Marusin v Brian WL Tod Professional Corporation, 2014 ABQB 743

Court of Queen ’ s Bench of Alberta Citation: Marusin v Brian WL Tod Professional Corporation, 2014 ABQB 743 Date: 20141205 Docket: 0603 16057 Registry: Edmonton Between: Robert Marusin and 724145 Alberta Ltd. Plaintiffs - and - Brian W.L. Tod Professional Corporation, Brian W.L. Tod, Wendi P. Crowe, Miller Thomson LLP and John Doe Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice L.D.

Acton _______________________________________________________ Introduction [ 1 ] Robert Marusin and his holding company sue Miller Thomson and some of its lawyers for negligence in connection with the preparation of his father’s last will and testament. Among other things, they allege that Miller Thomson failed to prepare a simple additional document to reflect a contractual agreement between Robert and his father regarding his father’s estate.

Evidence [ 2 ] Robert Marusin’s father, Peter Marusin, was born in 1929. Peter married Robert’s mother in 1958. Robert was born in 1973. Robert was Peter’s only biological child. The marriage ended in divorce in 1978. [ 3 ] Peter was friendly with the Sakowsky family, which included Audrey and her two children, Kris and Susan. In 1984, Mr. Sakowsky died and his family endured a difficult grieving period.

Peter helped Audrey with the grieving process and, over the years, they developed a romantic relationship. [ 4 ] In 1989, when Robert was 16 years old, Peter encouraged him to come and work with him in Peter’s insurance business, MBS Insurance Brokers (MBS Insurance). Robert did so. [ 5 ] In 1990, Peter incorporated a holding company, 424124 Alberta Ltd. (424124). [ 6 ] Directly after high school, with Peter’s encouragement, Robert commenced working full-time in Peter’s insurance business. Robert was 18 at the time.

He obtained his insurance licence a week after his high school graduation and started selling personal and commercial insurance. [ 7 ] In 1992, Peter married Audrey. [ 8 ] Prior to 1993, Peter was sole shareholder of 424124. 414124 was a 52% shareholder in MBS Insurance. Three other shareholders held 16% each in MBS Insurance. [ 9 ] In 1993, the Alberta Government began to take steps to privatize the registry business. Robert did the legwork to get Peter and Robert started in the registry business under the name MBS Registry Services Ltd. (MBS Registry).

Robert sold licence plates out of the MBS Insurance office until the government insisted that they be sold only out of the MBS Registry office. They hired Joan Keereweer and she was given one share (7%) in MBS Registry.

MBS Insurance owned 50% of the shares. (Again, 424124 Alberta Ltd. owned 52% of the shares in MBS Insurance.) Other employees subscribed to the remaining shares. [ 10 ] MBS Registry ran successfully and generated income with Joan Keereweer as the hands-on manager of the office. [ 11 ] In 1993, Peter re-organized 424124 to effect an estate freeze by issuing 20 Class “A” common shares to Robert and 20 Class “A” common shares to Audrey. Peter told Robert that he was giving 20 shares to him in recognition of the work he had done and would do. Peter held 60 Class “A” common shares.

Peter also held 100 Class “D” preferred shares with a fair market value of $499,000 and 100 Class “E” preferred shares with fair market value of $464,480. Robert was not aware of Peter’s preferred shares at the time. [ 12 ] In 1994, Robert bought one Class “B” non-voting share in MBS Registry for $5,000. MBS Insurance held all 12 Class “A” shares in MBS Registry.

Seven Class “B” non-voting shares were held by six individuals, including the one share held by Robert. [ 13 ] In 1996, Peter formed a relationship with the owner of Kramer Insurance and Robert started working at that office. [ 14 ] In January 1997, Robert transferred his 20 shares in 424124 to his holding company, 724145 Alberta Ltd. (724145). The agreement stated the fair market value as being $20.

He testified that this value was attributed solely for tax purposes. [ 15 ] In early 1997, Robert purchased the assets of Kramer Insurance with respect to the personal lines of insurance through Robert’s company, 724145. He raised the $240,000 for this purchase by mortgaging his house and obtaining a vendor take back loan from Mr. Kramer. Robert changed the name from Kramer Insurance to MBS Insurance Brokers North. Robert worked at that office. He retained Mr. Ron Brunet at Kingston Ross Pasnak (KRP) as his personal and corporate accountant. Mr.

Brunet also provided accounting services to Peter, MBS Insurance Brokers and MBS Registry. [ 16 ] In late 1997, Peter gave Robert $25,000. Robert testified that Peter said it was a gift as he knew how hard it was to get started in life.

They never spoke of it again until a meeting at Miller Thomson on November 16, 2000. [ 17 ] In June 1998, Robert sold his one Class “B” share in MBS Registry to 414124 for $10,000. [ 18 ] Robert testified that Peter told him many times over the following years that he wanted Robert to have MBS Registry, or at least Peter’s shares in MBS Registry, when he passed away, so Robert always expected to receive this upon his father’s death. [ 19 ] In the fall of 1998, Peter’s company 414124 sold its 52% interest in MBS Insurance to one of the 16% shareholders, Al Symington.

Robert acted as the “go-between” as there had been a falling out between Peter and Al. [ 20 ] Brian Tod from Cook Duke Cox did the legal work for the sale. Ultimately, Mr. Symington purchased 414124’s 52% interest in MBS Insurance for $700,000 cash plus a management fee for Peter to assist with managing the business over 5 years. Robert does not know exactly what happened to the $700,000. At the same time, 414124 purchased the 50% share in MBS Registry owned by MBS Insurance. Robert’s evidence was that Peter never provided any management services for MBS Insurance during the contemplated 5 year period.

Robert never received any of the management fees. [ 21 ] Following this transaction, 414124 owned MBS Registry with the exception of one share owned by Joan Keereweer. As employees left MBS Registry, their shares had been repurchased. [ 22 ] The overall effect of these transactions was that Peter, Robert and Audrey gave up 414124’s interest in MBS Insurance, and MBS Insurance gave up its interest in MBS Registry, giving Peter full effective control of MBS Registry. Robert was not an officer, director or employee of 424124. Joan Keereweer was managing MBS Registry. Robert was involved in only a minor way in MBS

Registry. [ 23 ] Shortly after 414124 sold its shares in MBS Insurance in 1998, Peter retired from active business. With some of the proceeds, 414124 purchased and renovated a house in Phoenix.

From that time forward, Peter and Audrey spent 6 months each year in Phoenix. [ 24 ] In 2000, Peter instructed his accountants at KRP to prepare for a corporate re-organization and new Wills for Peter and Audrey in order to set up an estate freeze which would divide the assets being held in 414124 among three companies. [ 25 ] The accountants devised a plan to achieve the overall objectives through re-organization, the purchase of insurance and new Wills. [ 26 ] It appears from a memo to Peter and Audrey from KRP and a letter to Miller Thomson (Exhibits 6 and 7) that Peter neither sought nor received legal advice on this arrangement.

He sought and received only accounting advice in developing the plan. [ 27 ] After Peter approved the plan that KRP had devised upon his instructions, it was sent to Brian Tod at Miller Thomson, who was to prepare the legal documents to bring the plan into effect. Mr. Tod assigned the majority of the work to Wendi Crowe. [ 28 ] There was no evidence that Peter ever sought from any of the lawyers at Miller Thomson a legal opinion as to the advisability of the plan, or its strengths and potential weaknesses from a legal perspective, on either corporate issues or testamentary issues. [ 29 ] Ms.

