginalized and low-income Toronto community members.

There is an obvious and growing need for access to affordable legal services for individuals and families across Ontario. Despite this need, the Ontario government has announced cuts to LAO’s funding in the 2019 Provincial Budget:

  • A decrease of 30% of LAO’s funding in 2019, amounting to a total cut of $133 million;
  • Raising the decrease to 40% by 2021;
  • Ending all provincial funding for refugee and immigration law services; and
  • Removing mandatory ancillary fees from university tuition.

A number of community legal clinics are associated with Ontario universities. While the bulk of their funding comes from LAO, an important source of funding comes from mandatory ancillary tuition fees. With the government’s announcement that these fees will no longer be mandatory, providing students with the option to “opt-out”, community clinics are facing an additional hit to their funding structures.

International research has shown that investing in community legal clinics reduces overall costs to the legal system and to government programs generally, by decreasing the number of self-represented litigants, helping to keep people housed, and empowering people to live independently and to participate in their communities.

Ontario is comprised of a vast number of diverse and vibrant communities – all of whom deserve to have access to legal services and representation when they need it. As stated by the Honourable R. Roy McMurtry during his tenure as Ontario’s Attorney General: “Legal Aid, and in particular community law, is perhaps the single most important mechanism we have to make the equal rights dream a reality.”

What You Can Do:

If you are as angered by the Ontario government’s proposed cuts as I am, please see just a few examples of actions you can take below:

(1)        Emails, Letters and Phone calls

You can write a personalized letter or email to your local MPP. You can also send a personalized letter or email directly to Premier Doug Ford and the Ontario Attorney General, the Honourable Caroline Mulroney. Depending on your level of comfort, you can also call them.

If you do not have time to write a personalized letter, there are many template letters or forms that are being circulated by community clinics. You can also go here for a template form and more information generally.

(2)        Petitions

In addition to template forms that are being circulated, so are petitions. For examples and further information, you can go here or here.

(3)        Town Halls and Rallies

Community members have been active in their organizing. For example, there is an upcoming joint Town Hall on the recent cuts to legal aid (and its impact), hosted by CSALC (the Chinese and Southeast Asian Legal Clinic), CCSP (the Centre for Spanish Speaking Peoples), and SALCO (the South Asian Legal Clinic for Ontario).

The Town Hall will be May 29, 2019 at 6:00pm at the Ryerson Centre for Urban Innovation; 44 Gerrard St. East, 2nd Floor Room 219. For more information you can go here.

(4)        Donate

While our communities work together to urge the Ontario government to reconsider, and reverse the devastating cuts to legal aid, those who are able to, can donate directly to a community clinic of their choosing. For example, to donate to CLASP you can go here, or, to donate to the Advocacy Centre for the Elderly, you can go here.

Stay tuned for more on this issue which will be discussed by my colleague Nick Esterbauer. Thanks for reading!

Sydney Osmar

07 Mar

Solicitor’s Negligence Claims: are Non-Clients Owed a Duty of Care?

Sydney Osmar Disappointed Beneficiaries, Estate & Trust, Estate Planning, Litigation, Wills Tags: 0 Comments

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?

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