BC Supreme Court provides guidance on the law governing solicitor negligence

Following a 44-day trial, the Honorable Justice Branch released his decision in Blizzard Uranium Corp v. Nathanson, Schacter & Thompson LLP, 2026 BCSC 466. Hein Poulus, Joe Ensom, Tessa Pedersen, and Naoki Hasegawa successfully represented the plaintiffs in their claims against their former lawyer (the “Lawyer”) and his firm. The decision provides a clear and practical articulation of the law governing solicitor negligence and serves as a reminder of the diligence expected of lawyers.

Claims Against the Defendants

The plaintiffs advanced a professional negligence claim arising from legal services provided by the Lawyer to Boss Power Corp. (“Boss”) in connection with its claim for compensation following the expropriation of its uranium mineral claims by the Province of British Columbia (the “Province”).

The Court found that the Lawyer negligently pleaded Boss’s mineral interests by including certain mineral claims (the “B Claims”) that were not owned by Boss but by a third party, Anthony Beruschi. Justice Branch held that this “Error” fell below the standard of care expected of a reasonably competent commercial litigator, emphasizing that counsel must understand and accurately plead their client’s ownership interests[1] and properly carry out client instructions.[2]

In rejecting what Justice Branch described as a “just following orders” defence, the Court noted that Boss had repeatedly advised the Lawyer, in writing, that it did not hold a beneficial interest in the B Claims and “yet [the Lawyer] pleaded otherwise”.[3] Doing this was negligent as, among other things, he should have confirmed, from the material in his file or by discussion with his client, that the pleading was accurate.

The inclusion of the B Claims in the Notice of Civil Claim had significant downstream consequences. As the Court found, the Error became embedded in the settlement that was ultimately reached between Boss and the Province: Boss promised to transfer all mineral claims pled in the NOCC in exchange for $30 million. Boss effectively agreed to transfer interests it did not own.

Justice Branch described the situation Boss found itself in following the settlement:

What natural result flowed thereafter? To invoke the analogy used by the Court during oral argument, the inclusion of the B Claims in the pleading and then (predictably) in the Settlement effectively handed Mr. Beruschi a bazooka—he was given the power to blow up the Settlement by simply saying “no” to the request that he deliver up his equitable rights to the B Claims to the Province. Or, as the defendants put it in their argument, Mr. Beruschi had the plaintiffs “over a barrel”. The Province had a firm enforceable deal, but the plaintiffs could not complete without Mr. Beruschi’s assignment of his equitable rights. The plaintiffs had minimal leverage at this point. Mr. Beruschi had been given virtually all the leverage. As a matter of pure economic pressure, the plaintiffs were not going to see a penny of their magnificent $30 million settlement unless they obtained Mr. Beruschi’s forbearance.[4]

Following the discovery of this Error, the Lawyer continued to act for Boss in attempting to salvage the settlement, including in negotiations with Mr. Beruschi. These efforts ultimately resulted in a complex commercial restructuring involving Boss dividing into two companies: Boss and Blizzard Uranium Corp. (“Blizzard”). Blizzard Finance assumed the liability to compensate Mr. Beruschi and acquired the right to pursue this action against the defendants.

Critically, on breach of fiduciary duty, Justice Branch found that once the Error came to light, the Lawyer was in a clear conflict of interest. Despite this, he continued to act. Justice Branch stated:

I find it impossible to conclude that [the Lawyer] failed to recognize this conflict. He had the necessary knowledge to identify the B Claims Problem, and his subsequent conduct suggests he did recognize it. Furthermore, Mr. Beruschi’s counsel clearly framed the conflict problem for [the Lawyer].

Despite this conflict, [the Lawyer] and his firm continued to act as counsel for the Clients. I do not see that the defendants ever made appropriate disclosure regarding the circumstances of the Error to allow full and informed consent to continuing to act in the face of a conflict. Rather than providing adequate disclosure, [the Lawyer] immediately sought to shift responsibility for the Error to Mr. Rogers (subtly at the time, and more aggressively at trial), and (more aggressively) to Mr. Beruschi.[5]

Justice Branch found the Lawyer’s actions – including supplying incorrect information to other lawyers retained to assist Boss with its dispute with Mr. Beruschi and to advise whether the defendants were liable for including the B Claims – could not be inadvertent:

There are too many instances of misleading information being provided for this conduct to be the product of mere inadvertence. The failure to make a clean breast of the situation to such a wide range of individuals suggests that [the Lawyer] was attempting to divert the parties’ attention from his own Error, conduct which is inconsistent with the duty of loyalty. A lawyer’s duty of loyalty is a fiduciary one.[6]

The Court also found that the negligence was also a breach of the retainer agreement between Boss and the Firm. Further, the Lawyer’s lack of candor amounted to a breach of the duty of honest performance of the retainer agreement.

