Restitution Discussion Group Archives
| Sender: |
Lionel Smith |
| Date: |
Wed, 4 Jan 2006 20:36:51 -0500 |
| Re: |
VL for breach of duty of loyalty |
3464920
Canada Inc. v. Strother, 2005 BCCA 385 was released in July 2005.
It involved a breach of fiduciary duty by a lawyer (Strother)
at one of Vancouver's leading firms. There was a conflict inasmuch as
he advised his client that a change in tax law made the client's business
no longer sustainable; he then took a financial interest in an undertaking
in the same area. The client, who had suffered no loss, sued for the profits
(said to exceed $60 million) and won against the lawyer (2005
BCCA 35). In the later holding, the client argued that the firm was
liable as well.
The careful judgment holds that the firm was not directly
liable as a knowing assistant. Was it vicariously liable for the profits
acquired by Strother? In general, no, since the profits were not acquired
in the ordinary course of the partnership's business and such an order
would go beyond disgorgement. But the firm had to return to the client
all fees (not disbursements) it had paid to the firm after the breach,
and it had to disgorge to the client all of the fees it had received from
the newly formed entities.
Leave to appeal to the SCC was granted in December 2005
from both CA holdings (against the lawyer & entities, and against the
firm).
Lionel
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