CITATION: Robinson v. Rochester Financial Limited, 2010 ONSC 1899
DIVISIONAL COURT FILE NO.: 56/10 and 71/10
DATE: 20100401
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N :
KATHRYN ROBINSON and RICK ROBINSON
Plaintiffs/Respondents
- and -
ROCHESTER FINANCIAL LIMITED, PROMITTERE CAPITAL GROUP INC., PROMITTERE ASSET MANAGEMENT LTD., BANYAN TREE FOUNDATION AND FRASER MILNER CASGRAIN LLP
Defendants/Moving Parties
David Thompson and
Mathew G. Moloci
for the Plaintiffs/Respondents
Peter Griffin and
Paola Calce
for Fraser Milner Casgrain LLP
Robert Cohen
for the remaining Defendants/Moving Parties
HEARD AT TORONTO: March 24, 2010
DAMBROT J.:
[1] The defendants (the “gift program defendants”) other than Fraser Milner Cosgrain (“Fraser”) seek leave to appeal to the Divisional Court the order of Lax J. dated January 19, 2010 granting the plaintiffs’ motion to certify an action pursuant to s. 5 of the Class Proceedings Act, 1992 (the “CPA”). Fraser brings a motion for the identical relief, and also for leave to appeal the order of Lax J. of the same date dismissing Fraser’s motions to dismiss the action under rules 21 and 51.06 of the Rules of Civil Procedure.
BACKGROUND
[2] The plaintiffs brought the proposed class proceedings on behalf of 2,855 individuals who participated in a charitable gift program for the taxation years 2003 to 2007. They seek damages and declaratory relief against the promoters of the program and Fraser as a result of the disallowance by the Canada Revenue Agency (“CRA”) of the tax benefits that the plaintiffs allege they were to have received. CRA has determined that the gift program was a sham. As a result, proposed class members have been or will be reassessed and required to pay taxes and interest on arrears arising from the reassessment.
[3] The plaintiffs allege that the gift program defendants are in breach of contract and were negligent in failing to provide a charitable donation receipt that would be recognized by CRA and in failing to ensure that class members would not be at risk to repay the loans that were obtained in order to facilitate their participation in the program. They allege that Fraser's tax opinions were necessary and instrumental to the marketing of the gift program and that the law firm was negligent in the preparation of these opinions.
[4] The program was structured as a mechanism for Banyan Tree, which was a charitable foundation, to provide donations to various charities using donations from participants in the gift program. The program was marketed and promoted by Promittere Capital and Promittere Asset.
[5] Participants were solicited by a network of financial advisors who promoted and sold the gift program to individuals on behalf of Banyan Tree. Each year, Banyan Tree produced information about the program which it provided to soliciting agents. It did not instruct the soliciting agents to distribute the information documents to potential participants. In fact, some participants did not receive any such documents.
[6] Each participant in the program executed a pledge, loan application, power of attorney and promissory note which set out the terms and conditions of the program. Through these documents, the participant would pledge a donation of a specified amount to Banyan Tree, and would borrow approximately 85% of the pledge from Rochester. The pledge would be evidenced by the promissory note. The participant would also pay a “security deposit” in respect of the loan to Rochester. The security deposit would be invested to create growth. The growth of the security deposit, if any and if sufficient, would be used to pay interest and income taxes owed on the growth and to reduce the principal amount of the loan. It was contemplated that Rochester would acquire an insurance policy that would insure the risk that the security deposit would not be sufficient to repay the loans. The participant would receive a charitable donation tax receipt for the full amount of the pledge.
[7] Fraser delivered opinion letters dated October 23, 2002 and September 5, 2003 to Promittere Asset relating to the tax status of the program for 2003. According to the opinion letters, Fraser was permitting Promittere Asset and prospective participants who were provided a copy of the letter by Promittere Asset or by the participant’s authorized representative, and no one else, to rely on the letters. After describing the proposed transactions and summarizing its assumptions, Fraser stated its opinion in each letter as follows:
OPINION
Although the matter is not free from doubt, in our opinion, as of the date hereof, the Cash Donation will constitute a gift to a registered charity for purposes of the Act and will entitle the Donor to a tax credit in respect of the Cash Donation under section 118.1 of the Act.