The Court rejected several of the defendants’ arguments, including that the assignment of the claims to Blizzard Finance was champertous, the claims were an abuse of process, the claims should be dismissed for public policy reasons, and that the claims were time-barred.

The plaintiffs successfully established both factual and legal causation with respect to the consequences both of the initial negligence and of the later breaches of the duty of loyalty.

Justice Branch described the “First Phase Resolution” – the settlement between Boss and Mr. Beruschi that resulted in the creation of Blizzard Finance through a divisive arrangement – as an “elegant” mechanism that allowed shareholders to swap their shares of Boss for shares of Blizzard Finance (which was getting the right to sue) if they had confidence in the strength of the claim against the Lawyer and the Firm.

On the “Second Phase Resolution” – a negotiated settlement between Blizzard Finance and Mr. Beruschi under which Blizzard Finance agreed to pay millions of dollars to Mr. Beruschi, Justice Branch noted that it was neither remote nor unforeseeable that an individual placed in Mr. Beruschi’s position would act aggressively to capitalize on his interests.[7]

Damages

Having found liability, the Court undertook a detailed and complex assessment of damages. The analysis addressed multiple categories of loss arising from the Error and its long and difficult aftermath, including the loss of use of approximately $30 million in settlement funds for more than two years.

Starting with Biggin & Co. Ltd. v. Permanite Ltd., [1951] 2 K.B. 314, there is an interesting body of case law regarding when reasonable amounts are recoverable as damages. Instead of finding the full settlement amounts to be recoverable, Justice Branch undertook his own assessment of recoverability and reduced the plaintiffs’ claimed damages substantially. In doing so, he applied and clarified the limiting principles governing when settlement amounts may be recovered, providing important guidance on the application of those principles in the commercial litigation context.

In addition, the Court applied a 50% reduction for contributory negligence, noting that the plaintiffs had multiple opportunities to identify the Error but failed to do so. Justice Branch found the clients’ failure to discover the Error amounted to negligence, particularly given the “existential” importance of the settlement to the plaintiffs.[8]

In total after deductions, the plaintiffs were awarded approximately $4 million in damages, exclusive of costs and post-judgment interest.

Key Takeaways

This decision provides a comprehensive and practical review of the law governing solicitor negligence. It reinforces that lawyers are expected to know the contents of their own files and cannot avoid liability by claiming they forgot material information.

Further, a client’s failure to detect an error will not amount to ratification. As Justice Branch noted, a lawyer cannot obtain immunity from drafting errors “…by suggesting the client should have engaged in a later ‘Where’s Waldo’ search through the pleadings to find the lawyer’s unidentified mistakes.”[9]

The decision also highlights that errors of this nature can have cascading consequences. Even relatively minor drafting errors can have significant “knock-on” effects resulting in substantial, compensable financial losses for clients.[10]

Finally, the case highlights the high standard to which a lawyer will be held when a mistake is made: the lawyer must make full and frank disclosure of the mistake and may not continue to act unless the client—with full knowledge of the facts and the applicable law—consents.  Failure to meet that high standard can give rise to independent breaches of fiduciary duty and the contractual duty of honest performance.

There were several interesting procedural decisions related to this case, which can be found at:

2020 BCSC 1344 (examination for discovery rights where the cause of action has been assigned)

2024 BCSC 2163 (admissibility of stock price evidence)

2024 BCSC 2168 (application to set aside an adverse witness notice served under Rule 12-5(21))

2024 BCSC 2169 (admissibility of alleged hearsay/opinion evidence during discovery)

2024 BCSC 2170 and 2025 BCSC 310 (admissibility of affidavits filed in another proceeding)

2024 BCSC 2197 (admissibility of expert report)

For any questions regarding this case or related issues, please contact Hein Poulus, Joe Ensom, Tessa Pedersen, or Naoki Hasegawa.