This week on Hull on Estates, Paul and Allan discuss the deemed undertaking rule and its application to estate matters.

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog at http://estatelaw.hullandhull.com.

The Deemed Undertaking Rule - Hull on Estates Podcast #102

Posted on March 18^th, 2008 by Hull & Hull LLP

Paul Trudelle: Hello and welcome to Hull on Estates. You’re listening to Episode #102 on Tuesday, March 18^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

Paul Trudelle:  Hi, I’m Paul Trudelle.

Allan Socken: Hi, and I’m Allan Socken.

Paul Trudelle:  Hi Allen, how are you today?

Allan Socken:  I’m good, thank you. How are you Paul?

Paul Trudelle: Good, withstanding the winter?

Allan Socken: Yeah, hopefully it’s close to an end.

Paul Trudelle:  The end is in sight, we’re almost there. With respect to our podcast today and we’re now up into the triple digits, we thought we’d talk a bit about the deemed undertaking rule. The deemed undertaking rule is a rule that applies in litigation, it’s a common law rule, that talks about the use of evidence, and it’s now codified in the Rules of Civil Procedure.

Allan Socken:  I think it’s also just important to make mention that while this appears to be standard practice in all jurisdictions in Canada, it’s interesting to note that only P.E.I. and Ontario have this codified within our Rules of Practice.

Paul Trudelle:  Yeah, that is a bit strange, but we have it codified in Ontario and that’s the system that we’re working under, so we’re going to talk a bit about the rule as it applies in Ontario.  However, it should be noted that it probably applies to the same effect in other jurisdictions as well, being a common law rule that is now codified.

With respect to the purpose of the rule, it basically… the rule is set to limit the use that one can make use of when obtaining evidence in the litigation process.  And there’s a very good quote from the Ontario Court of Appeal decision of Goodman v. Rosi that talks about the basis upon which the rule exists or why it exists.

Allan Socken:  It basically says the principle is based on recognition of the general right of privacy which a person has with respect to his or her documents. The discovery process represents an intrusion on this right under the compulsory processes of the Court. The necessary corollary is that this intrusion should not be allowed for any purpose, other than that of securing justice in the proceeding in which the discovery takes place.

Paul Trudelle:  Right, and I think that’s a great quote and I think it summarizes the purpose of the rule quite well and quite succinctly … I guess, put another way or restated, if you’re going to be forced to the litigation table by someone and you’re forced to disclose your documents, the documents only need to be disclosed for that limited purpose and they shouldn’t be disclosed for the whole world to see or they shouldn’t be used in some other proceeding and come back to bite you that way.

Allan Socken:  I think also to point out, I think the purpose of the deemed undertaking rule as is set out in Rule 30.1.01 sub 1, is that you can only use evidentiary documents that relate to the discovery and inspection of property, medical examination and the like. That’s what the rule tries to capture. So, for example, if you are in Court and there’s evidence given, then that probably isn’t captured under the deemed undertaking rule.

Paul Trudelle:  That’s right. The principle of the rule is if you’re forced to disclose information in the litigation process before it gets to open Court, it’s that information that’s going to be protected by the deemed undertaking rule. And the rule sets out that the rule applies to evidence obtained under the rules relating to documentary discovery, Examination for Discovery, that’s of the parties and of witnesses as well, inspection of property, medical examination, written interrogatories if they are used, and even as far as examinations in aid of execution after judgment is obtained. So it is of limited application, however, in the context of litigation, it seems to protect most evidence that you are able to obtain from the other party or from the witnesses.

Allan Socken:  For example, for Will challenges, a lot of the time, it’s very standard to ask for complete disclosure of medical, financial and legal information.  And especially in the case of legal materials, when you do a Will challenge, it may be necessary or it may be an option for the client subsequent to the Will challenge or during the Will challenge, to want to pursue a negligence claim against the solicitor in certain circumstances.

Paul Trudelle:  That’s right, Allen. And I think that that’s very important from an estate point of view. The only way we are able to obtain evidence, usually from medical practitioners, and perhaps more importantly from solicitors, is through the litigation process. If that evidence is protected by the deemed undertaking rule, that’s going to have a significant impact on the rights of the parties to pursue those types of claims, and we’ll talk about that in a minute.

The substance of the rule, I think we should mention briefly, we talked about what evidence it applies to. With respect to the substance, that’s set out in the rule itself.  And the rule states that all parties and their counsel are deemed to undertake not to use evidence or information to which the rule applies, and we talked about that, for any purposes other than those of the proceeding in which the evidence was obtained. So that’s very limiting.  You can’t use it for any other purpose other than the purpose of the very litigation that’s before the Court. And that’s quite restrictive. Having said that, there are exceptions to that rule and perhaps we can talk about some of the exceptions that are set out in the rule itself.

