Executive Summary: Key Legal and Evidentiary Issues

• Class certification was granted for claims involving breach of trust, fiduciary duty, negligence, and misrepresentation.

• The court accepted that $500 retainers paid by class members may have been misused by Merchant Law Group LLP.

• Use of pooled trust funds for unrelated legal matters and referral payments was central to the breach of trust claim.

• Misrepresentations regarding the necessity and purpose of the retainer payment were deemed suitable for common issue certification.

• Retainer agreements and related websites were examined for misleading or coercive communications to class members.

• No costs or damages were awarded at this stage; this was strictly a certification ruling.

Facts and outcome of the case

Background and nature of the dispute

The case arose from a failed charitable donation tax shelter program operated by Global Learning Group Inc. (GLGI), which had promised donors significant tax credits. The Canada Revenue Agency (CRA) later reassessed participants, denying those credits on the basis that the program was a sham. In response, a proposed national class action—known as the Piett Action—was initiated in Saskatchewan in 2016 by Merchant Law Group LLP (MLG), a national law firm. This earlier action was never certified and was ultimately struck as an abuse of process in 2021, with the court finding that it was improperly advanced to generate profits for its promoters.

James Mayer, a participant in the GLGI program, later brought a separate proposed class action in British Columbia against MLG. He alleged that MLG had misrepresented the need to pay a $500 retainer to join the Piett Action, and had misused the collected funds. The funds were said to be pooled and spent on unrelated litigation, consulting fees, and referral commissions. Class members were allegedly told—via teleseminars, websites, and retainer agreements—that payment was essential to participate in the class action, when in fact participation did not require upfront payment.

Certification ruling and findings

Justice Branch of the British Columbia Supreme Court ruled on the certification application brought by Mayer. The court found that the action should be certified as a class proceeding, subject to certain amendments to clarify the pleadings, particularly around the specific misrepresentations made.

The court concluded there was a sufficient basis in fact for several causes of action to proceed, including breach of trust, breach of fiduciary duty, negligence, fraudulent and negligent misrepresentation, equitable fraud, and unjust enrichment. The alleged misconduct included failing to disclose the true purpose and use of the $500 retainers, paying non-lawyers referral fees, and using trust funds for other litigation (like the Scheuer Action).

Justice Branch found the claims and issues suitable for resolution as a class proceeding, emphasizing the uniformity of the alleged misrepresentations and treatment of the funds. The decision also noted that the existence of pooled funds and shared contractual documents supported a finding of commonality among class members.

The class was defined as all individuals who paid retainers to MLG in relation to the Piett Action or the intended class action involving the GLGI program, excluding certain named individuals and defendants in other related cases. A subclass was certified for those who paid the retainer but did not sign the agreement, due to their distinct legal standing.

The court did not assess the merits of the claims or award any damages, as the decision was limited to whether the lawsuit could proceed as a class action. Costs were not awarded at this stage. The case will now move forward to substantive litigation where liability and damages will be determined.