A lawyer (Strother) advised his client (Monarch) that its tax-shelter business was dead due to new tax rules.
Later, Strother learned of a potential workaround and agreed to help a former Monarch executive (Darc) obtain a tax ruling for a new company (Sentinel) in exchange for a personal financial interest in Sentinel's profits.
Strother did not disclose this to Monarch, which remained a client of his firm (Davis).
The Supreme Court of Canada held that Strother breached his fiduciary duty of loyalty to Monarch by acquiring a personal financial interest in a competitor that conflicted with his duty to provide candid advice to Monarch.
Strother was ordered to disgorge his profits from Sentinel for the period he remained at Davis.
Davis was held vicariously liable for Strother's breach under s. 12 of the Partnership Act, despite being innocent of the breach.
