Month: March 2021

Lawyer Negligence Explained

Tellini v Grewal and Bell Alliance 2021 BCS549 discussed the standard of care upon a lawyer who for negligence.

The law is clear with respect to the standard of care required :

A leading case is Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147 at paras. 58 and 59 [Central Trust]:

1. A solicitor is required to bring reasonable care, skill and knowledge to the performance of the professional service which he has undertaken. See Hett v. Pun Pong (1890), 18 S.C.R. 290 at 292 (S.C.C.). The requisite standard of care has been variously referred to as that of the reasonably competent solicitor ( lawyer), the ordinary competent solicitor and the ordinary prudent solicitor.

2. A solicitor is not required to know all the law applicable to the performance of a particular legal service, in the sense that he must carry it around with him as part of his “working knowledge”, without the need of further research, but he must have a sufficient knowledge of the fundamental issues or principles of law applicable to the particular work he has undertaken to enable him to perceive the need to ascertain the law on relevant points.

3. “An attorney is expected to possess knowledge of those plain and elementary principles of law which are commonly known by well informed attorneys, and to discover those additional rules of law which, although not commonly known, may readily be found by standard research techniques.

The law with respect to the standard of care required of lawyers was discussed in in Newton v. Marzban, 2008 BCSC 328 at paras. 605-609 [Newton].

At para. 605 she referred to Millican v. Tiffin Holdings Ltd. (1964), 49 D.L.R. (2d) 216 at 219 (Atla. T.D.), aff’d [1967] S.C.R 183 for this list of a lawyer’s obligations:

(1) To be skilful and careful.
(2) To advise his client on all matters relevant to his retainer, so far as may be reasonably necessary.
(3) To protect the interests of his client.
(4) To carry out his instructions by all proper means.
(5) To consult with his client on all questions of doubt which do not fall within the express or implied discretion left to him.
(6) To keep his client informed to such an extent as may be reasonably necessary, according to the same criteria.

Millican referred at paras. 607 and 608 to the lawyer’s duty to inform a client of all relevant matters, and to warn of risks that accompany a proposed course of action, relying on Girardet v. Crease & Co. (1987), 11 B.C.L.R. (2d) 361 (S.C.)

Fiduciary Obligations of a Power of Attorney

Sarzynick v Skwarchuk 2021 BCSC 443 discussed the fiduciary obligations that an ad hoc fiduciary attorney under a power of attorney would owe in equity that have largely been codified in the Power of Attorney Act, R.S.B.C. 1996, c.370 (“PAA”):

For example, s. 19(1) of the PAA now mandates that an attorney must “act honestly and in good faith” and “exercise the care, diligence and skill of a reasonably prudent person”.

Moreover, s. 19(1)(d) requires that an attorney “keep prescribed records and produce the prescribed records for inspection and copying at the request of the adult.”
An attorney is required to act in the “adult’s best interest’s” when managing and making decisions about the adult’s financial affairs: PAA, s. 19(2).

Finally, pursuant to s. 19(4) of the PAA, an attorney must keep their own property separate from the donor’s property.

In a similar vein, the Power of Attorney Regulation, B.C. Reg. 20/2011 (“Regulation”) imposes further obligations on attorneys.

Section 2(1) mandates that an attorney acting under an enduring power “must make a reasonable effort to determine the adult’s property and liabilities as of the date on which the attorney first exercises authority on the adult’s behalf” and “maintain a list of that property and those liabilities.”

Further record keeping obligations are imposed under s. 2(2) of the Regulation, which provides as follows:

(2) An attorney acting under an enduring power of attorney must keep the following records in relation to the period for which the attorney is acting:
(a) a current list of the adult’s property and liabilities, including an estimate of their value if it is reasonable to do so;
(b) accounts and other records respecting the exercise of the attorney’s authority under the enduring power of attorney;
(c) all invoices, bank statements and other records necessary to create full accounts respecting the receipt or disbursement, on behalf of the adult, of capital or income.

In short, the Regulation imposes fairly robust record keeping obligations on those acting under an enduring power of atto
The standard of care for an attorney, which has now been codified under s. 19(1) of PAA, was well-established in the case law by 2008.