Crowe took her instructions from KRP and went to work to document the plan set out in the letter and memo Miller Thomson had received from KRP. [ 30 ] In that material, KRP stated the conclusion that the Class “A” common shares had not increased in value. Ms. Crowe was unaware that from 1993 to 2000, 414124 had sold MBS Insurance for $700,000, had acquired all except one share (7%) in MBS Registry, and had purchased a house in Phoenix. Ms. Crowe testified that she had no information other than what she reviewed in the minute book and the memo from KRP.

She had no independent information as to the value of the shares or whether they had increased or decreased in value over the period from 1993 to 2000, and it was of no concern to her. [ 31 ] Robert testified that he understood that there were no formal evaluations done, and that the KRP attribution of $20 as the value of his shares in 414124 was unsubstantiated and was for the sole purposes of the re-organization. However, the Plaintiffs did not adduce any evidence as to the fair value of any of the shares or assets at that time. [ 32 ] Ms.

Crowe explained that an estate freeze is a type of re-organization where an owner can transfer growth in a company by issuing common shares for a nominal amount, setting the redemption amount for preferred shares as of a set date, and establishing a specific value for other preferred shares. This is a means by which to ensure that future growth will increase the value of the common shares. This was the objective of the estate freeze designed by Ms. Crowe, and documented in 2000.

The effective date for the purpose of the s. 85 rollover under the Income Tax Act , RSC 1985, c 1 (5th Supp) was May 1, 2000. [ 33 ] Once the necessary corporate papers had been drafted, Ms. Crowe sent them to KRP for review and approval before proceeding further. [ 34 ] Ms. Crowe spoke to Peter on the phone about the Wills portion of the plan and communicated with him and Audrey to ensure that the draft Wills were satisfactory. Ms. Crowe explained to Peter that Audrey could not be a trustee of her own trust.

Peter indicated that he did not want the children to be the trustees of the spousal trust, so they agreed on a unanimous co-executorship to resolve that concern. As a result, Peter’s Will appointed Audrey, Robert and Kris Sakowsky as co-executors, requiring that their decisions be unanimous. [ 35 ] After confirming Peter and Audrey’s instructions for the Wills, and receiving approval from KRP on the corporate documentation, Ms. Crowe arranged to meet with Peter and Audrey on November 16, 2000 to sign the documents. [ 36 ] Peter told Robert he was having an estate plan prepared by KRP and Miller Thomson.

He told Robert that part of the plan was for Robert to get the shares of MBS Registry when Peter died. He sent Robert a copy of an agenda (Exhibit 11) which he had received from Ms. Crowe. Peter told Robert the agenda was to be used for the meeting at Miller Thomson on November 16, 2000. He asked Robert to attend.

Robert did not receive the final copy of the agenda, nor any copies of documents to be discussed at the meeting. [ 37 ] Robert candidly testified in cross-examination that Peter did not expressly state that he was making an irrevocable, binding contract to gift the shares in MBS Registry to Robert on his death. [ 38 ] Robert did not tell anyone at the meeting that he had the draft agenda. Neither Mr. Tod nor Ms. Crowe had any contact or discussion with Robert regarding the documentation to be signed. They sent him no documents, nor did they expect to see him at the November 16, 2000 meeting.

They also did not expect to see Kris at the meeting, and neither one remembers Kris being there. However, Kris testified that he was there at Peter and Audrey’s request because he was to be a co-executor of the estate. He has no recollection of anyone discussing or mentioning an agreement between Robert and Peter during the meeting. [ 39 ] The accountants attended the meeting and explained many of the reasons for moving the assets from 414124 into three corporations.

The plan resulted in division of 414124’s assets among the following three companies: 1) 414124 would hold the house in Phoenix and be owned by Audrey; 2) 858703 Alberta Ltd. (858703) would hold Peter’s marketable securities, and be owned jointly by Peter and Audrey; and

3) 858697 Alberta Ltd. (858697) would hold MBS Registry. [ 40 ] The plan was that 724145 (Robert’s company) would receive 80 of the common shares of 858697 and Peter would receive 20 common shares. 724145 would give up its 20 common shares (20%) in MBS Registry in return for the 80 common shares (80%) in 858697. [ 41 ] Peter retained control of MBS Registry as only he held Class “E” voting preferred shares in 858697, which were attributed a value of $250,181 effective May 1, 2000 for the purposes of the s. 85 rollover. Ms.

Crowe explained this to those present as she had the s. 85 rollover documentation signed at the meeting with respect to these preferred shares. [ 42 ] As at the start of the meeting, Robert was not aware as to whether his shares were voting or non-voting. He was not aware of other classes of shares, nor that Peter owned Class D and Class E preferred shares. He was not aware of the rights attached to the various classes of shares in 414124. He was not aware of the prior estate freeze. [ 43 ] During the meeting, Ms.

Crowe went around the table, handing out the documents, explaining to the group what each document was, and having them signed one by one. The meeting took about two hours. [ 44 ] Mr. Tod did not expect to be present at the meeting on November 16, 2000, having had a previous commitment to be in Calgary that day. However, he was in Edmonton and decided to pop in during a break in a conference call. At that time, he learned that Peter wanted him to explain to Robert the reason for a promissory note to be made by Robert’s company, 724145, in favour of the new company in which he was receiving shares, 858697.

There had been no promissory note between the companies prior to this time. Robert did not tell Mr. Tod that 724145 did not owe 414124 any money. Mr. Tod had to inquire of Ms. Crowe, and after being briefed, he explained the effect of the note to Robert. Mr. Tod remembers Robert asking him if he would have to pay it back right away. Mr. Tod told Robert this would be up to Peter. Robert does not remember this. Mr. Tod then left the meeting. [ 45 ] Peter did not demand payment of the $25,000 note.

Peter did not say it was a gift. [ 46 ] Robert said no money changed hands, but he acknowledged receipt of payment for shares during that meeting. Robert did not ask for copies of documents at the time, although he had previously received copies of documents in relation to his own prior business transactions. [ 47 ] Robert agreed on cross-examination that he was never told that the only way Peter could accomplish his objectives would be for Rob to give up his shares in 414124.

From his perspective, he was giving up something of value in order to receive MBS Registry on Peter’s death. [ 48 ] No one explained what an estate freeze was, nor that an estate freeze was occurring. Robert was aware that some of the value of 414124 was attributed to a class of shares other than the class to be owned by 724145. He knew there were a couple of million in assets. He thought that his 20 shares in 414124 were worth 20% of total value or $400,000.

No one explained his shares were not worth that amount. [ 49 ] After the corporate documents were signed, Robert left the meeting and both Peter and Audrey signed their Wills. Peter’s Will included provisions to the effect that Rob would receive the proceeds of a Manulife Universal life insurance policy. The proceeds of all other existing life insurance policies would be paid to Audrey. The Will included a declaration under the Insurance Act , RSA 2000, c. I-3 empowering the Trustees to deal with the proceeds as a separate fund forming no part of the estate.

The Will also included a specific bequest to Robert of all of Peter’s legal and beneficial interest in 858697. [ 50 ] As a result of the re-organization, Peter was the controlling shareholder, as well as director and officer, of 858697 and 858703. [ 51 ] Robert and Peter never had any discussions about what would happen if circumstances changed after the re-organization.

