ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 02-CV-241587CP
DATE: 20120618

B E T W E E N:

R. CHARLES ALLEN

Plaintiff

• and -

ASPEN GROUP RESOURCES CORPORATION,

JACK E. WHEELER, JAMES E. HOGUE, WAYNE T. EGAN, ANNE HOLLAND,

RANDALL B. KAHN, LENARD BRISCOE, PETER LUCAS,

LANE GORMAN TRUBITT L.L.P. and WEIRFOULDS LLP.

Defendants

Proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. 6

BEFORE: G.R. Strathy J.

COUNSEL:
William E. Pepall & Lucas Lung , for the Defendant/Moving Party,
WeirFoulds LLP

Paul Bates, Jonathan Foreman & Robert L. Gain , for the Plaintiff/Respondent

David Sischy & Joseph Groia , for the Aspen Defendants

Sarah Shody & Kosta Kalogiros , for the Defendant, Lenard Briscoe

DATE HEARD: April 4, 2012

E N D O R S E M E N T

S U M M A R Y J U D G M E N T M O T I O N O F W E I R F O U L D S LLP

[ 1 ] WeirFoulds LLP (WeirFoulds) moves for summary judgment dismissing the claims against it.

[ 2 ] This action results from the take-over of Endeavour Resources Inc. (Endeavour) by one of the defendants, Aspen Group Resources Corporation (Aspen), pursuant to an offer (the Offer) and take-over bid circular (the Circular), both dated November 23, 2001.

[ 3 ] This action was certified as a class proceeding on December 4, 2009: Allen v. Aspen Group Resources Corp. (2009), 81 C.P.C. (6 th ) 298, [2009] O.J. No. 5213 (Certification Decision) . Reference should be made to that decision for the underlying facts and allegations.

[ 4 ] The class was defined as securities holders of Endeavour whose securities were acquired by Aspen.

[ 5 ] The plaintiff claims that the defendants made certain misrepresentations or failed to disclose certain material facts in the Circular. He also asserts the statutory remedy for misrepresentation contained in section 131(1) of the Securities Act , R.S.O. 1990, c. S.5 against the directors of Aspen.

[ 6 ] Through one of its partners, the defendant Wayne Egan (Egan), WeirFoulds acted as counsel for Aspen in the preparation of the Circular. Egan was also a director of Aspen. In that capacity, he signed a certificate stating that the Circular contained no untrue statement of fact and did not omit any material fact or contain any misrepresentation likely to affect the value of the securities that were the subject of the Offer.

[ 7 ] The plaintiff claims that WeirFoulds was negligent in the preparation of the Circular and failed to ensure that it disclosed material facts. He alleges that Egan knew or ought to have known that the Circular was deficient. He also pleads that WeirFoulds is liable for Egan’s negligence and breach of s. 131.

[ 8 ] A common issue was certified with respect to WeirFoulds:

Is the Defendant WeirFoulds LLP liable in negligence or for any breach of s. 131 of the Ontario Securities Act by the Defendant director Wayne Egan?

[ 9 ] On the certification motion, counsel for WeirFoulds submitted that in signing the Circular, Egan was not acting in his capacity as a lawyer or as a partner in WeirFoulds. WeirFoulds argued that it could not be liable for Egan’s actions qua director unless, in carrying out his duties as a director, he was carrying on the usual and ordinary business of the law firm (see Certification Decision para. 70). I addressed this submission as follows:

It seems to me that it is arguable that a lawyer who, through his or her law firm, acts as external corporate counsel to a corporation and who also sits on the corporation's board, may well be acting in the ordinary course of the law firm's business when he or she takes a seat at the boardroom table. Indeed, such a relationship with the corporation may be encouraged by the law firm to strengthen the relationship with the client, to raise the profile of the lawyer and the law firm and to increase business. To the extent there are risks for the lawyer and the law firm, they undoubtedly can be offset by appropriate liability insurance. [Certification Decision, para. 71]

[ 10 ] The evidence on this motion establishes the following facts:

• WeirFoulds has provided Aspen with advice on securities and corporate matters since 1995.

• Egan has been a director of Aspen since 1996.

• WeirFoulds has billed Aspen for the time spent by Egan in his capacity as a director of Aspen, including time Egan spent preparing for and attending directors’ meetings, preparing agendas, and reviewing and revising minutes and related correspondence.

• The WeirFoulds partnership agreement provides that fees earned by partners as a result of outside directorships were deemed to be income of the partnership.

• Service as a director of a corporation required approval by the WeirFoulds management committee and Egan’s directorship of Aspen had been so approved.

• WeirFoulds maintained a Directors & Officers’ liability policy to insure the liability of its lawyers as outside directors, and the firm was named as an additional insured on the policy.

• WeirFoulds’ website made reference to directorships held by its lawyers, including Egan.

[ 11 ] This evidence supports the conclusion that Egan’s activities on the Aspen Board were part of the ordinary course of the business of WeirFoulds.

[ 12 ] The summary judgment motion raises the issue of whether there is a genuine issue requiring a trial concerning:

(a) whether WeirFoulds owed a common law duty of care to class members – that is, to the securities holders of Endeavour – in connection with the preparation of the Circular for its client Aspen; and

(b) whether WeirFoulds is vicariously liable for Egan’s liability, if any, under s. 131 of the Securities Act.

[ 13 ] In its recent decision in Combined Air Mechanical Services Inc. v. Flesch , 2011 ONCA 764 , [2011] O.J. No. 5431, the Court of Appeal for Ontario held that, on a summary judgment motion, except in cases where the parties consent or where there is no chance of success, the court must determine whether a “full appreciation” of the evidence and issues can be obtained without a trial and whether the “interest of justice” requires a trial.

The Duty of Care Issue

[ 14 ] WeirFoulds says that the common law negligence claim must be dismissed, because it owed no duty of care to the shareholders of Endeavour with respect to the accuracy of the Circular.

