In a recent British Columbia Supreme Court case, Longstaff
v. Robinson and IPC Investment Corporation, the
plaintiff alleged that his broker had a fiduciary duty to him which
had been breached, in addition to breaching contractual and tort
In the spring of 1999, Mr. Robinson (the broker) recommended
that Mr. Longstaff (the client) borrow $200,000 in order to
leverage his investments. Because of a dramatic downturn in the
stock market, Mr. Longstaff suffered financial losses, which he
sought to recoup from Mr. Robinson.
Mr. Longstaff argued that Mr. Robinson had breached his
fiduciary duties in recommending that Mr. Longstaff switch to a
leveraged investing plan. Mr. Longstaff submitted that Mr. Robinson
promoted this plan and frightened Mr. Longstaff into borrowing
$200,000 for the purpose of purchasing investments so that Mr.
Robinson could earn a substantial commission. Mr. Longstaff argued
that the advice was motivated by self-interest and was given in
breach of Mr. Robinson's fiduciary obligations to provide
comprehensive and selfless advice.
The court found that the advisor/client relationship could be
elevated to a fiduciary relationship if the client reposes trust
and confidence in the advisor and relies on the advisor's
advice to make business decisions. In considering whether there is
a fiduciary relationship in an advisory situation, the courts
consider whether the relationship included the presence of
vulnerability, trust, reliance on the advisor's discretion, and
the existence of professional rules or codes of conduct.
The court found that, in this particular case, a fiduciary
relationship existed because the client was an unsophisticated
investor with a limited education who had minimal experience in
making financial investments and had placed his complete trust and
confidence in his broker. The client had relied on the broker to
properly advise him and had followed all of the broker's
A fiduciary relationship requires the investment advisor to act
consistently with the trust reposed in him by the client and not to
betray the trust out of self-interest. To succeed on the claim for
breach of fiduciary duty, the client must establish that the broker
placed his personal interests before those of his client and took
advantage of the relationship for his direct or indirect personal
advantage. In this case, the court found that there was no evidence
to substantiate the allegation that Mr. Robinson recommended a
leveraging strategy to earn higher commissions.
The court stated that to establish a breach of fiduciary duty,
more is required than the mere fact that the advisor earned
commission income on a transaction. So, while the court did find
that there was a fiduciary relationship, the broker did not breach
his fiduciary duties and thus was not liable to his former
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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