Robert trusted Peter to run MBS Registry as a profitable enterprise until his death. [ 52 ] Notwithstanding that Peter was not doing any work for MBS Registry, he drew $5,000 each month from 858697 and received dividends on his preferred shares during his retirement. Indeed, that was Peter and Audrey’s primary source of income in their retirement. Robert was aware of this. [ 53 ] In 2002, Peter and Audrey met with a financial planner, Don Johnson. Robert was not aware of this at the time. Mr.

Johnson advised Peter that since their major income came from MBS Registry, Audrey might not have sufficient income if Peter died first. Mr. Johnson recommended that Peter change his Will to delay the gift of shares to Robert until after both Peter and Audrey had passed away. [ 54 ] As well, Peter had a life insurance policy designating Audrey as beneficiary. It was a term to 75 policy. Upon Mr. Johnson’s suggestion that Peter get it extended, Peter learned that it would cost $11,000 a year in premiums. Mr.

Johnson recommended that Peter change the beneficiary of his universal life insurance policy from Robert to Audrey and cancel the policy naming Audrey as beneficiary. There was no evidence that Miller Thomson was advised of this change. [ 55 ] Peter did both of these things. He contacted Ms. Crowe in 2002, and a Codicil was executed.

The Codicil deferred the gift of 858697 to Robert until Audrey died, and put the shares into the spousal trust in the interim, providing that all of the income from those shares was to be used for Audrey’s exclusive use only. [ 56 ] Peter never mentioned these changes to Robert. [ 57 ] KRP performed accounting work for Robert and 724145 until 2003. [ 58 ] Peter died on December 25, 2004.

[ 59 ] As at that date, 858697 owned MBS Registry. To that point, Robert had never received any income or dividends as a shareholder of MBS Registry. Peter was the sole director of 858697, and owned 100% of the voting shares. [ 60 ] Robert learned of the change in Peter’s Will. Robert told Audrey and Kris that Peter had told Robert he would get the MBS Registry shares when Peter died. He was upset and sought more information. Robert was concerned in part because he did not want to be involved in Audrey’s daily finances, nor would Audrey want that. [ 61 ] Robert told Ms.

Crowe in early January 2005 that Peter had promised to gift MBS Registry to him. Robert requested the minute books and financial information to try to understand what had happened. In a letter from Miller Thomson dated January 5, 2005, Ms. Crowe advised that Miller Thomson did not have the minute books. There is no evidence that they did have them at that time. She also noted in that letter that Peter had been the sole director, and his death left a decisional vacuum.

Kris testified that signing authority had to be established so that MBS Registry could advise the government of the change in control, complete required documentation, etc. Robert does not agree that there was any urgency in this regard. [ 62 ] Ms. Crowe did not recommend that Robert seek independent legal advice. Ms. Crowe acted for the estate until mid-April 2005. From January 2005 to mid-April 2005, Ms. Crowe maintained in discussions with Robert that it was Peter’s right to change his Will at any time, and he had changed it. During a telephone call with Ms.

Crowe in late April 2005, Robert discussed the possibility of purchasing the shares in 858967 by paying money into the spousal trust to settle the matter. In April or May 2005, Ms. Crowe told Robert that there was no confidentiality vis-à-vis the co-executors regarding her discussions with Robert. [ 63 ] Ms. Crowe sent correspondence to Audrey during this time (as late as May 2005) with requests that Audrey consult with the other co-executors with respect to the content, and advise Ms. Crowe of decisions. [ 64 ] Audrey returned from Arizona sometime in April 2005.

Robert understood from Joan Keereweer that Audrey had advised her not to give Robert any information regarding MBS Registry, and Audrey had instructed Joan to pay her a dividend. Robert told Ms. Crowe in April that Joan was refusing, on Audrey’s advice, to provide information. [ 65 ] In May 2005, shortly after Audrey returned home from Arizona, 858703 received some documentation at Dan St. Arnaud’s office in response to Robert’s request for information. [ 66 ] In a letter dated May 12, 2005 from Ms. Crowe to Audrey, she stated her understanding that Audrey would be meeting with Mr.

Sakowsky and Robert to decide on the appointment of one or more directors and officers for 858697, 858703 and MBS Registry. She requested that Audrey advise her of the decision and she would prepare the appropriate documentation. [ 67 ] In late May 2005, Robert was called to go to a meeting at Dan St. Arnaud’s office, who was the accountant for MBS Registry at the time. The three co-executors attended. A package of documents had been prepared. Robert had never seen the documents before. One document would make Audrey the sole director of 858697 and MBS Registry. They told him Ms. Crowe had prepared the documents.

A banking resolution giving Audrey sole signing authority for MBS Registry and 858697, was also prepared by Ms. Crowe. Peter’s interest in 858703 also went into the spousal trust, and there was a resolution appointing Audrey as director, prepared by Ms. Crowe. [ 68 ] Prior to that meeting, Robert had not had any discussions with the co-executors or Ms. Crowe regarding who would be selected as director or would have signing authority with respect to 858697 and MBS Registry.

Robert said he would take the documents with him and review them. [ 69 ] At that point, he had not received a retainer letter with respect to Miller Thomson acting on behalf of executors and trustees of Peter’s estate. He had not attended any meetings at Miller Thomson, received any correspondence from Miller Thomson in his capacity as co-executor, or received all of the requested documentation. [ 70 ] Robert says he went to see Sean McAllister directly thereafter, and hired him to represent him in his personal capacity. [ 71 ] There was a question as to when Robert retained Mr. McAllister.

He said at trial that it was in June 2005, but he stated in questioning that he had spoken with Mr. McAllister earlier, April or May. Further, a letter from Mr. McAllister to Ms. Crowe dated June 24, 2005 indicated that his office had conducted corporate searches in January 2005 shortly after Peter’s death, however, they had been advised by Robert that various corporate changes had been made since then and they were now renewing those searches. He requested the minute books. [ 72 ] Miller Thomson continued to act on behalf of the trustees and co-executors of the estate. [ 73 ] Robert contacted Ms.

Crowe in June 2005, and told her that Mr. McAllister thought Peter had made a binding agreement with Robert. Ms. Crowe told him that she was in a position of conflict and he needed to retain a lawyer. She continued to act on behalf of the co-executors and trustees of the estate. Robert understood from Ms. Crowe that Audrey wanted Robert to have nothing to do with the estate affairs. Robert was concerned about Audrey being sole director, as he saw MBS Registry as his asset. Audrey had no experience with the business of MBS Registry, and she was out of the country six months of year.

He had the same concerns regarding signing authority. He understood that Audrey thought she could take all of the money out of MBS Registry. [ 74 ] In an e-mail to Kris on June 29, 2005, Robert told him that any future communications with respect to the estate should be through Mr. McAllister. [ 75 ] Ms. Sanchez-Glowicki took over the file from Ms. Crowe who went on maternity leave in late June or early July 2005. She called Mr. McAllister on July 7, 2005, but he was away on holidays until July 18, 2005. She understood one of main issues to be the minute books.

She received instructions to clean up the minute books. Ms. Sanchez-Glowicki testified that there was no discussion in the phone conversation with Mr. McAllister on July 26, 2005 of a binding agreement. Mr. McAllister said he was retained to look at the corporate documents and to advise Robert whether what he received in the estate re-organization was fair.

