J.L. McDougall

The moving party sought an order permitting it to call and cross-examine certain current and retired partners of the defendant accounting firm at trial under Rule 53.07(5) of the Rules of Civil Procedure.

The court considered whether such individuals could be treated as adverse parties or partners of an adverse partnership for the purpose of cross-examination.

The court held that current partners of the defendant partnership clearly fell within the rule and could be called and cross-examined.

The court further concluded that retired partners could also qualify as adverse parties due to potential personal liability for partnership obligations incurred before retirement under the Partnerships Act.

The motion was granted in part, permitting cross-examination of specified partners and recognizing the applicability of the rule to retired partners.

In a CCAA proceeding, the Applicants (Hollinger Inc. et al.) sought approval of settlement agreements with their former auditors (KPMG) and lawyers (Torys).

The Non-Settling Defendants, including Conrad Black and David Radler, opposed the settlements, arguing the court lacked jurisdiction and that the included third-party releases and bar orders would deprive them of procedural rights to discovery.

The court held it had jurisdiction under the CCAA to manage litigation as a corporate asset.

The court approved the Pierringer-style settlements, finding that the procedural rights of the Non-Settling Defendants could be adequately protected through active case management and the application of the principle of proportionality in discovery.

The Institute of Chartered Accountants of Ontario (ICAO) appealed a Divisional Court decision that quashed professional misconduct convictions against three auditors regarding their 1997 audit of Livent Inc. The auditors cross-appealed the Divisional Court's decision upholding other convictions.

The Court of Appeal allowed the ICAO's appeal, finding that the Discipline Committee did not breach procedural fairness and provided adequate reasons for its findings of misconduct.

The Court also held that subsequent legislative amendments retroactively validated the Discipline Committee's costs award.

The auditors' cross-appeal was dismissed, and the Discipline Committee's original decisions and penalties were reinstated.

The applicants, three chartered accountants, sought judicial review of decisions by the Discipline Committee and Appeal Committee of the Institute of Chartered Accountants of Ontario finding them guilty of professional misconduct in relation to the 1997 audit of Livent Inc. The Divisional Court granted the applications in part.

The Court quashed the convictions on charges 1(i) and 1(iii) due to a breach of procedural fairness, as the applicants were convicted based on their treatment of a 'Put' agreement which was not part of the charges or the case they had to meet.

The Court also quashed the convictions on charges 1(iv) and 2(viii) as unreasonable.

However, the Court upheld the convictions on charges 2(ii), (iii), (iv), and (v), finding it was reasonable for the committees to conclude the auditors failed to exercise appropriate professional scepticism.

Finally, the Court quashed the costs award, holding that the Discipline Committee lacked jurisdiction to order costs because its by-law conflicted with the requirements of the Statutory Powers Procedure Act.

The appellant commenced an action alleging the respondents conspired to falsely accuse him of fraud, while criminal proceedings against him for that fraud were ongoing.

The motion judge struck the claim, characterizing it as malicious prosecution lacking the essential element of a favourable determination in the criminal proceedings.

The Court of Appeal upheld the decision, finding that even if framed as conspiracy to injure, the claim could not proceed in the face of ongoing criminal proceedings.

The appeal was dismissed and the claim struck in its entirety.

The appellant landowners brought a class action claiming compensation from the respondent pipeline companies for restrictions on the use of their lands imposed by government regulation under the National Energy Board Act.

The motion judge dismissed the action on summary judgment.

On appeal, the Court of Appeal upheld the dismissal, finding that s. 75 of the Act does not create a civil cause of action for compensation, but rather provides a complete code for negotiation and arbitration.

The Court also held that the compensation provisions in the easement agreements were limited to physical damages and did not cover economic losses resulting from regulatory land use restrictions.

The Ontario Energy Board (OEB) appealed a Divisional Court decision that set aside its order denying Enbridge Gas Distribution Inc. a rate increase for certain transportation costs.

The Divisional Court had found that the OEB erred in law by improperly using hindsight in its 'prudence' review of Enbridge's contracts.

The Court of Appeal allowed the appeal and restored the OEB's order, holding that when read as a whole, the OEB's reasons did not demonstrate a misuse of hindsight or legal error.

The Court also confirmed the OEB had standing to appeal the Divisional Court's decision.

Deloitte & Touche LLP appealed an order of the Ontario Securities Commission authorizing the disclosure of written answers provided by Deloitte during an investigation to the respondents in a related enforcement proceeding.

Deloitte argued the information was not relevant, that disclosure was not in the public interest, and that the information was privileged.

The Divisional Court dismissed the appeal, finding the Commission reasonably concluded the information was relevant to the respondents' ability to make full answer and defence, that the public interest favoured disclosure, and that the information was not privileged because it did not originate in confidence.

The appellants, two major gas distributors in Ontario, appealed a decision of the Divisional Court upholding the Gas Distribution Access Rule (GDAR) issued by the Ontario Energy Board.

The GDAR permitted gas vendors to determine how customers are billed for gas commodity sales and distribution services.

The appellants argued the Board lacked jurisdiction under the Ontario Energy Board Act to make such billing rules and failed to follow the required rule-making process.

The Court of Appeal held that the standard of review for subordinate legislation is correctness.

Applying this standard, the Court found that the Board had ample jurisdiction to make the billing provisions, as they regulated an important part of the gas distribution business.

The Court also found the Board complied with the statutory notice and comment process.

The appeal was dismissed.

