Lipson v. Cassels Brock & Blackwell LLP et al., 2013 ONCA 165

• Judge: Goudge, Simmons and Gillese, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 19, 2013
• Jurisdiction: Ontario
• Citations: 2013 ONCA 165;(2013), 303 O.A.C. 124 (CA)

Lipson v. Cassels Brock & Blackwell (2013), 303 O.A.C. 124 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. MR.027

Jeffrey Lipson (plaintiff/appellant/respondent by way of cross-appeal) v. Cassels Brock & Blackwell LLP (defendant/respondent/appellant by way of cross-appeal)

(C54702; 2013 ONCA 165)

Indexed As: Lipson v. Cassels Brock & Blackwell LLP et al.

Ontario Court of Appeal

Goudge, Simmons and Gillese, JJ.A.

March 19, 2013.

Summary:

Lipson was one of about 900 Canadian taxpayers who donated cash and resort timeshare weeks to registered Canadian athletic associations between 2000 and 2003. They made their donations through a program operated by the Canadian Athletic Trust. Under the program's terms, donors anticipated receiving tax credits worth more than their actual financial outlay. The promotional material included an opinion by Cassels Brock & Blackwell LLP (CBB) indicating that it was unlikely that the Canada Customs and Revenue Agency (CCRA) could successfully deny the anticipated tax credits. In 2004, the CCRA notified Lipson that it intended to disallow his claims for tax credits under the program in their entirety. On receiving this information, he and other donors who had received similar notices sought legal and accounting advice. In 2006, two of the other donors brought a test case challenging the CCRA's denial of the tax credits. In 2008, the CCRA settled the test case on the basis that the donors would receive tax credits for their actual cash donations, but not for their donations of timeshare weeks (which had been paid for by a third party). Lipson and other donors entered into similar arrangements with the CCRA. In April 2009, Lipson commenced a proposed class action against CBB for negligence and negligent misrepresentation relating to their opinion about the program. Lipson claimed damages for interest arrears, lost opportunities to make other donations, and special damages consisting of professional fees for challenging the CCRA's position.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 6724, dismissed the action, holding that it was statute barred by the two year limitation period in the Limitations Act. The court found that, apart from the limitations issue (and with the exception of certain proposed common issues including causation), the proposed class action had satisfied the criteria for certification. Lipson appealed submitting that the motion judge erred in: (1) dismissing his action as statute barred; and (2) not certifying the action, including his proposed common issue relating to causation, as a class proceeding. In the event that Lipson succeeded on the first issue, CBB cross-appealed aspects of the motion judge's finding that the proposed class action otherwise satisfied the criteria for certification.

The Ontario Court of Appeal allowed the appeal, set aside the part of the order that held that the action was statute barred and dismissed the action, and substituted an order that certified the action as a class proceeding. The court dismissed the cross-appeal.