Allan Socken:  Sure. Some of the exceptions are that the deemed undertaking rule does not apply to evidence that is filed with the Court. Similarly, it doesn’t apply to evidence that is given or referred to during the hearing, as well as information obtained from evidence regarding the evidence filed within the Court, or evidence that is given or referred to in the hearing.

Paul Trudelle:  That’s right. So once the material is aired in an open Court, then its open game and the parties are able to … the protection no longer applies. Similarly, if you obtain some information and it’s disclosed in open Court that leads to other information, that information isn’t protected either. There’s another exception that deals with using evidence to which the parties consent. So if you get the consent of the person with respect to the evidence that’s disclosed, then it can be used for another purpose.  Although if you’re going to be suing that person, it’s probably not likely you’re going to be getting their consent.

Allan Socken:  And I think another exception is the deemed undertaking rule doesn’t apply when the interests of justice outweigh the prejudices of the parties. I think that’s kind of an interesting exception, simply because it’s such a broad exception and it could probably capture a number of situations.

Paul Trudelle:  That’s right.  And to deal with that exception, you’d need to get an order of the Court allowing you to use that evidence for the ulterior purpose or for the purpose of the other proceeding. What you would need to do is show the Court that, just as the rule states, that the interests of justice outweigh any prejudice that would result to a party. That is often a sort of a way of saving yourself or allowing you to proceed with the action after the fact. If you obtain evidence through the examination process or the discovery process and there is no other way to get that, you may be able to argue that you have a legitimate interest in using that evidence for the purpose of the subsequent proceeding.

Allan Socken:  From your experience, Paul, is it easy to get that kind of order?

Paul Trudelle:  I think that that’s a very tough thing to do because I think that we have to look at the overriding purpose and the intrusive nature of the disclosure process. People are dragged to the table and forced to disclose their evidence, their documents.  And to allow that sort of fishing expedition to be used to commence another proceeding against another party, I think, is something that the Courts are not going to do lightly. Having said that, if there was no other way to get that evidence, or it’s clear that the evidence ought not to be protected, then the Court, I think, will make that type of an order and allow it to proceed. I think that’s still a very tough order to get, though.

Allan Socken:  Absolutely. I mean, because, I think, in most matters, certainly a Court would be very careful before it goes ahead and grants a rule or grants an order which basically prejudices a party in a certain way.

Paul Trudelle:  That’s right. With respect to the exceptions, there’s another exception.  You can use that evidence to impeach someone’s testimony in another proceeding. So the evidence, if it’s... documents are given in one proceeding, they can be used in another proceeding to impeach testimony. And that’s another exception as set out in the rules.

We were talking, or you mentioned before, the estates context and I think that’s what we should maybe touch on before we wrap up. In the estates context, we usually get an order in a Will challenge, that would allow the parties to obtain evidence on examination or through witnesses. That may be, for example, the evidence of a solicitor who prepared the Will and the instructions that were given to that solicitor. That information may be protected by the rule and it may preclude a party from bringing an action as against a solicitor. There was a case back in 1998 that’s an unreported decision of Giamanco and Zahora that dealt with that very issue. And there, the Court was faced with a motion to consolidate proceedings. There was a Will challenge, there was an action against a solicitor and there was a motion to consolidate.  The solicitor resisted that, as did the parties to the other lawsuit, on the basis that the deemed undertaking rule was breached.  And the Court there dealt with the issue of the deemed undertaking rule.

Allan Socken:  And what’s also interesting about that case was, it cited a decision known as Orfis Realty and D.J. Jewellery of Canada Ltd., which basically says that if you try to use evidence from one proceeding to another, notwithstanding the deemed undertaking rule, that a contempt order can be issued against the party who tries to do that. And notwithstanding that ruling, Justice Mossep in the Giamanco decision did not proceed to make a contempt order in the Giamanco decision.  But the Justice did make mention of the fact that the solicitor, the defendant, could go ahead and try to stay the proceedings. But what’s interesting about it is Justice Mossep didn’t, on its on volition, try to stay the proceeding.

Paul Trudelle:  That’s right.  I think she left it open to the party to bring the appropriate motion in the second proceeding to have it stayed. And I think that’s maybe something we can touch on before we wrap up, which is the remedies where there is a breach of the deemed undertaking rule. You mentioned that contempt was one of them.  And the other was a motion or a staying of the second proceeding or perhaps even a dismissal of that. You think that might be a fair conclusion?

