What is a Discretionary Trust?

What is a Discretionary Trust?

The BC Court of Appeal in Putzki v Saunders 2016 BCCA 344 examined the nature of a family property trust and discussed what is a discretionary trust.

A discretionary trust is commonly used in estate planning often  when dealing with infants, disabled people on a government pension, spendthrifts and mentally challenged people of all sorts. The simple idea is that someone else who is neutral and competent manages the assets/ monies held in the trust for the benefit of the beneficiary, typically by paying the interest and some capital from time to time when necessary.

Underhill and Hayton: Law of Trusts and Trustees, 18th ed. (London: LexisNexis, 2010) at 98, describe the nature of a discretionary trust as follows:

Where a beneficiary has no such absolute current right to direct the trustees to pay him an ascertainable part of the net income or capital he has ‘no interest in possession’, only being interested under a discretionary trust. Typically, this is the case where a beneficiary will receive income only if the trustees positively decide to carry out their duty to distribute income by favouring him rather than another member of the class of potential beneficiaries. There is also the atypical case where a beneficiary must receive the income unless the trustees exercise distributive (or dispositive) powers to divert the income elsewhere … or to withhold it …: the discretion-conferring distributive powers prevent an interest in possession arising (eg where B is a life tenant subject to dispositive powers).
66      A discretionary trust is distinct from a fixed trust. The authors of Underhill and Hayton at 98, describe a fixed trust as follows:
Where a beneficiary has a current fixed entitlement to an ascertainable part of the net income or net capital, if any, of the trust fund after deduction of sums paid by the trustees in the exercise of their administrative powers of management, the beneficiary has a fixed interest which ranks as ‘an interest in possession’ under the trust.
67      Unlike a fixed trust, the beneficiaries of a fully discretionary trust and their entitlements (distinct from the potential beneficiaries and their potential entitlements) cannot be ascertained at the time of settlement. A discretionary trust may also come in a variety of forms. Under an “exhaustive” discretionary trust, the trustee must distribute the whole of the income or capital, or both, but retains the power to choose who among the potential beneficiaries should receive distributions, and in what amount. Under a “non-exhaustive” discretionary trust, the trustee has the added power to choose whether or not to make any distribution at all.

Executor/Trustees Fees

Executor/Trustees Fees

Zadra v Cortese 2016 BCSC 390 dealt with a passing of executor’s accounts before a registrar to determine the amount of executor/trustees fees for handling a complex estate for ten years but delegating most of the work to professionals.

The value of the estate increased from $800,000 to $4.8 million over this time due to the rise in the real estate market.

The registrar allowed fees of %3 of the gross estate, plus %3 of the estate’s income and a management fee of $12,000.

The executor had pre- taken fees of $70,000 but was not admonished for it as it was done in the belief that the executor was entitled to it.

The Court Stated:

41 Sections 88 and 89 of the Trustee Act, R.S.B.C. 1996, c. 464, provide as follows:

88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper.

(2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

89 The court may, on application to it for the purpose, settle or direct the registrar to settle the amount of the compensation, although the estate is not before the court in an action.

42 The administrator is entitled to remuneration for his work on the estate to a maximum of 5% of the gross aggregate value, including capital and income of all the assets of the estate at the date of passing, pursuant to s. 88(1) of the Trustee Act. The criteria to be considered in determining the amount of remuneration which should be awarded are set out in the much cited case of Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at para. 23wherein the Court states:

[23] From the American and Canadian precedents, based upon statutory provision for compensation to trustees, the following circumstances appear proper to be taken into consideration in fixing the amount of compensation:
(1) the magnitude of the trust;

(2) the care and responsibility springing therefrom;

(3) the time occupied in performing its duties;

(4) the skill and ability displayed;

(5) the success which has attended its administration.

43 It is not required that remuneration be fixed at a specific percentage of the gross value of the estate, it can be calculated as a lump sum provided it does not exceed 5%. In Turley, Re (1955), 16 W.W.R. 72 (B.C. S.C.) at para. 11 the Court stated:

[11] As to grounds 1 and 2 of this application, I think the principles to be applied are well settled. I adopt the statement of the principles as given in, I think, all the cases and found in Re Atkinson Estate [1952] OR 688, that the compensation allowed an executor is to be a fair and reasonable allowance for his care, pains and trouble and his time expended in or about the estate. Both responsibility and actual work done are matters for consideration and, while there should not be a rigid adherence to fixed percentages, they are to be used as a guide. I think that the factors I mentioned in my judgment on the previous motion are found here. It is not only the presence of continuing trusts that makes the realization and administration of estates difficult. It is submitted that the capital fee should be charged only on the amount realized, excluding those assets that go over in specie. While the fact that considerable portions of the estate are transferred in specie is a factor the registrar may consider in settling the percentage he allows, I think it would be quite inappropriate as a rule to exclude these in the computation of aggregate value. There appears to be evidence here of extensive work. It is the duty of the executor to administer the whole of the estate. His work in some things might not be compensated sufficiently by a percentage much in excess of the maximum allowed.

44 Maximum remuneration is not awarded as a matter of routine. Appropriate remuneration is a matter of what is fair and reasonable in all the circumstances. As stated by the B.C.C.A, in Kanee Estate, Re [1991 CarswellBC 654 (B.C. C.A.)] (19 September 1991), Vancouver Registry CA014168:

Maximum remuneration does not go as a matter of course and it is to be expected that there will be disputes over the quantum of remuneration. Section 90(1) does not prescribe an adversarial process. There are no plaintiffs, no defendants, no pleadings, no discoveries, no provisions for offers of settlement or payment into Court, and no other trappings of an adversarial nature, All interested parties are entitled to be heard but in the end the officers of the Court must decide what is fair and reasonable in all of the circumstances.

45 The amount of remuneration to be paid to the administrator is determined on a quantum merit basis which reflects the reasonable value of the services rendered, which is subject to a 5% maximum.

46 In this regard, evidence is required concerning the administrator’s experience in estate matters, the nature of the estate, the tasks undertaken, the time spent, unusual problems arising during the administration of the estate, the skill employed by the administrator, and the results achieved which were directly attributable to the administrator’s efforts. Documentary evidence and time records should be provided where they exist. The administrator provided this evidence over the course of days of testimony. In addition, extensive documentary evidence was provided by both the administrator and the beneficiaries. However, no time records were provided, as the administrator did not keep a record in this regard.

47 An inference may be drawn against an administrator for failure to provide time records in appropriate circumstances. See Lowe Estate, Re, 2002 BCSC 813 (B.C. S.C.) at para. 33.

