It is not uncommon for the lawyer who drafted a testator’s will or codicil to subsequently be retained by the Estate Trustees after the testator’s death to assist with the administration of the estate. The rationale behind the drafting lawyer being retained to assist with the administration of the estate appears fairly self-evident, for as the drafting lawyer likely has an intimate knowledge of the testator’s estate plan and assets they may be in a better position than most to assist with the administration of the estate.
While retaining the drafting lawyer to assist with the administration of the estate is fairly uncontroversial in most situations, circumstances could become more complicated if there has been a challenge to the validity of the testamentary document prepared by the drafting lawyer. If a proceeding has been commenced challenging the validity of the testamentary document, there is an extremely high likelihood that the drafting lawyer’s notes and records will be produced as evidence, and that the drafting lawyer will be called as a non-party witness as part of the discovery process. If the matter should proceed all the way to trial, there is also an extremely high likelihood that the drafting lawyer would be called as a witness at trial. As the drafting lawyer would personally have a role to play in any court process challenging the validity of the will, questions emerge regarding whether it would be proper for the drafting lawyer to continue to represent any party in the will challenge, or would doing so place the drafting lawyer in a conflict of interest?
Rule 3.4-1 of the Law Society of Ontario’s Rules of Professional Conduct provides that a lawyer shall not act or continue to act where there is a conflict of interest. In the case of a drafting lawyer representing a party in a will challenge for a will that they prepared, an argument could be raised that the drafting lawyer is in an inherent position of conflict, as the drafting lawyer may be unable to look out for the best interests of their client while at the same time looking out for their own interests when being called as a witness or producing their file. There is also the potentially awkward situation of the drafting lawyer having to call themselves as a witness, and the associated logistical quagmire of how the lawyer would put questions to themselves.
The issue of whether a drafting lawyer would be in a conflict of interest in representing a party in a will challenge was dealt with in Dale v. Prentice, 2015 ONSC 1611. In such a decision, the party challenging the validity of the will brought a motion to remove the drafting lawyer as the lawyer of record for the propounder of the will, alleging they were in a conflict of interest. The court ultimately agreed that the drafting lawyer was in a conflict of interest, and ordered that the drafting lawyer be removed as the lawyer of record. In coming to such a conclusion, the court states:
“There is a significant likelihood of a real conflict arising. Counsel for the estate is propounding a Will prepared by his office. The preparation and execution of Wills are legal services, reserved to those who are properly licensed to practise law. Counsel’s ability to objectively and independently assess the evidence will necessarily be affected by his interest in having his firm’s legal services found to have been properly provided.” [emphasis added]
Decisions such as Dale v. Prentice suggest that a lawyer may be unable to represent any party in a will challenge for a will that was prepared by their office as they may be in a conflict of interest. Should the circumstance arise where the drafting lawyer is retained to assist with the administration of the estate, and subsequent to being retained someone challenges the validity of the Will, it may be in the best interest of all parties for the drafting lawyer to indicate that they are no longer able to act in the matter due to the potential conflict, and suggest to their clients that they retain a new lawyer to represent them in the will challenge.
Thank you for reading.
As lawyers, we always have to consider whether we can act for someone before we are retained. Often, the question of whether we are in a conflict is a simple one; however, occasionally, it is more difficult to assess whether we can or more importantly, should, act for someone.
In a recent case, a Plaintiff moved to remove counsel for the Defendant due to a perceived conflict of interest (Gloger v Evans 2018 ONSC 4919).
Otillie and Jochen Gloger, whose children are the parties in this action retained a law firm, to prepare their Wills. Otillie died first and Jochen retained the law firm to prepare a survivorship application with respect to their joint property.
Jochen’s Will named both the Plaintiff and the Defendant in this matter as the Estate Trustees of his Estate and the Estate was divided equally between the Plaintiff and the Defendant.
In this action, following Jochen’s death, the Plaintiff sought to have the Defendant removed as Estate Trustee based on various allegations such as misappropriation of assets and breach of fiduciary duty.
The Defendant retained the law firm to represent her in this action. In turn, the Plaintiff alleged that the firm could not represent the Defendant because there were several conflicts of interest and more importantly, such representation would undermine public confidence in the administration of justice.
The Court considered the test set out in MacDonald Estate v Martin (1990) 3 SCR 1235, which requires that two questions be answered:
- Did the lawyer receive confidential information attributable to a solicitor client relationship relevant to the matter at hand?
- Is there a risk that it will be used to the prejudice of the client?
Because prejudice is difficult to prove, the “test must be such that the public, represented by the reasonably informed person, would be satisfied that no use of confidential information would occur…”.