[ 15 ] WeirFoulds characterizes the plaintiff’s claim against it as one for negligent advice to Aspen as opposed to misrepresentation in the Circular. It relies on the general rule that a solicitor owes a duty only to his or her client and not to the opposite party: Baypark Investments Inc. v. Royal Bank of Canada (2002), 2002 49402 (ON SC) , 57 O.R. (3d) 528, [2002] O.J. No. 58 (S.C.J.) at para. 33 , aff’d [2002] O.J. No. 4377 (C.A.) . See also Seaway Trust Co. v. Markle (1991), 7 C.C.L.T. (2d) 83, [1991] O.J. No. 479 , adopting the observations of the New Zealand Court of Appeal in Allied Finance and Investments Ltd. v. Haddow & Co ., (1983) N.Z.L.R. 22:

… the relationship between two solicitors acting for their respective clients does not normally of itself impose a duty of care on one solicitor to the client of the other. Normally the relationship is not sufficiently proximate. Each solicitor is entitled to expect that the other party will look to his own solicitor for advice and protection. Lord Roskill says in Junior Books at p. 214, "The concept of proximity must always involve, at least in most cases, some degree of reliance. Lord Roskill illustrates this by citing observations in the Hedley Byrne case [1964] AC 465 , and he attaches importance to where "the real reliance" was placed. And even if prima facie there were sufficient proximity for a duty of care, the consideration that the other party has a solicitor to protect his interests would normally negative a duty. That is to say, the second of Lord Wilberforce's questions in Anns v. Merton London Borough Council , [1978] AC 728 , 752, would have to be answered against the duty even if the first was not.

[ 16 ] In my view, WeirFoulds misstates the issue, with the result that it skews the proximity analysis.

[ 17 ] The common law negligence claim against WeirFoulds is expressed in para. 72 of the statement of claim as follows:

The law firm Weir Foulds [sic] LLP drafted the take-over circular and offer presented to the class members. The Defendant, Weir Foulds [sic] LLP had a duty to make appropriate enquiries and to ensure the disclosure of all material facts and material changes in the take-over documents. WeirFoulds LLP was or ought to have been fixed with knowledge of the alleged misrepresentations and was negligent in the preparation of documents delivered to the class members. The defendant, Egan, was at all material times a partner and agent of the defendant, WeirFoulds LLP. Egan acted in the ordinary course of business between 1996 and the present as legal counsel, a member of the Board of Directors and as a member of various committees of Aspen. Egan acted as lead counsel to Aspen in respect of the take-over bid circular. WeirFoulds LLP is liable for the conduct of the defendant, Egan.

[ 18 ] The statement of claim contains allegations that the Circular and the Offer either misrepresented or failed to disclose a number of allegedly material facts.

[ 19 ] The plaintiff’s common law negligence claim is founded on the following facts:

• Egan was a partner in WeirFoulds and acted in the ordinary course of business of the law firm in providing legal advice to Aspen in connection with its take-over of Endeavour and in sitting as a director on Aspen’s board.

• Egan was responsible for the preparation of the Circular.

• Egan knew that the Circular would be delivered to the shareholders of Endeavour for the purpose of soliciting their shares.

• Egan signed a certificate in the Circular stating that it contained no untrue statement of a material fact, did not omit to state a material fact and did not contain any misrepresentation likely to affect the value or the market price of the securities that were the subject of the Offer.

[ 20 ] The issue is whether WeirFoulds owed a duty of care to the plaintiff, in light of these facts and other surrounding circumstances to which I will refer.

[ 21 ] WeirFoulds acknowledges that there may be circumstances where a professional owes a duty of care to a non-client third party, applying the test articulated by the Supreme Court of Canada in Hercules Managements Ltd. v. Ernst & Young , 1997 345 (SCC) , [1997] 2 S.C.R. 165 at paras. 19-21 . In the case of claims, for damages for “pure economic loss”, such as the plaintiff’s claim here, the court must also apply the additional scrutiny required by Martel Building Ltd. v. Canada, 2000 SCC 60 , [2000] 2 S.C.R. 860 at paras. 35 , 37.

[ 22 ] As WeirFoulds puts it in its factum:

In determining whether there is a prima facie duty of care, the courts will consider whether there is a sufficiently close relationship (or relationship of proximity) between the plaintiff and the professional that in the reasonable contemplation of the professional, careless on his or her part may cause damage to the plaintiff. In the context of a claim for pure economic loss, the courts will consider whether there was reasonable reliance on the part of the plaintiff. Proximity will inhere when two criteria relating to reliance may be said to exist on the facts: (a) the defendant ought reasonably to have foreseen that the plaintiff would rely on the defendant’s expertise, and (b) reliance, in the particular circumstances of the case, was reasonable.

[ 23 ] WeirFoulds submits that it could not reasonably have foreseen that Endeavour shareholders would look to it for advice and protection in connection with the take-over. Endeavour had its own legal and financial advisors, who acted on behalf of and for the benefit of Endeavour’s shareholders. Endeavour obtained an independent professional opinion concerning the fairness of the Offer and provided it to Endeavour’s shareholders. It also jointly retained a consultant to provide information and financial analysis to assist in determining the terms of its Offer. Endeavour’s board consulted with its own lawyers and financial advisors and, having done so, recommended that Endeavour’s shareholders accept the Aspen Offer. Allen admitted that he relied on the circular distributed by the directors of Endeavour and the reports of the independent experts.

[ 24 ] The Circular itself, which was distributed to all Endeavour shareholders along with the Offer, contained the following statement at the top of the first page:

This document is important and requires your immediate attention. If you are in any doubt as to how to deal with it, you should consult your investment dealer, stockbroker, bank manager, lawyer or other professional advisor. No securities commissions or similar authority in Canada has in any way passed upon the merits of the securities offered hereunder and any representation to the contrary is an offence.

[ 25 ] The Circular and Offer also contained an independent auditor’s report prepared by the defendant Lane Gorman Trubitt LLP.

[ 26 ] WeirFoulds relies on D’Amore Construction (Windsor) Ltd. v. Lawyers Professional Indemnity Co. (2005), 2005 3225 (ON SCDC) , 249 D.L.R. (4 th ) 467, [2005] O.J. No. 448 and Seaway Trust Co. v. Markle , above. I do not regard either one of these authorities as particularly on point. In the former case, it was held that a party represented by counsel in litigation was not owed a duty of care by counsel for another party. The plaintiff had sued his own counsel as well as the counsel for the other party. It was found that it was not foreseeable that the plaintiff would rely on the advice of someone who was not his lawyer.

[ 27 ] In the Seaway Trust case, the plaintiff argued that a lawyer in a commercial transaction has a duty to disclose or to warn the opposing party if that party is about to enter into a transaction with the lawyer’s client, which the lawyer knows is fraudulent, even where the lawyer is not a party to the fraud. It was held that there was no such duty.

