Gault v. Gault – 2016 ABCA 208 (CanLII)
http://canlii.ca/t/gsc28
Solicitor Client Privilege and Deceased Parties
The Alberta Court of Appeal recently examined whether the files of an accountant and lawyer retained by a party to an estate proceeding, who subsequently died, were producible and whether the accountant and lawyer could be examined under oath. This case also addressed whether the gross amount of legal fees an estate paid should be disclosed, or whether it would reveal privileged information.
Gault Estate v. Gault Estate[1] arises from a second marriage that took place in 1975 where both the husband and wife had three sons each from previous marriages. The husband and wife had entered into a prenuptial agreement to keep their property separate and for both parties to contribute to the household finances. In 2009 the husband’s cognitive functions began to decline and substitute decision makers were appointed to assist with his personal and property decisions. He died in 2014. His will left no monetary bequest to the wife.
The Litigation & Motion for Disclosure
After her husband’s death, the wife commenced an action for unjust enrichment alleging that the husband under-contributed to the household expenses causing him to be unjustly enriched and entitling the wife to a portion of his estate, notwithstanding the pre-nuptial agreement. The estate trustees of the husband’s estate launched a counterclaim alleging that the wife was the one who was unjustly enriched. The wife then died in 2015 but the litigation continues.
During the pursuit of the claims a dispute arose between the parties about the disclosure of certain documents and evidence. The wife had consulted an accountant and a lawyer with respect to her rights vis-à-vis the estate of her husband as early as 2009 or 2010. The husband’s estate trustees demanded production of these records for the purposes of bringing a summary dismissal application arguing that the wife’s claim was statute barred based on the expiry of the limitation period. Their theory was that the wife was aware of her claim against his eventual estate when she spoke with the lawyer and accountant in 2009 or 2010 and that is when the limitation period began to run. They also sought to examine the lawyer and accountant under oath.
The Appeal
After losing their motion, the husband’s estate trustees appealed to the Alberta Court of Appeal, where that Court held that:
[10] . . . [t]he case management judge correctly ruled, however, that the files of the lawyer are protected by solicitor-client privilege, because that file consists of communications with the client, and the advice given to her. The records of the accountant, to the extent that they were created for the dominant purpose of litigation, are subject to the litigation privilege. These documents need not be produced; there is no exception to privilege for the purposes of making out a limitation defence. . . Further, neither the lawyer nor the accountant may be examined . . . with respect to privileged information.
The husband’s estate argued that privilege does not extend to “facts” that are communicated by the client to the lawyer, if they are “neutral facts” that exist independent of the client’s communication. However, the Alberta Court of Appeal noted that the Supreme Court of Canada recently rejected the suggested that “facts” are not protected by privilege in Canada (Attorney General) v Chambre des notaires du Quebec 2016 SCC 20. Attempting fine distinctions between “fact” and “communication” runs the risk of seriously emasculating the privilege:
[13] It is difficult to perceive of a more pervasive breach of solicitor-client privilege than to acknowledge the exception to the privilege put forward by the appellant. [The wife] was entitled to tell her lawyer her expectations, perceptions, inferences, knowledge, and other information about her potential claim with the full expectation that what she told her lawyer would not leave the room. Her mindset and state of knowledge with respect to her grievance, as communicated to the lawyer from whom she was seeking advice, cannot be described as “neutral facts”. Even if her state of mind could be described as a “fact”, solicitor-client privilege must extend to her discussions with her solicitor about that state of mind.
[14] Likewise, any communications with the accountant with a view to obtaining his professional assistance in contemplation of litigation against the estate of [the husband] are privileged, so long as the communications were for the dominant purpose of the litigation. As noted, the respondent does not dispute that background financial information is producible, notwithstanding that it might have been delivered to the accountant or the lawyer [emphasis added].
The Court of Appeal also refused to allow an examination of the lawyer and accountant, even though the wife was deceased, as the death of a party is not a basis for setting aside privilege.[2]
Are Legal Fees Privileged?
The final issue the Court decided was whether the estate trustees for the husband’s estate were required to disclose the amount of legal fees paid by the estate. The trustees argued the amount was privileged. The Court noted that the Chambre des notaires du Quebec case (mentioned above) and its companion case Canada (National Revenue) v Thompson 2016 SCC 21 confirmed that the amount and content of a lawyer’s accounts may reveal privileged information, so accordingly there is a rebuttable presumption that the amount of fees paid is privileged.[3] However, the wife’s estate is a contingent beneficiary of the husband’s estate and so may be entitled to an accounting in due course. The motion judge found that there was no reasonable possibility of the amount of fees paid by the estate would “directly or indirectly” reveal any communications protected by privileged. The Court of Appeal deferred to the motion judge and found that there was no reviewable error.
Conclusion
This decision confirms that solicitor client privilege and litigation privilege are still strongly protected by our Courts. For the most recent overview of the state of solicitor client privilege in Canada it is helpful to review the Supreme Court of Canada cases, Canada (Attorney General) v Chambre des notaires due Quebec 2016 SCC 20 and its companion decision, Canada (National Revenue) v Thompson 2016 SCC 21.
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[1] 2016 ABCA 208 [“Gault”].
[2] Gault at para. 15.
[3] Gault at para. 21.