48 A negative inference in this regard will be appropriate where criticisms in the administrator’s administration of the estate are found to be valid. In these circumstances, the administrator’s remuneration may be substantially reduced. See Lowe Estate, Re , supra, at paras. 27, 28, 41 and 42.

Court Termination of Representation Agreements

Court Termination of Representation Agreements

Baker-McGrotty v Baker 2016 BCSC 699 discuss when the court will exercise its discretion to NOT terminate representation agreements after the appointment of a committee under the Patients Property Act.

26 Section 19 of the Patients Property act provides as follows:

19 On a person becoming a patient as defined in paragraph (b) of the definition of “patient” in section 1,

(a) every power of attorney given by the person is terminated, and

(b) unless the court orders otherwise, every representation agreement made by the person is terminated.

27 In Lindberg v. Lindberg, 2010 BCSC 1127 (B.C. S.C. [In Chambers]), Mr. Justice Willcock noted that the PPA is silent in relation to the factors the court is to consider in the exercise of its residual discretion to uphold a representation agreement following a declaration of incapacity under the PPA:

[49] The law permits the representation agreement to continue to be effective, despite the onset of disability, and recognizes the autonomous choice of a representative by a patient. The difficulty is that s. 19 of the PPA permits a representation agreement to be saved but does not establish the criteria which should be considered in determining whether or not to exercise that discretion. In the absence of further explicit direction in the legislation, I consider the following factors to be appropriate criteria:

(a) the circumstances in which the representation agreement was executed;

(b) the scope of the representation agreement; and,

(c) the basis for the application to set it aside.

28 The foregoing factors were subsequently adopted by Madam Justice Ross in Dawes v. Dawes, 2012 BCSC 1323 (B.C. S.C.), and there has been no suggestion that these criteria should not apply to the case at bar.

Proprietary Estoppel

Promissory Estoppel Revisited

NOTE:   This Court of Appeal Decision was over turned by the Supreme Court of Canada 2017 SCC 61 and the claim was allowed

 

See blog entry dated  February 2,2018

 

The BC Appeal Court in Cowper-Smith v Morgan 2016 BCCA 200 allowed an appeal in part to over turn the successful  the claim brought for proprietary estoppel at trial by finding that the claim should not be allowed where a non owner of property gave assurances and a reliance thereon with respect to her future intentions based on the assumption she would inherit from her mother the owner., when she might not.  Since the sister  had no enforceable equitable or legal right to the property at the critical time being when the representation was made, the brother should not have relied upon it.

The deceased mother transferred her house into joint tenancy with her daughter in 2001. In 2002 the mother made a will leaving her estate equally to her three children. The mother’s investment accounts were over several years transferred into joint names with the daughter.

A declaration of trust for the house and bank assets was signed in 2001.

The defendant sister told her siblings that the house was put into her name only so she could assist in their mother’s affairs and would all eventually go to her mother’s estate.

The defendant daughter promised to sell one of her brothers her anticipated 1/3 share in the house to lure him back to Canada to take care of his mother.

The trial and appeal courts over turned the transfers and distributed her estate equally as per her will on the basis of undue influence  but the appeal over turned the portion of the judgement that allowed the brother to succeed on the basis that he relied upon the promise made by his sister, he took care of his mother for years, but the sister reneged on her promise to transfer to him her 1/3 of the house as she did not own it when she promised it.

The Appeal Court stated in part:

Commerce International Bank Ltd., [1982] Q.B. 84 (Eng. C.A.) at 122:

When the parties to a transaction proceed on the basis of an underlying assumption (either of fact or of law, and whether due to misrepresentation or mistake, makes no difference), on which they have conducted the dealings between them, neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands.

70      While the principles of fairness and flexibility have informed the modern approach to the application of proprietary estoppel, as adopted by this Court in its jurisprudence (see Idle-O Apartments Inc. v. Charlyn Investments Ltd., 2014 BCCA 451 (B.C. C.A.) at para. 49; Sabey v. von Hopffgarten Estate, 2014 BCCA 360 (B.C. C.A.); Scholz v. Scholz, 2013 BCCA 309 (B.C. C.A.) at para. 31; Sykes v. Rosebery Parklands Development Society, 2011 BCCA 15 (B.C. C.A.) at paras. 44-46; Erickson v. Jones, 2008 BCCA 379 (B.C. C.A.) at paras. 52-57; Trethewey-Edge Dyking (District) v. Coniagas Ranches Ltd. [2003 CarswellBC 657 (B.C. C.A.)] at paras. 64-73; Zelmer v. Victor Projects Ltd. (1997), 34 B.C.L.R. (3d) 125 (B.C. C.A.) at paras. 36-37), there remains a necessary balancing between an overly broad application of the doctrine under the general guise of “unfairness” and an overly narrow application of the doctrine that places excessive weight on the technical requirements of the doctrine. See Lord Scott’s observations in Cobbe v. Yeoman’s Row Management Ltd., [2008] UKHL 55 (U.K. H.L.) in contrast to Lord Neuberger’s comments in Thorner v. Major, [2009] UKHL 18 (U.K. H.L.).

71      These underlying rationales and explanations for the evolution of the doctrine have led to its modern iteration as enunciated by Madam Justice Bennett in Sabey and affirmed by Madam Justice Newbury in Idle-O Apartments Inc. at para. 49:

[49] From the foregoing I infer that although proprietary estoppel is, like most equitable remedies, flexible and aimed at doing justice, and although the basic elements of the doctrine are not to be technically confined, those elements must still be made out and an equity established. I reproduce again the encapsulation of the doctrine provided recently in Sabey:

Is an equity established? An equity will be established where:

There was an assurance or representation, attributable to the owner, that the claimant has or will have some right to the property, and

The claimant relied on this assurance to his or her detriment so that it would be unconscionable for the owner to go back on that assurance.

If an equity is established, the court must determine the extent of the equity and the remedy appropriate to satisfy the equity.

72      As was noted by Bennett J.A. in Sabey, the bulk of the analysis occurs at the first stage, where “findings with regard to assurances, reliance and detriment are made” and where the court must determine whether it would be unconscionable for the person “to fail to make good on a promise to create a legal right in favour of someone else” (at para. 27).

73      Thus, the elements of the modern doctrine of proprietary estoppel require:

(i) an assurance or representation by the defendant that leads the claimant to form a mistaken assumption or misapprehension that he or she has an interest in the property at issue;

(ii) a causative connection between the assurance or representation and the claimant’s reliance on the assumption such that the claimant changes his or her course of conduct; (

iii) a detriment suffered by the claimant that flows from his or her reliance on the assumption, which causes the unfairness and underpins the proprietary estoppel; and

(iv) a sufficient property right held by the defendant that could be transferred to satisfy the right claimed by the claimant.