[8] Fraser then proceeded to explain the basis of its position in each letter.
[9] Fraser warned readers of the letter that no assurances were being given, that CRA might not agree with its opinion, that CRA might change its practices retroactively, that no advanced ruling had been obtained, that the opinion was based on assumptions of fact and law that Fraser had not verified, and that each participant should review the opinion and their circumstances with their professional tax advisor.
[10] Fraser gave no opinions in respect of the 2004 to 2007 gift programs.
[11] The Robinsons admitted in cross-examination that they did not obtain or read the Fraser opinions. They relied on their financial advisor’s advice about the program. Their advisor did show them a copy of one of Fraser’s letters, but only in 2003, and told them that “a large lawyer company” had signed it saying that they believed that the program was a safe way to go, and there would be no problems. They were not told that there were limitations or qualifications in the letter. Other potential class members who swore affidavits in support of the certification motion gave similar evidence during cross-examination.
[12] It is the position of CRA that the program involved no valid gift; that the program is a tax shelter; that the loan is a limited-recourse loan; that the program avoids the General Anti-Avoidance Rules; that the participants agreed to participate on the understanding that they were not at risk for more than their cash outlay; that the program was promoted on the basis that the participants would receive a tax credit that would result in a net positive cash position; that the gift program defendants acted in concert and not at arms length; that they had a common intention to deceitfully give the appearance of legal relations that masked the true purpose of the scheme: to sell tax credits at a profit and that the program was a sham involving a circular flow of funds that occurred on the same day calculated to give the appearance of a legitimate loan and donation when in fact this did not occur.
THE ISSUES
[13] The gift program defendants raised numerous issues in their factum. In argument, however, they took a much more limited approach. In essence, they argued that Lax J. erred in concluding that this was an appropriate case for certification because the five part test for certification was not met. Specifically, they argued that s. 5(1)(c) was not met: the claims of the class members did not raise common issues. The fundamental basis for their submission was the argument that there was uncontradicted evidence of significant divergent practices by multiple advisors at the point of sale and no evidence to support an inference of the development and deployment of a standard sales pitch. The plaintiffs’ effort to repackage a point-of-sale misrepresentation scheme as a uniform breach of contract case must fail.
[14] The core of Fraser’s argument related to the question whether the pleadings raised a cause of action against them. They submitted that Lax J. erred in concluding that they did. They argued that no facts were pleaded to support either reasonable forseeability or sufficient proximity between the plaintiffs and Fraser to justify the imposition of a duty of care by Fraser to the plaintiffs. They further argued that since the plaintiffs neither read nor relied on their opinions, causation cannot be established. This is really a negligent misrepresentation claim that founders for lack of reliance on the shoals of causation.
ANALYSIS
The gift program defendants
[15] Lax J. well understood the argument raised by the gift program defendants. She began by discussing the law in relation to the requirement of commonality in class actions. She said:
38 The core of a class action is commonality. For an issue to be common, it must be a substantial ingredient of each class member's claim and its resolution must be necessary to the resolution of each class member's claim: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 18. An issue will not be common if its resolution is dependent upon individual findings of fact that have to be made with respect to each individual claimant. Fehringer v. Sun Media Corp., [2002] O.J. No. 4110, 27 C.P.C. (5th) 155 (Sup. Ct.), aff'd, [2003] O.J. No. 3918, 39 C.P.C. (5th) 151 (Div. Ct.). The underlying question is whether the resolution of a proposed common issue will avoid duplication of fact-finding or legal analysis: Western Canadian Shopping at para. 39.
