Nathan J. Shaheen

The plaintiff, Barry Lavender, representing a class of investors, moved for summary judgment on five common issues in a class action against Miller Bernstein LLP, the auditor of a defunct securities dealer, Buckingham Securities.

The class members suffered $10.6 million in losses due to Buckingham's failure to segregate client assets and maintain minimum capital, which the defendant auditor negligently failed to report in Form 9s filed with the Ontario Securities Commission (OSC).

The court applied the Anns-Cooper analysis to establish a duty of care owed by the auditor to the class members, finding sufficient proximity and foreseeability, and no concerns of indeterminate liability.

The court found that Buckingham was required to segregate assets and failed to do so, and that the defendant breached its duty of care, causing damages.

However, the court could not determine the quantum of damages on a class-wide basis from the evidence presented.

Following dismissal of the defendant bank’s summary judgment motion asserting a limitations defence, the plaintiffs sought partial indemnity costs of $635,000.

The action arises from a massive Ponzi scheme involving certificates of deposit issued by an offshore bank, with the plaintiffs acting as joint liquidators pursuing damages of USD $5.5 billion against the defendant bank as correspondent banker.

The court held that although the plaintiffs were successful in resisting the motion, their claimed costs were excessive and far outside the reasonable expectations of the unsuccessful party for a two‑day summary judgment motion.

Considering the factors under Rule 57.01(1), the court fixed a fair and reasonable costs award of $120,000 all‑inclusive on a partial indemnity basis.

The award was made without prejudice to the plaintiffs’ ability to seek additional costs related to the motion at trial where the limitations issue remains live.

The defendant bank brought a summary judgment motion seeking dismissal of a $5.5 billion negligence and knowing assistance claim arising from an international Ponzi scheme, arguing the action was barred by the two‑year limitation period under the Limitations Act, 2002.

The claim was brought by joint liquidators of an offshore bank alleging the defendant bank failed to exercise appropriate due diligence and facilitated the scheme by continuing correspondent banking services.

The court held that the discoverability of the claim before the critical limitation date involved complex factual inquiries regarding what the liquidators’ predecessors knew or ought to have known about the bank’s role in the fraud.

Given the extensive evidence, overlapping merits issues, and disputed factual questions about knowledge and investigation during the liquidation process, the court found a genuine issue requiring a trial.

Summary judgment was therefore inappropriate.