February 23, 2018
Lindsay v. Aird & Berlis LLP | 2018 ONSC 7424 | Ontario Superior Court of Justice
Professions and occupations --- Barristers and solicitors — Negligence — General principles
Plaintiff was very accomplished alpine skier who put funds from prizes and endorsement contracts into amateur athletic trust established to preserve her amateur status and to defer income tax — After she retired from competitive skiing plaintiff was faced with mandatory wind-up of trust, and she sought tax advice from defendants, lawyer and law firm — Plaintiff was presented with charitable donation plan that involved her making charitable donation of $750,000 to offshore Canadian charity, and she was to purchase $250,000 disability/life insurance policy — Plan failed ab initio, charity that plaintiff made donation to was not registered charity, Canada Revenue Agency (CRA) reassessed plaintiff's tax returns, threatened her with criminal prosecution, and disability/life insurance policy was dismantled — Plaintiff brought action seeking damages based on solicitor's negligence, negligent misstatement, breach of trust and breach of fiduciary duty — Plaintiff brought motion for summary judgment on issue of liability — Motion granted — Lawyer admitted his conduct fell below reasonable standard and that he breached duty of care to plaintiff by failing to ensure that charity was registered charity — Only written warning was contained in opinion that was delivered to plaintiff two years after she accepted defendants' advice and committed to plan, by that time she was already embroiled in CRA audit, and written warning so late in time was no warning at all — Warning related only to disability/life insurance policy, and there was no evidence of any written warning of risks associated with making donation — Given nature of recommended transactions, plaintiff was entitled to detailed description of risks — Lawyer was architect of plan, he knew of significant risks, and lawyer's oral warning, if given at all, was not commensurate with risks that plaintiff faced in pursuing plan — Defendants failed to warn plaintiff of serious risks inherent in plan either in writing or orally — Defendants' failure to advise plaintiff of significant legal risks in pursuing plan fell squarely within exception of failure to warn where duty to warn was clear, and expert evidence of solicitor's negligence was not required — Defendants breached duty to provide competent legal and tax advice, and lawyer breached duty to apply reasonable care, skill and knowledge in provision of professional services to plaintiff in accordance with standards of reasonably competent solicitor with particular expertise in income tax planning matters — Issue of damages was to proceed to trial.
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