Livent Inc. v. Deloitte & Touche et al., (2016) 342 O.A.C. 201 (CA)

• Judge: Strathy, C.J.O., Blair and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: January 08, 2016
• Jurisdiction: Ontario
• Citations: (2016), 342 O.A.C. 201 (CA);2016 ONCA 11

Livent Inc. v. Deloitte & Touche (2016), 342 O.A.C. 201 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. JA.005

Livent Inc. Through its Special Receiver and Manager Roman Doroniuk (plaintiff/respondent/appellant by cross-appeal) v. Deloitte & Touche and Deloitte & Touche LLP (defendants/ appellant / respondent by cross-appeal )

(C58659; 2016 ONCA 11)

Indexed As: Livent Inc. v. Deloitte & Touche et al.

Ontario Court of Appeal

Strathy, C.J.O., Blair and Lauwers, JJ.A.

January 8, 2016.

Summary:

Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions. In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets. Livent filed for insolvency protection in Canada and the United States and was placed in receivership. Deloitte & Touche was the auditor for Livent for the period 1989 to 1998. It issued clean audited financial statements throughout this period. Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover Drabinsky and Gottlieb's fraud.

The Ontario Superior Court, in a decision with neutral citation 2014 ONSC 2176, found that Deloitte was not negligent in respect of the pre-1996 audits. Although it was negligent in respect of the 1996 audit, its negligence caused no damage to Livent. However, Deloitte was liable for damages arising from negligence in 1997 and 1998. The court awarded Livent damages of $84,750,000 plus interest. Deloitte appealed, arguing that the trial judge made a number of legal errors. Livent cross-appealed, arguing that the trial judge erred in failing to hold Deloitte liable for negligence in respect of the 1996 audit and in reducing the damages award by 25% to account for "contingencies".

The Ontario Court of Appeal dismissed the appeal and the cross-appeal.

Actions - Topic 1704

Cause of action - Bars - Ex turpi causa non oritur actio - [See all Torts - Topic 6995 ].

Company Law - Topic 251

Nature of corporations - General - Distinct legal personality - [See Damages - Topic 201 ].

Company Law - Topic 9405

Actions by corporations - General - Authority for - [See Damages - Topic 201 ].

Company Law - Topic 9704

Actions against corporations and directors - Liability of company - Identification theory - The Ontario Court of Appeal reviewed the corporate identification doctrine and the rules of corporate attribution - See paragraphs 82 to 98.

Company Law - Topic 9704

Actions against corporations and directors - Liability of company - Identification theory - [See second and third Torts - Topic 6995 ].

Damages - Topic 101

General principles - Evidence and proof - General - [See Professional Occupations - Topic 1480 ].

Damages - Topic 201

Entitlement - Requirement of loss - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that the Livent was not claiming for its own losses, but rather the losses sustained by its creditors and investors that would be recoverable in insolvency proceedings - The Ontario Court of Appeal dismissed the appeal - The losses sustained were Livent's losses - Deloitte's argument impermissibly conflated damages sustained by a corporation with the distribution of those damages, once recovered, to creditors and other stakeholders as part of the corporation's assets - A corporation was a legal entity separate and apart from its shareholders and stakeholders - The corporation alone had the right to sue for wrongs done to it - See paragraphs 56 to 65.

Damages - Topic 528

Limits of compensatory damages - Remoteness - Torts - Foreseeability - [See third Professional Occupations - Topic 1468 ].

Estoppel - Topic 3

General principles - When available - [See Practice - Topic 44.9 ].

Practice - Topic 44.9

Actions - Commencement of - General principles - Bars - General - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that Livent's action was barred by releases and bar orders made by a U.S. court in approving the settlements of class actions brought on behalf of Livent's shareholders and noteholders - The Ontario Court of Appeal dismissed the appeal - First, the plaintiffs and causes of actions in the U.S. class action were entirely different from the present proceeding - Second, Deloitte's submission was contrary to Livent's plan of reorganization, which courts in Canada and the U.S. approved and to which Deloitte was deemed to have consented - That plan confirmed that Livent's assets included its claim against Deloitte - See paragraphs 164 to 173.

Professional Occupations - Topic 1463

Accountants - Negligence - Duty of care - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - He stated that "auditors owe a duty of care to the company for the benefit of the corporate collective, the shareholders" - Deloitte appealed, arguing that the trial judge extended an auditor's duty of care to its client to include economic responsibility for losses experienced by those standing behind it, and in so doing, raised the spectre of indeterminate liability - The Ontario Court of Appeal dismissed the appeal - Deloitte owed a duty of care to Livent to conduct audits in accordance with the applicable standard of care - The cause of action belonged to Livent and was not being advanced for the benefit of third-party stakeholders - There was no concern of indeterminate liability - See paragraphs 174 to 178.