Analysis and Decision
The Court held that, at its best, the Plaintiff’s evidence was that he and the Defendant initially retained the law firm but that, three days later, he retained his own lawyer. The Plaintiff never met with a lawyer at the law firm but he apparently had a telephone call with someone at the law firm while the Defendant listened in. However, he could not advise whom he spoke with, nor what that person’s occupation was. Furthermore, the Plaintiff did not sign a retainer agreement nor did he provide a retainer.
Given this evidence, the Court held that the Plaintiff did not retain the law firm and was therefore not a former client. Even if he was a former client, however, the Plaintiff stated at his cross-examination that he did not provide any confidential information to the law firm.
The Court did not believe that any confidential information provided by the Deceased, with respect to the Will which named both the Plaintiff and the Defendant as the beneficiaries and Estate Trustees of the Estate, was relevant to this action regarding trustee misconduct, given that the Will was not ambiguous, nor was there a challenge to the Will.
In making this decision, the Court also commented on the importance of the right of the client to be represented by counsel of their choice and that a flexible approach must be taken.
In light of the foregoing, the Court did not consider the second step of the test and dismissed the Plaintiff’s motion for the removal of the law firm, as the Defendant’s counsel.
This case reminds us that it is important to consider whether you should act for someone in the circumstances of each individual case. The above-noted test helps one determine whether a potential conflict of interest may arise.
Thanks for reading!
Find this blog interesting? Please consider these other related posts:
The Court of Appeal of British Columbia (the “BCCA”) recently dealt with an appeal from an Order of the British Columbia Supreme Court which declined to exercise jurisdiction by staying a petition for guardianship of an incapable person. This Order also included various terms relating to the person’s care and property.
This appeal dealt with the guardianship of Ms. Dingwall, the mother of both the Appellant and the Respondent.
At all material times, Ms. Dingwall and the Appellant lived in Alberta and the Respondent resided in British Columbia. Between 2010 and 2014, Ms. Dingwall resided for various periods in both Alberta and British Columbia. At the time of this appeal, Ms. Dingwall lived in a care home in British Columbia. She suffered from advanced dementia.
The Alberta Proceedings
On February 5, 2015, the Appellant sought an Order from the Alberta Court of Queen’s Bench appointing him as Ms. Dingwall’s guardian and trustee. The Respondent opposed this Order and in September, 2015 filed an Application to move the proceedings to British Columbia. This Application was never heard and the matter continued to be heard in Alberta.
On July 7, 2016, the Court granted the Order sought by the Appellant which appointed him as Ms. Dingwall’s guardian and provided him with the authority to make decisions with respect to Ms. Dingwall’s health care, the carrying on of any legal proceeding not related primarily to Ms. Dingwall’s financial matters and Ms. Dingwall’s personal and real property in Alberta.
The British Columbia Proceedings
A few weeks prior to the Alberta hearing, the Respondent filed a petition with the Supreme Court of British Columbia seeking a declaration that Ms. Dingwall was incapable of managing herself or her affairs due to mental infirmity and an Order appointing her as committee of Ms. Dingwall’s person and Estate. The Appellant opposed the Respondent’s petition by arguing that the Supreme Court of British Columbia lacked jurisdiction.
The Supreme Court of British Columbia asserted jurisdiction because Ms. Dingwall was at the time of the decision, ordinarily resident in British Columbia and because there was a “real and substantial” connection to British Columbia. The Court found that, in this case, both Alberta and British Columbia had jurisdiction.
Despite British Columbia having jurisdiction in this case, the Court found that the Alberta forum was nonetheless more appropriate and cited the following factors in favour of its decision:
- The similarity of the proceedings;
- Alberta having issued a final order; and
- The Respondent having attorned to Alberta’s jurisdiction by opposing the Appellant’s petition.
As a result, the Court stayed the Respondent’s petition but also made several Orders respecting Ms. Dingwall’s care and property. The parties’ costs on a “solicitor client basis” were to be payable by Ms. Dingwall’s Estate.
The Appellant appealed the following Orders made by the Court, other than the stay of the Respondent’s proceedings:
- issuing an Order on the matter after declining to exercise jurisdiction respecting it;
- finding the Court had territorial competence over the matter; and
- awarding solicitor-client costs payable from Ms. Dingwall’s Estate.
The BCCA Decision
The BCCA allowed the appeal and found that the lower Court erred in making Orders concerning the very matter over which it had declined to exercise jurisdiction. The Court noted that a decision to decline jurisdiction over a particular matter renders a judge incapable of deciding issues or making orders as to the substance of that matter.