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Written by: Kimberly A. Whaley
Posted on: August 28, 2016
Categories: Commentary, WEL Newsletter
http://canlii.ca/t/gsc28
Solicitor Client Privilege and Deceased Parties
The Alberta Court of Appeal recently examined whether the files of an accountant and lawyer retained by a party to an estate proceeding, who subsequently died, were producible and whether the accountant and lawyer could be examined under oath. This case also addressed whether the gross amount of legal fees an estate paid should be disclosed, or whether it would reveal privileged information.
Gault Estate v. Gault Estate[1] arises from a second marriage that took place in 1975 where both the husband and wife had three sons each from previous marriages. The husband and wife had entered into a prenuptial agreement to keep their property separate and for both parties to contribute to the household finances. In 2009 the husband’s cognitive functions began to decline and substitute decision makers were appointed to assist with his personal and property decisions. He died in 2014. His will left no monetary bequest to the wife.
The Litigation & Motion for Disclosure
After her husband’s death, the wife commenced an action for unjust enrichment alleging that the husband under-contributed to the household expenses causing him to be unjustly enriched and entitling the wife to a portion of his estate, notwithstanding the pre-nuptial agreement. The estate trustees of the husband’s estate launched a counterclaim alleging that the wife was the one who was unjustly enriched. The wife then died in 2015 but the litigation continues.
During the pursuit of the claims a dispute arose between the parties about the disclosure of certain documents and evidence. The wife had consulted an accountant and a lawyer with respect to her rights vis-à-vis the estate of her husband as early as 2009 or 2010. The husband’s estate trustees demanded production of these records for the purposes of bringing a summary dismissal application arguing that the wife’s claim was statute barred based on the expiry of the limitation period. Their theory was that the wife was aware of her claim against his eventual estate when she spoke with the lawyer and accountant in 2009 or 2010 and that is when the limitation period began to run. They also sought to examine the lawyer and accountant under oath.
The Appeal
After losing their motion, the husband’s estate trustees appealed to the Alberta Court of Appeal, where that Court held that:
[10] . . . [t]he case management judge correctly ruled, however, that the files of the lawyer are protected by solicitor-client privilege, because that file consists of communications with the client, and the advice given to her. The records of the accountant, to the extent that they were created for the dominant purpose of litigation, are subject to the litigation privilege. These documents need not be produced; there is no exception to privilege for the purposes of making out a limitation defence. . . Further, neither the lawyer nor the accountant may be examined . . . with respect to privileged information.
The husband’s estate argued that privilege does not extend to “facts” that are communicated by the client to the lawyer, if they are “neutral facts” that exist independent of the client’s communication. However, the Alberta Court of Appeal noted that the Supreme Court of Canada recently rejected the suggested that “facts” are not protected by privilege in Canada (Attorney General) v Chambre des notaires du Quebec 2016 SCC 20. Attempting fine distinctions between “fact” and “communication” runs the risk of seriously emasculating the privilege:
[13] It is difficult to perceive of a more pervasive breach of solicitor-client privilege than to acknowledge the exception to the privilege put forward by the appellant. [The wife] was entitled to tell her lawyer her expectations, perceptions, inferences, knowledge, and other information about her potential claim with the full expectation that what she told her lawyer would not leave the room. Her mindset and state of knowledge with respect to her grievance, as communicated to the lawyer from whom she was seeking advice, cannot be described as “neutral facts”. Even if her state of mind could be described as a “fact”, solicitor-client privilege must extend to her discussions with her solicitor about that state of mind.
[14] Likewise, any communications with the accountant with a view to obtaining his professional assistance in contemplation of litigation against the estate of [the husband] are privileged, so long as the communications were for the dominant purpose of the litigation. As noted, the respondent does not dispute that background financial information is producible, notwithstanding that it might have been delivered to the accountant or the lawyer [emphasis added].
The Court of Appeal also refused to allow an examination of the lawyer and accountant, even though the wife was deceased, as the death of a party is not a basis for setting aside privilege.[2]
Are Legal Fees Privileged?
The final issue the Court decided was whether the estate trustees for the husband’s estate were required to disclose the amount of legal fees paid by the estate. The trustees argued the amount was privileged. The Court noted that the Chambre des notaires du Quebec case (mentioned above) and its companion case Canada (National Revenue) v Thompson 2016 SCC 21 confirmed that the amount and content of a lawyer’s accounts may reveal privileged information, so accordingly there is a rebuttable presumption that the amount of fees paid is privileged.[3] However, the wife’s estate is a contingent beneficiary of the husband’s estate and so may be entitled to an accounting in due course. The motion judge found that there was no reasonable possibility of the amount of fees paid by the estate would “directly or indirectly” reveal any communications protected by privileged. The Court of Appeal deferred to the motion judge and found that there was no reviewable error.
Conclusion
This decision confirms that solicitor client privilege and litigation privilege are still strongly protected by our Courts. For the most recent overview of the state of solicitor client privilege in Canada it is helpful to review the Supreme Court of Canada cases, Canada (Attorney General) v Chambre des notaires due Quebec 2016 SCC 20 and its companion decision, Canada (National Revenue) v Thompson 2016 SCC 21.
—
[1] 2016 ABCA 208 [“Gault”].
[2] Gault at para. 15.
[3] Gault at para. 21.
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