Special Costs Not to Include Pre Litigation Conduct

Special Costs Not to Include Pre Litigation Conduct

The BC Appeal court in Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA  extensively reviewed the law relating to an award of special costs and held that reprehensible pre litigation conduct should not be included when a judge exercises his or her discretion  as to award or not award special costs.

The court stated that oppressive or reprehensible conduct by a party in pre litigation might instead be awarded punitive damages, but any costs award for such behaviour should be limited to during the course of the litigation and not before.

Special costs are typically awarded when there has been some form of reprehensible conduct on the part of one of the parties: Young v. Young [1993] 4 SCR 3 at 134–138. Special costs are not compensatory; they are punitive: Grewal v. Sandhu, 2012 BCCA 26 at para. 106. They are awarded when a court seeks to disassociate itself from some misconduct: Fullerton v. Matsqui (District) (1992), 74 B.C.L.R. (2d) 311 (C.A.) at para. 23. There are circumstances where special costs may be ordered where there has been no wrongdoing: Gichuru v. Smith, 2014 BCCA 414 at para. 90. These reasons are not concerned with such types of cases.

[57]         The leading authority on special costs is this Court’s decision in Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 B.C.L.R. (3d) 242 (C.A.). There, Mr. Justice Lambert, writing for the Court, set out that the threshold for special cost awards is “reprehensible conduct”. He noted the continuum of circumstances in which special costs could be awarded, ranging from “milder forms of misconduct deserving of reproof or rebuke” to “scandalous or outrageous conduct”:

[17]      Having regard to the terminology adopted by Madam Justice McLachlin in Young v. Young, to the terminology adopted by Mr. Justice Cumming in Fullerton v. Matsqui,  and to the application of the standard of “reprehensible conduct” by Chief Justice Esson in Leung v. Leungin awarding special costs in circumstances where he had explicitly found that the conduct in question was neither scandalous nor outrageous, but could only be categorized as one of the “milder forms of misconduct” which could simply be said to be “deserving of reproof or rebuke”, it is my opinion that the single standard for the awarding of special costs is that the conduct in question properly be categorized as “reprehensible”. As Chief Justice Esson said in Leung v. Leung, the word reprehensible is a word of wide meaning. It encompasses scandalous or outrageous conduct but it also encompasses milder forms of misconduct deserving of reproof or rebuke. Accordingly, the standard represented by the word reprehensible, taken in that sense, must represent a general and all encompassing expression of the applicable standard for the award of special costs.

[100]    At the outset, it is important to emphasize that in exercising the power to fix costs a judge cannot act arbitrarily or capriciously. He or she must act in a manner consistent with the Rules and the principles that have long governed such awards. In Stiles v. B.C. (W.C.B) (1989), 38 B.C.L.R. (2d) 307 (C.A.) at 310, Lambert J.A. articulated the limits on a judge’s power to award costs:
…Generally, the decisions on costs, including both whether to award costs, and, if awarded, how to calculate them, are decisions governed by a wide measure of discretion. See Oasis Hotel Ltd. v. Zurich Insurance Co. (1981), 28 B.C.L.R. 230, [1981] 5 W.W.R. 24, 21 C.P.C. 260, [1982] I.L.R. 1-1459, 124 D.L.R. (3d) 455 (C.A.). The discretion must be exercised judicially, i.e. not arbitrarily or capriciously. And, as I have said, it must be exercised consistently with the Rules of Court. But it would be a sorry result if like cases were not decided in like ways with respect to costs. So, by judicial comity, principles have developed which guide the exercise of the discretion of a judge with respect to costs. Those principles should be consistently applied; if a judge declines to apply them, without a reason for doing so, he may be considered to have acted arbitrarily or capriciously and not judicially.
[Emphasis added in [131]     As has been set out in many authorities reviewed here, pre-litigation conduct that gives rise to a cause of action will already be the subject of a damage award flowing from the objectionable conduct. Where a party’s misconduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency, an award of punitive damages may also follow. Whiten provides a principled structured framework for such awards.

