Litigation Blog

Appeal Court Refuses to Hear Appeal Because Insurer’s Appointment of Defence Counsel Viewed as Conflict of Interest

October 10, 2017


Normally, the fact that an insurer provides defence counsel to an insured under a non-waiver and reservation of rights agreement does not pose a problem. Not so, though, when the appointed defence counsel brings an application on behalf of the insured for a declaration that the insured is also insured another policy—with the risk that the application’s outcome may eliminate coverage under the main policy. In a recent decision from the Ontario Court of Appeal, this problem was enough to stop the application from proceeding.

Investors Can Rely on a Report Without Ever Seeing It: Auditors’ Duty to Investors Increased

September 21, 2017

In Lavender v Miller Bernstein, 2017 ONSC 3958, the auditor of a securities dealer was required to compensate for the losses of investors, even though the investors never saw or relied upon the auditor’s inaccurate report.

For the last twenty years, Canadian common law has been settled in holding that investors ordinarily cannot recover for loss on an investment made in reliance on a negligently prepared audit report.  Auditors can be liable to those who rely on materially misstated audited financial statements if it was intended that the audit would be relied upon by those particular users for the particular purpose for which they placed reliance.  In the case of a typical company audit, the Supreme Court of Canada has held that audited financial statements are intended to be used by management and shareholders to evaluate management performance. An auditor ordinarily does not owe a duty of care to those who rely on audited financial statements as the basis for choosing to invest in a company, even those investors whose identity is known to the auditor.  The recent decision in Lavender v. Miller Bernstein changes that.

UnGoogle it: Search Engine ordered to de-list breaching websites

September 13, 2017

The Supreme Court of Canada in Google Inc. v. Equustek Solutions Inc., 2017 SCC 34 considered whether it could order Google to de-index websites of a company that was in breach of several court orders. There are at least two interesting questions that the Court had to consider. First, whether the Court had jurisdiction to grant equitable relief against a non-party. That is, could the Court order Google to de-index websites even though Google was not involved in the underlying legal dispute.  Second, the Court had to consider whether it could make an order with extraterritorial effect, i.e. could the Court order Google to de-index websites worldwide (not just in Canada)?

As background, Equustek sued a company called Datalink for unlawfully selling products that included Equustek’s intellectual property. Equustek was successful in getting an injunction against Datalink; however, Datalink did not properly comply with the injunction. In fact, Datalink continued to carry on business selling the impugned products on their websites worldwide.