Barristers and Solicitors - Topic 2508

Negligence - General principles - Limitation period for actions against lawyers - Lipson was one of about 900 Canadian taxpayers who donated cash and resort timeshare weeks to registered Canadian athletic associations between 2000 and 2003 - They made their donations through a program operated by the Canadian Athletic Trust - Under the program's terms, donors anticipated receiving tax credits worth more than their actual financial outlay - The promotional material included an opinion by Cassels Brock & Blackwell LLP (CBB) indicating that it was unlikely that the Canada Customs and Revenue Agency (CCRA) could successfully deny the anticipated tax credits - In 2004, the CCRA notified Lipson that it intended to disallow his claims for tax credits under the program in their entirety - On receiving this information, he and other donors who had received similar notices sought legal and accounting advice - In 2006, two of the other donors brought a test case challenging the CCRA's denial of the tax credits - In 2008, the CCRA settled the test case on the basis that the donors would receive tax credits for their actual cash donations, but not for their donations of timeshare weeks (which had been paid for by a third party) - Lipson and other donors entered into similar arrangements with the CCRA - In April 2009, Lipson commenced a proposed class action against CBB for negligence and negligent misrepresentation relating to their opinion about the program - Lipson claimed damages for interest arrears, lost opportunities to make other donations, and special damages consisting of professional fees for challenging the CCRA's position - A motion judge held that the action was statute barred by the two year limitation period in the Limitations Act - Lipson appealed - The Ontario Court of Appeal allowed the appeal - For the purposes of s. 5(1)(a) of the Class Proceedings Act (reasonable cause of action prong of the certification test), no evidence was admissible - Unless patently ridiculous or incapable of proof, a plaintiff's pleadings had to be accepted as true - Although perhaps not express, the pleadings at least implied that Lipson and the other class members were not advised until January 2008 of the likelihood that the CCRA's disallowance of the tax credits would succeed, at least in part - Accordingly, his pleadings did not demonstrate that his claim was statute barred when he commenced his action in April 2009 - Further, under ss. 5(1)(b) through 5(1)(e) of the Act (the remaining prongs of the certification test), a plaintiff only had to show some evidence that the proposed claim satisfied each of the relevant criteria - Because the limitation issue was a defence, in the absence of evidence tending to demonstrate that the limitation period had expired, the limitation issue did not undermine Lipson's request for certification - The court rejected CBB's argument that such evidence was before the court - See paragraphs 57 to 91.

Limitation of Actions - Topic 15

Limitation of actions - General principles - Discoverability rule - [See Barristers and Solicitors - Topic 2508 ].

Limitation of Actions - Topic 3103

Actions in tort - Negligence - When time begins to run - [See Barristers and Solicitors - Topic 2508 ].

Limitation of Actions - Topic 9305

Postponement or suspension of statute - General - Discoverability rule - [See Barristers and Solicitors - Topic 2508 ].

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - [See Barristers and Solicitors - Topic 2508 ].

