3 total
Class action settlement of US$90 million and class counsel fees of $21.9 million approved.
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.
Costs of a partial summary judgment motion ordered in the cause rather than payable forthwith.
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.
Auditors owed no duty of care to lenders relying on corporate audit.
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.