[ 76 ] On July 28, 2005, Ms. Sanchez-Glowicki provided the minute books to Mr. McAllister, but not those relating to 414124 as Audrey had been the owner of 414124 since 2000. She stated in the letter of that date her understanding that Mr. McAllister represented Robert in his personal capacity, and confirmed that Miller Thomson was acting for the estate and the three co-executors. [ 77 ] Ms. Sanchez-Glowicki asked for evidence of the agreement between Robert and Peter. [ 78 ] By early December 2, 2005, Ms. Bonora was retained as Audrey’s lawyer in her personal capacity.

Miller Thomson was still acting for the estate and co-executors. [ 79 ] Robert took issue with Audrey receiving Peter’s “salary”, but consented to this occurring until the matter could be sorted out. He found out in September 2005 that Audrey had declared dividends to herself. He was shocked. [ 80 ] There were issues with respect to paying estate expenses from what remained in Peter’s estate.

As MBS Registry was the only going concern in Peter’s estate, it was agreed that it would pay all estate bills, as a loan to the estate, subject to a final accounting. [ 81 ] Robert testified that it was possible he was advised at a meeting on September 23, 2005, that probate was required. He received a copy of a February 2006 draft application for probate. He did not agree with certain asset values, and had no basis upon which to assess others. [ 82 ] Ms. Sanchez-Glowicki testified that it was extremely important to obtain information from the accountant in order to meet tax filing deadlines. Mr. St.

Arnaud was ill, so there were many delays. It was very difficult getting information from the accountant and Mr. McAllister, and the three co-executors were not getting along. It was difficult to get concrete answers. Ultimately, she received instructions to apply for advice and directions.

Rob had been threatening to sue for 1½ years at that point but had never done so. [ 83 ] Following further draft applications, Robert filed a Notice of Motion on Sept 22, 2006 for an independent party to administer the estate. [ 84 ] Robert’s affidavit sworn on September 24, 2006 was the first time Robert’s issues with probate application were set down in writing. [ 85 ] On September 27, 2006, Sanderman J. ordered that Robert be removed as co-executor, leaving Audrey and Kris as co- executors. Robert’s decision to sue had been made known to Sanderman J.

Robert could not sue himself as a co-executor, so he would have to withdraw from that role. Robert was to continue to receive MBS Registry financial reporting. His application for an independent executor was denied, his application to remove Miller Thomson was deemed premature and denied. [ 86 ] Sanderman J. granted probate on November 6, 2006. [ 87 ] The Plaintiffs issued the Statement of Claim on November 16, 2006 against the estate and Miller Thomson. The estate file was sent to Duncan and Craig. Robert learned that an insurance policy existed on Peter’s death, and Audrey had received the proceeds.

Don Johnson had told him that the policy did not exist. Ms. Sanchez-Glowicki testified that only the beneficiary, being Audrey, was entitled to information regarding the insurance policy. The asset passed outside of the Will. [ 88 ] By letter to Audrey and Kris dated April 2, 2007 (Exhibit 170(F)), Duncan and Craig recommended the sale of MBS Registry in accordance with the “prudent investor rule” on the reasoning that it was not prudent to have the entire estate dependent on the financial success of MBS Registry.

The proceeds from the sale of the assets would be put into the spousal trust for Audrey’s use and benefit. There was conflicting evidence at trial as to whether the prudent investor rule would mandate this result in this case. [ 89 ] In 2008, Duncan and Craig received an offer from New Star Investments to purchase the assets of MBS Registry for $875,000. This was Robert’s “worst fear”. He offered $950,000. He did not have any details of the other offer, but he wanted his offer to be superior.

Ultimately, the parties agreed to settle the estate matter by Robert paying a lump sum of $425,000, and continued payments of $5,000 for 48 months. Miller Thomson was put on notice of the settlement, and did not object to it. The settlement involved a Pierringer agreement and required court approval which was obtained by order of Jeffreys J. [ 90 ] Ms. Bonora filed a Notice of Motion for a dependent relief application on Audrey’s behalf on November 16, 2006.

This could not be filed until after probate and two notices under the Matrimonial Property Act , RSA 2000, c M-8 and what was then the Dependants Relief Act , RSA 2000, c D-10.5.

Parties’ Positions [ 91 ] The Plaintiffs take the position that Peter promised Robert that he would never change the terms of his Will or the life insurance policy designation. [ 92 ] They argue that this amounted to a contract as Robert only agreed to exchange his shares in 724145 for the shares in 858697 as consideration for Peter’s irrevocable promise to leave the rest of the shares in 858697 to Robert in his Will, thereby leaving Robert all of the shares in 858697 and control of MBS Registry on Peter’s death.

The Plaintiffs claim that Robert’s shares in 724145 were more valuable than the shares he received in 858697, and this difference constituted good consideration for the contract. [ 93 ] The Plaintiffs further contend that Peter had promised to designate Robert as the beneficiary of a life insurance policy to cover any tax implications that might arise for Robert upon Peter’s death.

This was part of the deal. [ 94 ] The Plaintiffs point to the gift of MBS Registry to Robert in the Will as evidence of the contract, as corroborated by Robert’s evidence at trial that Peter promised him that this was what he was going to do.

[95] The Plaintiffs argue that the Defendants were negligent in failing to send Robert out for independent legal advice on or aroundNovember 16, 2000, and for breaching duties they owed to him as a result. The Plaintiffs submit that certain documents received by theDefendants required them to prepare an additional agreement for Peter to sign in order to make his Will irrevocable.

The Defendantsshould have known that such additional documentation was necessary to avoid the situation which arose. [96] The Plaintiffs allege that if Robert had been properly advised, he would not have signed over his shares in 724145 withoutPeter signing the additional documents and making the insurance policy designation to him irrevocable, as could have been done underthe Insurance Act. [97] The Defendants argue that Peter always controlled all of the assets in question. Peter made the Codicil to his Will to secureAudrey’s income stream after his death. He was entitled to do so.

There is no evidence that Peter contracted with Robert not to changehis Will. In any event, the effect of the Codicil was that Robert would receive what he understood Peter to have promised him, but itwould be deferred until the death of Audrey. [98] The Defendants take the position that they had no knowledge of the life insurance policy or the reasons it was mentioned inthe Will.

The beneficiary designation was changed on the advice of Peter’s new financial advisor. [99] Further, even if there was negligence on the Defendants’ part, there are no resulting damages. [100] Finally, the Defendants submit that even if Robert had been entitled to 858697 on Peter’s death, Audrey would have prevailedon a statutory dependant relief claim. Audrey is now 80 years old and still living independently. However, she is an insulin-dependentdiabetic and has had cancer. She is entitled to maintain the lifestyle she enjoyed when Peter was alive.

Issues [101] The Court must address the following issues: 1) Was there an enforceable agreement between Robert and Peter? 2) Did Miller Thomson owe a duty to Robert and if so, was there a breach of that duty resulting in damages? Law 1 Revocation of Wills and Insurance Designations [102] The authors of Feeney’s Canadian Law of Wills, 4th ed (Toronto: Butterworths, 2000-) explain: §1.7 A testamentary gift occurs when the donor intends to make a gift that is effective only at the donor’s death and is revocable untilthen—the gift is said to be “dependent on death for its vigour and effect”.

A testamentary transaction allows the donor to retain his orher property under his or her own absolute control neither limiting his or her full rights of ownership nor conferring any benefit, howeverslight, on the donee until the moment of the donor’s death. §1.8 A true testamentary gift, when properly executed is a will; it confers no interest on its beneficiaries, nothing more than a hopereally, until the unrevoked will takes effect by the testator’s death. [103] The courts in Canada have held that no will is irrevocable.