For example, in Andreasen v. Daniels-Ferrie, 2001 BCSC 1503 at para. 27, the requisite standard of care for a fiduciary acting under a power of attorney was described as follows:
even where the attorney acts gratuitously he or she has a duty to account, to exercise reasonable care as would a typically prudent person managing his or her own affairs, and not act contrary to the interests of the donor.

Principles of Contract Interpretation

Principles of Contractual Interpretation

The goal is to ascertain the objective intentions of the parties
A practical, common sense approach is required;
The court is to look to the contract as a whole and give effect to all provisions (i.e., provisions should not be read as standing alone but in light of the contract as a whole);
Words used must be given their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time;
Contextual evidence must not be permitted to overwhelm the wording of the agreement);
Contractual provisions should be interpreted in the context of the objective intention of the parties as evidenced by the contract as a whole;
It should be presumed that the parties meant what they said in the contract; and
The contract’s interpretation should accord with sound commercial principles and good business sense. It is important to consider the purpose and nature of the relationship established by the contract,

(Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53).

Courts seek to discover what the parties intended, not what a court thinks reasonable.

In determining the intention of the parties, and where appropriate, the court has the ability to imply terms even if the parties did not put them in writing. A term cannot be implied simply on the ground of fairness. There has to be strong evidence to support the conclusion that the implication of a term is permissible in the circumstances: Fridman, G.H.L., The Law of Contract in Canada, 6th Ed. (Toronto: Thomson Reuters, 2011) at 463–64.

Ultimately, a term can be implied into a contract in one of three general scenarios:

Where custom and usage necessitates the implication of the term;
Where a term is necessary to give business efficacy to a contract by implying terms that the parties would have obviously assumed; and
Where the proposed term is implied by law;

(see M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 at 634–635 [M.J.B.]; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 at 1009–1010, per McLachlin J., as she then was; Union Road Properties Ltd. v. British Columbia, 2019 BCCA 302 at para. 18).

[ In considering whether certain terms of a settlement contract were implied, the court will look at the settlement discussions and the documentation and correspondence in the context of normal business and common sense: Urban Handyman Inc. v. Should I stay or Should I Go West Productions Inc., 2015 BCSC 1780 at para. 56, quoting Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.).

When considering whether an implied term is necessary, the court must not slip into a determination of the intention of reasonable parties; the term must have “a certain degree of obviousness to it” that the actual parties would have intended at the time of contract formation: M.J.B., at 635; Illidge v. Sona Resources Corporation, 2019 BCCA 89 at para 23, quoting Moulton Contract Ltd. v. British Columbia, 2015 BCCA 89 at paras. 55, 58.

Fiduciary Relationships: Ad Hoc and Per Se

At the highest level of generality, a fiduciary must act with utmost loyalty, good faith, and in the best interests of the person over whom they exercise discretion or control: Galambos v. Perez, 2009 SCC 48 at para. 69.

As a result of these obligations, a fiduciary exercising a power of attorney cannot act for their own personal benefit or use property under their power for their own gain: Zeligs v. Janes, 2016 BCCA 280 at para. 86; S

A fiduciary attorney must account for assets under their power and all proceeds generated from those assets.

Sarzynick v Skwarchuk 2021 BCSC 443 discussed how the existence of a fiduciary relationship can arise in one of two ways:

First, there are per se fiduciaries that come from certain established classes of relationships. In Public Service of Canada v. Canada (Attorney General), 2012 SCC 71 at para. 115, the list of per se fiduciary relationships include: trustee-cestui que trust, executor-beneficiary, solicitor-client, agent-principal, director-corporation, guardian-ward, and parent-child.

Second, there are ad hoc fiduciary relationships that, while not falling within the established categories of per se fiduciaries, nevertheless give rise to fiduciary obligations in the circumstances.

The test for establishing an ad hoc fiduciary relationship has gone through several iterations over the years. It was most recently reformulated in Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 at para. 36 and clarified in Professional Institute, at para. 128.

The party seeking to establish the existence of an ad hoc fiduciary relationship must show:

(i) An undertaking by the alleged fiduciary to act in the best interest of the alleged beneficiary or beneficiaries;
(ii) A defined person or class of persons who is/are vulnerable to the fiduciary in that the fiduciary has a discretionary power over them; and
(iii) A legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control.