As a result, the Court set aside the Orders respecting Ms. Dingwall’s care and property. In light of that finding, the Court of Appeal found it unnecessary to deal with the issue of whether British Columbia had territorial competence over this matter, given that the lower Court declined to exercise jurisdiction, in any event.
The Court of Appeal found that the Appellant was entitled to special costs payable by Ms. Dingwall’s Estate and that the Respondent was not entitled to costs.
The full decision can be found here: Pellerin v. Dingwall, 2018 BCCA 110
Thanks for reading.
It is commonly understood that an Attorney for Property can do anything that the grantor of the Power of Attorney could do other than make a Will. Indeed, s. 7(2) of the Substitute Decisions Act provides: “The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of the property that the grantor could do if capable, except make a will.”
In practice, “will” has been expanded to mean testamentary dispositions. Accordingly, as an example, beneficiary designations under RRSPs and life insurance policies cannot be changed by an attorney on behalf of the incapable grantor.
The unpredictable onset of incapacity can make for some unintended consequences. And the choice of attorney can create situations of inevitable conflict of interest that challenge the limitations of the statute.
An example would be a situation in which a separated but not divorced spouse is appointed under a Power of Attorney for Property. What if an application for divorce was jointly initiated by the grantor and his spouse and the grantor then becomes incapable before the divorce is finalized and before the Power of Attorney is revoked?
In such a situation, the Attorney for Property/separated spouse is in a curious predicament: on the one hand, the grantor would presumably (but not as a certainty) have wanted to complete the steps required to conclude the divorce. On the other hand, the separated spouse clearly has a competing interest: he or she would presumably financially benefit from the divorce not being finalized. To complicate matters further, if the grantor/incapable spouse chose to maintain his separated spouse as his attorney for property, he or she may been seen as wanting to trust that person to act in his or her best interests despite the conflict.
The reality is that there can be no certainty that the grantor would have as a matter of indisputable fact performed the additional steps required to conclude a divorce. While the surviving spouse in this scenario would have a conflict of interest which raises a question of whether there would be a motive to avoid concluding the divorce, it would seen that, in addition to not being able to make a Will, an Attorney for Property, could not necessarily conclude a divorce on behalf of an incapable Grantor.
There are surprisingly few cases on point. One such case is O.(M.K.) (Litigation Guardian of) v. C.(M.E.) in which the British Columbia Supreme Court decided against allowing a Divorce to proceed at the behest of a Committee for an incapable husband where the Court found, on a balance of probabilities, that no intention to divorce had been demonstrated before the incapacity.
Of course, it is a nice question as to whether intent to separate is the same as intent to divorce….
Thanks for reading,
Conflict occurs in many (if not most) families, so it’s no surprise that it often creeps into estate disputes when a close family member dies as well. No family is immune. Many people who encounter family estate disputes and litigation previously thought that a messy inheritance battle would never happen to them.
There can be many potential causes of estate conflict and estate litigation. These include:
- Questions about the validity of the will or other testamentary documents
- Unequal division of property amongst beneficiaries
- Issues relating to surviving family members who were financially dependent upon the deceased; and
- Disagreements about how the deceased’s assets were managed by an attorney for property or guardian during his or her lifetime.
And disputes aren’t always about a valuable asset or a significant sum of money – it can be about whether the deceased is buried or cremated, how a memorial service is carried out, or some other disagreement based on preference or principle.
While complete conflict avoidance is unrealistic for many families, a better focus is on conflict management – taking steps to minimize the impact of conflict and helping ensure a smooth estate settlement. Here are a couple of steps that can help minimize or manage family conflict.
Choose your executor with care
Selecting the right executor to fulfill your wishes completely and accurately can go a long way towards mitigating any possible family squabbles. It’s a big job. The executor is required to locate testamentary documents, plan the funeral, probate the will (if necessary), collect and secure assets, pay debts, attend to any necessary tax filings, and, eventually, distribute the assets of the estate. You want someone with not only a personal connection but also the financial acumen to be effective in their role. You also want someone who:
- understands the circumstances that can lead to conflict
- can keep emotions out of the mix, and
- not get caught up in any related family conflict.
Even if a dispute arises, keep the line of communication open to clarify positions and enhance the understanding of the source of the dispute. An open dialogue – ideally with the help of a good executor – can go a long way to preventing a dispute from escalating and to ultimately resolving it.
Of course, the ideal time for good family communications is during the estate planning process, while the testator is still alive. This article outlines some key steps: http://www.primewealth.ca/e-newsletter/2017/2017-04/article-3.htm. Meeting with family members during the planning process allows the testator to clearly express his or her wishes, but, just as importantly, gives them a chance to listen to the wishes of others. In this way, potential problems can be identified, and, where possible, resolved. This is especially important if it’s known that siblings don’t get along, or there are children from a prior relationship.