However, if a testator validly contracted for good consideration tothat effect, the person ultimately benefitting from the revocation may be held to be trustee for the person who had the benefit under thecontract: Re Ohorodnyk (1979), (ON SC), 24 OR (2d) 228, [1979] OJ No 4172 (HCJ), aff’d (ONCA), 26 OR (2d) 704n, [1980] OJ No 3903 (CA). [104] In other words, a binding contractual obligation to refrain from revoking a will gives rise to an action for breach of contract.

Itdoes not affect the validity of the will itself: AH Oosterhoff, Oosterhoff on Wills and Succession, 6th ed (Toronto: Thomson Carswell,2007) at 126-27, cited with approval in Frye v Frye Estate, 2008 ONCA 606, 299 DLR (4th) 184, leave denied [2008] SCCA No 465. [105] To be enforceable, such an agreement must be more than a mere representation by the testator that s/he intends to make acertain testamentary disposition, notwithstanding that the person to whom the representation is made has relied on it: Pahara v Pahara(1945), (SCC), [1946] SCR 89. [106] The Court in Clancy v Gough, 2011 ABQB 439, 523 AR 138 cited the proposition that intention on the part of both parties tothis type of agreement must be proven, quoting at para 52 from GHL Fridman, The Law of Contract in Canada, 5th ed (Toronto:Thomson Carswell, 2006) at 15: ...The law is concerned not with the parties’ intentions but with their manifested intentions.

It is not what an individual party believed orunderstood was the meaning of what the other party said or did that is the criterion of the agreement; it is whether a reasonable man inthe situation of that party would have believed and understood that the other party was consenting to the identical terms. [107] In some cases, such agreements have been established. For example, in Brownscombe v Alberta (Public Trustee), (SCC), [1969] SCR 658 the plaintiff worked for a farmer for 26 years for no remuneration. The farmer verbally promised to leavehim the farm in his will.

The plaintiff had built a house on the farm almost, if not totally, at his own expense. The Supreme Court found

that this constituted part performance, removing the need for a memorandum in writing in relation to land. In addition, there were fourindependent witnesses who corroborated the alleged agreement. The Court upheld the finding of a binding agreement. [108] In Hiller v Hiller (1983), 41 AR 602, 1983 Carswell Alta 482, the testator had promised, in contemplation of marriage, to leavethe residue of his estate to his future wife when he died. The contract was in writing under seal. It was upheld. [109]

Section 661 of the Insurance Act, RSA 2000, c I-3 (formerly s. 575) sets out the requirements for the irrevocable designation ofthe beneficiary of an insurance policy. A declaration to that effect must be filed with the insurer at its head or principal office in Canadaduring the lifetime of the person whose life is insured.

If an insured purports to designate a beneficiary irrevocably in a declaration that isnot so filed or in a will, the designation has the same effect as if the insured had not purported to make it irrevocable. 2 Solicitor-client relationships [110] The law is clear that in assessing whether a solicitor-client relationship existed, the court must consider whether a reasonableperson, with knowledge of all the facts, would reasonably conclude that a lawyer was acting for an individual.

The courts must examineall of the relevant facts, including the reasonable expectations of the party asserting such relationship. [111] A list of indicia of a solicitor-client relationship is set out in Jeffers v Calico Compression Systems, 2002 ABQB 72 at para 8,314 AR 294. Not all indicia need be present. [112] If such a relationship is established, the lawyer would be governed by the Rules of Court and by the Code of Conduct.

As well,the lawyer would be expected to: 1. be skillful and careful; 2. advise the client on all matters relevant to his retainer, so far as may be reasonably necessary; 3. protect the client’s interests; 4. carry out instructions by all proper means; 5. consult the client on all questions of doubt which do not fall within the express or implied discretion left to him; and 6. keep the client informed to such an extent as may be reasonably necessary.

Hummelle v Advani, 2014 ABQB 619 at para 26, citing Tiffin Holding Ltd v Millican (1964), (AB KB), 49 DLR (2d)216 at 219 (Alta SC (TD)). [113] Crighton J. in Hummelle also cited Malton v Attia, 2013 ABQB 642, 90 Alta LR (5th) 1 for the proposition that a court mayrequire, and should admit, expert evidence of the applicable standard of care where the alleged negligence relates to a specialized area oflegal practice, such as tax planning.

Expert evidence was adduced in relation to corporate commercial practice in Taubner Estate, 2010ABQB 60, 485 AR 98. [114] Recently, the Court of Appeal in Tran v Kerr, 2014 ABCA 350, [2014] AJ No 1189 at paras 21-26 held that it is usuallynecessary for there to be expert evidence on the standard of care in a professional malpractice suit. However, since all judges were oncelawyers, and are familiar with the practice of law and the legal system generally, there are cases where a judge can take judicial notice ofthe standard of care expected of lawyers.

The Court added that as professions (including the legal profession) become more highlyspecialized, the circumstances in which a trial judge can properly take judicial notice of the standard of care become narrower andnarrower. The Court cited Malton with approval for the proposition that judicial notice is only properly taken in cases where the courtcollectively could make a finding of the standard of care without the assistance of expert evidence, and even then, judicial notice canonly be taken of notorious and undebatable facts.

Analysis 1 Was there an enforceable agreement between Robert and Peter? [115] Clearly, Peter intended on November 16, 2000 that his interest in 858697 would go to Robert when Peter died. Paragraph 5(c)of the Will reflects this intention. [116] I find that Peter represented to Robert that he intended to make a testamentary disposition to that effect.

I also accept that Robertfully expected to receive the bequest. [117] However, I am not satisfied on the basis of all of the evidence before the Court that Peter formed, much less expressed, theintention to make the relevant (or any) provisions in his Will irrevocable. [118] The wording of the Will does not reflect or provide a hint of such an agreement. [119] There are no independent witnesses who testified to Peter expressing such an intention. [120] The Plaintiffs also rely on the draft “closing agenda” for the November 16, 2000 (Exhibit 11) given by Peter to Rob, whichindicates on page 6 that Peter’s testamentary dispositions in his Will would include gifting of the Manulife policy proceeds and theshares of 858697 to Rob.

In my view, this reflects Peter’s intention at the time with respect to which there is no serious debate. It does

not, however, support the existence of a binding agreement that Peter’s testamentary dispositions and beneficiary designations would be irrevocable. [ 121 ] As for valuable consideration, the Plaintiffs submit that the transfer of Robert’s 20 common shares constituted consideration. There was much disagreement over the true value of Robert’s shares at the time of the re-organization, and the value he would be receiving by surrendering them in exchange for shares in 858697.

Robert submits that this surrender was the valuable consideration for the bargain he made with Peter. [ 122 ] The common shares in question had been gifted by Peter to Robert in 1993. I am satisfied on the evidence that they had a nominal value of $1 per share at the time of the re-organization. Regardless of whether this nominal amount was sufficient to constitute valuable consideration, I note that the plan contemplated that Peter would purchase Robert’s 20 shares for $20 in the context of the restructuring.

Clearly, the value of Robert’s shares, to the extent it constituted consideration, related to the terms of the re-organization. It is true that the overall intent at that time behind the re-organization was reflected in Peter’s Will. However, the Plaintiffs have not established that the alleged consideration related to a separate agreement to make an irrevocable testamentary disposition. [ 123 ] As well, Peter clearly intended all along that 858697 would be the main source of Peter and Audrey’s retirement income. He drew $5,000 each month and received dividends on his preferred shares throughout his retirement.