[ 28 ] In neither of these cases was there reliance by the plaintiff on a document that was prepared by the solicitor with the knowledge that it would be provided to the plaintiff for the purpose of informing the plaintiff’s assessment of the transaction.

[ 29 ] However, that was the case in Cannon v. Funds for Canada Foundation , 2012 ONSC 399 , [2012] O.J. No. 168 (S.C.J.). In the summary judgment motion in that case, I addressed the question of whether a duty of care was owed to investors by a lawyer who had prepared an opinion concerning the viability of a tax shelter. The promotional materials for the plan contained a “comfort letter” written by the lawyer. I held that there was a genuine issue requiring a trial as to whether the lawyer owed a duty of care to investors and, if so, whether there were policy reasons that would limit that duty.

[ 30 ] I have come to the same conclusion here, for the following reasons.

[ 31 ] First, following the framework set out in Attis v. Canada (Minister of Health) (2008), 2008 ONCA 660 () , 93 O.R. (3d) 35 (C.A.), I would find that Egan could have foreseen that shareholders of Endeavour would suffer damages if the Circular contained misrepresentations. The Circular was prepared with the intention that it would be given to the shareholders of Endeavour. The whole purpose of the Circular was to provide those shareholders with the information necessary to evaluate Aspen’s Offer and to make a decision whether or not to accept it. It was foreseeable that Endeavour shareholders would suffer a loss if the Circular contained untrue statements.

[ 32 ] The next question is whether Egan and WeirFoulds, on the one hand, and the shareholders of Endeavour, on the other hand, were in a relationship of proximity that would support a prima facie duty of care. Having regard to considerations such as expectations, representations and reliance, is there a sufficient closeness in the relationship between the parties to make it “just and fair” to impose a duty of care on the defendant? See Cooper v. Hobart , 2001 SCC 79 , [2001] 3 S.C.R. 537 at para. 34 .

[ 33 ] I am prepared to assume that this case does not fall within an existing category in which a duty of care has been recognized. That said, it bears considerable similarity to cases in which lawyers have been found to owe a duty of care to persons other than their client – or at least, where that allegation has survived a pleadings motion. See: CC&L Dedicated Enterprise Fund (Trustee of) v. Fisherman (2001), 2001 28387 (ON SC) , 18 B.L.R. (3d) 240, [2001] O.J. No. 4622 (S.C.J.); Delgrosso v. Paul (1999), 1999 15084 (ON SC) , 45 O.R. (3d) 605, [1999] O.J. No. 5742 (Gen. Div.) and Elms v. Laurentian Bank of Canada , 2001 BCCA 429 , 90 B.C.L.R. (3d) 195; Robinson v. Rochester Financial Limited , 2010 ONSC 463 , [2010] O.J. No. 187, leave to appeal denied, 2010 ONSC 1899 (Div. Ct.); Cannon v. Funds for Canada Foundation , above.

[ 34 ] In this case, the factors of expectation, representation and reliance all exist to some degree or another. The shareholders of Endeavour could reasonably expect that a lawyer who prepared and signed the Circular would ensure that it was accurate. There was an express representation by Egan that the Circular was accurate. It would be reasonable to expect that there would be reliance on the Circular by Endeavour’s shareholders in deciding whether to tender their shares. Allen’s evidence was that he read the Circular and that it was a factor in his decision to tender his shares. He also testified that he relied on the fact that WeirFoulds had created a document, in accordance with securities legislation, that did not misrepresent the facts.

[ 35 ] I acknowledge that the relative weight to be applied to these factors and to be given to some of the counterbalancing factors identified by WeirFoulds will require a careful analysis. In my opinion, that analysis requires a trial, particularly in view of the novelty of the issue.

[ 36 ] This brings me to the second stage of the analysis, whether the duty of care is negatived by policy considerations. As the Supreme Court of Canada said in Cooper v. Hobart , this stage of the analysis is particularly important in cases where a duty of care has not been previously recognized.

[ 37 ] Here, WeirFoulds says that if any prima facie duty of care exists, it is negatived by public policy considerations. It says that imposing a duty of care would put any solicitor acting in an arm’s length transaction into an irreconcilable conflict of interest and would mean that lawyers would not be at liberty to freely advise their clients with respect to their rights and obligations without breaching some duty to the other party.

[ 38 ] A similar issue was addressed by Cumming J. in the YBM case, CC&L Dedicated Enterprise Fund (Trustee of) v. Fisherman , above, albeit on a pleadings motion. Cumming J. found that the plaintiffs had properly pleaded the elements of a negligence claim, including a pleading that in drafting the prospectus, the law firm and its partner had a duty to ensure that it contained full and true disclosure of the material facts relating to the securities. Cumming J. found that the pleading was sufficient to give rise to a relationship of proximity that would give rise to a prima facie duty of care. He also found that a factual record would be necessary to resolve the question of whether there are policy considerations that would negative the scope of any duty and that it would not be appropriate to attempt to resolve these issues on the pleadings motion.

[ 39 ] As a general rule, courts have been reluctant to determine novel or unsettled questions of law on summary judgment without a full factual record. The principle was expressed by the Court of Appeal in Aronowicz v. Emtwo Properties Inc. (2010), 2010 ONCA 96 () , 98 O.R. (3d) 641 at para. 71 :

Generally, courts are reluctant to determine unsettled matters of law at a pre-trial stage -- including on motions for summary judgment -- on the theory that new or important questions of law should not be determined on an incomplete factual record: Société Générale , at para. 51; Romano v. D'Onofrio (2005), 2005 43288 (ON CA) , 77 O.R. (3d) 583, [2005] O.J. No. 4969 (C.A.), at para. 7 : Bendix Foreign Exchange Corp. v. Integrated Payment Systems Canada Inc ., [2005] O.J. No. 2241, 18 C.P.C. (6th) 15 (C.A.), at para. 6 . However, a court may determine a question of law on a motion for summary judgment if it has the necessary undisputed factual record before it, is in just as good a position as the trial judge would be to do so and is satisfied the only genuine issue is a question of law: see, for example, Bader v. Rennie , 2007 37674 (ON SCDC) , [2007] O.J. No. 3441, 229 O.A.C. 320 (Div. Ct.), at para. 22 ; Robinson v. Ottawa (City), [2009] O.J. No. 262, 55 M.P.L.R. (4th) 283 (S.C.J.), at paras. 63-64 ; Alexis v. Toronto Police Services Board , [2009] O.J. No. 5170, 2009 ONCA 847 , at para. 19 .