 

The Majority of the Court held:

98      There is no doubt that the applicable standard of review in this case is that described by Newbury J.A. in Idle-O Apartments Inc. as follows (at para. 72):

[72] At the outset, I note that the granting of a remedy for proprietary estoppel is a discretionary matter that attracts a high degree of appellate [deference]. The classic statement of the applicable standard of review may be found in Friends of the Old Man River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, where the Court quoted with approval the following passage from Charles Osenton & Co. v. Johnston, [1942] A.C. 130 (H.L.):

The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such as those urged before us by the appellant, then the reversal of the order on appeal may be justified…(See also Wenngatz v. 371431 Alberta Ltd., 2013 BCCA 225 at para. 9; Stone v. Ellerman, 2009 BCCA 294 at para. 94; and Harper v. Canada (Attorney General), 2000 SCC 57at para. 26.)

99      In considering whether there has been a wrongful exercise of discretion, I begin by noting that in Uglow v. Uglow, [2004] EWCA Civ 987 (Eng. & Wales C.A. (Civil)) at para. 9, the Court of Appeal described the following general principle:

The overriding concern of equity to prevent unconscionable conduct permeates all the different elements of the doctrine of proprietary estoppel; assurance, reliance, detriment and satisfaction are all intertwined.

100      In my view, the assurance given by Gloria to Max in this case was so based on uncertainty as to undermine any claim based on proprietary estoppel and that uncertainty goes to the root of reliance. The uncertainty arises from the fact that both at the time the assurance was given by Gloria and at the time Max acted upon the assurance, the Property was owned by Elizabeth; that is, Gloria had no beneficial interest in the Property and was uncertain what interest she would eventually inherit, if any. In the circumstances, Max cannot have been reasonably certain Gloria could do what she represented she would do. His hope and belief, initiated and encouraged by her, that he would likely be given the opportunity to buy whatever interest Gloria might inherit does not give rise to an interest in his mother’s estate. With respect, I do not agree with Smith J.A.’s view that Gloria’s “clear entitlement to a one-third interest in the Property at the time of the judge’s order” is relevant to whether an estoppel arose when Max acted upon the assurance given to him.

101      In relation to reliance as an essential element of a claim founded upon proprietary estoppel, Snell’s Equity, 31st ed (London: Sweet and Maxwell, 2005) says, at §10-18:

A must have acted in the belief either that he or she already owned a sufficient interest in O’s property to justify the expenditure or that he or she would obtain such an interest although it is not necessary for A to establish that he or she had an expectation in relation to a specific or clearly identified piece of property. But if A has no such belief, and improves land in which he knows he has no interest or merely the interest of the tenant, or licensee or as an occupier who incurs expenditure in the hope of obtaining planning permission and then entering into a contract to buy the land, he or she has no equity in respect of his expenditure. It is not sufficient that A believes he will obtain an interest over O’s property if he is also aware that O may change his mind.

[Emphasis added.]

102      Snell’s Equity proposes that in order to establish the estoppel it is necessary for A to show that O “created or encouraged the belief or expectation on the part of A that O would not withdraw from the agreement in principle”. That is a description of a present and ongoing obligation.

103      The circumstances in the case at bar resemble those in the many reported inheritance cases, including In re Basham and Thorner v. Major, with an important exception: the assurance here did not come from the beneficial owner of the property interest. In my view, the interest found by the judge to have been wrongly obtained through undue influence in respect of the land transfer and Declaration of Trust cannot be regarded as sufficient interest to permit Gloria to make representations or give assurances that might give rise to a proprietary estoppel. The assurance Gloria gave to Max had nothing to do with an interest in the Property created by the transfer or Declaration of Trust (both of which she thought, at the time, to be intended to simply facilitate the handling of the estate). The interest she promised to Max was the right to buy her expected inheritance. She did not yet own that inheritance and might never have come into it.

104      Walker L.J., in the passage from Thorner cited by Smith J.A., was of the view that in order to constitute proprietary estoppel, “the assurances given to the claimant (expressly or impliedly, or, in standing-by cases, tacitly) should relate to identified property owned (or, perhaps, about to be owned) by the defendant” (emphasis added).

105      Walker L.J. does not expand upon his view that an estoppel may arise from assurances made by one who is about to be the owner of the property. Neither the source nor the extent of that qualification to simple ownership is described, other than by a reference later in the paragraph to Crabb v. Arun District Council, in which there is no discussion of property about to be owned by the Council that made the representation in that case. In fact, in Crabb there are repeated references to the legal rights of the person making the representation. Denning M.R. states: “Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights — knowing or intending that the other will act on that belief — and he does so act, that again will raise an equity in favour of the other; and it is for a court of equity to say in what way the equity may be satisfied” (emphasis added). Scarman L.J., citing Willmott, notes: “the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right” (emphasis added). In short, there is nothing expressly stated in Crabb that contemplates an estoppel arising with respect to property that is other than legally owned by the person making the representation.

106      Even assuming there to be some basis for the view that proprietary estoppel might arise as a result of an assurance given by one about to be the owner of property, I would not expand that class of persons so far as to include a potential beneficiary who gives an assurance to another, years before the death of a testator, with respect to what she will do with an inheritance that she merely anticipates receiving, if the person receiving the assurance acts as requested in the meantime. Not only is there uncertainty, in such a case, with respect to the promisor’s ability to deliver a proprietary interest to the promisee at the time the assurance is given, the uncertainty is not resolved when the promisee acts in reliance upon the promise.

107      Leaving aside, for the moment, the question whether Gloria was in a position to exert undue influence upon her mother, there was uncertainty with respect to the property interest Max was being promised. First, there was uncertainty whether Gloria would inherit anything from her mother. She might have predeceased her mother. Her mother might have changed her will and left Gloria more or less than a one-third interest in the property. Her mother might have sold the house and moved into accommodation more suited to her declining health. Simply by liquidating her property Elizabeth Cowper-Smith would have precluded Max from asserting a right to buy anything from Gloria. Certainly it is not suggested that Elizabeth was in any way restricted in her dealings with the property simply because her daughter made assurances to Max about what she would do on Elizabeth’s death.

108      Without exerting undue influence upon her mother, Gloria was not in a position to determine what property interest Max would receive in exchange for his move to Victoria. The fulfilment of Gloria’s promise was entirely conditional on her mother’s actions, which were outside her control.