[132]     Special costs are an inherently unsatisfactory mechanism to punish pre-litigation conduct. Special costs are intended to punish reprehensible conduct which as per Garcia includes scandalous or outrageous conduct as well as milder forms of misconduct deserving of reproof or rebuke. The case law has considered a range of pre-litigation conduct, including breach of contract, negligence, breach of fiduciary duty, fraud, misappropriation, deceit, sexual assault, failure to follow a constitutionally mandated process and murder. All such conduct could be said to be deserving of rebuke.

[133]     Attempting to draw the line on a principled basis as to what pre-litigation conduct should be sanctioned by special costs and which should not is, as amply demonstrated by the case law, a near impossible task. It is also an unnecessary task as the law already provides appropriate relief and remedies for such conduct. In my respectful opinion, special costs should only be awarded to punish reprehensible conduct in the litigation.

[134]     In the result, I am of the view that a bright line can and should be drawn so that judges will be able to exercise their discretion in like cases in a like manner. Special costs should be reserved to punish and deter reprehensible conduct in the course of litigation. Pre-litigation conduct should not be considered in determining whether such an award is appropriate. There are other suitable mechanisms to censure pre-litigation conduct.

APPLICATION OF THE BRIGHT LINE RULE

[135]     It is clear from the trial judge’s reasons that special costs were awarded in this case because of the pre-litigation conduct. That conduct was the central issue in the trial. It is the basis of RCV’s claim for loss of opportunity. I note in his costs reasons the trial judge stated that RCV did not claim punitive damages and in the circumstances of this case, it could not have done so. While it is true that RCV did not seek punitive damages, I am not aware of any reason why it could not have done so.

[136]     For the reasons I have set out, pre-litigation conduct should not have been considered in determining the cost award. I thus find the trial judge erred in principle. In the result, I would allow the appeal and set aside the award of special costs. RCV is entitled to the costs of the trial on a party and party basis. The Appellants are entitled to the costs of the appeal.

Prohibiting Lawyer From Acting

Prohibiting Lawyer From Acting

Rubin Estate v Rubin Estate 2017 ONSC 1404  dealt with an application of prohibiting Lawyer from acting for her siblings and mother who were being sued by one daughter.

The lawyer in question had previously given US tax advise on a ” no names basis” and the court found that this did not warrant sufficient grounds to prohibit the lawyer from acting as counsel.

2. Lawyers can be prohibited from acting against a person where:

a. the lawyer has received relevant confidential information from the person attributable to a lawyer client relationship; and

b. there is a risk that the lawyer will use the person’s confidential information to the prejudice of the person.

Ontario v. Chartis Insurance Co. of Canada, 2017 ONCA 59 (Ont. C.A.) (CanLII) at para.33.

In the leading Supreme Court of Canada case on this topic, MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 (S.C.C.), Mr. Justice Sopinka adverted to this very issue.

In discussing the need to protect the client’s confidentiality during a motion to remove opposing counsel, Sopinka J. held that clients cannot be required to prove that their former lawyer had confidential information because “[i]n order to explore the matter in depth may require the very confidential information for which protection is sought to be revealed.”

To avoid this conundrum, the Supreme Court of Canada created a rule under which all that a former client needs to do is to show that there was a previous relationship between the client and the lawyer related to the lawyer’s current, adverse retainer, and the court will then infer that confidential information was imparted to the lawyer by the former client unless the lawyer proves otherwise.

Moreover, if the lawyer wants to try to prove that no confidential information was disclosed to him or her, the lawyer’s burden “must be discharged without revealing the specifics of the privileged communication.” See MacDonald Estate at pp. 1260 and 1261.

 Accordingly, I do not have to assess whether a lawyer who receives information on a “no names” basis has a duty akin to a law firm marketing its services to a potential client as discussed in Ainsworth Electric Co. v. Alcatel Canada Wire Inc., 1998 CarswellOnt 2162 (Ont. Master).