[ 40 ] In my view, determining whether there is a duty of care in this case, and, if so, whether it is negatived by policy considerations, is a complex, nuanced and important question that should be decided on a full record. I am not satisfied that I can obtain a full appreciation of the evidence or fairly resolve the issue without a trial.

[ 41 ] The motion for summary judgment on this issue is therefore dismissed.

The Claim under s. 131 of the Securities Act

[ 42 ] The plaintiff’s claim against Egan is based on the statutory remedy under s. 131(1) of the Securities Act for misrepresentation in a take-over bid. This provision gives the security holder of an offeree a cause of action for misrepresentation against, among others, a director of the offeror. The section at the material time provided as follows:

131. (1) Where a take-over bid circular sent to the security holders of an offeree issuer as required by Part XX or any notice of change or variation in respect thereof contains a misrepresentation, every such security holder shall be deemed to have relied on the misrepresentation and may elect to exercise a right of action for rescission or damages against the offeror or a right of action for damages against,

(a) every person who at the time the circular or notice, as the case may be, was signed was a director of the offeror;

(b) every person or company whose consent in respect of the circular or notice, as the case may be, has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by the person or company; and

(c) each person who signed a certificate in the circular or notice, as the case may be, other than the person included in clause (a).

[ 43 ] The plaintiff says that WeirFoulds is responsible for Egan’s liability as a director under s. 131(1) by virtue of sections 6 and 11 of the Partnerships Act , R.S.O. 1990, c. P.5. The relevant provisions are:

6. Every partner is an agent of the firm and of the other partners for the purpose of the business of the partnership, and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he or she is a member, bind the firm and the other partners unless the partner so acting has in fact no authority to act for the firm in the particular matter and the person with whom the partner is dealing either knows that the partner has no authority, or does not know or believe him or her to be a partner.

7. Where by any wrongful act or omission of a partner acting in the ordinary course of the business of the firm, or with the authority of the co-partners, loss or injury is caused to a person not being a partner of the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.

[ 44 ] WeirFoulds says that s. 11 of the Partnerships Act has no application to the statutory cause of action under s. 131 of the Securities Act. It does not rest its defence on the issue of whether Egan was acting in the ordinary course of the business of the WeirFoulds partnership in serving as a director of Aspen. It . Its submission has two branches.

[ 45 ] First, WeirFoulds says that the doctrine of vicarious liability has no application to a statutory cause of action. It says that the liability of a director under s. 131(1) of the Securities Act is purely a creature of statute and leaves no room for the application of the principles expressed in the Partnership Act or for a finding of a secondary liability on the part of someone who is a partner of the director.

[ 46 ] Second, WeirFoulds submits that, as a matter of statutory interpretation, s. 131 does not make law firms responsible for the statutory liability of their partners or employees who sit on corporate boards because:

(i) the ordinary and unequivocal meaning of s. 131(1)(a) appplies only to directors;

(ii) the liability under s. 131(1)(a) is personal to the director;

(iii) where the legislature has imposed liability on partners in the Securities Act , it has done so directly;

(iv) the Partnerships Act cannot be relied upon to extend liability under s. 131 to partnerships, because s. 131 is intended to be a complete code of liability – moreover, interpreting the Partnerships Act to extend liability under s. 131 to partners of the director would create an absurdity, because the partnership would be liable for the acts of partners who are directors, but not for the acts of employees who are directors; and

(v) accepting the plaintiff’s position would unduly expand the scope of liability under s. 131 and would expand the scope of the various statutory causes of action under the Securities Act including s. 130 (misrepresentation in a prospectus), s. 130.1 (misrepresentation in an offering memorandum) and s. 138.3 (misrprepresentation in the secondary market).

[ 47 ] I will begin by addressing the first submission that the vicarious liability of a partnership under the Partnerships Act does not apply to statutory causes of action.

[ 48 ] The underlying rationale of s. 11 of the Partnerships Act is similar to the rationale behind the vicarious liability of an employer for the actions of an employee acting in the course of business. It is based on a combination of policy factors that are rooted in fairness, equitable compensation for injuries, loss spreading and risk control. This was explained by the House of Lords in Majrowski v. Guy’s and St. Thomas’ NHS Trust , [2006] UKHL 34 at para. 9 :

Whatever its historical origin, this common law principle of strict liability for another person's wrongs finds its rationale today in a combination of policy factors. They are summarised in Professor Fleming's Law of Torts , 9th ed, (1998) pages 409-410. Stated shortly, these factors are that all forms of economic activity carry a risk of harm to others, and fairness requires that those responsible for such activities should be liable to persons suffering loss from wrongs committed in the conduct of the enterprise. This is 'fair', because it means injured persons can look for recompense to a source better placed financially than individual wrongdoing employees. It means also that the financial loss arising from the wrongs can be spread more widely, by liability insurance and higher prices. In addition, and importantly, imposing strict liability on employers encourages them to maintain standards of 'good practice' by their employees. For these reasons employers are to be held liable for wrongs committed by their employees in the course of their employment.

See also: 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. , 2001 SCC 59 , [2001] S.C.J. No. 61 at paras. 25-32 .

[ 49 ] While these observations dealt with the employment relationship, the point is precisely the same in the case of a partnership.

[ 50 ] In the Majrowski case, the issue was whether a trust could be liable under the Protection from Harassment Act 1997 , 1997, c. 40 for the harassment of the respondent by an employee of the trust. The House of Lords, in dismissing an appeal from the Court of Appeal, affirmed that the trust could be held vicariously liable for the breach of the statute by an employee. Lord Nicholls observed, at para. 17:

…Unless the statute expressly or impliedly indicates otherwise, the principle of vicarious liability is applicable where an employee commits a breach of a statutory obligation sounding in damages while acting in the course of his employment.

[ 51 ] Lord Carswell and Lord Brown expressly agreed with this observation.

[ 52 ] Lord Nicholls explained the rationale for his conclusion at para. 10:

With these policy considerations [set out in para. 9, above] in mind, it is difficult to see a coherent basis for confining the common law principle of vicarious liability to common law wrongs. The rationale underlying the principle holds good for equitable wrongs. The rationale also holds good for a wrong comprising a breach of a statutory duty or prohibition which gives rise to civil liability, provided always the statute does not expressly or impliedly indicate otherwise. A precondition of vicarious liability is that the wrong must be committed by an employee in the course of his employment. A wrong is committed in the course of employment only if the conduct is so closely connected with acts the employee is authorised to do that, for the purposes of the liability of the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the employee while acting in the course of his employment: see Lister v Hesley Hall Ltd [2002] 1 AC 215 , 245, para 69, per Lord Millett, and Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 2 AC 366 , 377, para 23. If this prerequisite is satisfied the policy reasons underlying the common law principle are as much applicable to equitable wrongs and breaches of statutory obligations as they are to common law torts.

