In its much anticipated decision in Deloitte & Touche v. Livent Inc. (Receiver of), the Supreme Court of Canada has considerably reduced the damage award payable by an auditor after it failed to detect a colossal fraud perpetrated by the directors of Livent. While the amount of the award remains significant at $40,425,000, this is less than half of the $84,750,000 initially awarded by the lower courts. In reaching this result, the Court provided clearer guidance on when an auditor may be liable to its corporate client in cases of negligent misrepresentation or performance of a service. Significantly, where … Continue Reading
In a decision released on December 8, 2016, the Ontario Court of Appeal allowed an appeal from partial summary judgment, holding that issues of indeterminate auditor liability should proceed to trial.
In 1998, an accounting fraud was discovered at Philip Services Corp. (“Philip”), a publicly traded company. The Plaintiffs alleged that Philip’s auditors, Deloitte and Deloitte Touche Tohmatsu (“Deloitte”) gave unqualified opinions in connection with its audits of Philip’s consolidated financial statements for the financial years ending December 31, 1995 and 1996.… Continue Reading
Since our last post, the Supreme Court has granted and denied leave in a few significant cases that will be of interest to our readers.
Leave to Appeal Granted
Auditor Liability: Livent Inc v Deloitte & Touche
The SCC granted leave to appeal from the judgment of the Ontario Court of Appeal in Livent Inc v Deloitte & Touche, 2016 ONCA 11, which is an important decision concerning the liability of auditors for negligence.… Continue Reading
In a decision of interest to barristers, the Ontario Court of Appeal held that the Law Society of Upper Canada is entitled to deference when regulating a lawyer’s in-court conduct in Groia v The Law Society of Upper Canada, 2016 ONCA 471 (“Groia”). The Court of Appeal affirmed the Law Society’s holding that it is professional misconduct to make allegations of prosecutorial misconduct or that impugn the integrity of opposing counsel, unless the allegations are made in good faith and with a reasonable basis.
Joseph Groia defended John Felderhof against securities charges brought by the Ontario … Continue Reading
Joint retainers are common in modern legal practice. But what happens when a dispute is brewing between two parties represented by the same law firm? How is a lawyer to know when the “bright line” of conflict of interest has been crossed? And when the duty of loyalty to a client is breached, when is disqualification of the law firm an appropriate remedy? The Alberta Court of Appeal addressed these issues in Statesman Master Builders Inc v Bennett Jones LLP, 2015 ABCA 142 (“Statesman”).… Continue Reading
Are the legal profession’s rules regarding civility at odds with a lawyer’s duty to zealously advocate on behalf of his or her client? Debate on this point has recently focused on the Law Society of Upper Canada’s discipline of Toronto lawyer Joseph Groia for uncivil conduct during his defence of former Bre-X mining officer John Felderhof. The Ontario Divisional Court grappled with this question, and on February 2, 2015, upheld the Law Society’s finding that Mr. Groia’s conduct amounted to professional misconduct.… Continue Reading
Recently, the Supreme Court of Canada (“SCC”) and the Supreme Court of the United Kingdom (“UKSC”) both had cause to consider the nature of partnership, and when certain protections due to employees or workers are extended to partners. While the two cases presented very different scenarios – the Canadian case concerning human rights, and the UK decision concerning employment rights – both decisions suggested that partners may indeed be employees in certain situations.
In a recent decision, Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, the Supreme Court of Canada revisited the “bright line” rule that applies to conflicts of interest among current clients. This rule, which was first articulated in R. v. Neil,  3 S.C.R. 631, provides that:
… Continue Reading
“… a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client — even if the two mandates are unrelated — unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably
The Supreme Court has rendered its decision in Cojocaru v. British Columbia Women’s Hospital and Health Centre, a case concerned with the propriety of judicial adoption verbatim of counsel’s submissions in the Court’s decision. Beyond the issue of when extensive incorporation of a party’s submission into a judicial decision rebuts the presumption of judicial integrity and impartiality, the decision illustrates the difference between judicial writing and other forms of written expression. Unlike academic, artistic or scientific writing, judicial prose is not required, or indeed expected, to be original. All that is required is that the reasons demonstrate that… Continue Reading
Can equity partners at professional firms take advantage of statutory employment law protections? Both the UK and Canadian Supreme Courts have recently granted leave in cases which consider that question. In the UK, Clyde & Co LLP v Bates Van Winkelhof concerns a whistle blower claim, money laundering in Tanzania, and allegations of sexual discrimination. In Canada, Fasken Martineau DuMoulin LLP v. British Columbia (Human Rights Tribunal) is, in typical Canadian fashion, far less exciting. It concerns the application of a national full service law firm’s mandatory retirement policy.