109      Further, an obligation on Gloria’s part cannot have arisen before she inherited an interest in the Property. In this case, unlike the inheritance cases, no obligation arose simply as a result of the reliance upon the assurance. Where the assurance comes from the testator, the estoppel arises because there has been such reliance, making it inequitable to permit the testator to resile from the promise. A remedy is available before the testator’s death. As noted by Mummery L.J. in Uglow, proprietary estoppel may be relied upon to prevent a testator from making a will giving specific property to one person, if by his conduct he has previously created the expectation in a different person that he will inherit it:

The testator’s assurance that he will leave specific property to a person by will may thus become irrevocable as a result of the other’s detrimental reliance on the assurance, even though the testator’s power of testamentary disposition to which the assurance is linked is inherently revocable.

110      As Professor MacDougall observes in Estoppel at §6.38, there is a temporal element to proprietary estoppel. The demands of equity and how they are properly satisfied may change over time; but the equity arises when there is reliance. That is the foundation for what he describes at §6.73 as a “more orthodox approach” to the question we face than that which is taken by Smith J.A.:

… [P]roprietary estoppel will not apply where the owner in fact has no existing rights with respect to the property in question when the equity would otherwise arise — i.e., at the time of the detrimental reliance.

111      Uncertainty with respect to the promisor’s ability to fulfill the promise is closely related to the concept of reliance. Key to the acquisition of a proprietary interest by estoppel is the principle that it is unconscionable to permit a person to fail to keep a promise made and reasonably relied upon by the promisee. How can there be reasonable reliance upon a promise to convey an interest in property made by one who does not have such an interest or whose interest is uncertain?

112      Like my colleague, I recognize the evolution of the law of proprietary estoppel has been marked by tensions between, on the one hand, broad principles of flexibility and fairness, and on the other hand, narrow technical requirements. While the jurisprudence tells us that proprietary estoppel is no longer a “Procrustean bed constructed from some unalterable criteria” (see Idle-O Apartments Inc. at para. 23), the Court in Crabb nonetheless insisted the exercise of equitable jurisdiction be rooted in identifiable principles. To that end, the Court adopted the words of Harman L.J. in Bridge v. Campbell Discount Co., [1961] 1 Q.B. 445 (Eng. C.A.) at 459:

Equitable principles are … perhaps rather too often bandied about in common law courts as though the Chancellor still had only the length of his own foot to measure when coming to a conclusion. Since the time of Lord Eldon the system of equity for good or evil has been a very precise one, and equitable jurisdiction is exercised on well-known principles.

113      I do not read this Court’s judgment in Idle-O Apartments Inc. as suggesting that uncertainty that undermines reliance on a representation may be disregarded. To the contrary, when the Court considered whether an equity was established (at para. 23) it required the claimant to establish he believed in the existence of “a right created or encouraged by the words or the actions of the other party such that it would be unfair, unjust or unconscionable to allow the representor to set up its undoubted rights against the claimant”. At para. 57, the Court referred with approval to the trial judge’s recognition that detrimental reliance on the part of the claimant “underpins the claim and establishes the unfairness or unjustness that ought to be addressed by equity. Without such, … the doctrine may become ‘somewhat pointless’ and a ‘circumlocution for doing justice’.”

114      Newbury J.A., after describing the evolving conception of the scope of proprietary estoppel, noted:

[48] This court has adopted the “broader” approach to proprietary estoppel: see Zelmer at para. 49, Erickson at paras. 55-7, and most recently in Sabey at paras. 28-9. This approach is consistent with the judgment of Lord Denning in the seminal English case of Crabb v. Arun District Council, [1976] 1 Ch. D. 179 at 187-9; Oliver J. in Taylor Fashions; Buckley L.J. in Shaw v. Applegate, [1978] 1 All E.R. 123 at 130-1; and various other English authorities. On the other hand, English and Australian courts (and to some extent Canadian courts) have in recent years been at pains to emphasize that proprietary estoppel does not arise simply out of conduct that a court finds to be unconscionable. As observed by Lord Scott in Yeoman’s Row Management Ltd v. Cobbe, [2008] UKHL 55:

… unconscionability of conduct may well lead to a remedy but, in my opinion, proprietary estoppel cannot be the route to it unless the ingredients for a proprietary estoppel are present. These ingredients should include, in principle, a proprietary claim made by a claimant and an answer to that claim based on some fact, or some point of mixed fact and law, that the person against whom the claim is made can be estopped from asserting. To treat a “proprietary estoppel equity” as requiring neither a proprietary claim by the claimant nor an estoppel against the defendant but simply unconscionable behaviour is, in my respectful opinion, a recipe for confusion. [At para. 16.]

[Emphasis added.]

115      Professor MacDougall, at §6.34, echoes Lord Scott’s concerns, suggesting the doctrine of proprietary estoppel “should not be seen as a generalized remedial doctrine for unfairness.” Unfairness, in MacDougall’s view, is merely a general description of what the doctrine seeks to combat. Unfairness is not, in itself, an “overarching principle” that allows proprietary estoppel to be applied even in the absence of the typical requirements.

116      The Court in Idle-O Apartments Inc. further noted that the test for establishing a proprietary estoppel had recently been collapsed, in Sabey, into two components (see para. 30):

There was an assurance or representation, attributable to the owner, that the claimant has or will have some right to the property, and

The claimant relied on this assurance to his or her detriment so that it would be unconscionable for the owner to go back on that assurance.

[Emphasis added.]

117      While the criteria that define the limits of proprietary estoppel are not unalterable, I see no reason in principle why the cause of action should be expanded to permit a person to acquire an interest in property by reliance upon an assurance by a non-owner that falls short of a contractual obligation. Such an expansion would be problematic, untying entirely from its ties to property the only estoppel that can be used as a sword. I would not so extend the cause of action.

118      In my view, the fact Gloria used undue influence to obtain de facto control over the Property and Investments does not affect that conclusion. Max did not, in fact, rely upon that undue influence as assurance that Gloria would deliver on her promise. Even if he had known of the influence exerted by Gloria, equity should not come to the assistance of one who says he arranged his affairs in reliance upon a promise made by a person exerting improper control over a testator with respect to what she would do with the inheritance assured by the exercise of that control. In fairness to him it should be said that Max is not advancing that argument. Even so, the logic of that argument lies at the root of the proposition that undue influence distinguishes this case from others where a non-owner makes assurances about what rights an owner will exercise over property.

Conclusion

119      In the result, I would allow the appeal on this aspect of the order only and set aside the Order made in Max’s favour. In all other respects, I agree with my colleague’s reasons and conclusions.

Saunders J.A.:

I AGREE:

Appeal allowed in part.