39 Section 6 of the CPA is clear that where the relief claimed includes a claim for damages, certification should not be refused because this would require individual assessment after the determination of the common issues or because the relief claimed relates to separate contracts involving different class members or because different remedies are sought for different class members. Common issues need not determine liability, but need only be issues of fact or law that will move the litigation forward. Many individual issues may remain to be decided after the resolution of a common issues trial: Hollick at para. 16; Cloud at para. 52; Cassano v. Toronto-Dominion Bank (2007), 2007 ONCA 781, 87 O.R. (3d) 401 (C.A.) at paras. 60-63, leave to appeal to S.C.C. refused, [2008] S.C.C.A. No. 15. The common issues requirement is not a high legal hurdle, but a plaintiff must adduce some evidence to show that there is a basis in fact that issues are common: Hollick at para. 25.
[16] After listing the proposed common issues, she identified the argument made by the gift program defendants, stating:
41 The gift program defendants argue that this is a point-of-sale representation case as in Williams v. Mutual Life Assurance Co. of Canada (2000), 2000 22704 (ON SC), 51 O.R. (3d) 54 (Sup. Ct.); Kumar v. The Mutual Life Assurance Co. of Canada et al, 2003 48334 (ON CA), [2003] O.J. No. 1160, [2003] I.L.R. I-4181 (Ont. C.A.) and Bellaire v. Independent Order of Foresters (2004), 2004 95288 (ON SC), 5 C.P.C. (6th) 68 (Ont. Sup. Ct.). See also, Controltech Engineering Inc. v. Ontario Hydro, [1998] O.J. No. 5350, 72 O.T.C. 351 (Sup. Ct.).
42 In each of these cases, certification was refused. Williams and Kumar were pleaded on the basis of negligent misrepresentation, which the plaintiffs acknowledge can be problematic in a class action. Controltech was also a misrepresentation case. In Bellaire, the plaintiffs alleged breach of contract and sought to certify common issues on contractual interpretation, but Nordheimer J. found that the claims, at their heart, were claims of negligent misrepresentation. In coming to that conclusion, he referred to the plaintiff's evidence that the plaintiff had been "induced" to purchase the life insurance policy in question based on representations made to him by the defendant's agent. As well, the draft litigation plan explicitly stated that the "the substantive and determinative common issue turns on whether or not there was a misrepresentation which induced the plaintiff to enter the contract." Nordheimer J. found that the case suffered from the same problem which Cumming J. found to exist in Kumar and with which Rosenberg J.A. expressly agreed when he referred with approval at para. 48 of Kumar to Cumming J.'s statement:
While the theories of liability can be phrased commonly the actual determination of liability for each class member can only be made upon an examination of the unique circumstances with respect to each class member's purchase of a policy (at para.39).
[17] She then explained, with great care, and with a detailed examination of the evidence, why she did not accept the argument of the gift program defendants, and concluded that the proposed common issues in both contract and negligence relating to the gift program defendants were appropriate for certification. (See paragraphs 43-53 of her reasons.)
[18] The gift program defendants dispute her conclusions. They say that she erred in her appreciation of critical facts, distinguished analogous and applicable cases and inappropriately relied on obiter comments in other cases. I do not propose to rehearse the details of this argument. It is sufficient to say that I am not satisfied that there is good reason to doubt the correctness of her analysis, or that the cases she distinguished are necessarily in conflict with her decision. More importantly, I do not believe that it is desirable that leave to appeal this highly fact-driven judgment be granted, or that the proposed appeal, again bearing in mind its highly fact-driven nature, involves matters of such importance that leave to appeal should be granted.
Fraser
[19] Lax J. had a clear understanding of Fraser’s argument as well. She summarized it as follows:
16 The gift program defendants do not dispute that the statement of claim discloses causes of action against them in contract and negligence, and I am satisfied that it does. The contested issue is whether the pleading discloses a cause of action in negligence against FMC.
