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An ad hoc fiduciary duty cannot be found in the absence of an undertaking by the fiduciary to act in the best interests of the other party. The Supreme Court of Canada, in Galambos v. Perez, 2009 SCC 48, overturned the B.C. Court of Appeal finding that, in the case of a “power-dependency” relationship, a fiduciary duty may arise even in the absence of a mutual understanding that one party would act only in the interests of the other. Justice Cromwell, speaking for the entire court stated that: In my view, while a mutual understanding may not always be necessary (a point we need not decide here), it is fundamental to ad hoc fiduciary duties that there be an undertaking by the fiduciary, which may be either express or implied, that the fiduciary will act in the best interests of the other party. The decision arose out of an unusual set of circumstances in which the former bookkeeper of a law firm, while working at the firm, made unsolicited cash advances totalling some $200 000 to the firm to assist with cash flow. While she was employed, the firm represented her without charging any fees in the drafting of some wills and in mortgage transactions. When the firm ultimately went into receivership, she sought to recover the amounts advanced. The Canadian Lawyers Insurance Association provides loss prevention information solely for the benefit of CLIA insured lawyers. The content and links provided in Loss Prevention eBytes are intended as resources to qualified lawyers who should exercise due care and their professional judgment in adapting or making use of any content.
The B.C. Court of Appeal recently found that “...it is the solicitor’s duty to “disabuse a client of any subjective misapprehension the client may have as to how fees may be charged” and if the solicitor fails to discharge that duty, he or she should be estopped from charging a fee on a basis other than the basis understood by the client.” In Nathanson, Schachter & Thompson v. Inmet Mining Corp., 2009 BCCA 385, the court refused to allows the firms’ request for fees of some $10 million, in addition to the $5.2 million already paid. The parties had not entered into any written retainer agreement and as a result, the primary issue in the litigation was whether the law firm had charged a “fair fee.” The Canadian Lawyers Insurance Association provides loss prevention information solely for the benefit of CLIA insured lawyers. The content and links provided in Loss Prevention eBytes are intended as resources to qualified lawyers who should exercise due care and their professional judgment in adapting or making use of any content.
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