Leave to Appeal Certification Decision Denied in Banyan Tree Foundation Case

On April 1, 2010, the Ontario Divisional Court dismissed the motion of the defendants seeking leave to appeal from the order of Justice Joan Lax certifying the action as a class proceeding against Rochester Financial Limited, Banyan Tree Foundation, Promittere Asset Management Ltd., Promittere Capital Group Inc. (the “Gift Program Defendants”) and Fraser Milner Casgrain LLP (“FMC”) concerning the Banyan Tree Foundation Gift Program, a leveraged charitable donation program.

Justice Michael Dambrot dismissed the motion for leave to appeal. He found that neither of the grounds for leave to appeal, namely, good reason to doubt the correctness of the decision or conflicting decisions require resolution, was raised by the proposed appeal. Lastly, he ruled that the proposed appeal did not involve matters of sufficient importance that leave to appeal should be granted. Justice Dambrot did note the anomaly in the position of the plaintiffs in that they alleged damages resulting from an opinion provided by FMC, but never read the opinion.

Justice Lax certified the action as a class proceeding against all defendants by order dated January 19, 2010. She rejected the arguments of FMC that this claim is a negligent misrepresentation claim dressed up as a negligence claim.

The action is brought on behalf of 2,825 individuals who participated in the Banyan Tree Foundation Gift Program for the tax years 2003 through to 2007.

The action claims damages and declaratory relief against the Gift Program Defendants and against FMC as a result of the disallowance by the Canada Revenue Agency (“CRA”) of the tax benefits that the plaintiffs allege they were to have received.

CRA alleged that the Gift Program is a sham. Subject to proceedings initiated by the vast majority of the class members to contest the position of the CRA, class members have been or will be reassessed and required to pay taxes and interest on tax arrears arising from the reassessments.

The plaintiffs alleged breach of contract and negligence against the Gift Program Defendants in failing to provide a charitable donation receipt recognized by CRA and in failing to ensure that class members would not be at risk to repay the loans obtained in order to facilitate participation in the program.

The plaintiffs further alleged that FMC's tax opinions were necessary and instrumental to the marketing of the Gift Program and that FMC was negligent in the preparation of the opinions.

David Thompson, Matthew Moloci and Michael Stanton of Scarfone Hawkins LLP represented the class.

FMC was represented by Peter Griffin, Glenn Smith and Paola Calce of Lenczner Slaght Royce Smith Griffin LLP.

Robert Cohen and Timothy Pinos of Cassels Brock & Blackwell LLP acted for the Gift Program Defendants.

Lawyer(s)

Matthew G. Moloci Michael Stanton J. D. Timothy Pinos Peter Griffin Robert B. Cohen Paola Calce Glenn Smith

Firm(s)