Blog

Supreme Court Split in Long-Awaited Auditor Negligence Case

December 22, 2017

In Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, the Supreme Court of Canada in a split decision reviewed the analytical framework for liability in cases of negligent misrepresentation or performance of a service by an auditor.
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Directors and Officers Must Defend Secondary Market Misrepresentation Claim

December 04, 2017

The directors and officers of a company mining coal in Mongolia were named personally as defendants in a securities class action in Ontario.  On the plaintiff’s motion for leave to bring the action, the court permitted the claim to proceed against the company, but not the directors and officers. Not so fast, said the Ontario Court of Appeal in allowing the claim against the individuals to go ahead.
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Auditors’ Assessment of Risk Determines Appropriate Audit Procedures

November 22, 2017

The Court of Queen’s Bench of Alberta recently released an interesting decision dealing with auditors’ liability and the relevance of appropriately assessing the risk of fraud in planning and performing an audit: Cooperatieve Centrale Raiffeisen-Boerenleenbank BA v Stout & Company LLP, 2017 ABQB 637.  The Plaintiff, Cooperatieve Centrale Raiffeisen-Berenleenbank B.A. (“Rabobank”) is a Dutch cooperative bank with international operations.  One of Rabobank’s customers was Agra Services Canada Inc. (“Agra”), an Alberta corporation which was in the business of purchasing agricultural commodities and selling them in Mexico.  James Stout Professional Corporation (“Stout”) began auditing the financial statements of Agra commencing with the 2007 year end.
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That cause of action is sooo three years ago: limitation periods barring negligence claims

November 22, 2017

Below two cases will be reviewed: one from British Columbia in 2017 and an Ontario case from 2016. Both cases deal with statutory and contractual limitation periods barring negligence claims against an architecture firm and an engineering consulting firm, respectively. In both cases, the claims were found to have been time-barred based on contractual limitation clauses exemplifying the importance of contractual limitations in professional services contracts and their potential to limit liability.
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Denials of Duty to Defend Go Down to Defeat

October 31, 2017

In most cases, whether an insurer has a duty to defend an insured is not a terribly controversial question. On occasion, however, the insurer denies coverage and the insured must ask a court to decide if there is a duty or not. In recent judgments, courts in Ontario and British Columbia asked to resolve just this kind of dispute decided the question in the insured’s favour.
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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.
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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.
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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)?
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Negligence Claims for Mental Injury: No Diagnosis? No Problem.

September 13, 2017

The Supreme Court of Canada has ruled that a diagnosed psychiatric illness is not required to prove mental injury for the purpose of a negligence claim.
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