James Mangan

The defendants moved for security for costs in a $5 billion auditor negligence action arising from audits connected to investments with Bernard L. Madoff Investment Securities.

The plaintiffs, investment funds in liquidation, did not dispute entitlement to security but contested the amount sought.

The court considered estimates for pleadings, discovery planning, document review, examinations for discovery, and disbursements, including expert evidence.

Applying Rule 56.01 and assessing reasonable partial indemnity rates, the court found the plaintiffs’ proposed figures unrealistic given the complexity and scale of the litigation.

Substantial security for costs was ordered to cover work through the first stage of examinations for discovery.

In a professional negligence action arising from accounting advice regarding eligibility for Canadian Controlled Private Corporation status, the defendant accountants moved for summary judgment dismissing the plaintiffs’ claim.

The defendant also brought a third party claim against the plaintiffs’ solicitors alleging negligent misrepresentation and seeking contribution and indemnity.

The court held that the accounting negligence claim involved complex factual disputes, credibility issues, and professional standards unsuitable for determination on summary judgment and therefore required a trial.

However, the court granted summary judgment dismissing the third party claim against the solicitors, finding no duty of care and no reasonable reliance by the accountants on the solicitors’ confirmations regarding a shareholders’ agreement.

The defendants appealed a Master's order that struck out one of two defence neuropsychological assessments of the plaintiff.

The Master had varied his original order allowing two assessments after discovering the defendants had entered into an undisclosed settlement agreement, reasoning they were no longer adverse in interest.

The Superior Court allowed the appeal, finding the Master erred in law.

The court held that the defendants remained adverse in interest despite the settlement, and that adversity is not a strict prerequisite for multiple defence medicals under section 105 of the Courts of Justice Act if fairness requires it.

Both assessments were permitted, but the defendants were ordered to pay full indemnity costs and fund an additional assessment for the plaintiff as a sanction for failing to disclose the agreement and breaching the examination protocol.

The plaintiffs moved to set aside an order that required the plaintiff to undergo two defence neuropsychological examinations.

The original order was made on the assumption that the defendants were adverse in interest.

It was subsequently discovered that the defendants had entered into a secret settlement agreement ending all adversity between them six months prior to the order.

The court found that the failure to disclose the agreement altered the landscape of the litigation.

The court varied the original order to permit only a single neuropsychological examination, finding that allowing two examinations by experts in the same field for non-adverse defendants was improper.

The court declined to exclude both reports entirely, finding that such a consequence would be disproportionate, but awarded the plaintiffs full indemnity costs.