Canada: The Disappointed Beneficiary

The Supreme Court of Canada has cautioned all counsel that, amongst other matters, we must be skillful and careful, advise our clients of all matters relevant to our retainer and protect the interests of our clients. However, when it comes to drafting estate documents, does a duty of care extend to beneficiaries who may be disappointed by a Will that is found to be invalid?

This body of case law begins to develop in the 1979 English decision in Ross v. Caunters¹. In this decision a solicitor prepared a Will for the testator and sent it to the testator for her to attend to execution. The solicitor failed to warn the testator that her husband could not be a witness to the Will as it would render her husband's gift void. The Court found this to be negligent on the part of the solicitor and found the solicitor to be liable to the husband.

The English Courts considered these issues again in 1995 when a prospective beneficiary sued the testator's solicitors for negligent delay in preparing the testator's new Will². In White, the testator had an unfortunate falling out with his children and had a Will drafted that cut them out entirely from the estate. Fortunately, the testator and his children mended their differences and the testator gave his solicitor instructions on July 17, 1986 that he wanted a new Will created that included his children. The solicitor did not make an appointment with the testator to have his new Will executed until September 17, 1986 (and did not begin the drafting process itself until September). As fate would have it, the testator passed on September 14, 1986 and was not able to execute a new Will. Interestingly, the Court awarded damages to the prospective beneficiary noting that "the only person who may have a valid claim has suffered no loss, and the only person who has suffered a loss has no claim." It is an important practice point that Courts have held that a two month delay in preparing a Will can constitute negligence.

The rule in White was later adopted by the Saskatchewan Court of Appeal in the Hickson v. Wilhelm³decision. The unfortunate lawyer in this decision failed to ascertain that farmland that was the subject of certain bequests was owned by the testator's corporation and not the testator himself and thus the bequests failed. The Court found the lawyer's actions to be negligent and awarded damages to the disappointed beneficiaries.

The Alberta Court of Appeal was required to consider the disappointed beneficiary rule in the 2004 decision in Graham v. Bonnycastle⁴. The Court held that the duty owed by the solicitor when drafting estate documents is to the third party as well as the client to use proper care in carrying out the client's instructions for conferring the benefit on the third party. The Court noted that liability is limited to situations where there is an identified third party beneficiary and the solicitor knew of the client's intention to benefit that individual and there is not a conflict of interest between the third party beneficiary and the client The most recent Alberta decision that considers the disappointed beneficiary rule is in Meier v. Rose⁵. The facts in Meier are quite similar to Hickson wherein the solicitor neglected to ascertain that certain lands were owned by the testator's corporation and not the testator himself. The Court held in paragraph 53 that "In receiving instructions for the preparation of a will, a solicitor is entitled to place an appropriate degree of reliance upon the client and the information he provides, having regard to the circumstances of the engagement. However, a solicitor is not relieved from the responsibility to ensure that his instructions are complete and sufficiently accurate in law or otherwise so that the work undertaken by solicitor on behalf of a client will achieve the intended result. The standard of care goes beyond simply recording the testator's wishes and preparing the will, without anything further, in circumstances where the reasonably competent solicitor should be alert to the need to clarify certain information." The Court held that the solicitor had breached the standard of care placed upon him and that he was liable to the disappointed beneficiary. The Court noted that even though the testator was in a hurry to get their Will done, as so often many clients are, this did not provide a justification for not verifying the ownership of the land. The Court largely came to this conclusion because the solicitor had some knowledge that the testator used a corporate vehicle to own some of his land.

In summary, when drafting Wills for our clients, we owe a duty of care to identified third party beneficiaries so long as:

a. There is no possibility of conflict between the interests of our client and the third party;

b. We knew of our client's intention to benefit that third party beneficiary;

c. The scope of that duty is to use proper care in carrying out the client's instructions for conferring the benefit on the third party; and

d. It is not sufficient for us to blindly take instructions and to record them in the Will, we have an obligation to ensure that the instructions are complete and sufficiently accurate in law in order to achieve the desired result. However, we are entitled to place an appropriate degree of reliance upon the client and the information provided, having regard to all of the circumstances.

Footnotes

1. [1979] 3 All E.R. 580 (Ch D).

2. White v. Jones, [1995] 1 All ER 691 (HL).["White"]

3. 2000 SKCA 1, leaved denied [2000] SCCA No. 124.["Hickson"]

4. 2004 ABCA 270, leave denied [2004] SCCA No. 489.

5. 2012 ABQB 82["Meier"]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.