[ 53 ] He noted that this approach was supported by a number of cases and academic writers, including the decision of the British Columbia Court of Appeal in Nelson and Byron Price & Associates Ltd. (1981), 1981 415 (BC CA) , 122 D.L.R. (3d) 340, [1981] B.C.J. No. 461, relied upon by WeirFoulds, which I will discuss below.

[ 54 ] Lord Nicholls held that vicarious liability for statutory wrongs should be the general rule, in the absence of statutory language to the contrary:

One further general question should be noted on the interpretation of statutory provisions in this context. The question can be framed this way. Does employers' vicarious liability arise unless the statutory provision expressly or impliedly excludes such liability? Or does employers' liability arise only if the statutory provision expressly or impliedly envisages such liability may arise? As already indicated, I prefer the first alternative. It is more consistent with the general rule that employers are liable for wrongs committed by employees in the course of their employment. The general rule should apply in respect of wrongs having a statutory source unless the statute displaces the ordinary rule. This accords with the approach adopted by Lord Oaksey in the passage cited above from National Coal Board v England [1954] AC 403 , 422. [para. 16].

[ 55 ] He found that there was nothing in the legislation to evidence an intention to exempt the statutory wrong from the usual rule of vicarious liability:

As to the terms of the legislation, by section 3 Parliament created a new cause of action, a new civil wrong. Damages are one of the remedies for this wrong, although they are not the primary remedy. Parliament has spelled out some particular features of this new wrong: anxiety is a head of damage, the limitation period is six years, and so on. These features do not in themselves indicate an intention to exclude vicarious liability. Vicarious liability arises only if the new wrong is committed by an employee in the course of his employment, as already described. The acts of the employee must meet the 'close connection' test. If an employee's acts of harassment meet this test, I am at a loss to see why these particular features of this newly created wrong should be thought to place this wrong in a special category in which an employer is exempt from vicarious liability. It is true that this new wrong usually comprises conduct of an intensely personal character between two individuals. But this feature may also be present with other wrongs which attract vicarious liability, such as assault. [para. 25].

[ 56 ] The test proposed by the House of Lords, then, was whether the statute in question expressly or impliedly evidenced an intention to exclude vicarious liability. It was found that there was no such intention and that there was, in fact, some express language in the statute that showed that Parliament intended the rules of vicarious liability to apply.

[ 57 ] The issue has been dealt with by the Supreme Court of Canada, in a related context, in Strother v. 3464920 Canada Inc. , 2007 SCC 24 , [2007] 2 S.C.R. 177. The issue in that case was whether a law partnership was liable, under section 12 of the British Columbia Partnership Act , R.S.B.C. 1996, c. 348, for a breach by one of its partners of a fiduciary duty to a former client, by acquiring a personal interest in a competing business. This provision is the British Columbia equivalent of s. 11 of the Ontario statute.

[ 58 ] Binnie J., who delivered the majority judgment of the Supreme Court, noted that there was no finding that the law partnership itself had breached a fiduciary duty to the client. The other partners had been unaware of the partner’s breach of fiduciary duty. The question was whether the law firm was vicariously liable for the partner’s personal profits.

[ 59 ] The Court of Appeal had held that the firm was not vicariously liable, because the partner was on a “frolic of his own”. The managing partner had directed him not to acquire an interest in the other firm. It was argued that, in spite of this, there was a statutory right of recovery under the provisions of the British Columbia Partnership Act .

[ 60 ] Binnie J. concluded that the partnership’s liability under the equivalent of s. 11 of the Ontario statute was not confined to common law torts and that the words “wrongful act or omission” could include equitable wrongs (at para. 100). He found that the inclusion of the words “loss or injury … or any penalty” in the section indicated that such claims were to be treated as liabilities of the firm regardless of their legal origin – at para. 102:

The combination of "loss, injury or penalty" suggests that the legislative purpose is to ensure that a delinquent partner's liability incurred "to any person who is not a partner", with the firm's authority or in the ordinary course of the firm's business, is to be treated as the obligation of the firm regardless of its legal origin. A money judgment resulting from an accounting of profits against the delinquent partner comes within this description, in my opinion.

[ 61 ] Binnie J. went on to find that the actions of the “rogue” partner were in the ordinary course of the business of the partnership. He found, at para. 105, that:

The "ordinary course of the business" test thus requires [the rogue partner’s] wrong to be "so connected" with the partnership business that it can be said that [the partnership] introduced the risk of the wrong that befell [its client] and is thereby fairly and usefully charged "with its management and minimization".

[ 62 ] Binnie J. held that even though the rogue partner deliberately kept the partnership “in the dark” concerning his actions, there were policy reasons why the firm should be held liable – at paras. 107 and 108:

…It is not possible, in my view, to disentangle [the partner’s] wrongful act from the "ordinary business" of [the law firm] so as to hold that [the partner] was off "on a frolic of his own". In these circumstances the "twin objectives" of compensation of the wronged client and deterrence of faithless fiduciaries will generally be furthered by vicarious liability, e.g., by encouraging greater vigilance by other partners, even though in some cases (as here) it may be difficult to know what more the other partners ought to have done to keep [the partner] out of trouble.

If [the law firm] is called on to pay monies to [the client]on the basis of vicarious liability, [the law firm] will no doubt seek to claim indemnity from [the partner]. If, in the circumstances, the claim is allowed and the rogue partner can pay, the firm is protected. If the rogue partner cannot pay, the legislature has decided that there is no good reason why the loss or injury should be inflicted on the innocent client rather than on the partnership which put the rogue partner in a professional position to do what he or she did.

[ 63 ] Chief Justice McLachlin gave the dissenting judgment. She found that a breach of fiduciary duty had not been established. In her brief observations concerning the liability of the partnership for the acts of the rogue, she observed that the basis for the liability of the partnership was the Partnership Act and that the determination of whether an act was in the ordinary course of the firm’s business requires that one look at the nature of the activity and not the manner in which the activity is performed. As she observed, it is possible for a solicitor to commit a fraud or other wrong in the course of the firm’s practice: “It is the nature of the underlying transaction that is critical” (at para. 163).

