Supreme Court of Canada (SCC) slashes damages awarded against Vancouver lawyer



    VANCOUVER, June 1 /CNW/ - The Supreme Court of Canada today, in a
decision which divided the nine judges 5-4, has substantially reduced an award
of damages against Vancouver lawyer Robert Strother.
    An earlier judgment had awarded a former client of Strother's, Monarch
Entertainment, damages estimated by the plaintiff to be $32 million. The
Supreme Court ruling reduced that amount to somewhere in the range of
$1 million, and possibly less.
    Four of the judges, in dissenting reasons written by the Chief Justice of
Canada, Beverly MacLachlin, would have thrown out the case against Strother in
its entirety, and restored the original trial judgment written by Justice
Peter Lowry, now a member of the BC Court of Appeal.
    Monarch v. Strother has a history reaching back to 2001. Monarch, a
former client of law firm Davis & Company, sued Davis and Strother, one of the
firm's partners, for assisting a new client, Sentinel Hill Entertainment
Corporation, in pursuing a tax-favoured financing business for film and
television projects. The suit alleged that Davis, Strother, and Paul Darc,
principal of Sentinel Hill, should have revealed to Monarch the key tax
strategies that had been the fresh initiative and property of Sentinel Hill.
    The suit was dismissed in 2002 by Mr. Justice Lowry in BC Supreme Court,
but that decision was overturned by the BC Court of Appeal in 2005 with
respect to Davis and Strother. The appeal against Darc was dismissed in its
entirety.
    Even in the majority judgment partially upholding Monarch's appeal, the
Court found today that Strother was entitled to act for his new client, and
that his sole breach was in going into business for himself in the same field.
However, the judgment found Monarch suffered no loss from Strother's actions.
    "This case has had an enormous impact on my life," said Strother in
Vancouver today. "For more than half a decade, I have been fighting for my
reputation in the legal and business community. With the Supreme Court ruling
behind me, I can move forward."
    Here are the key points made by Chief Justice MacLachlin in her
dissenting judgment for the four other members of the Court:
    (para 131) In my view, the Court of Appeal erred in holding that
Strother's duty to Monarch extended beyond the terms of the 1998 retainer
agreement with Monarch, grounding an on-going duty to advise Monarch of any
developments in the film production tax-shelter business.
    (para 137) (The correct) manner of viewing a lawyer's duties conforms to
the realities of the legal profession and the needs of clients. Modern
commerce, taxation and regulation flow together in complex, sometimes murky
streams. To navigate these waters, clients require specialized lawyers. The
more specialized the field, the more likely that the lawyer will act for
clients who are in competition with each other. Complicating this reality is
the fact that particular types of economic activity may be concentrated in
particular regions. The obligation of the legal profession is to provide the
required services. Yet in doing so, lawyers and law firms must inevitably act
for competitors.
    (para 141) This view of the matter does not conflict with the traditional
view of the fiduciary duty owed by lawyer to client. The fiduciary duty
between lawyer and client is rooted in the contract between them. It enhances
the contract by imposing a duty of loyalty with respect to the obligations
undertaken, but it does not change the contract's terms. Rather, it must be
molded to those terms.
    (para 143) Here, the trial judge was correct to begin by asking what the
contract obliged Strother to do for Monarch. Whatever he undertook to do, he
was bound to do it with complete loyalty in accordance with his fiduciary
obligation. He could not acquire other duties to other clients or personal
interests that might conflict with his duties to Monarch under the retainer.
But by the same token, he was entitled to take on duties to other clients or
acquire personal interests that were not directly adverse to his duties to
Monarch, as defined by the firm's contract of retainer with Monarch.
    (para 145) Unlike Binnie J., I accept the trial judge's findings of fact
and conclude that there was no conflict between what Strother agreed to do for
Monarch and what he was doing for Darc and himself with Sentinel Hill. Given
the changed nature of the lawyer-client relationship, there is no reason to
conclude that Strother's capacity to loyally and zealously perform the very
limited duties owed to Monarch under the 1998 oral retainer would be affected
by his taking a personal interest in Sentinel Hill.





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For further information: or interviews with Robert Strother, please
contact Paul Sullivan at Sullivan Media: (604) 685-4742, mobile: (604)
603-7358

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