Nor do I have to try to balance the applicant’s right to a lawyer of her choosing against the respondents’ right to protection of their confidences in a solicitor client relationship. In light of the disclosure of the email, there is no more confidential information in the hands of the applicant’s firm and therefore there is no risk of the applicant’s lawyer illicitly using any confidential information in his firm’s possession.

Damage Assessments on Appeal

Damage Assessments on Appeal

“An appellate court will not interfere with a trial judge’s assessment of damages unless he or she erred in principle of law, misapprehended the evidence, failed to consider relevant factors or considered irrelevant factors, or there was no evidence on which the judge could have reached his or her conclusion: Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58 at para. 80.  

An award is inordinately low if it falls substantially below the range for damage awards in the same class of case, such that it demonstrates palpable and overriding error: Cory v. Marsh (1993), 77 B.C.L.R. (2d) 248 (C.A.); Le v. Luz, 2003 BCCA 640.”

As stated by the Supreme Court of Canada in the Naylor Group v Ellis-Don case stated:

It is common ground that the Court of Appeal was not entitled to substitute its own view of a proper award unless it could be shown that the trial judge had made an error of principle of law, or misapprehended the evidence (Lang v. Pollard, [1957] S.C.R. 858, at p. 862), or it could be shown there was no evidence on which the trial judge could have reached his or her conclusion (Woelk v. Halvorson, [1980] 2 S.C.R. 430, at p. 435), or the trial judge failed to consider relevant factors in the assessment of damages, or considered irrelevant factors, or otherwise, in the result, made “a palpably incorrect” or “wholly erroneous” assessment of the damages (Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229, at p. 235; Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705, at p. 810; Widrig v. Strazer, [1964] S.C.R. 376, at pp. 388-89; Woelk, supra, at pp. 435-37; Waddams, supra, at para. 13.420; and H. D. Pitch and R. M. Snyder, Damages for Breach of Contract (2nd ed. 1989) 15§5).  Where one or more of these conditions are met, however, the appellate court is obliged to interfere. 

Civil Conspiracy

Civil Conspiracy

Klaus v. Hamilton, 2015 BCSC 2386 involved a claimant who sued alleging he was a spouse of the deceased, for a variance of her will and for damages for civil conspiracy for alleging he was not a spouse.

The tort of civil conspiracy has two branches (Cement LaFarge v, B.C. Lightweight Aggregate, [1983] 1 S.C.R. 452] at 471-472):

  1. whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants’ conduct is to cause injury to the plaintiff; or
  2. where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result[.]

[31]         Mr. Klaus asserts that the defendants conspired to harm him personally, emotionally and financially.

[32]         There is limited evidence to support a claim of conspiracy. At most, there is some evidence that Ms. Hamilton prepared the notices ending tenancy and requests that Mr. Klaus leave the New Westminster apartment by March 31, 2009. There is also some evidence that Ms. Hamilton asked the staff of the Fleetwood Manor to prevent Mr. Klaus from seeing Ethel Colley. The three defendants attended at the apartment building to provide the notices to Mr. Klaus.

[33]         I cannot conclude that any of these constitutes a conspiracy as that is contemplated by the law.

Abuse of Process in BC Estate Litigation

Special Costs Not to Include Pre Litigation Conduct

Many estate litigation claims and counterclaims contain far too much emotional distortion so as to become frivolous, vexatious, unnecessary and otherwise an abuse of process that upon application, may lead to those portions of the claim found to be such to be stricken or dismissed entirely.

In Wotherspoon v Steele 2016 BCSC 818, the plaintiffs believed that all matters between themselves and their defendant brother had been resolved at mediation.

The defendant subsequently  balked on carrying through with the settlement and filed a specious counterclaim that the court struck completely on the basis that it was without legal foundation and an abuse of process.