17 The plaintiffs plead that the opinion letters were a necessary prerequisite to the promotion and sale of the gift program, without which, the gift program could not have been launched. They plead that all class members were advised of their existence, that some received copies, that the opinion letters were referred to in promotional materials marketing the program and that they were an express term of the loan arrangements between the gift program participants and Rochester. The particulars of the claim in negligence against FMC are pleaded in paragraph 69(B) of the statement of claim:
NEGLIGENCE
- The plaintiffs and class members state that the defendants were negligent, particulars of which are as follows:
(B) FMC
(i) issued the Opinion Letters with the expressed intention that the Opinion Letters be relied upon by the Gift Program Defendants, without due care and consideration, when it knew or ought to have known that the Gift Program Defendants would rely upon and publish the existence of the Opinion Letters in promoting the Gift Program;
(ii) issued the Opinion Letters with the expressed intention that the Opinion Letters be relied upon by the Gift Program Defendants, without due care and consideration, when it knew or ought to have known that the Gift Program Defendants would rely upon the accuracy and reliability of the Opinion Letters in promoting the Gift Program;
(iii) issued the Opinion Letters with the expressed intention that the Opinion Letters be relied upon by the Gift Program participants as well as their authorized representatives, without due care and consideration, when it knew or ought to have known that the Gift Program participants would rely upon the existence of the Opinion Letters in deciding whether to participate in the Gift Program;
(iv) issued the Opinion Letters with the expressed intention that the Opinion Letters be relied upon by the Gift Program participants as well as their authorized representatives, without due care and consideration, when it knew or ought to have known that the Gift Program participants would rely upon the accuracy and reliability of the Opinion Letters in deciding whether to participate in the Gift Program;
(v) failed to properly investigate and consider the income tax consequences of participation in the Gift Program;
(vi) was negligent in the preparation of the Opinion Letters;
(vii) knew or ought to have known that the Opinion Letters were a necessary prerequisite for the promotion and sale of the Gift Program and that but for the Opinion Letters the Gift Program could not be undertaken, yet it failed to fully and properly investigate and accurately opine;
(viii) knew or ought to have known that the Opinion Letters were no longer accurate or reliable following: the issuance by Canada Revenue Agency of its Fact Sheets in November and December, 2003, and November, 2005, the legislative changes announced on December 5, 2003; and, the Canada Revenue Agency issued Taxpayer Alerts in November, 2005 and October, 2006;
(ix) failed to notify the Gift Program Defendants, prospective donors and existing participants in the Gift Program that its Opinion Letters were no longer accurate and reliable; and
(x) knew or ought to have known that the Gift program Defendants continue to rely upon and publish the existence and content of the Opinion Letters for the promotion and sale of the Gift Program to prospective donors and participants despite its knowledge that these Opinion Letters are no longer accurate or reliable.
18 The plaintiffs also plead in the following paragraphs that
FMC was negligent in the issuance of the Opinion Letters, the issuance of which was a necessary prerequisite for the promotion of the Gift Program by the Gift Program Defendants. Accordingly, the FMC's issuance of the Opinion Letters was the proximate cause of damages to Class Members.
FMC owed a duty of care to those whom it intended to, or knew or ought to have known would, rely upon the existence and/or accuracy and reliability of the content of the Opinion Letters it issued.
FMC had a duty to warn the Gift Program Defendants and Class Members and to make full disclosure to them as to the facts and circumstances set out above and failed to do so. Particularly, FMC failed to notify the Gift Program Defendants and Class members that the Opinion Letters were no longer accurate or reliable.
All defendants failed to take proper steps to fully investigate the Gift Program to ensure that the Canada revenue Agency would in fact recognize the charitable donation receipts issued and tax credits claimed.
19 On a motion under rule 21 and in considering s. 5(1)(a) of the CPA, no evidence is admissible. However, a motions judge may have regard to documents specifically referred to and incorporated by reference into the pleading in order to assess the substantive adequacy of the claim: Web Offset Publications Ltd. v. Vickery (1999), 1999 4462 (ON CA), 43 O.R. (3d) 802 (C.A.); Corktown Films Inc. v. Ontario (1996), 18 O.T.C. 308, 66 A.C.W.S. (3d) 868 (Ont. Gen. Div.); Montreal Trust Co. of Canada v. Toronto-Dominion Bank (1992), 40 CP.C. (3d) 389 (Ont. Gen. Div.). As the opinion letters are specifically referred to and relied on in the pleading, I may consider them.