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - Lipson was one of about 900 Canadian taxpayers who donated cash and resort timeshare weeks to registered Canadian athletic associations between 2000 and 2003 - They made their donations through a program operated by the Canadian Athletic Trust - Under the program's terms, donors anticipated receiving tax credits worth more than their actual financial outlay - The promotional material included an opinion by Cassels Brock & Blackwell LLP (CBB) indicating that it was unlikely that the Canada Customs and Revenue Agency (CCRA) could successfully deny the anticipated tax credits - In 2004, the CCRA notified Lipson that it intended to disallow his claims for tax credits under the program in their entirety - On receiving this information, he and other donors who had received similar notices sought legal and accounting advice - In 2006, two of the other donors brought a test case challenging the CCRA's denial of the tax credits - In 2008, the CCRA settled the test case on the basis that the donors would receive tax credits for their actual cash donations, but not for their donations of timeshare weeks (which had been paid for by a third party) - Lipson and other donors entered into similar arrangements with the CCRA - In April 2009, Lipson commenced a proposed class action against CBB for negligence and negligent misrepresentation relating to their opinion about the program - The motion judge found, inter alia, that Lipson's pleading disclosed a cause of action in negligent misrepresentation and also in simple negligence, and that it was not plain and obvious that these claims would fail - He also found that, for both causes of action, whether CBB owed the class a duty of care and whether it had breached that duty were proper common issues - However, the motion judge found that, for both causes of action, the question of whether CBB's breach caused the class damage was not a proper common issue but instead had to be answered on an individual basis for each class member - On appeal, Lipson contested this finding as it applied to his claim in simple negligence - The Ontario Court of Appeal agreed with Lipson - As pleaded, Lipson's claim in simple negligence raised the issue of whether, but for the CBB opinion, the program would have been marketed and therefore available to cause harm to all members of the class - This issue was properly resolved in a common trial - See paragraphs 92 to 100.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - Lipson was one of about 900 Canadian taxpayers who donated cash and resort timeshare weeks to registered Canadian athletic associations between 2000 and 2003 - They made their donations through a program operated by the Canadian Athletic Trust - Under the program's terms, donors anticipated receiving tax credits worth more than their actual financial outlay - The promotional material included an opinion by Cassels Brock & Blackwell LLP (CBB) indicating that it was unlikely that the Canada Customs and Revenue Agency (CCRA) could successfully deny the anticipated tax credits - In 2004, the CCRA notified Lipson that it intended to disallow his claims for tax credits under the program in their entirety - On receiving this information, he and other donors who had received similar notices sought legal and accounting advice - In 2006, two of the other donors brought a test case challenging the CCRA's denial of the tax credits - In 2008, the CCRA settled the test case on the basis that the donors would receive tax credits for their actual cash donations, but not for their donations of timeshare weeks (which had been paid for by a third party) - Lipson and other donors entered into similar arrangements with the CCRA - In April 2009, Lipson commenced a proposed class action against CBB for negligence and negligent misrepresentation relating to their opinion about the program - Lipson claimed damages for interest arrears, lost opportunities to make other donations, and special damages consisting of professional fees for challenging the CCRA's position - A motion judge held that the action was statute barred and dismissed the action - Lipson appealed the finding, inter alia, that the action was statute barred - If Lipson succeeded on that issue, CBB cross-appealed the motion judge's finding that the proposed class action otherwise satisfied the certification criteria - The Ontario Court of Appeal dismissed the cross-appeal - The motion judge did not err in finding that Lipson properly pleaded the elements of negligence, in particular: duty of care, causation and damages - The claim pled that CBB owed a duty of care to those who it could reasonably foresee would read and rely on its opinion and to those who would participate in the program marketed by the promoters based on the opinion - It pled causation and damages insofar as those participating in the program on either basis suffered losses as a consequence - CBB was also mistaken in arguing that reliance on its opinion (an individual issue) was a key element in determining whether it owed a duty of care to any class members - Whether or not any class member in fact relied on CBB's opinion was irrelevant to whether CBB owed a duty of care to those who CBB could reasonably foresee might do so - CBB erred in saying that the quantum of damage each class member in fact suffered (an individual issue) was integral to determining what types or heads of damage to which class members could be entitled, and what remedies flowed from that determination - The former was not relevant to the latter - As for the judge's conclusion about preferable procedure, CBB argued that the individual issues overwhelmed the common issues and the third party claims made a common trial unmanageable - The court disagreed - The judge's conclusion about preferable procedure required a balancing of considerations - This exercise of judicial discretion would attract appellate scrutiny only if it reflected an error in principle or unreasonable finding of fact - Neither of CBB's arguments permitted such a conclusion - See paragraphs 101 to 108.

Torts - Topic 61

Negligence - Causation - Causal connection - [See second Practice - Topic 209.3 ].

Cases Noticed:

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, consd. [para. 56].

Kenderry - Esprit v. Burgess, MacDonald, Martin & Younger et al., [2001] O.T.C. 147; 53 O.R.(3d) 208 (Sup. Ct.), agreed with [para. 75].

Ferrara et al. v. Lorenzetti, Wolfe Barristers and Solicitors et al. (2012), 299 O.A.C. 151; 2012 ONCA 851, refd to. [para. 77].

Counsel:

David F. O'Connor and J. Adam Dewar, for the appellant;

Peter H. Griffin, Ian MacLeod and Shara N. Roy, for Cassels Brock & Blackwell LLP;

Tim Gleason and Sean Dewart, for Gardner Roberts LLP and the Estate of Ronald Farano;

Alexandra Urbanski, for Deloitte & Touche LLP.

This appeal was heard on September 17 and 18, 2012, by Goudge, Simmons and Gillese, JJ.A., of the Ontario Court of Appeal. Goudge and Simmons, JJ.A, delivered the following reasons for judgment for the court on March 19, 2013.