28      The test for striking a pleading under R. 9-5(1)(b), on the basis that it is unnecessary, scandalous, frivolous or vexatious, was recently summarized in Willow v. Chong, 2013 BCSC 1083 (B.C. S.C.), where Madam Justice Fisher said:

[20] Under Rule 9-5(1)(b), a pleading is unnecessary or vexatious if it does not go to establishing the plaintiff’s cause of action, if it does not advance any claim known in law, where it is obvious that an action cannot succeed, or where it would serve no useful purpose and would be a waste of the court’s time and public resources: Citizens for Foreign Aid Reform Inc. v Canadian Jewish Congress, [1999] BCJ No. 2160 (SC); Skender v Farley, 2007 BCCA 629 …

29      The abuse of process standard under R. 9-5(1)(d) allows the court to prevent a claim from proceeding where to do so would violate principles of judicial economy, consistency, finality and the integrity of the administration of justice: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (S.C.C.) at paras. 35-37.

Adverse Inference

Adverse Inference

Bronson v Hewitt 2010 BCSC 169 reviewed the law of adverse inference, which probably is not utilized as much by counsel as they could.

It typically arises when a key witness who would normally be expected to testify, does not.

Adverse Inference

[323] The plaintiffs submit that the court should draw an adverse inference against both Eugene and Howard from Eugene’s failure to testify at trial. They submit that given Eugene’s role in these proceedings, his evidence is crucial in regard to several matters at issue. In support of their submission, they cite Sopinka, S.N. Lederman and A.W. Bryant, The Law of Evidence in Canada, 2d ed. (Toronto: Butterworths, 1999) where the authors state at 297:

In civil cases, an unfavourable inference can be drawn when, in the absence of an explanation, a party litigant does not testify, or fails to provide affidavit evidence on an application, or fails to call a witness who would have knowledge of the facts and would be assumed to be willing to assist that party. In the same vein, an adverse inference may be drawn against a party who does not call a material witness over whom he or she has exclusive control and does not explain it away. Such failure amounts to an implied admission that the evidence of the absent witness would be contrary to the party’s case, or at least would not support it.

[324] The defendants submit that such an inference should not be drawn in this case. Mr. Dives on behalf of Eugene notes that Eugene is not simply a witness, but also a party and, more importantly, a defendant in a case in which the plaintiff bears the burden of proof. He submits that a defendant is entitled to say: “you have not made out your case so there is nothing to answer.” He submits that the plaintiffs’ submission is an attempt to shift the burden of proof by making the defendant respond to matters that the plaintiffs have not proved.

[325] In R. v. Jolivet, 2000 SCC 29, [2000] 1 S.C.R. 751, the court at paras. 25-28

reviewed the principles governing the drawing of adverse inferences:

25. The general rule developed in civil cases respecting adverse inferences from failure to tender a witness goes back at least to Blatch v. Archer (1774), 1 Cowp. 63, 98 E.R. 969, where, at p. 65, Lord Mansfield stated:

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

26. The principle applies in criminal cases, but with due regard to the division of responsibilities between the Crown and the defence, as explained below. It is subject to many conditions. The party against whom the adverse inference is sought may, for example, give a satisfactory explanation for the failure to call the witness as explained in R. v. Rooke (1988), 40 C.C.C. (3d) 484 (B.C.C.A.), at p. 513, quoting Wigmore on Evidence (Chadbourn rev. 1979), vol. 2, at para. 290:

In any event, the party affected by the inference may of course explain it away by showing circumstances which otherwise account for his failure to produce the witness. There should be no limitation upon this right to explain, except that the trial judge is to be satisfied that the circumstances thus offered would, in ordinary logic and experience, furnish a plausible reason for nonproduction. [Italics in original; underlining added.]

27. The party in question may have no special access to the potential witness. On the other hand, the “missing proof” may lie in the “peculiar power” of the party against whom the adverse inference is sought to be drawn: Graves v. United States, 150 U.S. 118 (1893), at p. 121. In the latter case there is a stronger basis for an adverse inference.

