Does solicitor/client privilege extend to trustee, beneficiary?
Last week we considered the application of solicitor/client privilege to a deceased testator and their testamentary intentions. A further consideration in examining the passing of solicitor/client privilege upon death is whether the individual claiming privilege is a trustee, executor, or a beneficiary.
Trustees, executors, and beneficiaries are generally regarded as having a community of interest, which may entitle them to solicitor/client privilege. Under the common law, there is not a need to protect communications between solicitors and clients from disclosure to persons who are claiming under the estate where the executor (or trustee) and beneficiary have a joint interest in the advice. The common interest/joint interest provision applies so that no privilege will attach to communications between a solicitor and client against a person who has a joint interest with the client in the subject matter of the communication. There can be no privilege asserted against beneficiaries of a trust over communications between a trustee and a trustee’s solicitors regarding the business and affairs of the trust.
Re Ballard Estate, (1994), 20 OR (3d) 189 (Ont. Gen. Div.), held that documents will be said to belong to a beneficiary because the solicitor was engaged and giving advice in regard to the administration of the estate and for the benefit of all beneficiaries who take or may take under the will or trust.
Pursuant to paragraph 16 of Chang v. Lai Estate, 2014 BCSC 128, “it is well established that a beneficiary has a proprietary interest in and a right to production of any document relating to advice sought and obtained by an executrix or trustee in connection with the administration of an estate. The executrix cannot claim solicitor/client privilege over such documents because they have a commonality of interest with the beneficiaries in the administration of the estate.” As such, the advice taken by a trustee or an executor is for the benefit of all beneficiaries of the will, establishing a joint interest between the executrix and beneficiaries.
The aforementioned case further highlighted that a beneficiary is not entitled to the production of all communications between legal counsel and an executor. If there is an adversarial relationship between a trustee and a beneficiary, there is no joint interest that would compel disclosure of communications that would normally be protected by solicitor/client privilege. Where a beneficiary is in an adversarial relationship with the executor, solicitor/client privilege would appear to remain in place to preserve confidentiality
Moreover, if litigation is commenced against a third party on behalf of the trust, the trustee cannot generally claim privilege as against the beneficiary, as the beneficiary has an interest in the outcome of the litigation. However, pursuant to the case of Talbot v. Marshfield , if a trustee is in litigation against a beneficiary, and especially if the trustee is paying their own legal costs, the trustee can generally uphold privilege as against the beneficiary.