Last week we considered the application of solicitor/client privilege to a deceased testator and their testamentary intentions. A further consideration in examining the passing of solicitor/client privilege upon death is whether the individual claiming privilege is a trustee, executor, or a beneficiary.
Trustees, executors, and beneficiaries are generally regarded as having a community of interest, which may entitle them to solicitor/client privilege. Under the common law, there is not a need to protect communications between solicitors and clients from disclosure to persons who are claiming under the estate where the executor (or trustee) and beneficiary have a joint interest in the advice. The common interest/joint interest provision applies so that no privilege will attach to communications between a solicitor and client against a person who has a joint interest with the client in the subject matter of the communication. There can be no privilege asserted against beneficiaries of a trust over communications between a trustee and a trustee’s solicitors regarding the business and affairs of the trust.
Re Ballard Estate, (1994), 20 OR (3d) 189 (Ont. Gen. Div.), held that documents will be said to belong to a beneficiary because the solicitor was engaged and giving advice in regard to the administration of the estate and for the benefit of all beneficiaries who take or may take under the will or trust.
Pursuant to paragraph 16 of Chang v Lai Estate, 2014 BCSC 128, “it is well established that a beneficiary has a proprietary interest in and a right to production of any document relating to advice sought and obtained by an executrix or trustee in connection with the administration of an estate. The executrix cannot claim solicitor/client privilege over such documents because they have a commonality of interest with the beneficiaries in the administration of the estate.” As such, the advice taken by a trustee or an executor is for the benefit of all beneficiaries of the will, establishing a joint interest between the executrix and beneficiaries.
The aforementioned case further highlighted that a beneficiary is not entitled to the production of all communications between legal counsel and an executor. If there is an adversarial relationship between a trustee and a beneficiary, there is no joint interest that would compel disclosure of communications that would normally be protected by solicitor/client privilege. Where a beneficiary is in an adversarial relationship with the executor, solicitor/client privilege would appear to remain in place to preserve confidentiality
Moreover, if litigation is commenced against a third party on behalf of the trust, the trustee cannot generally claim privilege as against the beneficiary, as the beneficiary has an interest in the outcome of the litigation. However, pursuant to the case of Talbot v Marshfield , if a trustee is in litigation against a beneficiary, and especially if the trustee is paying their own legal costs, the trustee can generally uphold privilege as against the beneficiary.
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Settlement privilege excludes communications made in furtherance of settlement from the record. Settlement is a fundamental component of our trial system for trite reasons. Virtually every litigation proceeding has a parallel settlement component that the court does not and usually ought not to see, until after the main proceeding.
In Re Hallman Estate, the applicant had filed an affidavit including a letter that was a settlement offer from respondent trustees. The letter was marked "Without Prejudice". The trustees brought a motion to expunge that part of the affidavit. The applicant asserted that the trustees had impliedly waived settlement privilege by relying on the letter in exercising their discetion when, at a trustees’ meeting, they had discussed the letter then refused to pay trust income to the applicant, and later disclosed the minutes of the meeting to the applicant. Also, the trustees sent a letter to the applicant’s counsel noting that the letter had been discussed and offering to provide redacted minutes. The issue was whether this constituted implied waiver.
No waiver was found. Settlement privilege can be waived expressly or by implication. A clear intention is not always necessary. The privilege can be waived by conduct (waiver by implication), even in the absence of intention, and one situation where this occurs is where fairness requires it (for instance, taking a position inconsistent with the maintenance of privilege).
But here, it was the applicant asserting the waiver who first filed the Minutes referencing the letter, not the trustees relying on the privilege. Second, the communication to the applicant’s lawyer of the reliance on the letter constituted confirmation of non-waiver, not the opposite. Finally, there was no evidence the trustees actually did rely on the letter to exercise their discretion as trustees, only that they had discussed the applicant’s lack of reply to the letter during the meeting. On this final point, the decision does not unequivocably state that such reliance would have been sufficient.
The onus for proving waiver of the privilege rests with the party asserting the waiver, but that should not prevent litigants from fastidiously maintaining the privilege (as the trustees did in this case).
Have a great week,
Christopher M.B. Graham – Click here for more information on Chris Graham.
On Tuesday of this week, I blogged on s.35.1 of the Substitute Decisions Act. This section of the Act provides that a guardian of property for an incapable person has an obligation to preserve property that is subject to a specific legacy in the incapable person’s Will unless that property must be used to fund the needs of the incapable person. As I noted, litigation can ensue on the death of the incapable person if a disappointed beneficiary is not in receipt of his or her legacy. The disappointed beneficiary must demonstrate that the guardian knew or ought to have known the contents of the incapable person’s Will. While the Act itself provides an imperative in this regard, it is not at all clear what other evidence would be admissible. Specifically, the notes and records of the solicitor who drew the incapable person’s Will may shed some light on whether the guardian knew of the contents of the Will. The question, of course, is whether such solicitor’s notes are privileged.
In a conventional will challenge, little thought is given to the potentially sticky issue of privilege. Indeed, solicitor’s notes and records are produced as a matter of course when the validity of a Will is challenged. But when the notes are sought, not to challenge the Will but, rather, to establish the knowledge of someone other than the testator as to the contents of the Will, it is not at all clear whether privilege would be waived by the Court.
As a corollary to the entitlement of a beneficiary under a Will to make enquiry under s.35.1, a recent decision which Megan Connolly blogged on supports the obligation of a guardian (who is also an estate trustee) to account to such beneficiaries.
David M. Smith
When an irresistable force meets an immovable object, we appeal to the Supreme Court of Canada.
In Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, the force is the Personal Information Protection of Electronic Documents Act ("PIPEDA") and the object is solicitor-client privilege. Section 12 of PIPEDA grants the Privacy Commissioner express statutory power to compel a person to produce any records that the Privacy Commissioner considers necessary to investigate a complaint “in the same manner and to the same extent as a superior court of record”. The issue in Blood Tribe was whether this conferred a right of access to documents protected by solicitor-client privilege. The Court held unanimously that the broad grant did not contain the requisite specific express authority to override privilege.
The Court stated the rule that "general words of a statutory grant of authority to an office holder such as an ombudsperson or a regulator do not confer a right to access solicitor-client documents, even for the limited purpose of determining whether the privilege is properly claimed. That role is reserved to the courts. Express words are necessary to permit a regulator or other statutory official to “pierce” the privilege."
The Court also noted that "while the solicitor-client privilege may have started life as a rule of evidence, it is now unquestionably a rule of substance applicable to all interactions between a client and his or her lawyer when the lawyer is engaged in providing legal advice or otherwise acting as a lawyer rather than as a business counsellor or in some other non-legal capacity."
Speaking of the Supreme Court of Canada, the law you’re looking for just might be in the "unreported judgments" section of the Supreme Court’s user-friendly website. How does a Supreme Court decision go unreported?
Have a great day,
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