A lawyer was sued for negligence in allegedly failing to ensure that a will was not procured by undue influence or as a result of the testator’s lack of testamentary capacity. On examination for discovery, the lawyer was asked to advise as to texts or other secondary sources that the lawyer regarded as authoritative regarding the drafting of wills, and to advise as to whether the lawyer was aware of any cases (primary sources) that indicated that the lawyer was not required to document evidence of testamentary capacity.
The lawyer refused to answer those questions. The plaintiff brought a motion to compel the lawyer to answer. Must the lawyer answer those questions?
In Marshall v. Jackson, the motions master ordered the lawyer to answer the questions. On appeal, reported at 2021 ONSC 2361, the court held that the questions need not be answered.
The appeal judge held that it was trite law that a party cannot function as his or her own expert. By ordering the questions to be answered, the master in effect required a fact witness to research and deliver a legal opinion, which was contrary to a first principle of the law of evidence. Citing the Supreme Court of Canada, the appeal judge stated that “it is for the [trier of fact] to form opinions, and draw inferences and conclusions, and not for the witness”. The questions, it was held, went beyond asking the defendant for his or her general understanding of the steps he or she should have taken to ascertain testamentary capacity, but required that the lawyer research primary and secondary sources of law in an effort to provide support for legal reasoning going to the standard of care.
A third question was also refused: whether the defendant “understood that he was obliged to ensure that all available means were utilized to ascertain testamentary capacity”. The defendant submitted that the question was too broad to be answerable. Would “all available means” include hiring a team of psychiatrists to evaluate the testator’s capacity? The appeal judge held that while the defendant’s counsel may have a point, the fact that the question was excessively broad did not make it unanswerable. “Indeed, the very absurdity of the literal meaning of the question makes it an easy one to answer.” Presumably, the answer will be “No”.
Next question, counsel?
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Solicitors preparing Wills need to be mindful of the obligations they owe to a testator. The seminal Court of Appeal decision in Hall v Bennett Estate provides a helpful refresher of the steps a solicitor should consider to ensure best practices are followed.
According to the Court, it is well established that a “solicitor who undertakes to prepare a will has the duty to use reasonable skill, care and competence in carrying out the testator’s intentions. This duty includes the obligation to inquire into and substantiate the testator’s capacity to make a will”.
Testing for capacity is fundamental – a solicitor has a duty to make inquiries into the testamentary capacity of the testator.
Should the solicitor have any doubt as to capacity, Justice Cullity in Scott v Cousins, famously states that “…careful solicitors who are in doubt on the question of capacity, will not play God – or even judge – and will supervise the execution of the will while taking, and retaining, comprehensive notes of their observations on the question”.
The Court of Appeal proceeds to summarize an article written by M.M. Litman & G.B. Robertson outlining errors made by solicitors in the preparation of a Will, leading to negligence claims, including failing to:
- obtain a mental status examination;
- interview the testator in sufficient depth;
- properly record or maintain notes; and
- test for capacity.
As such, notes from a drafting solicitor should ensure that all of these are addressed.
In certain instances, although narrow, a duty of care might also be owed to a disappointed beneficiary. A two part test is applied as set out by the Supreme Court of Canada in Cooper v. Hobart.
While claims for negligence by testators and disappointed beneficiaries cannot be stopped, a file with detailed notes can go a long way in defending such a claim.
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As a professional, one is never pleased to hear of a colleague being found liable in negligence. However, there are always lessons to be learned.
Ozerdinc Family Trust v. Gowling Lafleur Henderson LLP is unfortunately an example of a case where, apparently, a simple failure to account for the deemed disposition date of trust assets resulted in an avoidable tax liability. While the defendant solicitors admitted acting below the standard of care in failing to inform the plaintiffs respecting the date and consequences of the deemed disposition of the capital assets of the trust, liability was resisted on the theory that the mistake didn’t cause the loss as the plaintiffs/trustees had retained accountants who, the plaintiffs pleaded, should have been tracking and reporting on the deemed disposition date. The point was determined in a motion for summary judgment which was decided in favour of the plaintiffs; the mistake was sufficiently causative on its own.