Thank you for reading … Have a great day.
The Law Society of Upper Canada recently released an e-Bulletin that outlines recent amendments to our Rules of Professional Conduct with respect to conflicts of interest.
Like the changes made to the Rules of Professional Conduct in late 2014, some of which dealt exclusively with practice involving wills and estates, these amendments are in part based on the Model Code of Professional Conduct, which was created by the Federation of Law Societies of Canada in 2011 to assist in implementing consistent professional standards throughout the country in light of increased lawyer mobility from province to province.
The new conflict of interest rules expand upon the changes implemented to reflect the terms of the Model Code, and introduce a reference to the 2013 decision of the Supreme Court of Canada in Canadian National Railway Co. v. McKercher LLP. This decision and the commentary added under Rules 3.4-1 and 3.4-2 refer to a “bright line rule”. While its scope in respect of conflicts of interest is suggested to be limited, the bright line rule can apply to unrelated work done by a lawyer for two clients if the advancement of one client’s interests are adverse to the immediate legal interests of another client. Even a “substantial risk of impairment” of the representation of a current client is noted to give rise to a conflict. In cases where there is actual impairment (rather than the mere risk of same), client consent to act in light of the conflict does not allow a lawyer to act.
The Report of Convocation with respect to these amendments indicates that the Rules of Professional Conduct were amended to provide lawyers in Ontario with further guidance in recognizing and dealing with conflicts of interest through the additional commentary. While the amendments to the rules themselves are relatively minor, all lawyers, including estate practitioners, should make themselves familiar with them and review the relevant commentary when faced with situations of potential conflict.
Further changes to the Model Code of Professional Conduct have now also been proposed to address obligations of a lawyer who leaves one law firm to work elsewhere. Only time will tell whether these proposed amendments to the Model Code ultimately make it into our Law Society’s Rules of Professional Conduct.
Thank you for reading.
One would be forgiven if at first instance they did not see any connection between Justin Trudeau’s recent selection of his cabinet and trust law. While most of the attention has been placed on the background of the new appointees, and of their immediate tasks at hand, there is a (however small) connection to the trust world, as many of the newly appointed Ministers and their staff are rushing to place their assets into blind trusts.
At its most simple, a blind trust can be thought of an individual relinquishing control over their assets, and providing them to a trustee to manage them on their behalf. The trustee has complete discretion over how to invest the individual’s assets, with the beneficiary being provided with no information regarding how the investments are being held, and the beneficiary having no say in how the funds are managed. As the beneficiary has no idea what their funds are invested in, the theory is that they would not be inclined to enact government policy which would favour their own investments, and that they would be able to avoid a conflict of interest.
In accordance with the federal Conflict of Interest Act, a “reporting public office holder”, which is defined as including a Minister of the Crown, a “ministerial adviser”, as well as a member of the “ministerial staff” who works on average 15 hours or more a week, must within 120 days of their appointment either sell all “controlled assets” in an arm’s length transaction, or place such assets into a blind trust. Any assets which are placed into a blind trust have annual reporting requirements, with the trustee having to file an annual report to the Conflict of Interest and Ethics Commissioner regarding the ongoing management of the blind trust.
In the context of the recent federal election, the most attention was placed on the recently elected Toronto Centre MP, Bill Morneau, who was appointed as Minister of Finance. As Mr. Morneau himself reportedly has a stock portfolio in excess of $30 million, and with his appointment as Minister of Finance would have a significant influence and impact upon the financial sector, some attention was paid to the transition of his investment portfolio likely into a blind trust. Justin Trudeau himself previously moved his own investments into a blind trust following his appointment as leader of the Liberal Party in 2013.
Being an executor is a lot of work and a job that can be trying at times, particularly where disputes arise among the beneficiaries and/or the deceased’s family members in relation to the assets of the estate.
If you are appointed an executor and you do not wish to act, you may execute a Form 74.11 “deed of renunciation” through which you may effectively give up the rights and responsibilities that come along with the role. This form of renunciation, however, is generally only available before any steps have been taken by the executor to administer the estate or apply for probate. A named executor, who has taken active steps to administer an estate and/or apply for probate will, in most cases, be required to apply to the Court to be removed. Upon such application, the Court may order that he or she complete the job.
This is precisely what occurred in the recent case, Dueck v. Chaplin. The facts of that case are as follows:
Prior to his death, the deceased executed a Last Will and Testament that named his solicitor and his sister as the executors of his estate, and his children and his sister’s children as the beneficiaries of his estate.