Not every breach of duty equates with a breach of a fiduciary duty: Girardet v. Crease & Co. (1987), 11 B.C.L.R. (2d) 361 at 362 (S.C.). As Justice Harris aptly summarized, a breach of fiduciary duty typically “captures circumstances in which there is a breach of the duty of loyalty owed by the fiduciary and includes circumstances involving acting in the face of a conflict, preferring a personal interest, taking a secret profit, acting dishonestly or in bad faith, or a variety of similar or related circumstances”: Meng Estate v. Liem, 2019 BCCA 127 at para. 35.

Equity Demands “Clean Hands”

The equity demands “clean hands” doctrine was discussed in Wang v. Wang, 2020 BCCA 15.

The clean hands doctrine decrees that “[h]e who comes to equity must come with clean hands”: Mayer v. Mayer, 2012 BCCA 77.

The doctrine is narrowly applied, however, and does not entitle a court to canvass all aspects of the party’s behaviour known to the court. Its use must be kept to the circle of behaviour related to the relief sought.

In DeJesus v. Sharif, 2010 BCCA 121 at para. 85 the court stated:

“The maxim … must not be taken too widely; ‘Equity does not demand that its suitors shall have led blameless lives.’ What bars the claim is not a general depravity but one which has ‘an immediate and necessary relation to the equity sued for,’ and is not balanced by any mitigating factors.”

The Principles of Equitable Remedies, 6th ed. (UK: Sweet & Maxwell, 2001) at 169-170:

… it must be shown, in order to justify a refusal of relief, that there is such an “immediate and necessary relation” between the relief sought and the delinquent behaviour in question that it would be unjust to grant that particular relief. …

So it was once emphasized “that general fraudulent conduct signifies nothing; that general dishonesty of purpose signifies nothing; that attempts to overreach go for nothing; that an intention and design to deceive may go for nothing, unless all this dishonesty of purpose, all this fraud, all this intention and design, can be connected with the particular transaction, and not only connected with the particular transaction, but must be made to be the very ground upon which the transaction took place, and must have given rise to this contract”.

BC Contested Estates-Wills Variance: The Ten Considerations

Trevor Todd and Jackson Todd have over sixty years combined experience in handling contested estates, including the wills variation provisions of WESA.

The leading case Tataryn v Tataryn (1994) 2 SCR 807 clarified that most people would agree that an adult independent child is entitled to such consideration as the size of the estate and the testator’s other obligations may allow, after he for after firstly satisfying any legal obligations owed to a spouse or dependent children.

The court recognized that while the moral claim of an independent adult child may be more tenuous, a large body of case law existed that suggested that if the size of the estate, permitted and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made in an estate.

The court was clear that the testator’s will should only be interfered with to the extent necessary to meet the testator’s legal and moral obligations and also that so long as the testator has chosen an option which is within the range of appropriate options for dividing his or her estate, the will should not be disturbed.

The two leading cases on the summary of overriding principles the courts will consider and a wills variation claim are Clucas estate (1999) 25 ETR 175 at para. 12 and later McBride v Voth 2010 BCSC 443 at paras 129-142.

Subsequently in Dundsdon v Dunsdon 2012 BCSC 1274 at para. 234 the court identified the following 10 considerations as those which have been accepted, in the post Tataryn era, as informing the existence and strength of a testator’s moral duty to independent children:

The relationship between the testator and the claimant, including abandonment, neglect and estrangement by one or the other;
The size of the estate;
The contributions if any, by the claimant;
Any reasonably held expectations to inherit of the claimant;
The standard of living of the testator and the claimant;
Gifts and bequests made by the testator outside of the will or previously by inter vivos gifts;
The testator’s reasons for any disinheritance;
The financial need another personal circumstances, including disability of the claimant;
Any misconduct or poor character of the claimant;
Competing claimants and other beneficiaries.

Promissory Estoppel 2021

Khela v Clarke 2021 BCSC 752 examined the criteria for a claim of promissory estoppel.

