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 a duty of care arises in respect of an auditor’s representation or services, it will be limited to the purpose for which the auditor undertook to provide the representation or services. It follows that an auditor will not be liable where a corporate client detrimentally relies on the auditor’s representation or services for any purpose other than that for which the auditor undertook to act. Here, the auditor was not liable to Livent for negligent misrepresentations contained in a comfort letter and press release prepared for the purpose of assisting Livent to solicit investment. As the representations were intended to provide comfort to investors rather than to inform Livent of its own financial position, any reliance Livent placed on them for the purpose of overseeing its operations fell outside the scope of the auditor’s duty of care. In contrast, Livent was able to recoup its losses which followed the issuance of a negligently prepared clean audit opinion, as the Court found that Livent had relied on the statutory audit for one of its intended purposes, which was to enable shareholder oversight of management. Continue Reading
The recent decision of the Ontario Court of Appeal in DBDC Spadina Ltd. v. Walton, 2018 ONCA 60 is significant for being one of the first to cite the Supreme Court of Canada’s decision in Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63. Blair J.A., writing for the majority of the Court of Appeal, cites Livent for the proposition that the doctrine of corporate identification may be applied less stringently in the civil context where a massive, complex fraud is involved in order to affix a corporation with the fault of its directing mind. The case is also significant for its debate about the requirements of the doctrine of knowing assistance. Blair J.A. ultimately concludes knowing assistance does not require the plaintiff to trace specific funds to the defendant in order to be successful in a claim for damages, unlike its colleague in equity, the doctrine of knowing receipt. van Rensburg J.A., dissenting, disagrees. Continue Reading
On February 20, 2018 the Ontario Court of Appeal released its decision in Oravital v. Aird & Berlis LLP, 2018 ONCA 164, a brief decision with important implications on the scope of a lawyer’s duty to advise. The Court of Appeal held that a lawyer’s duty to advise clients of the risks and benefits of pursuing litigation, including the quantum of recoverable damages, is not negated just because the client is commercially sophisticated. The decision serves as a useful reminder that litigators must advise clients (even sophisticated clients) of the costs and benefits of pursuing an action both at the outset of litigation and as circumstances change and the litigation evolves. Continue Reading
A detained person’s right to counsel is guaranteed by s. 10(b) of the Charter. It imposes on police a duty to “hold off” on trying to elicit incriminating evidence from the detainee “until he or she has had a reasonable opportunity to reach counsel”: R. v. Prosper,  3 S.C.R. 236, at p. 269. Continue Reading
The Ontario Court of Appeal recently released a significant decision on the insider trading provisions of provincial securities legislation. In Finkelstein v. Ontario Securities Commission, 2018 ONCA 61, the Court considered for the first time the insider trading and tipping scheme in the Securities Act, R.S.O. 1990, c. S. 5 (the “Act”), and particularly, the definition of a “person in a special relationship with an issuer” as it applies to successive tippees who share insider information. Continue Reading
The doctrine of proprietary estoppel can enforce a promise to transfer real property to a person who acts to his or her detriment based on the promise. In Cowper‑Smith v. Morgan, 2017 SCC 61, the court confirmed that proprietary estoppel can enforce a promise to transfer a property interest that the promisor does not have at the time of the promise. The decision raises other questions—such as whether proprietary estoppel can enforce a promise to transfer personal property—but leaves them unanswered. Continue Reading
For nearly thirty years, the Commissioner of Competition has been able to assert ‘public interest’ privilege – on a class basis – to prevent the disclosure of documents obtained from informants in the course of its investigations. Not anymore.
Access by litigants to the Commissioner’s investigation file is an important and developing issue. In Vancouver Airport Authority v. Commissioner of Competition, 2018 FCA 24, Justice Stratas, writing for a unanimous panel with Justices Boivin and Laskin, held that the Commissioner can no longer invoke ‘public interest’ privilege on a class-wide basis to prevent access. While the Commissioner can still invoke public interest privilege, it can now only do so document-by-document. Continue Reading
In Delta Air Lines Inc. v. Lukács, 2018 SCC 2 (“Lukács”), the Supreme Court of Canada addressed two important issues in administrative law. First, the Court addressed the role that a Tribunal’s reasons play in judicial review for substantive error. Second, the Court addressed principles relating to public interest standing, including standing before regulatory tribunals. Continue Reading
For a party wishing to appeal the decision of an Ontario judge or master, determining the appropriate Court to appeal to is occasionally not a straightforward matter. In some previous cases where there has been uncertainty between the parties as to the appropriate appeal route, single judges of appellate courts have been willing to provide direction to the parties on this question following a short chambers appearance.
In Ontario (Provincial Police) v. Assessment Direct Inc., 2017 ONCA 986 (“Assessment Direct”), Juriansz J.A. held that this practice is improper and a motion to a full three-member panel of the Court of Appeal is required in order to obtain a decision on the Court’s jurisdiction over a given appeal. It appears that parties will no longer be able to rely on the motion for directions shortcut to obtain an answer to the jurisdiction question. Continue Reading
In order to be admissible to Canada, permanent residents and foreign nationals must avoid “serious criminality” as set out in s. 36(1)(a) of Canada’s Immigration and Refugee Protection Act. That section provides that “serious criminality” is evidenced by being sentenced in Canada to a term of imprisonment of more than six months, or by being convicted of an offence punishable by a maximum term of imprisonment of at least 10 years.