The deceased had executed a prior Will many years earlier, in which he had named his wife as both the executor and sole residuary beneficiary of his estate.
At the time of his death the deceased was estranged from but still legally married to his wife, with whom he had been in the midst of contentious litigation regarding the division of their assets and custody of their children.
Following the deceased’s death, the deceased’s solicitor and the deceased’s sister, being the executors named under the deceased’s Last Will, began the process of gathering the deceased’s assets and paying the deceased’s outstanding liabilities. They also filed an Application for probate.
The deceased’s wife subsequently filed a Notice of Objection challenging the validity of the deceased’s Last Will.
Both the deceased’s solicitor and the deceased’s sister sought to renounce from their role of executor on the basis that they were conflicted given their involvement in the drafting and execution of the deceased’s Last Will. (The deceased’s solicitor had met with the deceased and had drafted the deceased’s Last Will, and the deceased’s sister had accompanied the deceased to his various meetings with the solicitor.)
Upon hearing the case, the Honorable Justice Goodman referred to paragraph 66 of the decision of the Ontario Court of Appeal in the Estate of Herbert Washington Chambers, deceased, 2013 ONCA 511 in which Justice Gillese stated:
Renunciation is generally not available if a party has already “intermeddled” with the estate. Intermeddling is the term used to describe the acts of a person who deals with an estate without having been formally recognized as the estate trustee. As Kennedy J. explained, “while executors may renounce at any time, (a right which is usually exercised before applying to probate) the courts have been reluctant to allow an executor to renounce after having intermeddled in the estate, or after having applied for probate”: Stordy v. McGregor (1986), 42 Man. R. (2d) 237 (Q.B.), at para. 9. Even a slight act of intermeddling with a deceased’s assets may preclude an executor from afterwards renouncing: see Cummins v. Cummins (1845), 8 I. Eq. R. 723 (Ch.), at pp. 737-38.
Following this precedent, Justice Goodman found that the executors’ intermeddling precluded them from renouncing, and that they were in fact the most appropriate individuals to propound the Last Will given their involvement in the drafting and execution of the testamentary document.
Thank you for reading.
Ian Hull and Laura Betts
One day, when I was about 7 years old, my brother offered me a quarter, the caveat being that I would have to earn the quarter by running around the perimeter of the house, outside, in my bare feet. This would not have been so much of a barrier had it not been the middle of winter, and had the snow not reached the height of my kneecaps. Alas, my head spun with the possibilities… Dubble Bubble? Popeye cigarettes? Dip-N-Stix? Desperate times called for desperate measures, and with little hesitation, off came the shoes, off came the socks, and I burst out the front door and started the most hellacious sprint of my short life. I can’t adequately describe the searing pain that shot up both legs the moment my feet hit that snow. I tripped on the root of the overgrown euonymus bush on the side of the house and tumbled face-first into the snow, so now I was thoroughly frozen, but I got to my feet and kept my eye on the ball, or quarter, in this case, and continued around the house to complete my feat. My heart was pounding (early hypothermia?) but I was just so pleased with my accomplishment, and even more excited that I was well on my way to financial freedom. I heaved on the front door handle with the last smidgen of energy in my body, thinking only of the quarter that awaited inside.
The front door was locked.
As I stood on the front porch, eyes wide with terror, I could hear my brother laughing hysterically on the other side.
Flash forward to last week, when this CNN (online) headline caught my eye: “Siblings Still Pushing Your Buttons?”. The article’s author, Jane Isay, has written two books: "Mom Still Likes You Best: The Unfinished Business Between Siblings," and "Walking on Eggshells: Navigating the Delicate Relationship between Adult Children and Parents". [Frankly, I’m surprised I wasn’t contacted for either of these, but that’s an aside…]. Ms. Isay suggests that we reframe our historical experiences with our siblings in an attempt to achieve a new perspective, and even reconciliation.
As I scanned through the comments below the CNN article, I admit to being deeply comforted by the camaraderie of picked-on siblings out there. To the guy whose sister used to trick him into playing “Houdini” and would then tie him to the kitchen chair and leave him like that for a couple of hours while she went out to play, I raise my glass and say a hearty thank you for sharing your angst. Perhaps we can get a group rate on therapy….
Jennifer Hartman, Guest Blogger
Listen to Passing of Accounts
This week on Hull on Estates, Diane Vieira and Craig Vander Zee talk about how to avoid conflict during the passing of accounts.
Comments? Send us an email at firstname.lastname@example.org, call us on the comment line at 206-350-6636 or visit our blog at http://estatelaw.hullandhull.com.