[ 64 ] The decision in Strother dealt with an equitable wrong, but in my view, there is no reason to distinguish between an equitable wrong and a statutory wrong. Both are a “wrongful act or omission”. In the case of a statutory wrong, it will be necessary to examine the statute to determine whether vicarious liability is expressly or impliedly excluded. I will turn to that question shortly.

[ 65 ] WeirFoulds refers, however, to three authorities that it says run contrary to a theory of vicarious liability for statutory wrongs.

[ 66 ] The first is Nelson and Byron Price & Associates Ltd. , above, which was referred to by Lord Nicholls in Majrowski as a case in support of the proposition that the law of vicarious liability applies to statutory obligations unless the statute provides otherwise.

[ 67 ] In that case, the plaintiffs, who were members of a First Nation, made a complaint under the Human Rights Code , R.S.B.C. 1979, c. 186 , alleging that they had been unlawfully denied the right to occupy certain rental premises. The complaint was filed against the manager of the premises and the rental agent who was employed by the owner and who supervised the manager. The board of inquiry had found that the manager had “knowingly or with a wanton disregard” contravened the Code and was therefore liable for aggravated damages under the Code . It held that the rental agent was “vicariously liable” for the contravention.

[ 68 ] The Board of Inquiry’s findings of fact were somewhat confusing. It found that:

• the manager was employed by the owner of the premises and not by the rental agent;

• the rental agent was responsible for the administration of the premises and made the ultimate decision as to who should occupy the premises and gave directions to the manager;

• the manager contravened the statute “knowingly and with a wanton disregard” and was therefore liable for aggravated damages under the Code ;

• the manager was not an agent of the rental agent for any relevant purpose but that in her dealings with the plaintiffs, she was acting in the course and scope of her employment and that there was sufficient evidence to make the rental agent vicariously liable for the manager’s contravention of the Code.

[ 69 ] On appeal, a British Columbia Supreme Court Judge held that the rental agent was not vicariously liable. The plaintiffs appealed to the British Columbia Court of Appeal.

[ 70 ] The Court of Appeal found that there were certain parts of the decision of the Board that indicated that it had found that the manager was an employee of the rental agent. It dealt with the appeal on the basis that the issue was whether the rental agent, as employer, was vicariously liable for the contravention of the Code by the manager. It held, however, that since the award of aggravated damages could only be made against a “person who contravened this Act”, it applied only to the vicarious liability of the manager and not that of the rental agent.

[ 71 ] Craig J.A., with whom Bull J.A. agreed, concluded that although there are sound policy reasons for extending vicarious liability to statutory causes of action, the wording of the statute in question made it clear that there was no express or implied intention to make the employer liable for the discriminatory conduct of the employee. He stated, at para. 19:

If policy is the basis for the vicarious liability of a master at common law because of the culpable conduct of his servant, then, logically, it should be, also, the basis for statutory liability, subject, of course, to the intention of the Legislature as expressed under relevant legislation. It is not necessary, however, to resolve that problem in this particular case because, in my opinion, reading the words of the Statute in their context and in their ordinary and grammatical sense it cannot be said that the respondent is vicariously liable. If the Legislature had intended that an individual in the position of the respondent should be amenable to any of the orders which may be made under s. 17, it would have been a simple matter for the Legislature to have enacted words to the effect that any employer whose servant contravened the Act in the course of his employment would be deemed to have contravened the Act. The Legislature has not done so either expressly or impliedly.

[ 72 ] I do not regard this case as particularly strong authority for WeirFoulds, because the decision turns on the interpretation of the statute in question. Indeed, the first sentence of the above extract is consistent with the observations of Binnie J. in Strother and of Lord Nicholls in Majrowski.

[ 73 ] The second case relied upon by WeirFoulds is Robichaud v. Canada (Treasury Board) , 1987 73 (SCC) , [1987] 2 S.C.R. 84, [1987] S.C.J. No. 47. That case involved a complaint to the Canadian Human Rights Commission, alleging sexual harassment by the complainant’s supervisor at the Department of National Defence. The Review Tribunal had found that the Department was strictly liable for the actions of its supervisory personnel. The Federal Court of Appeal allowed the appeal of the Crown on the basis that the complaint was not sustainable against it.

[ 74 ] In Robichaud , the Supreme Court of Canada allowed the complainant’s appeal. It held that it was not necessary to analyze the issue by reference to theories of vicarious liability. The real purpose of the legislation was to eradicate discrimination and questions of motive or whether the person was acting in the course of their employment were not germane to giving effect to the goal of the legislation. Considering the purpose of the legislation as a whole and the scope of the remedies available, such as remedial measures that could only be instituted by the employer, it was clear that Parliament intended that the employer could be found liable for the acts of its employees in the course of their employment, interpreted in a broad sense. La Forest J., stated as follows at para. 17:

Hence, I would conclude that the statute contemplates the imposition of liability on employers for all acts of their employees "in the course of employment", interpreted in the purposive fashion outlined earlier as being in some way related or associated with the employment. It is unnecessary to attach any label to this type of liability; it is purely statutory. However, it serves a purpose somewhat similar to that of vicarious liability in tort, by placing responsibility for an organization on those who control it and are in a position to take effective remedial action to remove undesirable conditions. …

[ 75 ] WeirFoulds emphasizes the use of the words “it is purely statutory” to suggest that the vicarious liability of the employer can only be imposed by statute. I disagree. I do not regard the decision of the Supreme Court as excluding the possibility that there can be vicarious liability for statutory wrongs committed by an employee. I regard it as simply stating that in this particular case, considering the objects of the legislation and its particular provisions, it was unnecessary to engage in a vicarious liability analysis or to consider whether a conventional “course of employment” analysis was required.

[ 76 ] The third authority relied upon by WeirFoulds is R. v. Servacar Ltd. (1983), 1 O.A.C. 96, [1983] O.J. No. 190 (C.A.) , in which Dubin J.A., giving the judgment of the Court of Appeal for Ontario, stated at para. 10: “If liability is to be imposed on someone for the acts or omissions of others, then it is important that the statute clearly manifests such intention.” WeirFoulds relies upon this general statement in support of the proposition that s. 131(1)(a) should not be extended to a partnership of which the director is a member, because it contains no express statement to that effect.

