Law Times

Page 4 February 26, 2018 • Law Times www.lawtimesnews.com NEWS NEWS NEWS Judge finds lawyer negligent for advice to Olympic skier BY ALEX ROBINSON Law Times A n Ontario judge has found a Toronto law- yer and his law firm were negligent in tax advice they gave to a former Ca- nadian Olympic skier. Ontario Superior Court Jus- tice Bernadette Dietrich deter- mined that lawyer Stuart Bolle- fer and Aird & Berlis LLP failed to warn retired skier Katherine Pace-Lindsay about the risks of a plan they provided to limit the amount of income tax paid on assets she held in a trust. "The defendants breached their duty to provide competent legal and tax advice," Dietrich wrote in Lindsay v. Aird & Ber- lis LLP. "Mr. Bollefer breached his duty to apply reasonable care, skill and knowledge in the pro- vision of his professional servi- ces to the plaintiff in accordance with the standards of a reason- ably competent solicitor with particular expertise in income tax planning matters." Pace-Lindsay retained Bolle- fer and his firm in 2006 to get advice on the winding up of a trust, which had been set up to preserve her amateur status as an athlete and to defer income tax, according to the decision. By the time Pace-Lindsay was 16 years old, she was travelling most of the year for skiing com- petitions. Pace-Lindsay was named Canadian Female Athlete of the Year in 1993 and competed in the 1994 Olympic Games in Lillehammer, Norway. The money she received from prizes and endorsements went into the trust, which amassed around $1 million worth of as- sets including publicly traded se- curities and shares from private companies. The trust was set to wind up in 2006, eight years after she re- tired from competitive skiing. Part of Bollefer's proposal was to have Pace-Lindsay make a donation of $750,000 from the trust to an offshore Canadian charity and spend the remain- ing $250,000 on a life insurance policy, according to the deci- sion. This plan was meant to let her keep the private company shares and limit the amount of income tax she would pay on the investments. Pace-Lindsay would then use the receipt from the donation to claim a deduction against her in- come from the trust. The amount she paid to the charity — minus a 15-per-cent fee — would be transferred to an offshore insurance company, which would buy a life insur- ance policy, according to the decision. Bollefer and the firm told Pace-Lindsay that she would avoid tax on the pre-tax income held in the trust. They also advised her that she would be able to direct the investment of the donated funds through an offshore entity and that, upon the death of the in- sured parties, the money would be returned to her. The plan failed, as the off- shore charity was not a regis- tered charity at the time the do- nation was made. Bollefer was involved in the charity foundation's formation and acted as its legal counsel at the time its registration was re- voked. Pace-Lindsay later testified that she did not fully under- stand the plan and depended on the advice of the lawyer and his firm. Pace-Lindsay also contended that she never would have com- mitted her funds to the plan if it weren't for Bollefer's advice. Pace-Lindsay brought the lawsuit after the Canada Rev- enue Agency audited her tax returns and found that "the steps taken pursuant to the de- fendants' advice relating to the donation amounted to a sham," the decision said. The CRA then threatened Pace-Lindsay with criminal prosecution, but after a ninth- month appeal process, she was told criminal charges would not be brought against her. Bollefer admitted that his conduct fell below a reasonable standard and that he breached his duty of care to ensure the charity was registered at the time, according to the decision. James Gibson, one of the lawyers representing the defen- dants, did not respond to re- quests for comment. Dietrich found the law- yer and firm failed to warn Pace-Lindsay of the serious risks inherent in the plan either in writing or orally and that they had a duty to do so. The defendants provided a written opinion to Pace-Lindsay warning about the part of the plan concerning the insurance policy — but not until two years after she already accepted the advice, the decision said. Pace-Lindsay claimed that Bollefer had said the plan was routine and similar to that em- ployed by other athletes with trusts and failed to warn her about the risks if CRA became aware of the plan. Bollefer contended it was his practice to warn a client about such an "aggressive plan," but on cross-examination, he had no specific recollection of an oral warning. Ronald Caza, of Caza- Saikaley LLP, says the decision serves as a reminder for lawyers to make sure they give advice in writing. "It's so essential for all lawyers whenever they're giving advice, especially on issues such as tax or anything that can be compli- cated, to put it in writing," says Caza, who was not involved in the case. Eric Fournie, the lawyer who represented Pace-Lindsay in the case, declined to comment on the decision. LT Ronald Caza says a recent Ontario Superior Court decision serves as a reminder that lawyers should put all advice in writing. 18th Annual TLA Awards Reception © 2017 Thomson Reuters Canada Limited 00238SJ-88292-NP The Honourable Justice John I. Laskin will be honoured with the Toronto Lawyers Association Award of Distinction. Ian Hull will be honoured with the Honsberger Award. 18th Annual TLA Awards Reception Thursday, March 8, 2018 OMNI KING EDWARD HOTEL Vanity Fair Ballroom 37 King Street East, Toronto Reception at 6:00 p.m. Presentation to follow at 7:00 p.m. Hors d'oeuvres and food stations. Business attire is requested. tlaonline.ca/event/2018Awards Untitled-1 1 2018-01-16 9:06 AM

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