Indeed, that was Peter and Audrey’s primary source of income in their retirement. Robert was aware of this. The change in Peter’s Will occurred when Peter’s financial planner suggested that Audrey would continue to require that income if Peter pre-deceased her. The result of Peter’s subsequent change to his Will was that 858697 would continue go to Robert under the Will, but only after Audrey’s death.

In my view, this was not necessarily inconsistent with a general representation made by Peter to Robert to the effect that he would bequeath 858697 to Robert. [ 124 ] In any event, the evidence globally establishes that Peter was, and always remained, firmly in control of everything he had ever managed, including on occasion giving money to benefit Robert without advising Audrey, and also taking steps to benefit Audrey without advising Robert.

I find that Peter was not likely to sign something that would require him to absolutely relinquish control of the major asset that was providing income required by Peter and Audrey to maintain their lifestyle. [ 125 ] Further, the evidence was that KRP had recommended that Robert and Kris be named as executors, but Peter said that he did not want the children to be in control of Audrey’s spousal trust. Ms. Crowe explained to him that Audrey could not be the trustee of her own trust. This would have been Peter’s preference.

Following discussions, it was finally settled that there would be three executors and trustees, including Audrey, and a unanimity clause would be added. Peter was satisfied with this. [ 126 ] In my view, this further supports the conclusion that Peter wanted to ensure that Audrey, as the person who was affected by the income stream, had a say - and, indeed, as much control as the law allowed - in controlling that income stream.

Again, in my view, this is strong evidence that Peter would not have made a decision that could have adversely affected his ability to control the source of the income for Audrey’s benefit, whether before or after his death. [ 127 ] Don Johnson testified that he met Peter in 2002. He had known Audrey through the investment work he had done for Audrey’s family for several years. Mr. Johnson had been working in the insurance and investment business for over 50 years. I have no doubt regarding his credibility or reliability.

Peter and Audrey came to him to discuss investments but his evidence was that he did not do investments without doing planning, so he gathered all the information he could and then sat down with them. He had copies of their investments and copies of their Wills and understood their lifestyle. He was concerned that if Peter died, the income from MBS Registry would cease flowing to Audrey and he discussed this with Peter. He felt that Audrey would not have sufficient income if Peter died before her.

He recommended to Peter that he change his agreement to pass MBS Registry on to Robert on his death and instead pass it on to him after Audrey had died. He testified that it was he who recommended that Peter change his Will as well as the beneficiary of the life insurance policy. [ 128 ] The Plaintiffs seized on Mr. Johnson’s use of the word “agreement” in his testimony and submit that this corroborates their position that Peter and Robert had a “deal”. In my view, nothing hangs on Mr. Johnson’s use of the word “agreement” during the trial some 12 years after his meeting with Peter.

I have already found that Peter represented to Robert that he intended to give him 858793. Peter’s conversation with Mr. Johnson reinforces my view that Peter never considered that he had agreed with Robert to make an irrevocable testamentary gift. Peter contacted Ms. Crowe the next day by phone to ask her to make the necessary changes to defer the gift. This supports my conclusion that Peter considered himself to be in control of his assets, and intended to maintain that control. [ 129 ] Peter was a sophisticated and experienced businessman.

Any agreement to make his testamentary gifts irrevocable would have required careful consideration of potential changes in Peter’s circumstances and the rights Peter would have in the interim with respect to dealing with the asset. I am satisfied that had he wished to enter into an irrevocable agreement affecting the gifts under his Will, he would have taken steps to do this properly. [ 130 ] I conclude that Peter told Robert in November 2000 that he intended to leave 858697 to Robert on Peter’s death. That was his intention at that time.

However, the Plaintiffs have not established that Peter stated or otherwise communicated that he would never change his testamentary intention regardless of what might occur in Peter’s life. [ 131 ] For the same reasons, the Plaintiffs have not established that Peter intended the insurance beneficiary designation to be irrevocable. The Insurance Act contains strict but straightforward requirements regarding irrevocable designations.

Had Peter intended to make such a designation, it would not have been difficult to take the necessary steps to do so. [ 132 ] The evidence does not support a finding that Peter intended his testamentary disposition or his beneficiary designation to be irrevocable, nor that he entered into an agreement with Robert to that effect. 2 Did Miller Thomson owe a duty to Robert, and if so did the Miller Thomson lawyers breach that duty?

[ 133 ] I would note at the outset that much of the argument on the professional standard of care for lawyers on estate files concerned matters of which the Court cannot take judicial notice. The applicable standard of care in the specific circumstances arising in this case is not notorious or undebatable.

Although a number of witnesses provided comments, no expert evidence was adduced in this regard. [ 134 ] Given that I have found the evidence does not establish that Peter intended to make an irrevocable testamentary disposition or insurance designation, there is no merit to the Plaintiffs’ argument that Miller Thomson should have drafted an additional document to reflect such an intention. [ 135 ] However, I accept that Robert understood that Peter had represented that he would not change the testamentary gifts and insurance designation.

The Plaintiffs also argued that Miller Thomson owed duties to protect Robert’s interests and should have either provided advice to him or sent him out for independent legal advice. [ 136 ] The Court must consider all of the circumstances and Robert’s reasonable expectations in determining whether Miller Thomson owed a duty to Robert. a Facts [ 137 ] Robert, like his father Peter, was an experienced businessman by the time of the November 16, 2000 meeting. He had already had the experience of involving his own lawyers and accountants in his own business transactions. [ 138 ] Mr.

Tod had very little to do with this entire matter. I found his evidence to be honest, thoughtful, credible and reliable. He had extensive and varied experience as both a barrister and a solicitor prior to November 2000, including considerable experience in estate planning. He had acted for Peter when Peter sold his shares in MBS Insurance. Mr. Tod testified that he acted on behalf of Peter’s company and took his instructions from Peter. He considered Peter and Audrey to be Miller Thomson’s client. [ 139 ] Mr. Tod explained that the letter from KRP just showed up at his office one day out of the blue.

He was not consulted about the estate plan by Peter and Audrey, nor did he consult with KRP about it prior to July 13, 2000. He had no knowledge as to why Peter was making the decisions he was making, or what Peter and Robert might have discussed. Neither Peter nor KRP asked Miller Thomson for legal advice on any of the issues involving this estate plan. Miller Thomson was only asked to draft the documents. [ 140 ] Prior to November 16, 2000, Mr. Tod had no discussions with Peter and Audrey or KRP about the estate plan, the memo, or the instructions from KRP relating to the estate plan.

In particular, he never discussed an irrevocable Will with Peter or Audrey. He testified that if they had asked about this, he would have advised against it since circumstances could change. He further testified that if such a contract had been contemplated, the terms would have to be very certain as to what was being conveyed and the specific consideration being given. Peter’s rights to deal with the assets in the interval would have to be addressed.

For example, would Peter be at liberty to encumber shares, or to issue additional shares? [ 141 ] The preparation of corporate documents and Wills was Wendi Crowe’s area of expertise, so Mr. Tod referred the file to her to prepare those documents. I accept Mr. Tod’s evidence as accurately setting out the terms of the retainer from Peter through KRP and his directions to Ms. Crowe. [ 142 ] I found Ms. Crowe to be a thoughtful and careful witness who was honest and forthright in her answers.

