Author: Sydney Osmar
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,  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.
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Please feel free to check out the below related blog:
My colleague, Natalia Angelini, recently blogged on the unexpected death of QuadrigaCX’s founder, Gerald Cotton. Mr. Cotton was the only person who held the password to access the holdings of the company’s clients.
The QuadrigaCX case has brought the issue of digital assets and passwords within estate planning to the global stage. While this case is an extreme, most testators, if not all, will have some form of online presence requiring the use of passwords when they die.
Natalia discusses the case as a reminder that in the era of growing digital assets, we need to think about how to ensure the gifting of such assets can be effected, as well as ensuring that estate trustees know how to access such assets. I would like to examine the topic of the digital era and passwords in relation to fraud and identity theft involving estates.
Identity Theft of the Dead
Back in September, 2018, I attended the Law Society’s continuing professional development program called “Practice Gems: Probate Essentials 2018”. While there, a paper written by Craig Ross and Kyle Kuczynski of Pallett Valo LLP entitled “Protecting Estates From Identity Theft” was presented.
The paper examines the increase in identity theft of estates and sets out helpful tips on what steps can be taken by testators and estate trustees alike to protect the privacy and identity of the estate.
The paper discusses concerns regarding the vast online presence a testator may have, the full extent of which will likely be unknown to the intended estate trustee. Personally, I think of how this could easily include not only social media accounts such as Facebook, Instagram and LinkedIn, it would also include the many other applications I use in a day, including but not limited to music streaming apps, fitness apps, online banking apps, video streaming apps and transportation apps such as Uber. All of the various social media platforms and applications we utilize store important information including names, dates of birth, phone numbers, emails, credit card numbers, and in some instances the names of family members.
Tips to Protect your Estate
As the paper points out, this information “sits dormant and vulnerable after death”. Below, I summarize some of the main tips the paper discusses in relation to a testator’s online presence, and how best to protect against fraud and/or identity theft:
- The testator should keep and safely store a master list of accounts, subscriptions and services;
- The testator should keep a record of all websites that store or publish personal information. The Testator should also attempt to minimize the personal data that may be published online, such as birth dates, or city of residence;
- The testator should keep a list of login information and passwords for websites and services regularly used by the testator that retain or publish personal information. The list should be maintained in a secure manner;
- The estate trustee should cancel all memberships and known subscriptions of the deceased;
- The estate trustee should advise all financial institutions and credit agencies of death as soon as possible;
- The estate trustee should redirect mail as soon as possible;
- If account logins and passwords are available, social media accounts and other websites should be deleted. If no logins and passwords are available, the estate trustee should contact the website or account providers in question and request that the account be frozen or deleted; and
- Online service providers should also be notified of the death and instructed to freeze accounts.
In addition to providing these helpful tips, the paper discusses the difficulties an estate trustee may have in actually effecting the deleting and freezing of certain social media accounts and/or websites depending on the user agreement between the testator and the platform or website. They provide the example of Facebook which includes a term within its user agreement that prohibits the sharing of passwords and login information without its permission.
Further, Facebook’s default policy is to memorialize a user’s account upon their death, rather than delete it, and while they may delete it upon request, they are under no obligation to do so.
Out of curiosity, I conducted a quick search on Instagram to learn more about their policies regarding the death of user and it also appears that the app will memorialize, rather than delete the account of a deceased user. Instagram also has a policy against the sharing of login and password information.
In light of the ever evolving digital era we find ourselves in, it is prudent to give consideration to what will happen to our expansive online presences after we die, and to take what steps we can now to protect our assets and identities.
Thanks for reading!
Please feel free to check out the below blog which discusses protecting against identity theft after death more generally:
My colleague, Garrett Horrocks, recently blogged on a promising breakthrough in research relating to the early detection of Alzheimer’s disease. The research focused on the use of artificial intelligence to assist in the early detection of the disease.
Last week, I came across an interesting article that discusses a promising breakthrough in the United States in treatment for patients who suffer from Alzheimer’s disease and other degenerative diseases. The fact that treatment options continue to be explored by the science, engineering and medical community is hopeful, in light of last year’s announcement by the world’s largest pharmaceutical company, Pfizer, that it is pulling out of research into Alzheimer’s disease.
The treatment consists of implanting a “pacemaker” into the part of the brain responsible for executive and cognitive functions, such as planning, problem solving and judgment. The article explains that a battery pack is then placed in the chest, which sends electrical currents through the wires in a process called “deep brain stimulation” or DBS.
Studies on the use of the implant have shown that the subject patients’ cognitive and daily functional abilities as a whole declined much more slowly than Alzheimer’s patients in a matched comparison group who were not being treated with DBS.
The article highlights one study participant, Ms. Moore, who, prior to receiving the implant, was unable to cook meals or dress herself without assistance. According to the article, Ms. Moore was very fearful that her disease would take away her ability to play hymns on the piano, however, after two years of receiving DBS, she is still able to continue playing the piano and can now cook meals, select outfits and plan outings independently.
My colleague, Garrett, has pointed out in his recent blog that there could be many ways in which the use of artificial intelligence in the early detection of Alzheimer’s could impact succession and estate planning, such as a predictive diagnosis prompting a testator to take steps to implement an estate plan prior to the loss of capacity.
There is no global definition of capacity, and there are varying degrees of capacity that attract different legal tests. Capacity is decision, time and situation specific, such that a person may have capacity to do certain things, but not others, at different times and under different circumstances.
While the full impact of the use of the implant and DBS in treating Alzheimer’s is not yet clear, should the treatment continue with its successes, it may be possible that people living with Alzheimer’s who do not have testamentary capacity today, may have testamentary capacity sometime in the future.
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