28. One must also be precise about the exact nature of the “adverse inference” sought to be drawn. In J. Sopinka, S. N. Lederman and A. W. Bryant, The Law of Evidence in Canada (2nd ed. 1999), at p. 297, para. 6.321, it is pointed out that the failure to call evidence may, depending on the circumstances, amount “to an implied admission that the evidence of the absent witness would be contrary to the party’s case, or at least would not support it” (emphasis added), as stated in the civil case of Murray v. Saskatoon, [1952] 2 D.L.R. 499 (Sask. C.A.), at p. 506. The circumstances in which trial counsel decide not to call a particular witness may restrict the nature of the appropriate “adverse inference”. Experienced trial lawyers will often decide against calling an available witness because the point has been adequately covered by another witness, or an honest witness has a poor demeanour, or other factors unrelated to the truth of the testimony. Other jurisdictions also recognize that in many cases the most that can be inferred is that the testimony would not have been helpful to a party, not necessarily that it would have been adverse: United States v. Hines, 470 F 2d 225 (3rd Cir. 1972), at p. 230, certiorari denied, 410 U.S. 968 96 (1973); and the Australian cases of Duke Group Ltd. (in Liquidation) v. Pilmer & Ors, [1998] A.S.O.U. 6529 (QL), and O’Donnell v. Reichard, [1975] V.R. 916 (S.C.), at p. 929.

[326] In this case, counsel for both Eugene and Howard offered explanations for their decision not to call Eugene. Mr. Dives advised that Eugene was not called because, in his view, there was no case to meet. Further, he says the expenses involved in bringing Eugene from Florida to testify at the trial would have been significant. He did not suggest, however, that Eugene’s attendance was financially impossible.

[327] Mr. Harris, on behalf of Howard, further advised that he had no special access to Eugene as a witness and had no way of compelling his attendance. He does not suggest, however, that Eugene would have refused to testify on Howard’s behalf if asked.

[328] Both Mr. Dives and Mr. Harris note that Eugene was extensively examined for discovery and the nature of his evidence is known to the plaintiffs. They submit that if the plaintiffs thought that Eugene’s evidence would be of assistance to them they should have taken steps to compel his attendance pursuant to the adverse witness rule (Rule 40(17)).

[329] As noted by Saunders J.A. in Buksh v. Miles, 2008 BCCA 318 at para. 30, 83 B.C.L.R. (4th) 162, the notion of adverse inference is related to the best evidence rule. The inference should only be drawn in regard to the non-production of witnesses whose testimony would be superior in respect of the facts to be proved.

Consolidation of Court Actions

Consolidation of Court Actions
 It is not uncommon that two estate cases are commenced at the same time that relate to the same estate, and in such situations an order is often made for consolidation of the court actions or alternatively, that they be heard at the same time by the same judge.
THE  LAW
Rule 22-5(8) of the Supreme Court Civil Rules provides:
Consolidation
(8) Proceedings may be consolidated at any time by order of the court or may be ordered to be tried at the same time or on the same day.
In The Owners, Strata Plan BCS 2854 v. Travelers Guarantee, 2013 BCSC 2428, Mr. Justice Steeves discussed the factors to be considered:
[14] It is well established in the authorities that I have a broad discretion under this Rule. As well, a number of previous cases have discussed consolidation applications. In these there appear to be acceptance of the following factors that should be considered:
• Whether there is a common question of law and fact. That is an important factor, but not the only one:
• Avoidance of multiplicity of proceedings.
• Savings of time and expense.
• Inconvenience to parties.
• Whether one action is at a more advanced stage.
• Whether an order results in delay of trial and so prejudice to one party; and
• Avoidance of inconsistent results.
This is from Merritt v. Imasco, [1992] B.C.J. No. 160, Shah v. Bakken (1996), 20 B.C.L.R. (3rd) 393, and ICBC v. Sam (1998), 24 C.P.C. (4th) 338.
Paragraph 37 from the Globalnet Management Solutions Inc. v. Aviva Insurance Company of Canada, 2013 BCSC 829, decision:
[37] Master Joyce held the issue is not to be determined solely on the basis of the commonality of issues, although that is described as important, and the first factor to be considered, but that after finding commonality the court should look at factors which were enumerated as follows:
(1) Will the order sought create a saving in pretrial procedures, (in particular, pre-trial conferences)?
(2) Will there be a real reduction in the number of trial days taken up by the trials being heard at the same time?
(3) What is the potential for a party to be seriously inconvenienced by being required to attend a trial in which that party may have only a marginal interest?
(4) Will there be a real saving in experts’ time and witness fees?
(5) Is one of the actions at a more advanced stage than the other?
(6) Will the order result a delay of the trial of one of the actions?
(7) If so, does any prejudice which a party may suffer as a result of that delay outweigh the potential benefits which a combined trial might otherwise have?
[16] A broad summary of my role under an application for consolidation is set out at paragraph 39 of Globalnet (citing Master Keighley in Sohal Estate v. Argitos, 2010 BCSC 916, para. 22) and that is: will the order to consolidate make sense in the circumstances?