Joint Account Holders Are Fiduciaries

Joint Account Holders Are Fiduciaries

MacKay v. MacKay Estate,2015 ONSC 7429, held that one joint account holder may serve as a fiduciary in relation to the other simply via the traditional indicia of such a relationship as set out in Frame v. Smith, [1987] 2 SCR 99 (i.e., the ability by the fiduciary to exercise unilateral control over the beneficiary’s interests; the vulnerability of the beneficiary).

In MacKay, supra, the defendant daughter-in-law had been added as a joint account holder to her mother-in-law’s account in order to help her with her day-to-day finances; this occurred while the mother-in-law retained capacity. The daughter-in-law did not hold power of attorney. She was her mother-in-law’s main caregiver, emotional support and confidante. In her capacity as joint account holder, in addition to covering the mother-in-law’s expenses, she paid herself a modest weekly sum in compensation for her services. The son (ex-husband of the daughter-in-law at the time of litigation), who held power of attorney for his mother, brought an action against his ex-wife seeking an accounting and repayment of the funds in question.

The court held that the daughter-in-law had a fiduciary obligation to her mother-in-law in her management and operation of the joint bank account, but that she had not breached her duty; her payments to herself were reasonable in the circumstances.

The holding in MacKay underscores the principle that the prima facie nature of a joint account—that is, of its being equally owned and equally subject to the discretion of all account holders—will give way, in some circumstances, before deeper considerations of equity.

In some respects MacKay stands for this proposition more strenuously than Pecore itself, as the former is less reliant on traditional doctrines concerning gifts and donors’ intentions. MacKay does not treat the nature of a joint account as an either/or proposition by which either a gift or trust is created. Rather, MacKay concerns itself solely with the question of fiduciary obligations, specifically as they may arise in the context of a “typical” joint account where one party is vulnerable to the discretion of the other.

Liability of Trustees

Liability of Trustees

Daum v Clapci  2016 BCCA 176 recently discussed the liability of a trustee for failing to properly insure a hotel that burned  stating inter alia.

The test for liability is essentially one of honesty and reasonable man prudence in administering the estate affairs as if they were his or her own.

THE LAW

23      The trial judge described Mr. Clapci’s decision to eliminate replacement insurance coverage for the Hotel as “recklessness”, but he found that this conduct was not linked to Mr. Clapci’s duties as a trustee and therefore did not constitute a breach of trust. In reaching that conclusion, the trial judge relied on Waters’ Law of Trust in Canada, 4th ed., at page 932 and following.

24      Professor Waters at pages 931 and 932 states that “[t]he duty of loyalty requires the avoidance of situations where that duty conflicts with the self-interest of the fiduciary” but “should not encompass activities which are so remote from the task undertaken that they could not in any reasonable assessment be said to be forbidden”. 

Equity has come to take the view that the solution is provided by an examination of the scope of the agency or task undertaken. If the person who owes fiduciary duties is acting outside the scope of the task he has undertaken – that is, in a manner which has nothing to do with his task – then he will not be required to hand over to the principal any profit which he has made or to desist from any intended activity which would render him profit.

Even by narrowing the principle in this way, however, there are bound to be difficult questions of fact as to whether the particular fiduciary was indeed in the circumstances acting within the scope of his activity when he made a profit for himself, or was positioning himself to make such an intended profit. But the difficult questions of fact which have ceaselessly troubled the courts cannot be avoided; they are inseparable from the application of the principle of conflict of interest and duty.

Professor Waters notes at page 906:

[A] trustee must act honestly and with that level of skill and prudence which would be expected of the reasonable man of business administering his own affairs.

Company Director is a Fiduciary

Company Director is a Fiduciary

It is common in estate disputes to encounter a party attempting to deal inappropriately with the affairs of a limited company whose shares should be an estate asset, and when this occurs, one should look for a breach of the directors fiduciary duty owed to the company.

The fiduciary duty of a director to the company is one of loyalty ,good faith, avoidance of conflict of duty and self-interest.

The leading case in this area is Canadian Aero Services Ltd v O’Malley 1974 SCR 592 where the court found senior management who had left the plaintiff with confidential information were fiduciaries and that duty continued after their employment ceased.

25      An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of directors and senior officers shows the pervasiveness of a strict ethic in this area of the law. In my opinion, this ethic disqualifies a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.
26      It is this fiduciary duty which is invoked by the appellant in this case and which is resisted by the respondents on the grounds that the duty as formulated is not nor should be part of our law and that, in any event, the facts of the present case do not fall within its scope.
27      This Court considered the issue of fiduciary duty of directors in Zwicker v. Stanbury1, where it found apt for the purposes of that case certain general statements of law by Viscount Sankey and by Lord Russell of Killowen in Regal (Hastings) Ltd. v. Gulliver2, at pp. 381 and 389. These statements, reflecting basic principle which is not challenged in the present case, are represented in the following passages:
28      Per Viscount Sankey:
In my view, the respondents were in a fiduciary position and their liability to account does not depend upon proof of mala fides. The general rule of equity is that no one who has duties of a fiduciary nature to perform is allowed to enter into engagements in which he has or can have a personal interest conflicting with the interests of those whom he is bound to protect. If he holds any property so acquired as trustee, he is bound to account for it to his cestui que trust. The earlier cases are concerned with trusts of specific property: Keech v. Sandford ((1726), Sel. Cas. Ch. 61) per Lord King, L.C. The rule, however, applies to agents, as, for example, solicitors and directors, when acting in a fiduciary capacity.
29      Per Lord Russell of Killowen:
In the result, I am of opinion that the directors standing in a fiduciary relationship to Regal in regard to the exercise of their powers as directors, and having obtained these shares by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office, are accountable for the profits which they have made out of them. The equitable rule laid down in Keech v. Sandford [supra] and Ex p. James ((1803), 8 Ves. 337), and similar authorities applies … in full force. It was contended that these cases were distinguishable by reason of the fact that it was impossible for Regal to get the shares owing to lack of funds, and that the directors in taking the shares were really acting as members of the public. I cannot accept this argument. It was impossible for the cestui que trust in Keech v. Sandford to obtain the lease, nevertheless the trustee was accountable. The suggestion that the directors were applying simply as members of the public is a travesty of the facts. They could, had they wished, have protected themselves by a resolution (either antecedent or subsequent) of the Regal shareholders in general meeting. In default of such approval, the liability to account must remain.

Fiduciary Duty: Employee For Employer

Fiduciary Employee - Employer

The law of fiduciary duty is very relevant to estate litigation cases but is also prevalent in almost any other claim where equity is involved, including an employee can be found to be a fiduciary for the employer.