She did not attempt to avoid answering difficult questions and faced a grueling cross-examination in a calm and dignified manner. I accept her evidence as truthful, forthright and reliable. [ 143 ] Ms. Crowe testified that she received the file from Mr. Tod, reviewed the letter and contacted KRP to obtain the memo which had not been attached. Ms. Crowe took her instructions from KRP and documented the plan set out in KRP’s letter and memo. She testified that she was acting only for Peter and Audrey. [ 144 ] Ms. Crowe reviewed the memo, which was directed to Peter and Audrey.

She saw that she was being asked to implement an estate plan designed by KRP involving three main components: an estate freeze, a butterfly transaction to divide the assets on a tax-free basis, and new Wills. KRP provided her with two charts showing the corporate organization and what it would look like after the re- organization. Ms.

Crowe testified that Peter was the controlling shareholder both before and after the re-organization, so his power over the companies did not change. [ 145 ] KRP provided her with the valuations she was to use, and she saw nothing unreasonable about the methodology they had employed. [ 146 ] She drafted the documents and sent to KRP the documents and a draft agenda with notes in bold type containing questions to which she required answers. She sent the draft Wills to Peter and Audrey. [ 147 ] Ms. Crowe testified that the final closing agenda (Exhibit 19) was simply her checklist of the documents to be signed.

She explained that the two “agendas” (Exhibits 11 and 19) were simply lists of things she needed to do to complete her work, and nothing more. [ 148 ] Mr. Tod did not review the documents prepared by Ms. Crowe. The only recollection he has of any conversations with Ms. Crowe about her work on the file was that she told him the minute books were a mess. [ 149 ] Ms. Crowe never spoke to Robert before the meeting on November 16, 2000 because Robert was not the client. Ms.

Crowe did not send Robert any documents; she would have required Peter and Audrey’s consent to do that, as they were her clients. [ 150 ] Throughout the course of the November 16, 2000 meeting, Ms. Crowe explained each document to the group assembled in the boardroom and explained what each document was intended to accomplish. She testified that the accountants would jump in and provide contextual explanations. Then the relevant individuals would sign the documents. This took approximately two hours.

[ 151 ] She acknowledged that she never advised Robert to seek independent legal advice on any of the matters that arose during the course of the document signing, including the signing of the promissory note from his company, 724145, to 858697. At the beginning of the meeting, Mr. Tod asked Ms. Crowe about the promissory note to be made by Robert’s company, 724145 in favour of 858697, and she explained its genesis and what it was designed to do. There was no prior documentation of any loan between the two companies. She relied on the accountants and Peter’s advice that it existed.

Her view of the re-organization was that Robert was receiving a gift of future growth potential, not giving up 20 shares in one company in exchange for 80 shares in another. [ 152 ] When Mr. Tod popped into the meeting, Peter requested that he explain to Robert the reason for the promissory note. After being briefed by Ms. Crowe, Mr. Tod explained the effect of the note to Robert. Robert was concerned that he might have to pay it back right away. Mr. Tod told Robert this would be up to Peter. No one at the meeting told Mr. Tod that this was not a debt owed by 724145 to 414124 in the first place. No one told Mr.

Tod that it had been a gift of money from Peter to Robert. [ 153 ] After the corporate documents were signed, everyone except Peter and Audrey left and Ms. Crowe attended to the signing of the Wills by Peter and Audrey. [ 154 ] After Ms. Crowe finished her paper work, she sent a letter to Peter and Audrey enclosing copies of their Wills and expressly advising them to review their Wills annually to ensure that circumstances had not occurred which would require changes to their Wills. [ 155 ] Ms. Crowe testified the next contact she had with Peter was when he called her on November 7, 2002 about changing his Will.

He told her that their financial advisor, Don Johnson, had told him that Audrey would not have sufficient income to live on if he pre- deceased her. Ms. Crowe prepared the Codicil to defer the bequest of the 858697 shares to Robert until after both Peter and Audrey had died. [ 156 ] Ms. Crowe’s next involvement was when Mr. Tod told her that Peter had died and to expect a call from Audrey. b Analysis [ 157 ] There was no evidence of a formal contract or retainer between Miller Thomson and Robert. Robert did not give any instructions to Miller Thomson. He did not receive or pay any associated bills.

There was no evidence that Miller Thomson opened any file aside from those opened in relation to the re-organization work done for Peter and his companies, and estate work done for Peter and Audrey. [ 158 ] The Miller Thomson lawyers did not have any contact or discussions with Robert regarding the re-organization documentation during its preparation. They did not expect to see him at the meeting on November 16, 2000. Robert received a draft agenda and an invitation to the meeting from Peter.

The accountants from KRP attended the meeting and explained the re-organization. [ 159 ] There is no evidence of a statement made by anyone at Miller Thomson that one of its lawyers was acting for Robert. There is no evidence that Miller Thomson received confidential information from Robert.

Nor is there any evidence that Miller Thomson provided anything more than an explanation of the documents which had already been drafted, pursuant to Peter’s instructions through KRP. [ 160 ] In fact, there was no evidence that Peter himself ever sought a legal opinion from Miller Thomson as to the advisability of the plan, or its strengths and potential weaknesses from a legal perspective, on either corporate issues or testamentary issues. KRP devised the plan in conjunction with Peter. Ms. Crowe drafted the legal documents to implement the plan. [ 161 ] Ms.

Crowe prepared several documents to be signed on behalf of Robert’s corporation, 724145. The mere fact of preparing, in the course of a retainer with one client, a document which will be signed by more than one party does not create a solicitor-client relationship, or a “near” relationship, between the lawyer and all of the signors. [ 162 ] However, the documents in question were not sent out to be signed by Robert elsewhere. Rather, he attended at the firm to sign them. Mr. Tod and Ms. Crowe provided explanations to all of those present at the November 16, 2000 meeting, including Robert.

In the course of signing them, he received explanations as to their significance and meaning. [ 163 ] Mr. Tod candidly testified that any difference between “explain” and “advise” amounts to splitting hairs. I agree. In my view, the explanations provided by Mr. Tod and Ms. Crowe constituted advice provided in their capacity as solicitors with their specialized knowledge of the area and the documents, their significance, what they were designed to achieve, and why they had to be signed.

Robert reasonably understood these explanations to be legal advice. [ 164 ] However, the Plaintiffs do not allege any negligence in relation to Ms. Crowe’s drafting of the documents to be signed on behalf of 724145, the effect of the re-organization and estate freeze effected at the time, or the accuracy of her explanations generally. As for Mr.

Tod’s explanation to Robert regarding the promissory note, he cannot be faulted for relying on the representations made to him with respect to the loan when Robert said nothing to contradict this understanding. [ 165 ] The Plaintiffs allege that Robert should either have been sent out to obtain independent legal advice, or he should have been advised that Peter retained the power to change elements of the plan, or the entire plan, should he wish to do so.

However, there is nothing in the evidence to suggest that Miller Thomson had any indication from Peter, Robert, or anyone else, that Peter and Robert had an agreement to make an irrevocable gift to Robert, or that Robert held such an expectation. In my view, to the extent that Miller Thomson had any duty to Robert as a client in relation to the November 16, 2000 meeting, the scope of the duty was restricted to proper drafting of the documents affecting him, and proper explanations of the import of the documents he was signing.