Lawyer Solicitor Client Privilege

Lawyer Solicitor Client Privilege

With very rare exceptions, a lawyer must never disclose communications or instructions between the lawyer and the client without the express permission of the client, as such communications are protected by solicitor client privilege. The privilege continues after death and is assumed by the executor or administrator of the estate.

Lawyers are the only profession that cannot be compelled to breach this privilege either by court order or interrogation. Other professions and institutional  records are routinely ordered by the court to be produced in litigation but it is relatively rare that a lawyers file will be compelled to be produced unless the privilege has been waived by conduct or consent has been provided.

The law relating to solicitor and client privilege is well known and set forward clearly in Smith v. Bell, [1968] S.C.R. 664 at 671:

It is rather astounding that Mr. Schreiber should be subpoenaed to give evidence on behalf of the defendants as against his former clients and that he should produce his complete file including many memoranda and other material all of which were privileged as against the plaintiffs and whether the plaintiffs’ counsel objected or not that he should be permitted to so testify and so produce without the consent of the plaintiffs being requested and obtained.

Lord Chancellor Eldon said, in Beer v. Ward (1821), Jacob 77, 37 E.R. 779, at p. 80:

…it would be the duty of any Court to stop him if he was about to disclose confidential matters…the Court knows the privilege of the client, and it must be taken for granted that the attorney will act rightly, and claim that privilege; or that if he does not, the Court will make him claim it.

Because the solicitor owes to his former client a duty to claim the privilege when applicable, it is improper for him not to claim it without showing that it has been properly waived. Especially is this so when, as here, the circumstances are such as to make it most unlikely that a waiver would be given. Also, because it is improper to induce a breach of duty, I have serious doubts about the propriety of putting to a solicitor questions that involve the disclosure of confidential information without first bringing in evidence of a proper waiver. In any case, because the client’s privilege is a duty owed to the Court, no objection ought to be necessary and the evidence in violation of the privilege should not be received.

Solicitor Client Privilege and the Will File

Solicitor Client Privilege Upheld By Highest Court

Solicitor client privilege and the will file can often end up in a tug of war between the executor upholding a claim of privilege after the death of the estate deceased, and beneficiaries who want to see the lawyers notes and other file contents of the same deceased.

The decision of Chang v. Lai Estate 2014 BCSC 128 discusses these competing principles in the context of the advice re a   wills variation action was also in the same file as advice and documentation relating to the administration of the estate.

The court held that solicitor client privilege should apply where the beneficiaries are in an adversarial relationship with the executor. Solicitor client privilege will remain in place to preserve the confidentiality of those communications. There must be a joint for common interest before the court will entertain disclosing such communications, as otherwise they will remain privileged.