20 The opinion letters are dated October 23, 2002, and September 5, 2003, and are addressed to the attention of Mr. Thiessen as President of Promiterre Asset. FMC did not structure the gift program, but the program's structure was integral to the opinion FMC rendered that the donation made partly in cash from the participant's own resources and partly from a loan from Rochester would qualify as a valid charitable donation for tax purposes. If that opinion was given negligently as is alleged, it could, subject to the arguments discussed below, support the plaintiffs' claim in negligence against FMC.
21 FMC submits that a duty of care cannot be created based on the fact that an opinion was prepared, when its contents were never read or relied upon by anyone. They say that the allegations against FMC arise from the existence and the contents of the letters and that, in substance, the claim is made for negligent misrepresentation. I disagree. The claim is not pleaded on the basis that the plaintiffs read or relied upon the FMC letters, but on the basis that FMC issued the opinion letters with the expressed intention that they be relied upon by the gift program defendants and knowing that the gift program defendants would rely upon and publish the existence of the opinions in promoting the gift program.
22 FMC points out that the letters contained express qualifications on the opinion and authorized reliance by a very limited category of individuals and disclaimed reliance by any other person, without FMC's prior written consent. The letters state:
The opinions expressed in this letter may be relied upon by you, and by a Donor who is provided a copy of this letter by you, or the Donor's authorized representative, and may not be relied on by anyone else without our written permission.
23 FMC submits that, given this language, it could not be reasonably foreseeable to FMC that individuals like the plaintiffs who did not receive or read the FMC letters would sustain damages as a result of the opinions expressed in them. It says that the result is that there was no relationship between FMC and the plaintiffs sufficiently close to satisfy the first part of the Anns test for duty of care (Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.)). This submission overlooks that the limitation on reliance does not qualify in any way Promiterre's ability to rely on the opinions expressed in the letters. In fact, the letters specifically permit Promiterre's reliance and it is alleged that the gift program defendants did rely on the opinions to launch and sell the program.
[20] In response to this submission, in addition to what she said in paragraphs 21 and 23 in the course of summarizing Fraser’s argument, Lax J. stated:
24 The allegation is not that FMC provided the letters intending that they be read and relied upon by the plaintiffs and proposed class members, although some may have done so, but rather that FMC provided the letters (1) with the intention that they be used by the gift program defendants in the manner the plaintiffs allege, namely to market the program as one in which proposed class members would receive a charitable tax receipt recognized by CRA; and (2) with the intention and knowledge that the existence of a tax opinion would inform the decision of class members about whether or not to participate in the gift program. If these allegations are made out at trial, it is not plain and obvious that they could not support a duty to take care that the opinions expressed in the letters were accurate and reliable and that a failure to take such care or a failure to warn was the proximate cause of the losses the plaintiffs allege they suffered.
25 To put this in a different way, the reliance the plaintiffs allege is not on the tax opinion per se, but on there being a tax opinion that FMC intended and knew would be used by the gift program defendants to support the legitimacy of the gift program for income tax purposes and would be relied upon by the class members in deciding whether or not to participate. I would therefore not give effect to FMC's argument that this is a negligent misrepresentation claim "dressed up" as a negligence claim. It is properly pleaded as a negligence claim and the essential elements of the cause of action - duty, foreseeability, proximity, breach, and damage - are present. The express qualifications on the opinion are not matters to be considered at the certification stage.
26 The question then is whether it is plain and obvious that a claim in negligence against FMC cannot possibly succeed. The plaintiffs have not pleaded and cannot plead any direct relationship with FMC, but there is precedent, as discussed below, for advancing a class action claim in negligence against a law firm even though generally, a lawyer owes a duty of care only to the lawyer's client: Baypark Investments Inc. v. Royal Bank (2002), 2002 49402 (ON SC), 57 O.R. (3d) 528 at paras. 23 and 33 (Sup. Ct.), aff'd, [2002] O.J. No. 4377 (C.A.); Elms v. Laurentian Bank of Canada, 2004 BCSC 1013, 35 B.C.L.R. (4th) 373 (S.C.) at paras. 63-65, aff'd, 2006 BCCA 86.