The applicants, chartered accountants charged with professional misconduct, brought a motion for review of an order dismissing their request to compel the respondent's Professional Conduct Committee to file a record of proceedings under section 10 of the Judicial Review Procedure Act.

The Divisional Court dismissed the motion, holding that the committee's power to investigate and charge is not a 'statutory power of decision' as defined in the Act, and therefore section 10 does not apply.

The applicants sought judicial review of the investigative process leading to charges by the Professional Conduct Committee of the Institute of Chartered Accountants of Ontario.

On a motion to determine who must file the record under Rule 68.04(1) of the Rules of Civil Procedure, the court held that the Committee was not acting as a court or tribunal in its investigative function.

Therefore, Rule 68.04(1)(b) applied, requiring the applicants to prepare and file the record.

The motion was dismissed.

The applicants, members of the Grassy Meadows First Nation, brought an application for judicial review challenging the Minister of Natural Resources' authority to approve forest licences and management plans that allegedly infringed their Treaty 3 hunting and fishing rights.

The Minister and the licensee, Abitibi-Consolidated Inc., brought motions to quash the application.

The Divisional Court held that a single judge has jurisdiction to quash an application for judicial review.

The court quashed the application on the basis that much of the relief sought, which involved constitutional challenges and declarations against a private company, fell outside the court's judicial review jurisdiction.

Furthermore, the court exercised its inherent jurisdiction to quash the application because the complex factual and constitutional issues, including aboriginal treaty rights, required a full trial rather than a summary application.

The application was quashed with leave to commence an action.

The appellants appealed an order dismissing their motion for certification of a class proceeding and striking certain paragraphs of their statement of claim.

The proposed class action alleged negligence and negligent/reckless misrepresentation by the respondent auditors in connection with financial statements relied upon by lenders who advanced over US$1 billion.

The Divisional Court allowed the appeal in part, finding that the motions judge erred in striking the claim for reckless misrepresentation and in concluding that a class proceeding was not the preferable procedure.

The court upheld the striking of claims by assignor lenders and claims against individual partners and employees.

The matter was referred back to a class proceedings judge.

Following an appeal, the court received written submissions regarding the quantum of costs.

The court rejected the appellant's argument that the appeal involved a novel issue of law or public interest, but agreed that the respondents' claimed costs were excessive.

Costs were fixed on a partial-indemnity basis at $15,000 payable to each of the two respondent groups.

The appellants, indirect purchasers of homes containing concrete bricks coloured with the respondents' iron oxide pigment, sought to certify a class action alleging a price-fixing conspiracy.

The motion judge certified the action, but the Divisional Court set aside the certification.

On appeal, the Court of Appeal upheld the Divisional Court's decision, finding that the appellants failed to provide a sufficient evidentiary basis to show that loss could be proved on a class-wide basis.

Because liability required individual proof of loss, a class action was not the preferable procedure.

The appellant, an investor who purchased shares in the secondary market, sought to certify a class proceeding against the issuer, underwriters, and auditors for negligent misrepresentation in a prospectus.

The motions judge dismissed the action, finding the pleadings failed to disclose a reasonable cause of action as they did not establish a special relationship giving rise to a duty of care.

The Court of Appeal upheld the dismissal, agreeing that the pleadings lacked material facts to support a duty of care owed to secondary market purchasers by the auditors or underwriters.

The Ontario Securities Commission (OSC) appealed a Divisional Court decision that set aside an OSC order requiring disclosure of compelled material to respondents in a s. 127 proceeding.

The material, including audit files and testimony, had been compelled from Deloitte & Touche LLP during an investigation into Philip Services Corp. The Court of Appeal allowed the appeal and restored the OSC's order, finding that the Commission's application of the Stinchcombe relevance standard and its balancing of the public interest against Deloitte's confidentiality expectations were reasonable.

The plaintiffs sought to certify a class action on behalf of indirect purchasers (homeowners and end users) alleging that the defendants engaged in a price-fixing conspiracy regarding iron oxide pigment used in construction materials.

The application judge certified the action.

The defendants appealed.

The Divisional Court allowed the appeal and set aside the certification order, finding that a class proceeding was not the preferable procedure.

The court held that the plaintiffs faced insurmountable problems of proof regarding whether the alleged overcharge was passed on to them through the chain of distribution, making the action unmanageable and inappropriate for aggregate damages assessment.

The defendants appealed an order directing that a certification motion in a class proceeding be heard in Hamilton based on the balance of convenience.

The Divisional Court allowed the appeal, holding that rule 37.03 of the Rules of Civil Procedure applies to determine the venue of a certification motion and that section 12 of the Class Proceedings Act, 1992 does not oust that rule.

The court further held that the balance of convenience is not the proper test for granting leave under rule 37.03(4) to hear a motion elsewhere.

The appellant appealed the dismissal of its motion seeking to strike an action brought by a debenture trustee and assignee arising from an alleged failure to perform duties undertaken during a corporate restructuring and bankruptcy context.

The court held it had not been demonstrated that the respondent could not succeed at trial on the issue of capacity, accepting that the floating charge over the debtor's assets, including choses in action, could crystallize on bankruptcy and support the trustee's standing.

Assuming without deciding that leave was required to sue the appellant in its role as monitor, the absence of leave was treated as an irregularity and leave was granted nunc pro tunc because there was a proper basis for the claim and no demonstrated prejudice.

The argument that individual debentureholders had to be added as parties was also rejected, and the appeal was dismissed with costs.