[16] 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. The advice taken by the executrix is for the benefit of all beneficiaries under the will. There is no need to protect solicitor-client communications from disclosure because the beneficiaries and the executrix have a joint interest in the advice: Re Ballard Estate at p. 354. The same principle applies to legal opinions the executrix obtains regarding the proper administration of the estate. No solicitor-client privilege applies because the legal opinion sought by the executrix was to further the interests of the beneficiaries under the will: Re Ballard Estate at p. 354.

[17]         The beneficiary is not, however, entitled to production of all communications between legal counsel and the executrix. Where there is an adversarial relationship between a trustee and a beneficiary, there is no “joint interest” that compels disclosure of communications that would normally be protected by solicitor-client privilege. As Lederman J. says in Re Ballard Estate at p. 354:

… there is no need to protect the solicitor-client communication from disclosure to those very persons who are claiming under the estate. The communications remain privileged as against third parties who are strangers or are in conflict with the estate, but as was stated in Stewart v. Walker, supra, not those who are claiming under the estate. And that is because the trustee and beneficiary have a joint interest…

[18]         The requirement for a joint or commonality of interest was recognized in MacPherson, where Humphries J. says at para. 18:

Both sides cited cases which stand for the same basic proposition:  A beneficiary has a proprietary interest in and is entitled to production of documents relating to advice sought and obtained by a trustee in connection with the administration or management of, for instance, a pension plan, or an estate (see Froese v. Montreal Trust Co. of Canada [1993] B.C.J. No. 1529 (S.C.), aff’d [1993] B.C.J. No. 1847 (C.A.); Re Ballard Estate [1994] O.J. No. 2281 (Gen. Div.); Cooke et al v. Canada Trust  (Van. Reg. No. S011763, October 22, 2004; leave to appeal granted); Merritt v. Imasco Enterprise Inc. [1992] B.C.J. No. 2011; Thomas v. Secretary of State for India in Council (1870) 18 W.R. 312 (Ch.)), but not to documents that arise in the course of an adversarial relationship between the trustee and beneficiary.

[19]         There are clearly conflicting principles in this case. On the one hand, it is of the utmost importance to protect solicitor-client communications from disclosure. The law has consistently upheld the confidential nature of such communications and strictly construed the circumstances that may be regarded as an implicit waiver of the privilege. On the other hand, the beneficiaries of a trust are entitled to production of documents that fall broadly within the category of administration of the estate.

[20]         Balancing these conflicting principles, I find that the issue in this case must be resolved in favour of the plaintiffs. The underlying basis for exempting from solicitor-client privilege those documents that relate to advice sought in connection with the administration of the estate is the joint or common interest of the trustee and the beneficiary. It follows that where the beneficiary is in an adversarial relationship with the executrix, solicitor-client privilege remains in place to preserve the confidentiality of those communications. In this case the defendants do not have a common or joint interest with the plaintiffs regarding the wills variation action. Their interests are clearly in conflict due to the variation of the will sought by the plaintiffs. Thus legal advice sought and received for that purpose remains privileged.

[21]         Furthermore, the fact that the plaintiffs retained the same legal counsel to act for them in regard to the wills variation action and the administration of the estate does not amount to a waiver of solicitor-client privilege. Regardless of whether Mr. Takahashi was in a conflict of interest position (and in light of the practice in estate law this is questionable), the plaintiffs cannot be taken to have waived solicitor-client privilege because he acted in both capacities. The fact that Mr. Takahashi kept the same file for both the wills variation litigation and the administration of the estate is unfortunate; however, it does not evidence a waiver of solicitor-client privilege by his clients qua plaintiffs in the wills variation action.

[22]         For these reasons, I dismiss the defendants’ application for production of the remaining documents from Mr. Takahashi’s file”

 

Estoppel By Convention

estoppel

Estoppel By Convention.

The Supreme Court of Canada has set out the criteria as to what establishes estoppel by convention in Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53. In paragraphs 53 and 54, the Court sets out how the forms of estoppel have been established in law.

