Lawyer

Duty to third parties

Compiled by Eric B. Appleby:

Overview

A lawyer when acting for a client may interact with third parties and this interaction may result in a duty owed by the lawyer to the non-client third party. 10.1 Duty of a lawyer to opposite parties In the case of Lubarevich v. Nurgitz (1996), 1 O.T.C. 360 (Gen. Div.), the court stated at para. 11: [11] “In the absence of special circumstances, of which none are pleaded in this case, a solicitor owes no duty of care to the opposite party and no action in negligence lies against the solicitor: Geo. Cluthe Manufacturing Co. et al. v. ZTW Properties Inc. et al. (1995), 81 O.A.C. 141; 23 O.R.(3d) 370 (Div. Ct.). While many of the authorities arose from litigation situations, there is no essential difference in the solicitor’s duty: it is to advance his client’s interests and not to protect those of the opposite party in the negotiations or dealings that he is engaged in. Search aid – MLB Key No. – Barristers and Solicitors Topic 4321 is assigned to cases that consider the duty of the lawyer to an opposite party. See www.mlb.nb.ca and Appendix for a list of cases that dealt with this issue.

Duty arising out of undertaking to third party to pay funds

In the case of Leisure Homes v. Metcalf & Holm (1977), 21 N.S.R.(2d) 703; 28 A.P.R. 703 (C.A.), on behalf of his client a solicitor undertook to the plaintiff to pay to the plaintiff funds from mortgage advances – Out of the first advance the solicitor paid the contractor who was pressing for payment and sent only a small portion to the plaintiff – The client ultimately defaulted and the plaintiff sought recourse against the solicitor on his undertaking – The Nova Scotia Court of Appeal held that the solicitor was liable to the plaintiff for the funds not paid out of the advance in accordance with the undertaking – See paragraphs 1 to 27.

Duty of a lawyer to a beneficiary when preparing a will

In the case of Remenda Estate v. Remenda (1998), 171 Sask.R. 300 (Q.B.), the Saskatchewan Court of Queen’s Bench stated that although solicitors drafting wills have a duty of care to beneficiaries, they are not insurers of all bequests. Negligence must be found; not only in failing to make proper inquiries of the testator but in failing to draft a document that accurately embodies the testator’s true intention. – See paragraph 4.

In the case of White v. Jones (1995), 179 N.R. 197 (H.L.), a solicitor delayed the preparation of a will – The testator died before the will could be executed – The testator’s two daughters got nothing under the original will – They would have received £9,000 each had the new will been executed – The daughters sued the solicitor for negligence – The solicitor submitted that, inter alia, no duty was owed to the daughters, there could be no recovery for an omission, and the loss was not recoverable as it was purely economic – The House of Lords held that the solicitor was liable for the daughters’ loss. Search aid – MLB Key No. – Barristers and Solicitors Topic 1681 is assigned to cases that consider the duty of the lawyer in the preparation of a will. See www.mlb.nb.ca and Appendix for a list of cases that dealt with this issue.

Duty of confidentiality to third parties

In the case of Escott v. Collision Clinic Ltd. et al. (1996), 141 Nfld. & P.E.I.R. 16; 443 A.P.R. 16 (Nfld. T.D.), the Newfoundland Supreme Court, Trial Division, discussed whether a lawyer owed a duty of confidentiality respecting conversations with a non-client – The court stated that if the circumstances are such as to warrant a reasonable expectation of confidentiality, the absence of the relationship should not automatically exclude a disqualifying conflict of interest. But in such a case, the person seeking to disqualify the solicitor must bring forward evidence of all the circumstances, and in particular those circumstances and facts giving rise to a ‘justifiable belief’ in confidentiality. The circumstances would include anything tending to show that the lawyer shared the individual’s expectation of confidentiality. – See paragraph 22.

Duty owed to the debtor of a client

In the case of Abacus Cities Ltd. (Bankrupt) v. Bank of Montreal et al. (1986), 74 A.R. 53 (Q.B.), the Alberta Court of Queen’s Bench held that where a client was a creditor, the solicitor owed a duty to further the client’s interests against the debtor – The solicitor owed no duty of care to the debtor in relation to advice given to his client re enforcement of the debt, because such a duty would impede the solicitor’s duty to his client – The court stated that to recognize a duty to the debtor would fetter the candour and vigour with which the solicitor should be encouraged to proffer advice to his client. As a matter of policy no such duty of care should be recognized by our law – See paragraph 19.

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This entry was last updated: February 13, 2017