Michael David Schafler

The plaintiffs brought a motion to approve a US$90 million settlement of a class action against the defendant auditors for alleged negligence and misrepresentation in auditing a company's financial statements.

The court considered the significant litigation risks, the defences advanced, and the depletion of the defendants' insurance coverage.

Finding the settlement fair, reasonable, and in the best interests of the class, the court approved the settlement.

The court also approved class counsel's contingency fee request of approximately $21.9 million, noting the substantial risk undertaken and the successful result achieved after 17 years of litigation.

This is a costs endorsement on appeal from a partial summary judgment motion.

The appellants (lenders) and respondents (Deloitte) agreed on the quantum of costs for both the motion below and the appeal but disagreed on timing of payment.

The respondents argued costs should remain in the cause based on an alleged agreement that no money change hands on interlocutory motions until final resolution.

The Court of Appeal rejected this argument, finding it inconsistent with the respondents' own prior positions and earlier costs orders in the litigation.

The court determined that the motion judge erred in granting partial summary judgment and that costs should be fixed and payable immediately.

The appellants, a syndicate of lenders, sued the respondent auditors for negligent and reckless misrepresentation after advancing funds to a company based on audited financial statements that failed to disclose a massive accounting fraud.

The motion judge granted partial summary judgment dismissing the lenders' negligence claim, finding that the spectre of indeterminate liability negated the auditors' prima facie duty of care.

The Court of Appeal allowed the appeal, holding that partial summary judgment was inadvisable in the context of the litigation as a whole due to the real risk of duplicative or inconsistent findings at the upcoming trial on the remaining claims.

The defendant successfully repelled the plaintiffs' motion for an interlocutory injunction and sought its costs of the motion payable forthwith.

The parties agreed to fix the quantum of costs at $150,000.

The court departed from the general rule that a successful defendant on an interlocutory injunction motion is presumptively entitled to costs payable forthwith, noting that the plaintiffs only sought a permanent injunction at trial and there were factual issues regarding the defendant's conduct.

The court fixed the costs at $150,000 but reserved the issue of entitlement to the trial judge.

The applicant, a tenant of the Toronto Community Housing Corporation (TCHC), sought judicial review of a decision removing his rent-geared-to-income subsidy.

The subsidy was removed after the applicant failed to provide requested corporate financial information and bank statements for his legal professional corporation.

The applicant argued that the TCHC breached procedural fairness and failed to accommodate his disabilities.

The Divisional Court dismissed the application, finding that the TCHC provided ample opportunity to comply, the process was fair, and there was no evidence that the applicant's disabilities prevented him from providing the required documentation.

The representative plaintiff in a securities class action sought court approval of an $11 million settlement agreement, a plan of distribution, and class counsel fees.

The action alleged that the defendants misrepresented the development costs of a mining project.

The court found the settlement to be fair, reasonable, and in the best interests of the class, noting the significant litigation risks, including proving liability and overcoming statutory liability caps under the Securities Act.

The court also approved the plan of distribution, the appointment of the claims administrator, and class counsel's fee request of $2.75 million (25% of the settlement) plus disbursements, finding them fair and reasonable given the results achieved and risks assumed.

Following the dismissal of an application to set aside an international arbitral award, the court determined the appropriate scale of costs.

The court initially considered awarding substantial indemnity costs to deter baseless challenges to an arbitrator's impartiality.

However, acknowledging that the applicant raised a novel point of law regarding an arbitrator's conflict of interest involving past firms, the court gave the applicant the benefit of the doubt.

Costs were awarded to the respondents on a partial indemnity basis, fixed at $55,000.

Following a successful partial summary judgment motion, the defendants sought costs of $700,000 plus disbursements payable forthwith.

The plaintiffs argued costs should be in the cause.

The court agreed with the plaintiffs that costs should be in the cause, as the trial was imminent and the trial judge would be in the best position to allocate liability for costs.

The court clarified that the costs would be in the cause of the specific plaintiff's action, not the consolidated action involving a receiver.

The applicant sought to set aside an arbitral award, arguing that the arbitrator's failure to conduct a conflict search with his former law firm, which had acted for the underwriters of the project and a company whose CFO was a witness, created a reasonable apprehension of bias.

The court found it had jurisdiction to hear the challenge under Article 34 of the Model Law.

However, the court dismissed the application, holding that the connection between the arbitrator and his former firm's clients was too remote to establish a reasonable apprehension of bias, and that an arbitrator who has left a law firm does not have a duty to investigate potential conflicts with that former firm.

Lenders brought a class proceeding alleging negligent misrepresentation by auditors in connection with audited financial statements relied upon when extending a large syndicated loan.

The defendants moved for partial summary judgment dismissing the negligent misrepresentation claim on the basis that no duty of care was owed to the lending syndicate.

Applying the principles from Hercules Managements Ltd. v. Ernst & Young, the court held that auditors generally owe duties to the corporation and its shareholders but not to third-party lenders due to concerns about indeterminate liability.

Although the auditors knew lenders would likely review the statements, they did not know the identity of the lenders nor prepare the audits for the specific lending transaction.

The court concluded the circumstances did not negate indeterminate liability and no duty of care arose.

The appellants, representative plaintiffs in a class action alleging auditor negligence, appealed the dismissal of their motion under Rule 30.10(1) for production of investigation documents from the Institute of Chartered Accountants of Ontario, a non-party.