Allan Socken:  Absolutely.

Paul Trudelle:  Okay.  Now how do we, as parties to a litigation, when we’re going to be getting evidence from solicitors, how do we protect the right to pursue an action, if one is advisable, as against the third parties or those people who are giving evidence?

Allan Socken:  Well generally, when we do a Will challenge, in that kind of situation, when we proceed with the order giving direction, which basically sets out the procedure for the litigation, we’ll specifically ask the Court within that order to ensure that this rule, the deemed undertaking rule, doesn’t apply for that litigation.

Paul Trudelle:  And the Court can make an order that the deemed undertaking rule doesn’t apply. Often, in estate matters, we seek that in the order giving directions, usually on the basis that there’s no other way to get that information. The solicitor is…the information that he has can only be produced on a Court order in this proceeding because the person who gave the instructions is deceased. In effect, the parties are stepping into the shoes of that deceased person to get the information.  And on that reasoning, we would argue that the deemed undertaking rule shouldn’t apply and that evidence shouldn’t be protected from an action, if it turns out that such an action is warranted.

Okay, well I think that’s a good, initial discussion with respect to the deemed undertaking rule, and when it can be invoked and the considerations to be taken into account. Thank you very much, Allan.

Allan Socken:  Thanks Paul.

Paul Trudelle:  And just before we go, we welcome your comments and we ask for your comments. You can send us an e-mail at hull.lawyers@gmail.com and send in any comments, your questions or suggestions that you might have.

Allan Socken:  And be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law.

Paul Trudelle:  And we also have a comment line.  You can call us at 206-350-6636, and give us your comments and you might even end up on the air, on our podcast, if you leave a comment.

Well, thanks a lot Allan, that was very good.  It was a pleasure blogging with you this week.

Allan Socken:  Likewise, Paul.

Paul Trudelle:  Podcasting with you, and I look forward to doing this again, thank you.

Allan Socken:  Thanks.

This has been Hull on Estates with the lawyers of Hull & Hull.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid  and is courtesy of the Podsafe Music Network.

/mem

This week on Hull on Estates, Natalia and Allan discuss the Family Conference.

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estate blog.

The Family Conference - Hull on Estates Podcast #96

Posted on February 5^th, 2008 by Hull & Hull LLP

Natalia Angelini: Hello and welcome to Hull on Estates. You’re listening to Episode #96 on Tuesday, February 5^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

Natalia Angelini: Hi and welcome to another episode on Hull on Estates. I’m Natalia Angelini.

Allan Socken: Hi and I’m Allan Socken.

Natalia Angelini: If you want to be heard on Hull on Estates, you can participate in our discussion by leaving a comment. Give us a call at 206-350-6636. The number is in the show notes along with our e-mail address: hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.

So Allan, it’s great to be podcasting with you today. It’s our first time together.

Allan Socken: I’m very excited about it, Natalia.

Natalia Angelini: That’s good. We’re going to be talking about the family conference. So perhaps I’ll just set out what it is. The family conference is a professionally mediated conference and it essentially provides a forum whereby a testator can reveal his or her proposed estate plan to intended adult beneficiaries. And the objective is to obtain their approval of the plan. So it’s quite a unique animal, the family conference. It’s really the only formal mechanism in place in estate matters where someone can, you know, look their loved ones in the eyes and explain their plan to them, answer any questions about why they wish to have their plans set out in that manner. And ultimately in an ideal scenario, get agreement on it. So Allan, why don’t you tell our listeners what needs to happen in preparation for a conference.

Allan Socken: Well before the conference, I think probably the most important question to ask is who do you invite to the conference? And the simple answer is you invite all adults who are involved in the estate plan. At least, at a minimum, the people you invite would be the spouse of the person who made this estate plan as well as his children. And I think in inviting these people, it’s really important that you speak to them and have a candid conversation with them, obviously before the conference, explain the purpose of a conference, namely for all the people to appreciate what the person’s estate plan looks like and the reasons as to why they’re leaving certain gifts the way that they are.

Natalia Angelini: And who else can be invited?

Allan Socken: Really, any person who has an interest or involvement in the estate plan of the person.

Natalia Angelini: Right. And that would even include professionals, like the testator’s estate lawyer, their financial planner or accountant, because they certainly can have a critical role in explaining or answering questions dealing with the assets.

