The appellants, former auditors and actuaries of the respondent law society, appealed the dismissal of their motions for summary judgment and to strike the statement of claim.
The respondents had sued for professional negligence, alleging the appellants understated deficits in the professional liability insurance plan.
The appellants argued that even if they were negligent, the respondents suffered no damages because the losses were 'passed on' to members through increased levies.
The motion judge dismissed the appellants' motions and struck the 'passing on' defence, proceeding on the basis of assumed facts.
The Court of Appeal allowed the appeal and cross-appeal, holding that the motion judge erred in deciding hypothetical questions of law based on assumed facts when material facts were in dispute.
The Court concluded that it was not plain and obvious that the 'passing on' defence is unavailable in Canadian law, and ordered the entire action to proceed to trial.