The Supreme Court of Canada (SCC) released a decision on November 2, 2017 dismissing a novel Aboriginal freedom of religion Charter claim that was raised in opposition to a ski resort development in British Columbia: Ktunaxa Nation v. British Columbia (Forests, Lands and Natural Resource Operations), 2017 SCC 54 (Ktunaxa). This is a significant case as it is the first time the SCC has been asked to consider an Aboriginal spiritual rights claim and the protections that may be afforded to it under s. 2(a) of the Charter in addition to s. 35 of the Constitution Act, 1982. McCarthy Tétrault LLP (Neil Finkelstein, Brandon Kain, and Bryn Gray) intervened in this case on behalf of the Canadian Chamber of Commerce. Continue Reading
On September 15, 2017, the B.C. Court of Appeal rejected a challenge by the Trial Lawyers Association of British Columbia (“TLA”) to the constitutionality of legislation requiring civil litigants opting for a jury trial to pay the fees and expenses of the jury and jury process. TLA 2017 holds that provinces may impose such fees without interfering with the core jurisdiction of the superior courts protected by s. 96 of the Constitution Act, 1867.
Mary Carter agreements are settlement agreements between a plaintiff and defendant in multiparty litigation wherein the defendant ostensibly remains an active party to the litigation while the plaintiff’s claim in fact targets the other parties. On September 5, 2017, the B.C. Court of Appeal (the “Court“) released its decision in Northwest Waste Solutions Inc. v. Super Save Disposal Inc., 2017 BCCA 312 affirming that Mary Carter agreements must be disclosed immediately and outlining potential remedies for a failure to make such disclosure. Parties and their counsel will need to keep this in mind when considering the merits of entering into a Mary Carter agreement. In the event that such agreements are entered into, parties must act quickly to discharge their now-clear duty of disclosure.
In Camions Daimler Canada ltée v. Camions Sterling de Lévis inc., 2017 QCCA 798, the Quebec Court of Appeal confirmed that the duty to inform that exists between contracting parties, which has been recognized as a general principle of Quebec contractual law since the early 1980s, may also apply to third parties, insofar as they might be impacted by the contractual relationship.
On June 2, 2017, the Ontario Court of Appeal decided, in what it described as a case of first impression, that a taxi company was not vicariously liable for a sexual assault allegedly committed by one of its employees, absent any evidence of fault on its part.
Following the Court’s review and affirmation of the leading jurisprudence on vicarious liability, it is doubtful that any car passenger service company could be found liable for the independent and wrongful criminal conduct of its drivers. Continue Reading
In R v. Cody, 2017 SCC 31, the Supreme Court of Canada reiterated its earlier call for reform to the criminal justice system, criticizing a “culture of complacency” toward delays. The Court’s insistence on reform may be good news for participants in the civil justice system, too, who have seen many civil actions delayed as courts devote their limited resources to clearing their criminal dockets. Continue Reading
Is a Plaintiff required to prove that they suffer from a recognized psychiatric illness in order to recover for mental injury? The Supreme Court has definitively said the answer is “no” in their recent decision in Saadati v Moorhead, a case that will be critically important to anyone who regularly prosecutes or defends personal injury claims. Continue Reading
In Pennyfeather v. Timminco (“Pennyfeather”), the Ontario Court of Appeal delivered yet another ruling concerning the interaction between the limitation period for obtaining leave to commence an action for misrepresentation in the secondary securities market under s. 138.14 of the Ontario Securities Act (the “OSA”), and s. 28 of the Class Proceedings Act (the “CPA”), which suspends a limitation period in favour of class members for a cause of action asserted in a class proceeding upon commencement of the class proceeding. Continue Reading
Susan Wortzman, partner and Director of E-Discovery, and a team of experienced authors the third edition of E-Discovery in Canada. The book covers everything lawyers, in-house counsel and law clerks need to know about conducting e-Discovery, from preservation to proportionality to costs.
Learn from the professionals in Canada and find out how to leverage their know-how for better outcomes for your clients’ in this revised and updated edition. The third edition can be purchased here.
This article was original posted on the Canadian Class Actions Monitor blog on June 2, 2017
In Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177, the BC Court of Appeal considered whether special costs can be awarded based on pre-litigation conduct. The Court reviewed the conflicting jurisprudence and unanimously concluded that a bright line should be drawn: pre-litigation conduct should not be considered in determining whether to award special costs. Continue Reading
The BC Court of Appeal recently reaffirmed the principles of preferability in class action certification proceedings in the case of Vaugeois v Budget Rent-A-Car, wherein the certification judge had determined that a class proceeding was not the preferable forum to decide the disputes between vehicle renters who had allegedly been improperly charged for vehicle repairs. Continue Reading
“Can a litigant challenge the constitutional validity of subordinate legislation such as a provincial regulation by bringing an application under Rule 14.05 in Superior Court or is she required to proceed by way of an application for judicial review in the Divisional Court?” Justice Belobaba says “Yes” in Di Cienzo v. Attorney General of Ontario. Continue Reading
On February 23, 2017, the Supreme Court of Canada refused leave to appeal the Court of Appeal’s decision in Xela Enterprises Ltd. v. Castillo: a case in which the Court determined that it is acceptable to serve parties in accordance with the Rules of Civil Procedure in states that are not signatories to the Hague Convention. Continue Reading
On February 16, 2017, the Supreme Court of Canada refused leave to appeal the 2016 decision of the Ontario Court of Appeal in Campbell v. Bruce (County): a case in which an Ontario municipality that operated a mountain biking adventure park (the “Bike Park”) was found liable, as occupier, for the accident that rendered cyclist Stephen Campbell a quadriplegic.