[ 77 ] Servacar was a case in which a mechanic employed by a service station had inspected a vehicle and had issued a safety standards certificate certifying that the vehicle in question met the applicable equipment and performance standards. It was alleged that the vehicle did not meet those standards and both the mechanic and his employer were charged with an offence under the Highway Traffic Act, (now R.S.O. 1990, c. H.8 ), and were convicted.

[ 78 ] The Court of Appeal, in setting aside the conviction of the service station, held that the obligation of the service station was to ensure that the vehicle was inspected by a mechanic who found that the vehicle complied with the applicable standards. That had occurred. There was no vicarious liability under the statute if the mechanic failed to perform his duty.

[ 79 ] I do not regard this case as authority for the broad proposition asserted by WeirFoulds. In the first place, the statute in question, the Highway Traffic Act , is a penal statute and was quite properly strictly construed. As well, the Court of Appeal found that on the construction of the statute, no offence had been committed by the employer. In contrast, the Partnership Act evidences an unambiguous intent that a partnership should be liable for the acts of its partners in the course of the partnership’s business.

Statutory Interpretation

[ 80 ] I turn then to the second branch of WeirFoulds’ submission on the s. 131(1) issue, to the effect that, as a matter of statutory interpretation, s. 131 of the Securities Act does not make law firms responsible for the statutory liability of their partners or employees.

[ 81 ] I discussed s. 131 of the Securities Act in the original decision on certification: Allen v. Aspen Group Resources Corp. , above. The full text of the provision was attached as a schedule to my reasons. There is nothing in the express language of the section to indicate that the statutory liability is to extend to employers or partners of persons who were directors of the corporation or who signed a certificate in the Circular. On the other hand, there is nothing in the express language to indicate that the vicarious liability of partners, imposed pursuant to common law and codified by the Partnership Act , is to be excluded.

[ 82 ] It is well-settled that the modern rule of statutory interpretation requires that "the words of an Act ... be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament": Bell ExpressVu Limited Partnership v. Rex , 2002 SCC 42 , [2002] 2 S.C.R. 559 at para. 26 , citing Elmer A. Driedger, Construction of Statutes , 2d ed. (Toronto: Butterworths, 1983) at 87; Friends of Lansdowne Inc. v. Ottawa (City), 2012 ONCA 273 , [2012] O.J. No. 1860.

[ 83 ] The take-over bid rules contained in s. 131 of the Securities Act followed the Kimber Report ( The Report of the Attorney General’s Committee on Securities Legislation in Ontario (Toronto: Queen’s Printer, 1965)). The purpose of the legislation was to protect the interests of shareholders of the offeree by ensuring that they received adequate time, adequate information, and equal treatment from any bidder: see Jeffrey G. MacIntosh and Christopher C. Nicholls, Essentials of Canadian Securities Law (Toronto: Irwin Law, 2002) at 296. The requirement to deliver a circular is at the heart of the legislative scheme and is designed to ensure that all security holders of the offeree are equipped with the information necessary to make an informed decision on whether to tender in response to the bid. To ensure that the directors of the offeror exercise reasonable care to ensure that the circular is accurate, they are made personally liable for misrepresentations in the circular, subject to a defence of due diligence (s. 131(7)).

[ 84 ] It seems to me, therefore, that the purpose of s. 131 , and specifically that of s. 131(1) (a) giving a cause of action for misrepresentation against directors of offerors, is to ensure that directors exercise due diligence to ensure the accuracy of the circular and to provide a source of compensation to those who suffer loss as a result of the inaccuracy of the circular.

[ 85 ] WeirFoulds’ first submission on the statutory interpretation argument is that the plain meaning of s. 131(1)(a) creates a cause of action only against directors. It says nothing about those who employ the director or those who are in partnership with directors. In fact, under the pertinent legislation, only a natural personal can be a director – a partnership or corporation cannot be a director. In my view, this submission does not advance the inquiry. The issue is not whether WeirFoulds is or could be a director. It is whether WeirFoulds can be held accountable for the statutory liability of the partner who it placed at Aspen’s boardroom table.

[ 86 ] Moreover, WeirFoulds’ submission on this point is really the argument that was rejected by Lord Nicholl in Majrowski , in holding that that the ordinary rule of vicarious liability should apply unless the statute excludes it expressly or by implication. I would reject WeirFoulds’ submission for the reason expressed by Lord Nicholl at para. 16 of Majrowski and by Binnie J. at para. 102 of Strother , referred to above. The ordinary rule is that a partnership is liable for all wrongs committed by a partner acting with the authority of the partnership and in the ordinary course of its business. Clear statutory language is required to displace that rule.

[ 87 ] WeirFoulds’ second submission is that the liability under s. 131(1) (a) is personal to the director. This is another way of saying that the section does not expressly state that there can be vicarious liability for the acts of the director. WeirFoulds says that, unlike the Robichaud case, where effectuating the purpose of the legislation could only be accomplished if the employer was responsible for the acts of employees, there is nothing in the legislation in this case to suggest that the legislature intended to extend liability to those other than directors. It says that this is confirmed by the “due diligence” defence, which is necessarily personal in nature. Similarly, s. 131(5)(b) provides a defence if the director, on becoming aware of a misrepresentation in the circular, withdraws the consent and gives reasonable notice of and the reason for withdrawal. WeirFoulds says that these are personal defences and that extending liability under s. 131 to partnerships and others who do not have control of or access to the pertinent information would not further the purposes of the legislation.

[ 88 ] To say that the liability under s. 131(1) (a) is “personal” to the director is to state a conclusion rather than a reason. It seems to me that the case can be made that, although the legislation is silent on the point, the purpose of the legislation can best be accomplished by holding partnerships and corporations accountable for the actions of those they select to sit on corporate boards. This way, partnerships and corporations can ensure that their employees and partners are competent to fulfill the responsibilities of a board member. They can put in place appropriate standards and controls to make sure that the director exercises due diligence in the discharge of his or her responsibilities. The partnership, or the corporation that employs the director, obtains the benefit of fees earned by the director, and fairness suggests that it should be required to stand behind the director in the event shareholders suffer loss as a result of the director’s failure to exercise due diligence.

