Today’s Blog was written by Mohena Singh, Associate at Fasken LLP.

As estate planners, we are regularly engaged by individuals who are acting as estate trustees. This role can often be a long endeavour as it could take several years to administer an estate. During an administration, estate trustees are entrusted to make important decisions, including how to invest estate funds and making distributions to beneficiaries. Sometimes a beneficiary may not agree with an estate trustee’s decision regarding the administration of the estate. What obligations would the estate trustee have in this instance? Would they be required to provide all documents evidencing their decision? A recent Ontario Superior Court case discussed this specific question and determined whether trustees could claim solicitor-client privilege on documents shared with their lawyers during an administration of an estate.

In this particular case, the issue of solicitor-client privilege arose when a beneficiary did not receive a distribution from the estate and the estate trustees argued that that beneficiary was not entitled to any distribution. The court had to determine whether the documents the beneficiary requested access to in connection with the beneficiary’s claim against the estate were protected by solicitor-client privilege or could be produced to the court for inspection.

Solicitor-client privilege attaches to communications between lawyers and their clients for the purpose of seeking or giving legal advice which is intended to be confidential.[1] This legal principle is critical to the legal system and should only be set aside when absolutely necessary. In the context of an estate administration, beneficiaries share in the same interests as the trustees, and as such, an estate trustee cannot claim solicitor-client privilege on any documents or communications related to advice sought and obtained with respect to the administration of the estate.[2]

A beneficiary is also entitled to documents between trustee and their lawyers where a beneficiary is alleging lack of good faith or breach of fiduciary duty. For the court to allow such documents to be produced, the beneficiary must provide a prima facie case that (i) such person is in fact a beneficiary of the trust, and (ii) the documents are prepared by the trustees in the administration of the trust and in the course of the trustee carrying out his or her duties as trustee.[3]

However, there are certain limitations placed on a beneficiary’s entitlement to documents. The first is that the court will not allow the production of documents related to a separate and distinct estate matter in which the parties are adverse.[4] This is because there is no joint interest between the beneficiary and estate trustee for such matters, which would be entitled to be covered under solicitor-client privilege. The second is where a trustee is managing a discretionary trust which involves decisions on matters between beneficiaries.

Since the issue in this particular case was the decision to not make a distribution to a beneficiary, the court had to determine which documents were protected by solicitor-client privilege due to the parties having adverse interests and which documents should be produced as either part of the argument that the trustees breached their fiduciary duty or were part of the administration of the estate. The court ultimately allowed certain documents to be produced to the court for inspection, as the court could not determine based solely on the limited information provided by the estate trustees whether the documents would be covered by solicitor-client privilege. However, the court also found that documents that could be easily distinguished from documents relating to the general administration of the estate would be protected by solicitor-client privilege. The court further found that even though the beneficiary had argued there was a breach of fiduciary duty and breach of trust, they could not find a basis in the limited record to support the beneficiary’s claims and as such, such documents were protected by solicitor-client privilege.

So to answer the question of whether solicitor-client privilege can protect estate trustees – well, it depends. When acting as an estate trustee, it is important that any decisions relating to the administration of the estate are properly and accurately recorded. This is one of the ways trustees can protect themselves if litigation ensues. However, estate trustees are not obligated to produce all documents or correspondences between them and their lawyers just because a beneficiary has requested it. As this case reiterates, solicitor-client privilege is a fundamental principle to our legal system and will not easily be set aside unless it is absolutely necessary.

Thank you for reading.

[1] Reardon v. Reardon, 2024 ONSC 1851 at para 17.

[2] Ibid at para 18.

[3] Ibid, at para 21.

[4] Ibid at para 19.