M A Concrete Ltd v Truter 2016 BCCA 138 quoted such law in an unrelated fiduciary claim re a failed business purchase and sale.

The facts Truter arose out of a failed attempt to purchase a business and the calculation of damages and costs arising out of it, but did quote some important statements of fiduciary law.

17      Employees cannot profit by taking unauthorized advantage of their employment. The law is clear: Reading v. R., [1951] A.C. 507 (Eng. H.L.). There, at 514, Lord Porter quoted Denning J., who was the trial judge, as follows:

… it is a principle of law that if a servant, in violation of his duty of honesty and good faith, takes advantage of his service to make a profit for himself, in this sense, that the assets of which he has control, or the facilities which he enjoys, or the position which he occupies, are the real cause of his obtaining the money, as distinct from the mere opportunity for getting it, that is to say, if they play the predominant part in his obtaining the money, then he is accountable for it to the master.

18      Lord Porter saw fiduciary duty as an alternative ground for liability (at 516):

As to the assertion that there must be a fiduciary relationship, the existence of such a connexion is, in my opinion, not an additional necessity in order to substantiate the claim; but another ground for succeeding where a claim for money had and received [i.e. bribery] would fail. In any case, I agree with Asquith, L.J. [[1949] 2 K.B. 232, 236], in thinking that the words “fiduciary relationship” in this setting are used in a wide and loose sense and include, inter alia, a case where the servant gains from his employment a position of authority which enables him to obtain the sum which he receives.

Reading is cited with approval in Canadian jurisprudence: see, for example, Frame v. Smith [1987] 2 S.C.R. 99 (S.C.C.), Wilson J. in dissent at 137; Tombill Gold Mines Ltd. v. Hamilton (City) (1954), [1955] 1 D.L.R. 101 (Ont. H.C.), at 133; aff’d [1955] 5 D.L.R. 708 (Ont. C.A.); aff’d [1956] S.C.R. 858, 5 D.L.R. (2d) 561 (S.C.C.); and Calbar Securities Ltd. v. Toole Peet Co. (1983), 29 Alta. L.R. (2d) 236 (Alta. C.A.), at 249.

On this point, the judge reviewed cases such as Canadian Aero Service Ltd. v. O’Malley (1973), [1974] S.C.R. 592 (S.C.C.) and Standard Life Assurance Co. v. Horsburgh 2005 BCCA 108 (B.C. C.A.) , which recognize that even an employee may be a fiduciary where he or she has control or discretionary authority over the employer’s assets. The duty includes, of course, the avoidance of conflicts of interest and the prohibition against taking for one’s self any “maturing” corporate opportunity of the person to whom the duty is owed.

Bearing in mind that once a breach of fiduciary duty is shown, the onus shifts to the defendant to disprove the amount of the loss (see Procon Mining & Tunnelling Ltd. v. McNeil 2010 BCSC 487 (B.C. S.C.) at para. 101), I see no error in the trial judge’s assessment of damages under this head at $32,2

Executor Removed For Delay and Disdain

Executor Removed For Delay and Disdain

Re Dirnberger Estate 2016 BCSC 439 removed an executor who had failed to settle and distribute a simple estate for more than four years and showed disdain and hostility towards his sister the other  major beneficiary.

The delay and behavior constituted an inability to act due to constant unaccountable hostility towards the other  beneficiary was a want of reasonable fidelity resulting in the removal of the executor and his replacement by the beneficiary. The executor had further failed to retain professional advisors that were necessary for the estate.

The Law: Removal of Executors/Trustees

[9]           The legal principles surrounding removal of a trustee are not in dispute. The court has the power under the Trustee Act, R.S.B.C. 1996, c. 464, to remove a trustee. The court also has such power under its inherent jurisdiction: Morelli v. Morelli, 2014 BCSC 106 (CanLII) at para. 29.

[10]        The court will remove a trustee where the welfare of the beneficiaries requires it. The existence of friction between the trustee and one or more beneficiaries is usually not sufficient, of itself, to justify removal of the trustee: Erlichman v. Erlichman, 2000 BCSC 173 (CanLII) at para. 8.

[11]        There are four categories of conduct on an executor’s part that will warrant removal:

1.         endangerment of the trust property;

2.         want of honesty;

3.         want of proper capacity to execute the duties; and

4.         want of reasonable fidelity.

[Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.)]

[12]        The applicant relies on the first, third and fourth of these categories. The applicant takes issue with Mr. Chase’s failure to wrap up and distribute the estate at this late date and his “unaccountable and hostile behaviour towards Ms. Dirnberger”.

[13]        The duty of an executor is to settle the affairs of the deceased and to distribute the estate in accordance with the terms of the will in a timely manner. Mr. Chase has failed to do this.

[14]        I have concluded that Mr. Chase must be removed as trustee. I have reached this conclusion for two reasons. His actions demonstrate that he lacks the necessary capacity to act as trustee. I do not mean that he lacks legal capacity but rather that he has demonstrated an inability to perform his duties as administrator of the estate: see Figley v. Figley, 2012 SKCA 36 (CanLII) at para. 49, and Estate of Forbes McTavish Campbell, 2015 BCSC 774 (CanLII) at para. 18. There is as well a want of reasonable fidelity.

[15]        With regards to the first reason, this is a simple estate that has not been distributed more than four years after probate.

[16]        In Levi-Bandel v. McKeen, 2011 BCSC 247 (CanLII), Justice Butler stated at paras. 21 and 23:

[21]      … it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal ….

…

[23]      … I have little difficulty in concluding that [the executor’s] inaction and her intransigence caused unnecessary delay. Her refusal or reluctance to proceed with the administration of the estate amounts to a want of reasonable fidelity and a failure to carry out her duties.

[27]        I appreciate that Mr. Chase has never acted as an executor before. But inexperience is not a licence to delay for more than four years the distribution of the estate. In Stolarchuk Estate (Re), 2011 BCSC 168 (CanLII), Master Bouck aptly notes at para. 61:

…Nonetheless, inexperience does not excuse the four to five year delay in dealing with the Properties in an appropriate manner. The executor’s duty was to obtain the best possible result from the realization of assets and ensure a timely distribution of the Estate residue to all Beneficiaries.

Lawyer Privilege: What is Included and What isn’t?

Privilege-of-Privilege

FACTS OF CASE: reviews in detail the types of documents and information that are covered by solicitor client privilege, those that are not, and the legal reasoning.

The respondents were appointed trustees in foreign bankruptcy proceedings of the appellant bankrupt. They sought an order requiring the appellant law firm to disclose accounting information relating to the bankrupt. The chambers judge found the law firm’s trust ledgers were not presumptively privileged nor did they arise out of communication for the purposes of obtaining legal advice. Disclosure was ordered with the exception of any notes relating to legal advice or communications for the purpose of legal advice.