The Court of Appeal upheld the motion judge's finding that it would not be unfair for the appellants to proceed to trial without the documents.

Although the Court found the motion judge erred in concluding the documents were protected by case-by-case privilege under the Wigmore criteria, the appeal was dismissed because the appellants failed to establish the unfairness requirement of Rule 30.10(1).

In a billion‑dollar negligence class action against auditors arising from allegedly defective audit reports relied upon by lenders, the plaintiffs brought a motion under Rule 30.10 of the Rules of Civil Procedure seeking production of investigative materials held by the Institute of Chartered Accountants of Ontario relating to disciplinary proceedings against two audit partners.

The court held that production from a non‑party requires proof that the documents are relevant and that it would be unfair to require the moving party to proceed without them.

The plaintiffs failed to demonstrate unfairness because they already possessed the underlying documentary record and extensive discovery evidence, and the investigator’s report was not necessary for the pending partial summary judgment motion or the pleaded issue estoppel.

The court further held that the materials were protected by a case‑by‑case privilege under the Wigmore criteria arising from confidential communications between the professional regulator and its members during disciplinary investigations.

Following the execution of an Anton Piller order in a commercial dispute, certain seized documents were identified as relating to “controlled goods” under the Defence Production Act.

The moving party sought an order declaring that the independent supervising solicitor appointed under the Anton Piller order was not required to register under Part 2 of the Defence Production Act in order to possess or examine such documents.

The Attorney General of Canada intervened and argued that the registration requirements applied.

The court held that an independent supervising solicitor appointed under the Model Anton Piller Order functions as a person employed for the execution of civil process and qualifies as a “peace officer” within the meaning of the Criminal Code for the limited purpose of the statutory exemption.

Accordingly, the solicitor was exempt from the registration requirement under s. 36 of the Defence Production Act.

The appellants challenged a motion decision holding that s. 61 of the Chartered Accountants Act, 2010 barred use in civil litigation of materials from professional discipline proceedings conducted under the predecessor Chartered Accountants Act, 1956.

The Court of Appeal held that, while s. 61 is an evidentiary rule with immediate application to ongoing civil proceedings, its text plainly applies only to records of proceedings under the 2010 Act.

The court rejected reliance on statutory purpose, transitional references to the predecessor legislation, and the alleged unusual procedural history to expand the section beyond its wording.

The appeal was allowed, the order below was set aside, and leave to amend the pleading was granted.

The plaintiff employer sought ex parte relief against an employee alleged to have breached contractual and fiduciary duties by participating in a competing business and misusing confidential information.

The court applied the four-part test for Anton Piller orders set out in Celanese Canada Inc. v. Murray Demolition Corp. and found a strong prima facie case of breach of loyalty and confidentiality obligations, a risk of serious harm to the employer’s customer relationships, convincing evidence that relevant documents likely existed in the defendant’s possession, and a real risk of destruction of evidence.

The court granted an Anton Piller order with a shortened duration and appointed independent supervising solicitors.

An interim injunction restraining disclosure of confidential information and solicitation of customers or employees was also granted applying the RJR‑MacDonald test.

The court further ordered that the motion materials be sealed under the Sierra Club test pending execution of the order.

In a certified class proceeding arising from a failed public company and alleged negligent audits, both sides brought refusals motions concerning answers and undertakings given during examinations for discovery.

The plaintiffs alleged that the auditors negligently prepared audit reports relied upon by lenders in extending a $1.5‑billion credit facility, while the auditors denied any duty of care and advanced additional defences.

The court reviewed the permissible scope of discovery under the Rules of Civil Procedure and the Class Proceedings Act, 1992, emphasizing relevance, materiality, proportionality, and recognized categories justifying refusals.

Applying those principles, the court ruled on numerous disputed questions, ordering some answers and upholding others as unanswerable, irrelevant, disproportionate, or privileged.

Costs of the refusals motions were ordered to be in the cause.

The appellant commenced a proposed class action asserting a statutory cause of action under s. 130 of the Securities Act for misrepresentations in a prospectus.

The motion judge found the claim was barred by the limitation period in s. 138 of the Securities Act and was not saved by the suspension of limitation periods in s. 28 of the Class Proceedings Act.

The Court of Appeal upheld the decision, finding that a prior class action appeal did not encompass the s. 130 claim, meaning the suspension of the limitation period ended when the time to appeal the dismissal of that specific claim expired.

The appellant municipality appealed a decision of the Ontario Energy Board declining to review its previous decision that allowed a wind energy company to build distribution facilities on municipal road allowances.

The municipality argued the Board erred in interpreting its review power too narrowly and that the presence of an original panel member on the review panel created a reasonable apprehension of bias.

The Divisional Court dismissed the appeal, finding the Board's interpretation of its review rules was reasonable and that the participation of an original member in a reconsideration process does not raise a reasonable apprehension of bias.

The third parties, who were directors and officers of the plaintiff company, sought leave to appeal an interlocutory order refusing to strike out third party claims brought against them personally by the defendant auditors.

The defendants had been sued for negligence in performing audits and sought contribution and indemnity from the third parties for their alleged tortious personal conduct.

The Divisional Court dismissed the motion for leave, finding no conflicting decisions and no good reason to doubt the correctness of the motions judge's decision, as the pleadings properly founded a reasonable cause of action against the third parties.

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.