The law is clear that the doctrine of promissory operates in the context of an existing legal relationship between the parties: Illingworth v. Evergreen Medicinal Supply Inc., 2018 BCCA 444 [Illingworth]; Ecobase Enterprises Inc. v. Mass Enterprise Inc., 2017 BCCA 29 [Ecobase]; Remington Energy Ltd. v. British Columbia Hydro & Power Authority, 2005 BCCA 191, [Remington]; Kahle v. Ritter, 2002 BCSC 199 [Kahle].

The legal test for promissory estoppel was set out in Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50 at 57. The party relying on the doctrine must establish:

a) that the other party has, by words or conduct, made a promise that was intended to affect the parties’ legal relationship;
b) that, in reliance on the promise, the promisee has acted or in some way changed his or her position; and
c) allowing the promisor to insist on their strict legal rights between the parties would be unfair.

As set out in Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50 at 57, a party seeking to rely on promissory estoppel must establish four elements:

1. an existing legal relationship;
2. a promise or assurance made by the other party and intended to affect their legal relationship;
3. reliance on the promise or assurance; and
4. a change in position to the party’s detriment.

It is clear that in Canada, there must be a pre-existing legal relationship between parties for an estoppel to arise: Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50, 80 D.L.R. (4th) 652 at para. 13.

Fundamentally, promissory estoppel is a matter of contract law. As stated by G.H.L. Fridman in The Law of Contract in Canada, 4th ed. (Scarborough: Carswell, 1999) at p. 134:

The only true function of this doctrine is to affect existing contractual rights, not to manufacture contracts out of such ‘promises’ or ‘representations’ … this use of estoppel can be made only to affect accrued or inchoate rights, not to produce contractual relations where the essential ingredients of a contract, such as consideration or a clear and ascertained agreement as to terms, are lacking.

When Did Spouses Separate

Liapis v Keshaw 2021 BCSC 502 dealt with the issue of when did spouses separate.

It is common in family and estate litigation for parties to dispute:

– Was there a spousal relationship
– – if so, when did it begin
– – when did it end

Section 8(3) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) provides:

8(3)(a) spouses shall be deemed to have lived separate and apart for any period during which they lived apart and either of them had the intention to live separate and apart from the other;
In Nearing v. Sauer, 2015 BCSC 58, the Court reviewed the factors regarding the determination of a separation date in light of the wording of the Divorce Act:

It is clear that a meeting of the minds on the intention to separate is not required. A physical separation, combined with one party’s intention to live separate and apart, is sufficient: Dhillon v. Dhillon, [1998] B.C.J. No. 823 (C.A.).

The case law also requires that the spouse who wishes to separate take action consistent with that intention.

The respondent relies on the case of J.L.L. v. G.A.L., 2010 MBQB 39, at para. 4, where the court quoted with approval these comments from Field v. McLaren, 2009 MBQB 118:

Certainly I accept it is settled law that the intention of one party to separate may be sufficient to sever the relationship. Judged objectively though there must be evidence that an intention to separate was not only held, but was communicated to the other party and acted upon.
The person desiring to separate must act in a way consistent with an intention to separate.

In Sachdeva v. Sachdeva, 2013 BCSC 313 relying primarily on Rose v. Guiguet, 2008 BCSC 1225, where the court looked at both the husband’s intention to live separate and apart and his actions.

Typically when the parties dispute the date of separation, the court’s analysis focuses on the generally accepted characteristics of marriage including the intention to remain married, having sexual involvement, carrying on activities in public, sharing financial resources and sharing significant family events: Sachdeva at para. 87.

The court will also consider a range of other factors, including a clear statement by one of the parties of his or her desire to terminate the relationship. Sexual involvement, or lack thereof, is not conclusive: Newth v. Booth, 2011 BCSC 317 at para. 17.

Nearing was cited with approval in S.A.H. v. I.B.L., 2018 BCSC 544, where the Court summarized the considerations:

As is evident from the case authorities, the determination of the parties’ date of separation is a very fact specific exercise.

Note the following questions, framed in the form of a test, useful to determining the date of separation here:

1. Did at least one spouse have the intention to separate?
2. Was the intention to separate communicated to the other spouse?
3. Was the intention to separate acted upon? In other words, using generally accepted characteristics of marriage, did one or both spouses take action that is consistent with the separation, such as:

a. changing how they behaved with each other in public; and
b. changing how they behaved with each other in private.