The Appeal Court held the Chambers Judge  was correct in concluding the trust ledger was not presumptively privileged and disclosure would not violate the client’s right to communicate in confidence with his legal advisor.

The chambers judge succinctly described the principles of solicitor-client privilege established in the jurisprudence and reiterated by the Supreme Court of Canada in Maranda v. Richer, 2003 SCC 67, [2003] 3 S.C.R. 193. Following Descôteaux v. Mierzwinski, [1982] 1 S.C.R. 860, 141 D.L.R. (3d) 590, and Donell v. GJB Enterprises Inc., 2012 BCCA 135, he proceeded on the basis that:

a)     Solicitor-client privilege is a fundamental substantive right of the client founded upon the unique relationship of solicitor and client;

b)     At a minimum, Maranda establishes that lawyers’ bills, in the criminal law context, are presumptively subject to solicitor-client privilege;

c)     This presumption flows from the connection between lawyers’ bills and the nature of the relationship between lawyers and clients; the account reflects work done on behalf of the client which involves communications that are privileged;

d)     The presumption may be rebutted if it is established that there is no reasonable possibility that disclosure will directly or indirectly reveal any communications protected by privilege;

e)     Maranda did not do away with the distinction between evidence of communications, which is privileged, and evidence of facts, which is not;

f)     Financial records of lawyers other than records of bills are not presumptively subject to solicitor-client privilege insofar as they merely represent records of actions or facts, but they should not be produced automatically solely for that reason;

g)     Maranda mandates that it is necessary to consider such records in order to determine whether they arise out of the solicitor-client relationship and what transpires within it, that is, communications to obtain legal advice;

h)     If it is concluded that the records do arise out of that relationship and what transpires within it, they are presumed to be privileged, but the privilege can be rebutted and the document produced if it is established that production will not permit the deduction or acquisition of communications protected by solicitor-client privilege.

[17]         The chambers judge concluded that most of the information sought by the Trustees was evidence with respect to the objective state of affairs: the value of funds held in trust for Mr. Luu; the record of funds provided to the firm by Mr. Luu or received by the firm to his credit; and records relating to activities in the trust account. He concluded this information was not presumptively privileged.

[18]         Having decided that those specific records were not presumptively privileged, the chambers judge went on to consider whether the information recorded might nevertheless be said to arise out of communications for the purposes of obtaining legal advice. The records had not been produced for examination

Discussion

[32]         The chambers judge properly noted that the right to communicate in confidence with one’s legal advisor is a fundamental civil and legal right, founded upon the unique relationship of solicitor and client: Solosky v. The Queen (1979), [1980] 1 S.C.R. 821, 105 D.L.R. (3d) 745; and Descôteaux.

[33]         That right is not lost to a bankrupt and cannot be waived by a trustee in bankruptcy, even where doing so might reveal the whereabouts of some of the bankrupt’s property: Re Chilcott and Clarkson Co. Ltd. (1984), 48 O.R. (2d) 545, 13 D.L.R. (4th) 481 (C.A.); and Bre‑X Minerals Ltd. (Trustee of) v. Verchere, 2001 ABCA 255.

[34]         While Chilcott stands for the proposition that a trustee cannot waive the privilege that attaches to communication between the bankrupt and his solicitors, it does not stand for the broad proposition that any and all information in the hands of the bankrupt’s solicitors, with respect to the bankrupt’s affairs, is privileged. To the contrary, the solicitors were ordered to make significant disclosure in Chilcott. The Alberta Court of Appeal in Bre‑X described the issues in Chilcott as follows:

[37]      … [I]n that case, a solicitor acted on behalf of the bankrupt prior to the bankruptcy and advised the bankrupt on financial and other corporate matters. The trustee sought to examine the solicitor regarding privileged communications with the bankrupt. Although the court accepted that the solicitor could be compelled to disclose information about the bankrupt’s property, affairs and transactions, the court held that information on any topic necessarily involving disclosure of communications made between the solicitor and the bankrupt for the purpose of giving legal advice could not be disclosed. Ultimately, the court refused to speculate on circumstances in which a trustee might properly waive a bankrupt’s privilege, but it concluded that the goal of protecting creditors’ rights, standing alone, could not defeat solicitor-client privilege.

[Emphasis added.]

[35]         The dispute in the case at bar required the chambers judge to follow both the line of cases, including this Court’s recent decision in Donell, requiring solicitors to disclose records of trust transactions, and the line of cases including Descôteaux and Maranda, that extend solicitor-client privilege to information concerning lawyers’ bills including the client’s ability to pay the lawyer and any other information which a lawyer is reasonably entitled to require before accepting the retainer. The appellants say the judge erred in striking a balance between competing interests in the case at bar. The amount paid for legal fees may be deduced from the information the firm has been ordered to disclose; that being the case, the order intrudes upon privileged communications. The appellants say the courts have recently and strongly reaffirmed the rule that solicitor-client privilege must be rigorously protected. It should not be balanced against competing interests in disclosure.

[36]         In my view, the chambers judge was correct to say there is no presumption that the information in a solicitor’s trust ledger is privileged. Making such a presumption would be inconsistent with this Court’s decision in Donell. The chambers judge cited extensively from the majority judgment in Donell and rightly, in my opinion, found in that judgment an answer to the appellant’s objections to production of the ledger.

[37]         In that case, the court-appointed receiver’s application for production of a law firm’s records of the business, affairs or property of the respondents was dismissed. The chambers judge found solicitor-client privilege attached to all of the files and documents in the possession of the firm. On appeal, the majority noted that in R. v. Joubert (1992), 7 B.C.A.C. 31, 69 C.C.C. (3d) 553, this Court, at 569, concluded that a record of money paid into and out of a lawyer’s trust account was not subject to solicitor-client privilege. In response to the argument that trust accounts had historically been disclosed because they were considered to record facts, rather than communications, and the argument such a distinction had been done away with in Maranda, Chiasson J.A. noted in Donell:

[43]      Much has been made of LeBel J.’s treatment in Maranda of the distinction between communications and actions or facts. In this province there has been debate as to whether Maranda did away with the distinction. In my view, it did not.

[44]      It is important to remember that the issue before the Supreme Court concerned the production of a lawyer’s bill for fees and disbursements. This was the issue that was placed into the context of the distinction between communications and facts.

