The appellant’s B.C. law firm retained Ernst & Young to provide her with U.S. tax advice in connection with negotiating a separation agreement with her husband. Although the engagement agreement had been entered into by the client’s BC family law firm with E&Y rather than by her directly, the Court applied the principle “that as a general rule, solicitors will be taken to be contracting on behalf of their clients in the course of their practice.” E&Y conceded that its advice was negligent but relied on a clause in its engagement agreement with the B.C. firm that limited its liability to its fee.
In rejecting an argument that the exclusion clause should be rejected on public policy grounds, Newbury JA stated (at para. 53):
As desirable as it might be to hold the accounting profession to a high standard of care, I am not persuaded that an error in the giving of erroneous tax advice in the circumstances of this case rises to the level of conduct that is “so reprehensible that it would be contrary to the public interest to allow [the defendant] to avoid liability.”