There is no expert evidence before the Court to suggest otherwise. [ 166 ] In Spence v Bell , 1982 ABCA 282 , 39 AR 239, leave denied [1982] SCCA No 31, the Court of Appeal held that no contractual duty arose to warn of pitfalls of which the solicitor was unaware. As to whether a duty of care in tort might arise, the Court quoted at para 75 from Oliver J. in Midland Bank Trust v Hett, Stubbs and Kemp , [1978] 3 All ER 571 :

Now no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the court must beware of imposing on solicitors, or on professional men in other spheres, duties which go beyond the scope of what they are requested and undertake to do. [ 167 ] In the absence of any knowledge of any discussions between Peter and Robert, and no basis upon which to infer that Robert thought the arrangement would be irrevocable, Miller Thomson cannot be held to be negligent.

Peter retained control both before and after the re-organization. Robert was not giving up any voting rights or preferred shares. From the lawyers’ standpoint, Robert was in no worse situation after the re-organization than before it. Ms. Crowe’s view was that Robert was in fact receiving a gift of future growth potential, not giving up 20 shares in one company in exchange for 80 shares in another.

If anything, it would have appeared to the lawyers that Robert’s exchange of shares benefitted him by ensuring that he would continue to potentially benefit in the long run. [ 168 ] Any duty the Miller Thomson lawyers had toward Robert did not extend to contacting Robert upon Peter requesting the Codicil.

There was no evidence that they had discussed anything with Robert, or made any representation, that would lead Robert to understand that Peter had relinquished control over any of the assets in question in the form of an irrevocable gift to Robert. [ 169 ] To the extent that Miller Thomson had an obligation to protect Robert’s interests, the documents the lawyers prepared on the basis of the information they had been provided did so. Robert did not give them any information to suggest otherwise.

He did not speak up on the matter of the $25,000 promissory note to say it was a gift from his father such that the lawyers could explore that before proceeding. [ 170 ] Underlying the Plaintiffs’ position is the suggestion that Robert had some sort of leverage as at November 16, 2000 that he forfeited by signing the documents without securing the irrevocability of the testamentary gifts. As I have already noted, Peter had always had sole control of his assets, and he retained control until his death. Mr.

Tod testified, and I accept, that the same result achieved by the re-organization could have been achieved without redeeming Robert’s shares in 724145 by Peter moving everything except MBS Registry out of 414124. In that case, Peter would still have retained control over the disposition of MBS Registry, and Robert would be in the same position in which he found himself upon Peter’s death. If Robert had refused to sign over his shares, Peter could easily have accomplished his objectives in another manner.

The only leverage Robert had was moral in nature. [ 171 ] As for the insurance policies, Miller Thomson played no role in the changes which subsequently occurred. In any event, in the absence of any knowledge of the alleged agreement between Peter and Robert, there would be no basis for Miller Thomson to take any steps to protect Robert’s position. Miller Thomson was entitled to conclude that Robert was receiving exactly what the documents indicated he was to receive. [ 172 ] Following the meeting, Miller Thomson did not provide to Robert copies of documents relating to his company for his records. Ms.

Crowe testified that she believed she ultimately gave the documents to Peter to give to Robert. Assuming she had a duty to ensure that they were given to him directly, rather than through Peter, in my view nothing turns on this. I note as well that there was no evidence that Robert requested copies at any time prior to Peter’s death. [ 173 ] The Plaintiffs also suggest that Miller Thomson should have sent the estate file to another law firm sooner after Peter’s death, and that it favoured Audrey in its communications to the co-executors.

The evidence establishes that although Robert did not sue until a considerable time later, he had consulted counsel as early as January 2005. [ 174 ] While it may have been prudent for Miller Thomson to send the file out earlier, given Robert’s rumblings and unhappiness about Peter’s Will, the estate was hamstrung by the requirement for co-executor unanimity. I find that this rendered it almost impossible for a considerable time for Miller Thomson to obtain instructions to do anything. Certainly, nothing of consequence occurred until Audrey returned to Canada in April or May 2005.

However, some of the estate matters could not be delayed indefinitely. I find that Ms. Crowe and Ms. Sanchez-Glowicki were attempting to manage the file in very difficult circumstances pending effective instructions from the co-executors. [ 175 ] I find that the Miller Thomson lawyers erred in communicating solely with Audrey as co-executor, particularly when they knew that the three co-executors were at odds. Further, Ms.

Crowe did not send out a letter to any of the executors when the estate file was opened, confirming that the firm was to be retained, getting their consent to this retainer, and setting out their duties and obtaining their instructions to her taking actions on their joint behalf. [ 176 ] However, nothing turns on this as Audrey was unable to make any decisions without the concurrence of the other two co- executors, as was borne out when Robert refused to sign documents.

Consequently, Miller Thomson was unable to receive any instructions from the co-executors to move the estate file forward in any significant manner. [ 177 ] Once the Plaintiffs sued, Miller Thomson sent the file out. As noted, Robert had been consulting his own counsel as early as January 2005. Nothing was done prior to sending out the file that diminished Robert’s rights as at Peter’s death. There can be no suggestion that steps taken by Miller Thomson after Peter’s death and before the file was sent out resulted in damage to the Plaintiffs.

The billing of disbursements to MBS Registry was understood by all to be subject to reconciliation. [ 178 ] Even if I am wrong with respect to the scope of Miller Thomson’s duties toward Robert, any breach did not result in damages. Peter retained control of his assets until his death. Peter’s Will as drafted by Miller Thomson included a term expressly providing for the trustees to be exempt from the “prudent investor rule”. Ms. Sanchez Glowicki testified that it is typically included in order to prevent the sale of family corporations.

No mention of this exemption is found in the correspondence from Duncan and Craig. Miller Thomson did not have carriage of the file when the decision was made to apply the “prudent investor” rule. [ 179 ] Peter’s Will left the promised shares to Robert after Audrey died. Robert’s decision to purchase the shares in 858697 pursuant to the settlement agreement was a decision he made in consultation with his own lawyers. There was no adjudication by the court resulting in the sale of MBS Registry. Without such an adjudication, I fail to see how any resulting damages can be laid at the feet of the Defendants.

[ 180 ] The Defendants submit that, regardless of the other defences raised to Robert’s claims, the fact that Audrey would have a statutory dependant relief claim would trump any right Robert had to the value in MBS Registry. However, although such an application was filed to preserve the limitation period, no affidavit in support was ever filed nor was an application ever made. It is not necessary for this Court for the purposes of this case to assess the likelihood of Audrey’s success on such an application.

Conclusion [ 181 ] It is clear from the evidence that Peter Marusin intended to bequeath to his son, Robert, the shares in 858697. However, he also intended to enable his wife, Audrey, to enjoy the benefit of that asset until her death. For the foregoing reasons, I conclude that the Plaintiffs have not proven on a balance of probabilities that Peter ever intended the gift of the shares of 858697 to Robert in his Will to be irrevocable.

Nor was there any evidence on a balance of probabilities that Peter intended to make Robert an irrevocable beneficiary of the life insurance policy. [ 182 ] Miller Thomson should have ensured that some documentation be provided to Robert following the November 16, 2000 meeting, and should have copied him as one of the co-executor on correspondence after Peter’s death. However, the Plaintiffs have not established any resulting damages. [ 183 ] Therefore, the Plaintiffs’ action is dismissed. Heard on October 6 to 17, 2014. Dated at the City of Edmonton, Alberta this 4 th day of December, 2014. L.D. Acton J.C.Q.B.A.

Appearances: David Hawreluk Ms. Archer Bennett Jones LLP for the Plaintiffs Phyllis A. Smith Mr. Ouellette Emery Jamieson LLP for the Defendants