Charity lawsuit has implications for lawyers

Karin Sachar, Laura Fric, Kevin O’Brien

Nov 7, 2012

Financial Post

Drew Hasselback, Legal Post

(Extract)

There are a lot of class action lawsuits resulting from the failure of charitable donation tax shelters.

Laura FricKevin O’Brien and Karin Sachar of Osler, Hoskin & Harcourt LLP have analyzed an Ontario court decision related to one of those pending cases, and they note that it could have some important implications for lawyers.

Cannon v. Funds for Canada Foundation is a complicated case with many parts, but one of the most important concerns legal opinion letters the promoters used to market the tax shelter.

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The important takeaway for lawyers — and perhaps other professionals who provide advice — is that Ontario judges are willing to consider scenarios where liability attaches for advice that might be passed to non-clients.

There’s another part of Cannon worth mentioning, the Osler lawyers note. Justice Sanderson also denied leave to appeal the certification. The plaintiffs are claiming negligent misrepresentation, and that’s something that judges usually assess based on direct, personal dealings between each of the parties.

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The Osler lawyers conclude: “While the facts of Cannon are complex and relatively unique, the potential for a finding of inferred reliance by an entire class could have an impact in class action litigation, including in securities class actions where claims of negligent misrepresentation are often asserted. Lawyers will also no doubt take interest in the findings with respect to the potential liability for lawyers to non-clients.”

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