What can one learn? It seems reasonable that the culprit here is faulty communication given that the firm and lawyers involved were of adequate experience and expertise to meet the applicable standard of care. As LawPro reminds us, mistakes are easy to make and standardized reporting systems help to avoid such errors.
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The passing of accounts process can provide beneficiaries with an insight into how an estate and/or trust has been administered, with the revelations not always being good. In response to being served with an Application to pass accounts, allegations will often be brought forward by the beneficiaries that, as a result of the actions or inactions of the trustee, the beneficiaries have suffered damages, and they will be looking to the trustee to compensate them for such damages. If such damages go beyond a mere reduction of a trustee’s compensation, the question which often emerges is whether the passing of accounts is the correct forum for the beneficiaries to seek such damages against the trustee, or if a separate proceeding is required.
Section 49(3) of the Estates Act provides the court with the authority to adjudicate issues of negligence and/or breach of trust as part of the passing of accounts process, providing:
“The judge, on passing any accounts under this section, has power to inquire into any complaint or claim by any person interested in the taking of the accounts of misconduct, neglect, or default on the part of the executor, administrator or trustee occasioning financial loss to the estate or trust fund, and the judge, on proof of such claim, may order the executor, administrator or trustee, to pay such sum by way of damages or otherwise as the judge considers proper and just to the estate or trust fund, but any order made under this subsection is subject to appeal.”
While section 49(3) of the Estates Act does provide the court with the authority to hear such issues as part of the passing of accounts process, section 49(4) of the Estates Act provides the Judge with the discretion to have such issues heard by way of separate trial of an issue, providing:
“The judge may order the trial of an issue of any complaint or claim under subsection (3), and in such case the judge shall make all necessary directions as to pleadings, production of documents, discovery and otherwise in connection with the issue.”
In determining whether such allegations should be directed to a separate trial of an issue, or heard as part of the passing of accounts process, the Ontario Court of Appeal in Simone v. Chiefetz provides the following commentary:
“While there is statutory authority for awarding damages for “misconduct, neglect or default” by a trustee on the passing of accounts (Estates Act, s. 49(3)), it is rare for the court to permit the parties to litigate a substantial claim for damages for breach of a trustee’s duties through the medium of an audit. As Professor Waters states: “… the courts prefer to see beneficiaries bring breach of trust actions for reinstatement of loss to the trust, rather than that a breach allegation be fought out through the medium of a remuneration hearing.“ [emphasis added]
Simply put, the Court of Appeal states that while section 49(3) of the Estates Act provides the court with the authority to hear such claims as part of the Application to pass accounts, that in the event that the claim being brought forward is a substantial claim, that the court prefers that such issues be directed to a separate trial of an issue in accordance with section 49(4) of the Estates Act.
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A common area of complaint stems from an allegation that the executor or trustee was negligent in his or her efforts to administer the assets of an estate or trust. For a comprehensive discussion of the personal liability of trustees, see Maurice C. Cullity, Q.C., "Personal Liability of Trustees and Rights of Indemnification", (1996) 16 E.T.J. 115.
Generally speaking, most claims or objections to accounts arise out of what is perceived by beneficiaries to be negligence or failure on the part of the executor or trustee to maintain a proper standard of care and skill in his or her office. The most common complaints arise out of the following situations:
- investments by the executor or trustee which are not authorized by the will or by the law;
- the failure to provide a proper mix of investments so as to balance competing interests, such as life interests as opposed to remainder interests;
- the negligent or improper investment by the executor or trustee in investments of a speculative nature;
- an executor or trustee can be held liable for not maintaining the value of assets, such as a residence, by effecting proper repairs and would be liable for such neglect;
- executors or trustees must be extremely careful to make sure that all proper considerations are taken into account in making elections under the Income Tax Act, so as to avoid any criticism by the beneficiaries;
- care must be taken by an executor or trustee to ensure that prompt filings of returns are made and that penalties and interest payable on late filings are not incurred; and
- while trustees are seldom culpable for what are perceived by beneficiaries to be unnecessary delays, care must be taken to ensure that damages are not in fact incurred by the beneficiaries by reason of delays caused by inattention.