The majority of multi-lawyer law firms in the United Kingdom, … Continue Reading
In the spirit of the season, Canadian Appeals Monitor has decided not only to look back on the key appeals of 2012, but also to make predictions about those Supreme Court of Canada appeals most likely to impact businesses and professionals in 2013. Predicting which appeal judgments are likely to have important and lasting effects before they are even decided involves a high degree of guesswork,… Continue Reading
The Supreme Court of Canada released one decision this week of interest to Canadian businesses and professions.
In Reference re Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010-168, 2012 SCC 68, Rothstein J. for the majority of the Court held that the Canadian Radio-television and Telecommunications Commission (“CRTC”) lacked the jurisdiction to create a market-based “value for signal” regime. The proposed regime would have enabled private local television stations (“broadcasters”) to negotiate direct compensation for the retransmission of their signals by broadcast distribution undertakings (“BDUs”), such as cable and satellite companies, and to prohibit… Continue Reading
The Supreme Court of Canada released one decision this week of interest to Canadian businesses and professions.
In Construction Labour Relations v. Driver Iron Inc., 2012 SCC 65, the Court held the Alberta Court of Appeal erred in quashing a decision of the Alberta Labour Relations Board on judicial review. The Court’s brief judgment criticizes the Court of Appeal for taking an overly rigid approach to the Board’s reasons when finding that the Board failed to consider various issues of statutory interpretation under the Alberta Labour Relations Code.
In the newly published World Class Actions: A Guide to Group and Representative Actions Around the Globe, McCarthy Tétrault litigators David Hamer and Shane D’Souza co-authored the “Multijurisdictional and Transnational Class Litigation: Lawsuits Heard ‘Round the World” chapter. The chapter offers guidance to international lawyers who represent clients involved in cross-border, multinational and international class actions.
World Class Actions is a practical guide for lawyers, clients, legal support professionals, academics, policymakers and judges on the procedures available for class, group and representative actions internationally. Each chapter is written by a local attorney familiar with the laws, best practices, legal … Continue Reading
The Supreme Court of Canada has granted leave to appeal in Canadian National Railway v. McKercher LLP et al., which raises significant issues relating to conflicts of interest, legal ethics, and the appropriate balance to be struck between the courts and the law societies in regulating the legal profession.
Perhaps most importantly, the case will require the Court to consider the “bright-line rule” and the related “professional litigant exception.” This rule was first articulated in R. v. Neil, and was subsequently re-affirmed in Strother v. 3464920 Canada Inc.. It provides:… Continue Reading
The Alberta Court of Appeal has provided its latest contribution to the analysis of the tort of civil conspiracy. The case’s importance lies in its consideration of the mental element of the tort. The case is also interesting for the absence of any reference to the recent Ontario Court of Appeal jurisprudence on the matter, perhaps signifying the development of distinct Western-Canadian jurisprudence on the subjection of economic torts. Mraiche also highlights the inherently contradictory nature of the Canadian formulation of the tort of civil conspiracy, which is a tort that involves both subjective and objective mental elements.
Decisions … Continue Reading
In Sobeski v. Mamo, now on appeal to the Ontario Court of Appeal, Justice Perell heard a motion by a defendant in a defamation action for relief from the deemed undertaking rule.
The defendant in the defamation action was a lawyer who, in a previous piece of litigation, had represented the opposing party to the plaintiff in the defamation action. In the defamation action, the plaintiff alleged that the defendant-lawyer had made defamatory remarks about him to the media during the previous litigation. The defendant-lawyer had told the media that the plaintiff’s version of events in the previous
The United States Supreme Court has allowed the appeal in KPMG LLP v. Robert Cocchi, reinforcing its policy preference for arbitrability, even in cases where some causes of action are arbitrable, while others are not. In particular, the Court stated that “[a] court may not issue a blanket refusal to compel arbitration merely on the grounds that some of the claims could be resolved by the court without arbitration.”
The case arose out of an action by a number of individuals and entities who bought limited partnership interests in one of three limited partnerships known as Rye
The Supreme Court of Canada has granted leave in an appeal that may significantly limit liability in tort. The case, Clements v. Clements, will require the Court to reconsider the “material contribution” test for causation, and in particular, whether it should be restricted to two narrow situations.
In the judgment below, Clements (Litigation Guardian of) v. Clements, the British Columbia Court of Appeal found that the driver of a motorcycle was not liable to his passenger for injuries sustained as the result of an accident. The driver was travelling at excessive speeds, and had overloaded the
On September 26, 2011, the Ontario Court of Appeal will hear an appeal from a decision of Cullity J., who rightly characterized the issue on the motion before him as one “of considerable importance for the proper conduct of class proceedings.” The decision will be important to class counsel since it addresses the duty to explain and clearly document the risks of adverse costs consequences to their representative plaintiff clients. If upheld, the decision may also provide a potential avenue for defendants in successful class actions to seek costs where class counsel have not discharged their burden.
In Attis v.