Allan Socken: For sure. And I think the other important thing to make mention of is there may be certain circumstances, probably quite frequently, where minor children have an interest in the estate plan. And it’s important to note that minor children should not be included in the family conference. In most jurisdictions, Ontario included, there’s an office known as the Office of the Children’s Lawyer, whose mandate is to protect the interests of minor children. And depending on what the estate plan looks like, it may be necessary to have discussions with them to see if it’s necessary for them to attend the conference as well.

Natalia Angelini: That’s a good point, Allan. So are there any other preparatory steps?

Allan Socken: The only other thing I’d like to make mention of is the question as to where to hold the family conference. Often people think that it may be prudent to hold it at a family member’s house.  But the reason why, I think, it’s not a good idea is, is often when you go to a person’s house, it may turn into a social function and it may lose the business touch that’s essential in planning for this conference. So I think probably the best place to hold a conference would be at the mediator’s office so people can really appreciate the business-like environment that they’re encountering and the importance placed on the family conference.

Natalia Angelini: In addition, it really is like a mediation and you want to be able to have individual caucuses as well as group caucuses. So you need several rooms and breakout rooms and privacy so you can really have it proceed in a meaningful way. So again, I think a mediator’s office or some other kind of office is ideal.

Allan Socken: I think moving along, Natalia, now we should address the agenda that’s put in place before the family conference. I think it’s important to stress to our listeners that an agenda is essential to have so that people are aware of what’s going to be taking place at the conference and so that divergence can be avoided as much as possible. So probably what’s important to include in the agenda is really the overview of the person’s estate plan which would include the proposed new Will, who the executor will be, funeral arrangements, debts of the person, taxation issues, guardianship of minor children, who may be the Power of Attorney and dealing with the distribution of specific assets for the estate.

Natalia Angelini: Right. I think it is critical to have an agenda and the family conference is chaired. And it’s usually chaired by either the testator or the mediator or someone else selected by the testator. So it’s great assistance to them to have an agenda to follow.

Now in respect of how the actual conference works over the course of a day or more than one day, it is much like a mediation.  And, you know, there is, I think, initially, commonly a group meeting where the chairperson goes through the rules of the day. There’s usually a family conference agreement signed which sets out that the mediator is neutral, that he or she is not offering legal advice, that all discussions are without prejudice, and of course, that the mediator is not liable for anything done or omitted at the family conference. So the usual sort of waivers. In addition, a document entitled Rules for Meeting is also signed. And Allan, why don’t you set out what is contained in that document?

Allan Socken: Typically for the Rules of the Meeting, it sets out that the parties understand who’s paying for the mediator’s time but not withstanding whoever is paying for the mediator’s time, the mediator still will be neutral throughout the process. As well, the parties agree that they’ll conduct themselves in a business and professional approach. And in that sense, there’ll be no harsh language spoken either at the other parties or the mediator. And believe me, I’m sure Natalia also can attest to the fact she’s seen certain times where discussions can get pretty heated.

Natalia Angelini: This is true. This is true. And I think in this kind of conference you really want to encourage views to be shared and grievances to be aired, but at the same time, in order for resolutions to come about, you want to make sure that everything is discussed in a cordial manner.

Allan Socken: And just the other thing to make mention of also is one of the rules should also include that all the parties are bound and acknowledge that they’re bound by the Family Conference Agreement. So they can leave whenever they feel like it if they feel progress is not being made. Certainly the mediator will try to keep them there and have the parties agree to at least spend a day there to try to sort things out. But even if the parties want to leave at the end of the day and no agreement can be reached, the parties still agree that all information and all people who were present can’t be subpoenaed in that respect. I think that’s important also to include in the agreement, Natalia.

Natalia Angelini: Good point, Allan. So again, it is a fluid process like any other type of mediation and it really can unfold in a different way depending on the parties and the circumstances.  And if an agreement is not ultimately reached at the end of the day, you can, you know, reconvene on another day if all or some of the people are willing to and you can get an agreement at a later time. What that looks like doesn’t necessarily have to be in accordance with the proposed estate plan. It’s not necessarily an imposition of that plan. The plan can be varied or amended pursuant to the comments and views of the beneficiaries and once an agreement is ultimately reached, it’s papered in a document that’s called The Family Constitution. And Allan, maybe you can expand a bit on that.

Allan Socken: Sure. Basically, you probably remember from law school, Natalia, that we always talk about the constitution as being a living tree.

Natalia Angelini: That’s right. Way back when I do remember.

