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Sender:
John McLinden
Date:
Thu, 29 Jan 1998 16:31:32 -0500
Re:
Undertakings to third parties, and fiduciary duties

 

Is a solicitor who gives a deceptive undertaking to a third party liable for a breach of fiduciary duty if the third party suffers loss as a result?

In Granville Savings & Mortgage Corp v Slevin (1992) 93 DLR 268 (a decision of the Manitoba Court of Appeal) Huband JA suggests that the solicitor is.

He says at 282 "It is argued that the breach of these specific undertakings gives rise to liability both for breach of a fiduciary duty and breach of the duty of care in negligence. If the solicitors agreed to specific undertakings, and then failed to abide by them, then one would not have to look for a breach of duty, fiduciary duty or otherwise. Liability would be imposed on the simple basis that having accepted certain conditions, is solicitor warranted that the conditions would be met.... (283) A solicitor who gives specific undertakings to a third party (even one who is separately represented) should be held liable for damages which flowed from a failure to about to the undertakings. But I would think, in the absence of dishonesty on the part of the solicitor, the action would be based upon breach of warranty rather than breach of a fiduciary duty."

Assuming, for my purposes, that one would have to discard any remedy caught by the normal six-year limitation period, is Huband JA right? If A lends to B because B's solicitor gives deceptive/fraudulent undertakings, does A have inter alia a cause of action which is not caught by the Limitation Act? Alternatively, for the purposes of section 21(1) of the Limitation Act, is there a trust created by the deceptive undertakings whereby A can bring an action against the solicitor for restitution of the monies subsequently lost by B? There seems to be a dearth of cases on this issue.

Is anyone aware of any other authority to the same or similar effect as Granville Savings?

 

John McLinden


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