27 In CC&L Dedicated Enterprise Fund (Trustee of) v. Fisherman (2001), 2001 28387 (ON SC), 18 B.L.R. (3d) 240, [2001] O.J. No. 4622 (Sup. Ct.) ["YBM"], the plaintiffs advanced claims in both negligent misrepresentation and negligence against a law firm and one of its lawyers for alleged misrepresentations in a prospectus. Cumming J. rejected the negligent misrepresentation claim because the plaintiffs' investment preceded the public offering negating any reliance on the prospectus. However, applying the principles set out in Hercules Managements Ltd. v. Ernst & Young, 1997 345 (SCC), [1997] 2 S.C.R. 165 and Anns v. Merton, he held that the pleading disclosed sufficient facts to give rise to a prima facie duty of care and that by enabling the public offering to come to fruition through the prospectus, it was arguable that the law firm and the lawyer could be found negligent. He concluded that a factual record was necessary to decide whether there were policy considerations that ought to negative or limit the scope of any duty of the law firm and lawyer in question.
28 In the earlier decision of Delgrosso v. Paul (1999), 1999 15084 (ON SC), 45 O.R. (3d) 605 (Gen. Div.), Sharpe J. (now, Sharpe J.A.), similarly found that a negligence claim in a class action brought against a solicitor on behalf of investors disclosed a cause of action. In doing so, he reviewed the "developing line of authority" holding that a solicitor may place himself or herself in a sufficient relationship of proximity to a third party to owe that party a duty of care: Filipovic v. Upshall (1998), 19 R.P.R. (3d) 88 (Ont. Gen. Div.); Whittingham v. Crease & Co., 1978 1930 (BC SC), [1978] 5 W.W.R. 45 (B.C.S.C.); Tracy v. Atkins (1979), 1979 760 (BC CA), 105 D.L.R. (3d) 632 (B.C.C.A.); Linsley v. Kirstiuk (1986), 1986 1292 (BC SC), 28 D.L.R. (4th) 495 (B.C.S.C.).
29 In Elms v. Laurentian Bank of Canada, 2001 BCCA 429, 90 B.C.L.R. (3d) 195, affirming (2000), 73 B.C.L.R. (3d) (S.C.), which was also a class action brought by investors against a solicitor and relied upon by Cumming J. in YBM, the British Columbia Court of Appeal affirmed the decision of the motions judge to certify the action. The court also reviewed the so-called "disappointed beneficiary" cases such as Whittingham and Tracy and quoted liberally from Justice Sharpe's reasons in Delgrosso in concluding that although the investors' argument was novel, it could not be said that it was plain and obvious that it would fail.
30 Notwithstanding the efforts of counsel for FMC to confine these cases to their facts and to distinguish them, there is clearly a developing line of authority in Ontario and elsewhere that have permitted claims of this kind to proceed. FMC pointed to no authority that rejected a third party negligence claim against lawyers at the certification stage. I regard Hurst v. Price Waterhouse Coopers (PWC) LLP, Canada, [2009] O.J. No. 1415 on which FMC relies as entirely distinguishable. This was a claim for negligent misrepresentation, reckless misrepresentation, and negligence in which the allegedly wrongful act by PWC amounted only to having its name appear as auditor on an offering memorandum. This was found insufficient to establish a relationship giving rise to a prima facie duty of care.
31 Whether or not the plaintiffs and proposed class members are akin to disappointed beneficiaries, it is certainly arguable that FMC ought reasonably to have foreseen that its tax opinion would be used to market the gift program and that the participants would be "disappointed" and suffer damages if FMC was negligent in giving that opinion. In my view, FMC placed itself in a relationship of sufficient proximity to owe a prima facie duty of care to the plaintiffs and proposed class members and I would leave to trial the question of whether policy considerations ought to negative that duty.