Allan Socken: Well not surprisingly, The Family Constitution is also a living document that requires amendments from time to time. Because as people move on and age in years, no doubt their estate plan changes and when their estate plan changes, it’s really important that The Family Constitution is also updated. And I think as a preamble to The Family Constitution, it’s important to note that while family members may have different views and opinions, they unanimously - hopefully that’s the goal at the end of the day - that they unanimously decide to create this Family Constitution. And I mean, in certain circumstances, there may be family members who don’t want to agree to The Family Constitution or some people may not even want to have the meeting in the first place. So I think the role of the mediator shouldn’t necessarily be to prevent the family conference from going ahead, but perhaps to engage the people who are willing and interested at first to participate in the conference and hopefully, if success can be achieved there, people who didn’t want to participate in the first place may be inclined to give it another look and perhaps be willing to review the constitution that was agreed to. And even in certain circumstances, they may be willing to sign the agreement, albeit they may expect some changes to be made. But at the end of the day, some progress can happen even if not everyone in the family conference is willing at first to participate. And I think that’s important to keep in mind.

Natalia Angelini: Right, and one benefit to proceeding even if you don’t have everyone’s consensus is that the process can be of real value because it shows a testator’s clear intention as to how he or she wishes to divide his or her assets, which can really deflate any kind of brewing Will challenge at the end of the day. So litigation avoidance is one real positive potential outcome of the conference. And if you actually do get a Family Constitution signed, then it’s a great thing to have because it includes an agreement not to contest the Will. So that’s a great way to avoid litigation or ultimately if litigation is commenced, to use that document in defence of that.

Allan Socken: And just one final point for me to make Natalia, if that’s okay, is probably the most complicated aspect of this family conference is really the need for full disclosure. And for a lot of people, that’s really a difficult thing to do because there may be situations that people are embarrassed to admit or really don’t want to disclose.  For example, extra-marital affairs, not dividing your estate equally among your children.  But at the end of the day, if you want success to be reached with the family conference and you don’t want your Will to be contested or other legal remedies pursued when you die, I really think it’s important that you make mention of these difficult aspects so people can appreciate and they don’t feel as though you’re hiding anything. So while it’s difficult to disclose this information, I really think it’s important to get across that at the end, if you hide it, it will really do more harm than good at the end of the day.

Natalia Angelini: That’s right. I mean the fact is this is a delicate process and it’s not one that I think most people are willing to enter into because I think a lot of us would rather not deal with these delicate and difficult issues during our lifetime and we’ll just wait for everyone else to kind of deal with it after we’ve passed on. So I think people need to have, I think in a lot of cases, it helps to sort of have the courage to go ahead with the process and be open and ultimately, in an ideal scenario, get agreement on the issues or at least, you know, canvass them in an open and honest way.

So well, I think that brings us to the end of this week’s discussion.  Thanks for listening and thanks for joining me today, Allan.

Allan Socken: Thanks Natalia, I had a great time.

Natalia Angelini: That’s great. And we look forward to hearing from our listeners. You can send us an email at hull.lawyers@gmail.com or just pick up the phone and leave us a message on our comment line at 206-350-6636. And again, you can also visit our blogs at estatelaw.hullandhull.com, where you’ll even find more information and discussion on today’s practice of estate law. We hope you enjoyed the show. I’m Natalia.

Allan Socken: And I’m Allan.

Natalia Angelini: And until next time, so long.

This has been Hull on Estates with the lawyers of Hull & Hull.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid  and is courtesy of the Podsafe Music Network.

/mem

Before July 2005, the Rules of Civil Procedure provided some sense of certainty to the Court’s broad discretion in awarding costs as the Rules provided a costs grid. The costs grid suggested that costs were to be determined by an hourly rate multiplied by the time spent. In 2004, the Court of Appeal in Boucher v. Public Accountants Council set forth the general principle as to the fixing of costs pursuant to Rule 57.01 and the costs grid. With respect to costs, the Court stated that the overall “objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”. Subsequently, in July 2005, the Rules were amended. 

The amendment to the Rules abolished the costs grid and expanded on the list of factors, set out in Rule 57.01, which the Court may consider before making a cost award. Rule 57.01 was now expanded to include the principle of full indemnity and the reasonable expectations of an unsuccessful party to pay a cost award.

The principle of the reasonable expectations of an unsuccessful party to pay a cost award appears to provide the parties with some flexibility in obtaining the maximum cost award by permitting the successful party to establish the reasonable expectations of the unsuccessful party.  

Thanks for reading, and have a great day!

Rick