[38]         A lawyer’s bills are presumptively privileged because they are ordinarily descriptive; by recording the work done by the solicitor, they disclose the client’s instructions, which the client cannot be compelled to divulge and the confidentiality of which the solicitor is obliged to protect. Chiasson J.A. noted:

[49]      I see nothing in Maranda that erodes generally or does away with the distinction between facts and communications. The case concerned a specific type of document ‒ a lawyer’s fee account ‒ which is intrinsically connected to the solicitor-client relationship and the communications inherent to it; to repeat LeBel J.’s formulation, “[t]he existence of the fact consisting of the bill and its payment arises out of the solicitor-client relationship and what transpires within it”. As noted by LeBel J., what transpires within that relationship is communication for the purpose of enabling clients to obtain legal advice; it is that communication that is protected by solicitor-client privilege.

[39]         The privilege extends to administrative facts tending to reveal the nature or extent of legal assistance sought and received. However, there is good reason not to extend the presumed privilege to the trust ledger. The entries in a trust account record the possession of and movement of funds which the client may be compelled to disclose. Insofar as the entries record the payment of funds to parties who do not owe a duty of confidence to the client, the client cannot have expected the fact of payment to remain confidential as between himself and his counsel.

[40]         After concluding that the trust leger was not presumptively privileged, the chambers judge correctly engaged in the exercise described in Donell by considering whether the entries on the trust ledger would contain information ancillary to the provision of legal advice. In Donell, the Court noted:

[51]      In the present case, we are not concerned with a lawyer’s bill. The Receiver seeks production of trust ledgers. Generally, such documents record facts, not communications, and are not subject to solicitor-client privilege, but I would not favour a blanket endorsement of the automatic production of such records. In my view, while the analysis in Maranda did not dispose of the distinction between facts and communications, it requires the court to ensure that entries on a trust ledger do not contain information that is ancillary to the provision of legal advice.

[41]         In other words, Maranda restates the importance of ensuring that disclosing factual information, such as administrative facts recorded in the lawyer’s file, does not give the recipient insight into protected communications he is not entitled to receive. The determination that the information sought is factual does not bring an end to the analysis.

[42]         In the case at bar, in my opinion, the chambers judge rightly held that disclosure of a redacted trust ledger would not violate the client’s right to communicate in confidence with his legal advisor. That is precisely the exercise endorsed by Chiasson J.A. for this Court in Donell, where he wrote:

[55]          I adopt the reasoning of the Alberta Court of Appeal [in Wyoming Machinery Co. v. Roch, 2008 ABCA 433, [2009] 3 W.W.R. 433]. In my view, whether the financial records of a lawyer are subject to solicitor-client privilege depends on an assessment of the connection between the record in issue and “the nature of the relationship in question” (Maranda at para. 32). As was held in Maranda, a lawyer’s bill arises out of the solicitor-client relationship and generally will be protected. This is because bills flow out of communications between the solicitor and the client seeking legal advice. In Greymac, the court held that generally evidence of deposits to and transfers from a lawyer’s trust account is evidence of facts, not of communications. The court held that such records are not privileged, adding the caveat that the “advice and communications from the client relating to advice” must be expunged (para. 22).

[43]         While in some cases knowing the amount spent on legal services in relation to a particular matter or issue will give the recipient of that information some insight into the solicitor-client relationship, no significant insight is gained by the disclosure ordered in this case. It cannot be said that deductive reasoning will permit the recipient of the records of trust transactions in the period from August 1, 2011 to July 31, 2013 to learn anything of value with respect to the solicitor-client relationship. The solicitors were first retained in 2007. They had opened an undetermined number of litigation files. The order requires disclosure of records for a discrete period. The recipient of the records may be able to determine, by deduction, how much was paid, in total, for legal services from trust in the relevant period but will not be able to determine what amount was paid for services actually provided to Mr. Luu by the firm during the period from August 1, 2011 to the July 31, 2013, because the records will disclose only payment of accounts, not when the work was done. Some payments may be for work performed before the August 1, 2011. Some of the work performed in the period may have been billed or paid after July 31, 2013. Disclosure of the trust records will not even permit the recipient to determine what fees were billed for legal work during the period because the recipient will learn only what accounts were paid from the trust account. Last, the recipient will not be able to determine which of the litigation files handled by the firm were billed and paid from trust during the period covered by the order.

[44]         The subsequent decisions of this Court and the Supreme Court of Canada in Federation of Law Societies of Canada v. Canada (Attorney General), 2013 BCCA 147, varied 2015 SCC 7, and the recent decision of the Québec Court of Appeal in Canada (Procureur général) c. Chambre des notaires du Québec, 2014 QCCA 552, leave to appeal granted February 9, 2015, [2014] S.C.C.A. No. 234, restate the fundamental importance of solicitor-client privilege as a substantive rule of law, as established in Solosky; Descôteaux; Smith v. Jones, [1999] 1 S.C.R. 455 at 474‑476; Lavallee; Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31 at paras. 14 to 21; Goodis v. Ontario (Ministry of Correctional Services), 2006 SCC 31 at paras. 12 to 25; and Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44 at paras. 9 to 11. In my view, however, the decisions do not detract from the approach described in Donell to determining what information, with respect to financial transactions in the hands of solicitors, is privileged.

[45]         As the Québec Court of Appeal noted in Chambre des notaires du Québec, after discussing the “quasi-absolute privilege” described by the Supreme Court of Canada:

[50]      That said—and it is also borne out by the aforementioned case law—not all information that passes between a client and his or her legal adviser is subject to professional secrecy, of course. So, what is subject to it must be distinguished from what is not. How can this be done? Per LeBel J. in Foster Wheeler [2004 SCC 18], we must “use an analytical method that upholds professional secrecy while allowing us to resolve difficulties of this sort”.

[Unofficial English translation provided by Société québécoise d’information juridique (SOQUIJ).]

Failing to Consider Alternate Remedies

[46]         The appellants say the chambers judge erred by ordering production of documents from the records of the solicitors when there was another source of the same information: Mr. Luu himself. In my view, there is no merit to this submission. While evidence should not routinely be sought in a client’s lawyer’s office and all reasonable alternatives to doing so must be canvassed, the application before the chambers judge in this case was not an end-run around a more appropriate procedure. The solicitors were not being used as a shortcut to evidence better sought elsewhere.

[47]         Mr. Luu is a party to these proceedings. Murray Jamieson continues to act for Mr. Luu in his personal capacity. He is not separately represented on this appeal, nor was he separately represented before the chambers judge. In effect, it is Mr. Luu advancing the claim for privilege and resisting the production of the information now in the hands of his solicitors. It is fair to presume he would oppose production of the information sought by asserting the same privilege if an application were brought in Hong Kong. The claim is properly determined here.