[ 89 ] WeirFoulds’ third submission is that the statute should be read as a whole and where the legislature has sought to impose liability under the Securities Act, it has done so expressly. It points in particular to s. 134, which imposes liability on persons in a “special relationship with a reporting issuer” who engage in trading with knowledge of material facts not generally disclosed or who engage in tipping. Persons in a “special relationship” are defined to include insiders, affiliates and “associates”, the latter being defined to include “any partner of that person or company” (see s. 1(1) and s. 76(5)). WeirFoulds submits that, applying the “legislative exclusion rule”, if the legislature had wanted to include partners within the scope of the s. 131 liability, it would have used the term “associate” to describe those liable: see University Health Network v. Ontario (Minister of Finance) (2001), 2001 8618 (ON CA) , 208 D.L.R. (4 th ) 459, [2001] O.J. No. 4485 at paras. 30-31 .

[ 90 ] I do not agree with this submission. The objectives of s. 134 are entirely different from those of s. 131. The scope of the definition of “associate” is extremely broad and includes a wide group of persons who would not have vicarious liability for the underlying acts.

[ 91 ] I might add here that the plaintiff relies on s. 131(11) of the Securities Act , which is titled “No derogation of rights” and which provides:

The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the security holders of the offeree issuer may have at law.

[ 92 ] The plaintiff notes that s. 131(11) would preserve other remedies of the plaintiff, such as a common law cause of action for misrepresentation or a statutory oppression remedy. He submits that the sub-section is an express preservation of the common law rule of liability of partnerships, as embodied in the Partnerships Act .

[ 93 ] In my view, as a matter of pure statutory interpretation, this submission fails. The sub-section refers to the statutory “right of action” being in addition to “any other right” the security holders may have at law. The issue is not whether there is another right of action available to the plaintiff at law, it is whether the statutory right of action conferred by s. 131 is exclusive or inclusive of other rights conferred by other legislation – in this case, the right to hold a partnership liable for the acts of one of its partners in the ordinary course of the business of the firm.

[ 94 ] The fourth submission of WeirFoulds is that s. 131 is intended to be a “complete code” governing claims based on misrepresentations in a take-over bid circular. It says that the provision is a “purely statutory cause of action” and that it is not appropriate to judicially expand it by imposing liability on parties who are not specifically mentioned in the statute. WeirFoulds relies, in part, on Dugal v. Manulife Financial Corp ., 2011 ONSC 1764 , [2011] O.J. No. 1240 at para. 9 , in which I described the sibling provision in s. 130 (dealing with prospectus misrepresentation) as “a purely statutory cause of action, it is a complete code governing such claims.” I found that it would not be appropriate to import the common law “special circumstances” doctrine to extend the limitation period expressed in the statute. I also held that even if I had jurisdiction to extend the limitation period, I would not do so in that case.

[ 95 ] Related to this submission is WeirFoulds’ argument that interpreting the Partnerships Act to impose liability on a partnership would create an absurdity, because while a partnership would be liable for the acts of its partner, it would not be liable for the acts of its employee, such as an associate lawyer sitting on the Board.

[ 96 ] Section 131 is a complete code, in that it imposes a statutory liability for misrepresentation in a circular, without regard to reliance by the security holder. That does not, however, preclude the possibility that liabilities imposed by other statutes cannot attach to those whose conduct is regulated by the code.

[ 97 ] As well, it seems to me entirely possible that the common law of vicarious liability could attach to WeirFoulds if it had inserted one of its associates into Aspen’s Board in the ordinary course of business and while billing for his or her work. I see no reason in principle why the law firm could not be held vicariously liable for the associate’s liability under s. 131 .

[ 98 ] WeirFoulds’ fifth and final submission is that the plaintiff’s position would set a “dangerous precedent”, because it would unduly expand the scope of liability under s. 131 . It would expose employers and partnerships to class action lawsuits based on the whole gamut of exposures under the Securities Act for take-over bids ( s. 131 ), prospectuses ( s. 130 ), offering memoranda ( s. 130.1 ) and the secondary market ( s. 138.3 ). It would result in them being fixed with knowledge obtained by the partner or employee in his or her capacity as a director. They say that expanding the statutory liability of directors to the firms in which they are partners would have a “chilling effect” on lawyers’ willingness to act as directors.

[ 99 ] I have set out earlier the reasons why, in my view, imposing liability on those who employ a director or who are in partnership with the director, is in keeping with the purpose of the Securities Act. It promotes the goals of compensation, loss distribution and risk management. Any other result would be unfair.

[ 100 ] Imposing liability on WeirFoulds also fulfills the purpose of the Partnership Act. This statute reflects the principle that those who are responsible for the activities of a partnership and who profit from these activities should be held accountable to persons who suffer wrongs committed in the conduct of the business.

[ 101 ] Egan sat on the Board of Aspen, because Aspen was a client of WeirFoulds. He was acting in the ordinary course of the business and as a partner of WeirFoulds when he sat at Aspen’s boardroom table and when he signed the Circular. WeirFoulds billed for his work and the proceeds of those billings were shared by the partnership. To hold that WeirFoulds is insulated from his liability would be inconsistent with the Partnerships Act and would not promote the objectives of the Securities Act

[ 102 ] Moreover, looking to the Partnership Act , the words “wrongful act or omission” in s. 11 are broad enough to include the statutory wrong of misrepresentation created by s. 131 of the Securities Act. In light of the decision in Strother to the effect that there can be liability for equitable wrongs as well as common law wrongs, I see no reason why s. 11 should not extend to statutory wrongs.

[ 103 ] I do not, therefore, accept the submission of WeirFoulds that this decision will deter lawyers from acting as directors. On the contrary, it would result in a sharing of the risk and responsibility between the lawyer and his or her law firm. This result accomplishes the goals of both the Securities Act and the Partnership Act . It provides greater protection for the public, results in higher standards and controls, and puts the risk on the party most able to control and insure it.

[ 104 ] I have decided, therefore, that the summary judgment motion under this head should be dismissed, without prejudice to the right of WeirFoulds to raise the issue at trial. As the action will proceed to trial under the common law duty of care issue in any event, the issue of WeirFoulds’ liability under s. 131(1) (a) should also be left to a trial judge. The issue is one of first impression; neither the Court of Appeal nor the Supreme Court of Canada has directly addressed the issue in Majrowski. The issue is important to the business world and to the legal profession. It should be decided on a full factual record.

Conclusion

[ 105 ] For the foregoing reasons, the summary judgment motions are dismissed, with costs. If not otherwise resolved, the parties may make written submissions as to costs, which shall be addressed to me care of Judges’ Administration. The submissions shall not exceed five pages in length, excluding the costs outline.

G.R. Strathy J.

Dated: June 18, 2012