 

An estoppel by convention,  is an estoppel by representation of fact, a promissory estoppel or a proprietary estoppel, in which the relevant proposition is established, not by representation or promise by one party to another, but by mutual, express or implicit, assent. This form of estoppel is founded, not on a representation made by a representor and believed by a representee, but on an agreed statement of facts, or law, the truth of which has been assumed, by convention of the parties, as a basis of their relationship. When the parties have so acted in their relationship upon the agreed assumption that the given state of facts or law is to be accepted between them as true, that it would be unfair on one for the other to resile from the agreed assumption, then he will be entitled to relief against the other according to whether the estoppel is as to a matter of fact, or promissory, and/or proprietary.

 

57      The Court, then, in para. 59, said that the following criteria form the basis of the doctrine of estoppel by convention:

 

(1) The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly).

(2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legal position.

(3) It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position.

 

58      With respect to estoppel by representation, the Supreme Court of Canada’s decision in Canadian Superior Oil Ltd. v. Hambly, [1970] S.C.R. 932, [1970] S.C.J. No. 48, which set out in para. 19, the factors giving rise to estoppel.

They are:

(1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part the person to whom the presentation is made;

(2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made;

(3) Detriment to such person as a consequence of the act of omission.

 

59      It is to be noted, however, that estoppel by representation cannot arise from silence unless a legal duty is owed by the representor to the representee to make the disclosure. See: Ryan v. Moore, 2005 SCC 38at para. 76.

 

62      Blake therefore accepted the terms of the Wills and acted upon those terms, not just once but 4 times, when he sold the house, sold the California condo, took the art he wanted, and divided various household goods and personal effects, and signed the corporate documents. Thus, all the parties involved took steps based on the shared assumption that the Wills were valid. Their mutual conduct shows this. Blake was silent about litigating anything in connection with the Wills until September 2013, although his lawyer had contacted the Estate Trustees in early February 2012. The Estate Trustees acted in reliance of this shared assumption, paid the taxes, and did not apply for an Income Tax Clearance Certificate, as there were still unadministered corporate assets to be divided between Blake and Cody under the Wills.

 

63      Blake should not be allowed now to resile from all of the actions he took during the two-year period after Eleanor’s death. As Mr. Justice Brown said, in Lawless, supra, a prospective litigant cannot wait until he or she determines that a claim is winnable or viable.

 

64      Blake’s conduct, in my view, induced the Estate Trustees to continue the administration of the Estate, since they had no legal document to show that Blake was in any way objecting. They organized the payment to CRA to stop any penalties and interest from running on the amount owing. They placed themselves in a precarious position, not knowing that Blake would later want Orders removing them as Estate Trustees, accusing them of improper conduct and accusing Ms. Rintoul of negligence. They took a course of making distributions to Blake out of the Estate before receiving an Income Tax Clearance Certificate, for which they possibly could be personally liable.

65      In Hayes v. Montreal Trust Co., 1977 CarswellBC 69 (B.C.S.C.), the Court said in para.8, that a plaintiff:

… accepted what was done and co-operated with the executor for over a year in administering the estate in according with the will to the point where all legacies have been paid, the life interest has terminated and all that remains is distribution to the residual beneficiaries.

 

66      Blake took no steps until September 2013 to challenge the Will. He co-operated with the Estate Trustees in administering the Estate for over 2 years to the point where all that remains to be done is to divide the residue between him and Cody, which he now opposes.

 

67      In my view, whether one says that Blake is estopped from taking the position he now has by estoppel by convention or estoppel by representation, he falls within both categories, given the facts of this case. Blake had counsel in February 2012, who stated there was an issue regarding Eleanor’s capacity to make the 2011 Wills but never took the legal step to go forward with any challenge. Is this silence? Did Blake receive legal advice that he should or should not move forward? The fact remains that nothing happened and the administration of the Estate continued in legal silence until the Application was finally made.