Hodgkinson v. Simms

Hodgkinson v. Simms

Majority: where a client reasonably places trust and confidence in an independent professional adviser and the adviser cultivates and induces reliance such that the adviser effectively determines the investment risk borne by the client, a fiduciary duty arises; respondent breached that duty by failing to disclose material pecuniary interests with developers; causation is established because the fiduciary breach initiated the chain of events leading to loss; damages are restitutionary (rescissionary equivalent) to restore the plaintiff to the pre-transaction position, including market losses, absent defendant proof to the contrary.

Citation
[1994] 3 SCR 377
Parties
Appellant: Robert L. Hodgkinson; Respondent: David L. Simms; Respondents: Jerry S. Waldman and Simms & Waldman (partnership)
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
30 September 1994
Procedural Posture
Civil Appeal / Final Appeal to the Supreme Court of Canada
Outcome
Appeal allowed; order of British Columbia Court of Appeal set aside; trial judgment restored
Legal Topics
Non Disclosure, Conflict of Interest, Investment Advice, Damages, Rescission/restitution, Reliance and Vulnerability
Source Language
English
Contract Trust Fiduciary Duty Professional Negligence Tax/income Tax Non Disclosure Conflict of Interest Investment Advice +3 more

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Parties

Robert L. Hodgkinson

Appellant

David L. Simms

Respondent

Jerry S. Waldman and Simms & Waldman (partnership)

Respondents

Procedural Posture

Civil Appeal / Final Appeal to the Supreme Court of Canada

Legal Issues

  1. 1 Whether an independent professional adviser (accountant) owed a fiduciary duty to a client who relied on his investment/tax advice
  2. 2 Whether respondent's failure to disclose financial relationships with developers constituted a material non-disclosure breaching fiduciary and contractual duties
  3. 3 Proper measure and causation of damages for non-disclosure and breach of fiduciary duty (restitutionary rescissionary remedy v. disgorgement)

Ratio Decidendi

Majority: where a client reasonably places trust and confidence in an independent professional adviser and the adviser cultivates and induces reliance such that the adviser effectively determines the investment risk borne by the client, a fiduciary duty arises; respondent breached that duty by failing to disclose material pecuniary interests with developers; causation is established because the fiduciary breach initiated the chain of events leading to loss; damages are restitutionary (rescissionary equivalent) to restore the plaintiff to the pre-transaction position, including market losses, absent defendant proof to the contrary.

Court Disposition

Appeal allowed; order of British Columbia Court of Appeal set aside; trial judgment restored

Orders

  • Set aside the British Columbia Court of Appeal judgment
  • Restore the trial judge's judgment finding breach of fiduciary duty and breach of contract