[21] I confess to having difficulty in the understanding the rationale relied on by Lax J. for her conclusion that this is not a negligent misrepresentation case dressed up as a negligence case. I have reference, in particular, to the following:
To put this in a different way, the reliance the plaintiffs allege is not on the tax opinion per se, but on there being a tax opinion that FMC intended and knew would be used by the gift program defendants to support the legitimacy of the gift program for income tax purposes and would be relied upon by the class members in deciding whether or not to participate.
[22] I find it impossible to separate reliance on the opinion, and reliance on there being an opinion. In the circumstances of this case, one can only take comfort from the existence of an opinion if one is told, or reasonably infers, that the opinion is a positive one, that is, one that supports the appropriateness of the scheme. This takes us full circle in short order. Reliance on there being an opinion can only mean reliance on the assumed content of the opinion.
[23] That said, I do not believe that the passage in the reasons of Lax J. that concerns me is determinative of this application. In the end, I think that my quibble is probably mere semantics. It does not undermine her conclusion that this is not a negligent misrepresentation case dressed up as a negligence case. It is arguable that reliance by the plaintiffs on the existence of a positive opinion given by Fraser to the gift program defendants supports their claim against Fraser in negligence. In my view, the words of Sharpe J., as he then was, at paragraph 10 of his judgment in Delgrosso v. Paul (1999), 1999 15084 (ON SC), 45 O.R. (3d) 605(Gen. Div.), one of the many cases relied on by Lax J., are apposite:
The defendant also submits that there can be no cause of action for breach of duty, whether as a solicitor or as a fiduciary, absent a plea of reliance by the plaintiff on his advice. While the plaintiff does not allege direct reliance on the solicitor, it seems to me at least arguable that where a party invests money in an RRSP to be invested in mortgages, the reliance the party places on the trustee or other advisors to ensure that adequate steps are taken to protect his interests may be adequate to support a claim against the solicitor retained by the trustee or advisor, particularly where the solicitor is aware of the identity of the party and the nature of the party's interest: see White v. Jones, [1995] 1 All E.R. 691 (H.L.).
[24] Here, equally, the absence of direct reliance by the plaintiffs on the solicitor’s advice may not be determinative. Even without direct reliance on the advice, it remains arguable that when the plaintiffs entered the scheme, they were relying on the legal advisors of the architects of the scheme to ensure that their pledges would qualify as valid charitable donations for tax purposes. If the legal advisors acted negligently in giving their advice to the gift plan defendants, the plaintiffs could have a claim in negligence against those legal advisors.
[25] While it may be, particularly taking into account the qualifications and reservations expressed in Fraser’s opinion, that the claim against Fraser will ultimately fail, I cannot say that there is good reason to doubt the correctness of the orders in issue, namely, the order to certify as against Fraser, the order to decline to strike the pleadings against Fraser and the order refusing to strike the claim against Fraser.
[26] What is more, and in any event, I am not of the view that this appeal involves matters of such importance that leave to appeal should be granted. Fraser raised the concern that this judgment is dismaying to lawyers. It signals to them that they may be in greater jeopardy of being sued by persons who are not their clients, and have not read their opinions, than by clients who have read their opinions. While I have some sympathy for this concern, I do not think that the mere decision to let this action stand, and to certify it as a class action should unduly trouble the profession.
DISPOSITION
[27] The motions for leave to appeal are dismissed. The respondents will have 15 days from the date of release of this decision to serve and file brief written submissions as to costs. The respondents will have 15 days from the receipt of those submissions to serve and file their brief written submissions.
M. DAMBROT J.
RELEASED:
CITATION: Robinson v. Rochester Financial Limited, 2010 ONSC 1899
COURT FILE NO.: 56/10 and 71/10
DATE: 20100401
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N :
KATHRYN ROBINSON and RICK ROBINSON
Plaintiffs/Respondents
- and -
ROCHESTER FINANCIAL LIMITED, PROMITTERE CAPITAL GROUP INC., PROMITTERE ASSET MANAGEMENT LTD., BANYAN TREE FOUNDATION AND FRASER MILNER CASGRAIN LLP
Defendants/Moving Parties
REASONS FOR JUDGMENT
DAMBROT J.
RELEASED: April 1, 2010