Independent Legal Advice

Independent Legal Advice

Zeligs v Janes 2015 BCSC 7 cited two maritime decisions with approval that were followed in BC in Mondolese v dDelac 201BCSC 82 as to the adequacy of independent legal advice( ILA) , particularly  in an undue influence case.

The absence or lack of adequacy of independent legal advice can be significant in many types of claims such as contractual and undue influence.

Legal advice is not always essential in all circumstances where undue influence is alleged.

However, the absence of independent legal advice would make the burden of proof to rebut the presumption of undue influence onerous. Dempsey v Dempsey 2010 NSSC 44

Mondonese v Delac estate 2011 BCSC 82 is a good starting point as a framework for discussing independent legal advice in the context of the presumption of undue influence in situations such as caregivers:

1. whether the party benefiting from the transaction is also present at the time the advice is given and/or at the time the documents are executed;
2. whether though technically acting for the grantor, the lawyer was engaged by and took instructions from the person alleged to be exercising the influence;
3. in a situation where the proposed transaction involves the transfer of all or substantially all of a person’s assets, whether the lawyer was aware of that fact, and discuss the financial implications with the grantor;
4. whether the lawyer inquired as to whether the donor or discuss the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place.

What to Look For in Independent Legal Advice

What to Look For in Independent Legal Advice

In the practice of estate litigation one of the most important aspects of each claim is to determine whether or not independent legal advice was provided where the transaction is suspect.

One of the leading decisions on independent legal advice is Gold v. Rosenberg (1997) 3 SCR with the Supreme Court of Canada stated the following at paragraphs 84-86:

“One can explain the necessity for independent legal advice in that case, by noting that Mrs. Bertolo was incapable without such advice of understanding any aspect of the transaction.

I need only quote from the Court of Appeal’s description of her at paragraph 579:

She has no business experience a little formal education. She is not fluent in English and is unable to read and discern such documents as promissory notes, collateral mortgages and financial statements.

Whether or not someone requires independent legal advice will depend on two principal concerns:

Whether they understand what is proposed to them, and whether they are free to decide according to their own will

The first is a function of information and intellect, while the second will depend amongst other things, and whether there is undue influence.

The court upheld the Ontario Court of Appeal decision that found that Mrs. Bertolo could not possibly have understood what she was agreeing to. The Ontario Court of Appeal held that she ought to have had independent legal advice and that she did not get it, first, because the lawyer she met work for the same firm that represented her son and the bank, and second because the nature and consequences of the transaction were not explained to her.”

7 Factors to Look For In Independent Legal Advice

1. The person taking advantage of the wealth transfer is present at the time, the advice is given or the time the documents are signed;

2. Some or all of the instructions of come from the person taking advantage from the transaction;

3. The lawyer does not have a full understanding of the client’s overall asset picture, and is unable to assess her to discuss the extent to which it will impoverish them;

4. The lawyer has any prior professional relationship with the person taking advantage;

5. The lawyer has a past or current personal relationship with the person taking advantage ( for example childhood friend, best friend her employer’s wife, etc.);

6. The lawyer is upon close scrutiny really acting for someone other than the client, or is acting in a joint retainer with the person taking advantage;

7. Any part of the fees are being paid by the person taking advantage under relationship rather than the client himself or herself

Independent Legal Advice Necessary

Independent Legal Advice Necessary

Bertolo v Bank of Montreal 1986 CarswellOnt 801, a decision of the Ontario Court of Appeal was one the earlier cases in Canada to support the legal proposition that independent legal advice(ILA) must be present, if in this situation, a bank is to rely upon suing a guarantor who did not receive same.

The Plaintiff’s son sought a loan from bank and the bank requested its solicitor to arrange for plaintiff, who was providing security for loan, to have independent legal advice.

The solicitor however arranged for the elderly plaintiff to consult with partner in same law firm.

The law partner provided the bank with letter confirming independent legal advice.

The son’s business failed and the bank demanded repayment of loan.

The elderly plaintiff sued and succeeded in having the promissory note declared invalid both at trial and on appeal.

The Courts held that the plaintiff received no independent legal advice.

Where plaintiff’s son and the bank possessed a mutual interest in completing the transaction, the solicitor acting on their behalf and the members of the firm are under a duty to disclose that interest to the plaintiff.

A lawyer, whether a partner or associate of a firm, is not to be viewed as an entity separate and apart from the firm or the member acting in a particular matter for the purpose of determining whether or not he or she is in a conflict of interest position. Where the member acting in the matter would be in a conflict of interest position if he were to advise another client, so also would his partner or associate.

The plaintiff, an elderly widow, possessed little formal education, was not fluent in English language, lacked business experience, and was unaware of terms of loan or restaurant purchase.

The plaintiff became the principal debtor by executing a promissory note secured by a mortgage on her home.

The plaintiff received no advice concerning legal obligations and risks to her property. The plaintiff was at a disadvantage in dealings with the bank and the latter was not entitled to recover where knowing or ought to have known that debtor not receiving independent legal advice.

Ensuring Independent Legal Advice

Ensuring Independent Legal Advice

Many transactions are set aside in British Columbia by the courts on the basis that true independent legal advice was not obtained by the person making a radically changed will or transferring an asset for little or no consideration.

A lawyer’s duty in such situations is to be the vanguard of providing true Independent legal advice (ILA) so as to protect  a victim of  undue influence or lack of mental capacity being taken advantage of by an unsavory character.

Thus it is critically important for the lawyer to ensure that he or she is in a position to provide truly independent legal advice to the client.

At any given time I have a case where that has not been the case.

For example a lawyer takes instructions form a daughter of the deceased that her mother wishes to transfer her property into joint tenancy with the daughter.

The lawyer meets with them both at the same time, confirms the instructions with the mother in the presence of the daughter, and transfers the property into joint tenancy for m$1 consideration, and renders the account to the daughter.

The client in that case is the daughter, not the mother. The mother has in effect given away all of her assets to the daughter without the benefit of any legal advice, let alone independent legal advice.

The mother in that scenario might well have balked at doing such had she received true independent legal advice. The lawyer acting for both the daughter and the mother is in a conflict of interest.

7 Reasons a Lawyer Cannot Provide Independent Legal Advice

Accordingly, a lawyer is not in a apposition to provide true independent legal advice if any one of the following is present (not an exhaustive list):

  1. The legal fees are being paid by the person taking advantage under the relationship rather than the person causing the transfer or changing will to be made;
  2. The lawyer does not have a full understanding of the clients total assets, income and expenses and is unable to assess a discuss with the client the extent to which it may leave them vulnerable or impoverished.Detailed notes of the financial situation of the possible victim should be entered contemporaneously.;
  3. The lawyer has a prior professional relationship with the person taking advantage;
  4. Some or all of the instructions have come from the party taking advantage;
  5. The lawyer has a past relationship such as personal, friendship, or the like with the party taking advantage;
  6. The lawyer is acting in a purported joint retainer with the person taking advantage;
  7. The party taking advantage is present at the time the advice or instructions are given or when the documents are signed

If any of the after said situations are present, then it is incumbent on the lawyer to refer the client out to another lawyer for true independent legal advice without any involvement of the party taking advantage.

There is a failure on the part of the lawyer to ask probing questions as to the reason for the will change or transfer of property for no consideration and to ensure that the client attains a true and complete understanding of all its implications.

In my experience as a BC Lawyer,  after a full and complete understanding is brought to bear, clients will often balk at entering into the change of will or property transaction. It is common that elderly persons are often pushed into a transaction based on poor explanation or untruths about other interested parties.