Law Times

PAGE 4 NEWS March 9, 2009 • Law TiMes Firm will 'vigorously defend' $55-million claim BY ROBERT TODD Law Times A national law fi rm has been named in a state- ment of claim that al- leges it issued favourable tax opinion letters that became inac- curate but were used to promote a gift program that has hurt the pocketbooks of potential class members. Fraser Milner Casgrain LLP is named as a defendant in the claim, which seeks $55 million in damages from several defendants. "Fraser Milner Casgrain has a well-earned reputation for con- sistently delivering the highest quality legal services and counsel to our clients and we fi rmly stand behind our lawyers and the qual- ity of their counsel. Therefore, we intend to vigorously defend this claim," said FMC chairman and CEO Michel Brunet, in an e-mail to Law Times. "It is not uncommon for law fi rms such as ours to be involved in litigation. Regretfully, it is inappropriate for us to comment deeply, be- cause this matter is the subject of pending litigation." The defendants in the matter, which has been brought under the Class Proceedings Act, have presented a motion seeking a stay of the action, and a motion to have that issue dealt with before the certifi cation motion. A judge has set both of those motions to be heard the week of June 22 according to Scarfone Hawkins LLP, which is act- ing for plaintiffs Kathryn and of Rochester, "developed, pro- moted, sold, and administered a gift program under which par- ticipants borrowed money to make a charitable donation in order to receive a charitable do- nation receipt and concomitant tax credit." It goes on to allege that, "Participants borrowed tax consequences of an individual participating in the gift program." The claim alleges that, "In the opinion letter, FMC opined that the gift program will operate such that the monies borrowed by participants and pledge to Banyan Tree will entitle partici- pants to a tax credit." Fraser Milner Casgrain has a well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients and we fi rmly stand behind our lawyers and the quality of their counsel. Therefore, we intend to vigorously defend this claim. Rick Robinson. Aside from the law fi rm, the claim names Rochester Financial Ltd., Promittere Capital Group Inc., Promittere Asset Management Ltd., and Banyan Tree Foundation. It was fi led Feb. 27, 2008. The claim seeks, among other things, an order certifying the action as a class proceeding and appointing the plaintiffs as representative plaintiffs; general damages and special damages of $50 million; and punitive dam- ages of $5 million. The claim alleges that Prom- ittere Capital, Promittere Asset, and Banyan Tree, with the help AG targets tobacco BY ROBERT TODD Law Times T he Ontario government is turning to the courts in hopes of recovering costs from tobacco companies over health-care spending. "Smoking hurts Ontarians and our health-care system," said Attorney General Chris Bentley, in a release announcing pro- posed new laws. "This legislation would allow the government to sue tobacco companies for alleged wrongdoing in order to recover taxpayer dollars spent to fi ght tobacco-related illnesses." The proposed legislation would let the province directly sue tobacco companies for alleged wrongdoing; permit the recov- ery of historical, current, and continuing tobacco-related dam- ages; establish a means to determine health-care cost damages incurred by taxpayers; determine the burden of proof needed to attach exposure to tobacco to related disease; and allot liability to companies based on their share of the market. Similar legislation exists in British Columbia, New Bruns- wick, Newfoundland, Nova Scotia, Saskatchewan, and Mani- toba. New Brunswick and B.C. have sparked lawsuits against tobacco companies to retrieve health-care costs. According to the government, smoking is the prime cause of premature death and illness in the province, claiming some 13,000 lives each year, or 36 a day. The province is getting nearly $157 million from tobacco com- panies through a settlement over smuggled contraband cigarettes between the Canada-U.S. border in the 1990s. "At over $1.6 billion annually, Ontario's tobacco-related health-care costs affect all Ontarians," said Minister of Health and Long-Term Care David Caplan. "This legislation, if passed, would provide our government with an avenue to address a costly drain on the health-care system we all depend on." LT DON'T COURT DISASTER Keep up-to-date on the latest judicial developments by reading Law Times CaseLaw on pages 14 -15 The Business of Printing Solutions substantially all of the funds do- nated and actually paid in cash only a small portion of the total donation amount." It alleges that, "FMC issued the opinion letters which were a necessary prerequisite to the promotion of the gift program to participants." The Canada Revenue Agency has disallowed the charitable dona- tion tax credits for 2003 and "in- tends to do so" for 2004 to 2007, the claim alleges. It goes on to al- lege that the CRA will hold class members liable for interest charges on income tax fi ling reassessments. Also, the claim alleges, gift program participants paid se- curity deposits that have been "severely compromised," while "promissory notes remain out- standing with respect to all funds borrowed by participants," and that "class members remain at risk to demands, enforcement, and possible liability to Roches- ter under the promissory notes." In terms of the accusations involving FMC, the claim alleges that the fi rm issued an opinion letter on Oct. 23, 2002, to Prom- ittere Asset regarding the "income It goes on to allege that, "On Sept. 5, 2003, FMC issued a fur- ther opinion letter to Promittere Asset as to the income tax conse- quences of an individual partici- pating in the gift program, on a limited-recourse basis. . . . In the opinion letter, FMC opined that the gift program will operate such that the monies borrowed by participants on a limited-re- course basis and pledged to Ban- yan Tree will entitle participants to a tax credit." It is further alleged that, "But for the opinion letters, the gift program defendants would not have been able to launch the gift program." The claim alleges that all class members knew of the opinion letters, and that they were noted in promotional materials. "In fact, the existence of the opinion letters and opinion from FMC was an express term of the loan arrangements between the gift program participants and Rochester," alleges the claim. The claim goes on to allege that the law fi rm "was negligent in the preparation of the opin- ion letters" and that it "knew or ought to have known that the opinion letters were no longer accurate or reliable following: the issuance by Canada Rev- enue Agency of its fact sheets in November and December 2003, and November 2005; the legislative changes announced on December 5, 2003; and, the Canada Revenue Agency issued taxpayer alerts in November 2005 and October 2006." The fi rm did not disclose to the gift program adminis- trators, prospective donors, or existing program participants that its opinion letters "were no longer accurate or reliable," the claim alleges. It alleges that, "FMC's issu- ance of its opinion letters was the proximate cause of damages to all class members," and that the fi rm "owed a duty of care" to those who relied on the accuracy of the opinion letters. Rochester, Promittere Capi- tal, Promittere Asset, and Ban- yan Tree have fi led a notice of motion for, among other things, a stay of action "pending the fi nal disposition of existing no- tices of objection and any sub- sequent appeals respecting taxa- tion reassessments referred to in the statement of claim." The motion further states that the "vast majority" of the Banyan Tree gift program participants are disputing the tax reassessments for 2003 and 2004. If the reassess- ments are confi rmed, the motion states, appeals will be pursued at the Tax Court of Canada. "Accordingly, the tax appeals, if successful, will render the Robinson action moot," reads the motion. Scarfone Hawkins lawyer Da- vid Thompson, who is acting for the plaintiffs, was unavailable for comment by press time. LT We have advanced to the highest levels in print technology to offer superior quality and diversified printing solutions. For all of your printing needs, please contact your Local Area Sales Representative or our Customer Care Team. Responsible Forest Management Cert no. SW-COC-002302 E Dye & Durham is A Division of The Cartwright Group Ltd S I C &DUR H PREFERRED SUPPLIER A dyedurham.ca • 1-888-393-3874 • Fax: 1-800-263-2772 Dye & Durham is an FSC certified company making a commitment to Responsible Forest Management NCE 1 9 9 Untitled-2 1www.lawtimesnews.com 3/3/09 9:49:02 AM D 8 M e Y W ' r e a y C a n a d i m a n o p a n

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