Trustee Must Follow Terms of Trust

A trustee is obliged to follow the terms of the trust – McLeod v. McLeod, 2011 BCSC 1942.

The trustee is obliged to follow the terms of the trust. The principle is so basic that it does not need authority; however, it is described succinctly in Merrill Petroleum Ltd. v. Seaboard Oil Co. (1957), 22 W.W.R. 529 at 557 (Alta. S.C.):

… While it is also true that there are certain general obligations imposed by law on any trustee (e.g., the duty not to profit from the trust at the expense of the beneficiaries) the more specific obligations and duties of a trustee are set forth in the instrument creating the trust – in other words, except for those general duties imposed by law on all trustees, the terms of a trust are to be found within the four corners of the trust instrument. … In other words, the first duty of this trustee (as of all trustees) was to follow implicitly the terms of the trust instrument, and, secondly, to observe those general principles of trustee law which did not run counter to the express terms of the trust.

Where the text of the trust instrument is not ambiguous, it is inappropriate to consider surrounding facts and circumstances.

The settlor’s intention is to be discerned primarily from the text of the trust instrument: TLC The Land Conservancy of British Columbia v. The University of British Columbia, 2014 BCCA 473 at paras. 45–47;

A trustee’s exercise of wide discretion under the express terms of a trust will rarely be interfered with by a court.

Court Intervention

There are grounds that may justify the court’s interference in the exercise of a trustee’s discretion.

The court may interfere in the exercise of discretion by a trustee where:

a) the decision is so unreasonable that no honest or fair dealing trustee could have come to that decision;
b) the trustees have taken into account considerations which are irrelevant to the discretionary decision they had to make; or
c) the trustees, in having done nothing, cannot show that they gave proper consideration to whether they ought to exercise the discretion.

(Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed (Toronto: Carswell, 2012))

These situations have long been recognized as appropriate circumstances for court intervention: Boe v. Alexander (1987), 41 D.L.R. (4th) 520 at paras. 20–21 (B.C.C.A.);

An example of a trustee’s extraneous consideration is a consideration that is not concerned with the welfare or benefit of the beneficiary of the trust, but with something else, such as disapproval of the beneficiary’s choice of spouse for racial or religious reasons

Litigation Funding vs Lawyer Privilege

The issue of litigation funding and lawyer privilege became a public news issue during the trial Hulk Hogan vs Gawker when it became known that Peter Thiel had secretly funded the litigation as revenge against Gawker for a personal exposé.

The litigation was very expensive and Hogan ultimately won such a large award that Gawker was put out of business.

Throughout various stages in the litigation the defendant tried to expose who was ultimately paying for the litigation, but it was held to be privileged.

The same issue arose in Galloway v AB BCSC 320 where the defendants sought an order that the plaintiff answer questions about whether a third-party was financing the plaintiff’s litigation.

The plaintiff argued that retainer agreements are privileged, including whether or not those arrangements involve any third party.

The defendants in turn argued that there was jurisprudence that required a person to reveal whether a third-party was paying their legal fees and that it was not a breach of solicitor client privilege.

They relied upon Adams v Norcan Energy Resources 1999 ABQB 84. The court stated that solicitor client privilege applies to communications, facts that exist independent of a communication may be disclosed in certain circumstances. The source of payment of legal fees is such a fact.

But in Telus v . Telecommunications Workers Union 2008 BCCA 144 the court stated that it is rare for the court to direct inquiries to counsel as to who is funding the litigation, including costs. In most cases that will be confidential, if not privileged information of no concern to the court. There may be many reasons why a nonparty might pay or assist.

The court in the Galloway decision declined to order disclosure of who is paying for the litigation, as the jurisprudence cautions against diving too deeply into the balancing test; whether there is an apparent imbalance in economic power, or any other area. If the court does so, all sides, including the very public “Go Fund Me” campaigns that the plaintiff contends that some of the defendants have used to raise money, would need to be examined.

The court held that any concern over financial advantage or disadvantage arises when a large corporate entity, or perhaps a union, is pitted against a private citizen, but is not intended to create an avenue of inquiry where individual citizens are facing other individual citizens.