Professional Occupations - Topic 1464

Accountants - Negligence - Standard of care - The Ontario Court of Appeal discussed the purpose of audits and the factors relevant to determining the standard of care applicable to an auditor in auditing a publicly traded company - See paragraphs 184 to 225.

Professional Occupations - Topic 1464

Accountants - Negligence - Standard of care - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that the trial judge erred in finding that it had breached the standard of care by failing to resign in 1997 when it suspected fraud or error - The Ontario Court of Appeal dismissed the appeal - The evidence that Deloitte was negligent was "overwhelming" - Deloitte knew that Drabinsky and Gottlieb were aggressive entrepreneurs who pushed the envelope in terms of accounting and financial measures - There was or should have been a complete breakdown in the relationship between Deloitte and Livent in 1997, which should have led Deloitte to resign - There were a number of red flags that should have heightened Deloitte's awareness of the need to apply an objective attitude of professional skepticism - Instead, Deloitte turned a blind eye - See paragraphs 227 to 303.

Professional Occupations - Topic 1468

Accountants - Negligence - Audit - General - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that the trial judge erred by failing to apply the "but for" test properly, as he did not expressly consider what would have happened if Deloitte had complied with the standard of care and resigned in 1997 - The Ontario Court of Appeal dismissed the appeal - The trial judge found that Deloitte's resignation and subsequent disclosure to the regulator or successor auditor would have ended Livent's access to the capital markets - A careful and objective investigation into Livent's financial statements, pursued with an attitude of professional skepticism, would have revealed the fraud - See paragraphs 311 to 322.

Professional Occupations - Topic 1468

Accountants - Negligence - Audit - General - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that an auditor's negligence in permitting a corporation to continue operating a money-losing business might create the opportunity for losses to continue or accumulate, but was not the proximate cause of those losses, which continued to be attributable to the decisions of management - The Ontario Court of Appeal dismissed the appeal - There were circumstances where an auditor's knowledge and the factual matrix could establish the necessary causal nexus between the auditor's breach and the client's losses - It was reasonably foreseeable that Livent would incur increased liabilities as a result of its continuing resort to capital market offerings through the use of financial statements founded on fraud or other material misstatements that Deloitte, in the reasonable exercise of its duties, should have discovered - See paragraphs 329 to 356.

Professional Occupations - Topic 1468

Accountants - Negligence - Audit - General - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - On appeal, both parties took issue with the trial judge's "contingencies" analysis, which was a reference to the "vagaries" or money-losing nature of Livent's business - The Ontario Court of Appeal held that Deloitte was only responsible for those losses that were reasonably foreseeable as a result of its negligence - There was no reason to interfere with the trial judge's conclusion that there should be a 25% reduction to reflect the fact that certain losses were attributable to Deloitte's negligence while others were generated by Livent's unprofitable but legitimate business - See paragraphs 358 to 377.

Professional Occupations - Topic 1468

Accountants - Negligence - Audit - General - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found that Deloitte was negligent in respect of the 1996 audit, but that its negligence caused no damage to Livent because even if Deloitte had discovered the misstatements, it would not have revealed instances of fraud or other irregularities sufficient to close Livent down - Livent challenged this finding on a cross-appeal - The Ontario Court of Appeal dismissed the cross-appeal - There was no need for a plaintiff to prove that an auditor should have discovered fraud as a threshold for establishing liability and damages - However, the trial judge did not impose fraud as a precondition for liability in this case - He was alive to the potential impact of other intentional misstatements apart from fraud - The trial judge found that discovery of the misstatements would not have resulted in Deloitte's failing to give a clean audit opinion in 1996 - His findings were grounded in the evidence - See paragraphs 402 to 438.

Professional Occupations - Topic 1468

Accountants - Negligence - Audit - General - [See both Professional Occupations - Topic 1464 ].

Professional Occupations - Topic 1480

Accountants - Negligence - Measure of damages - A client sued an auditor in negligence - The trial judge found the auditor liable - In assessing the client's damages, the trial judge found that neither of the experts' approaches was "unassailable" or could be accepted without modification - He effectively split the difference because he was "at a loss to settle upon a principled approach for preferring one set of numbers over another" - The client was awarded damages of $84,750,000 plus interest - The auditor appealed, arguing that it was not open to the trial judge to take an unprincipled approach to fixing the quantum of damages by simply choosing the mid-point between the experts' numbers - The Ontario Court of Appeal dismissed the appeal - Trial judges were obliged to do the best they could on the evidence, short of failing to analyze the evidence at all or simply guessing - The trial judge engaged in a lengthy consideration and analysis of both experts' evidence and their respective approaches - He concluded that neither approach could be accepted without modification - It did not follow that he was required to assess damages at zero - See paragraphs 386 to 389.

Professional Occupations - Topic 1586

Accountants - Duty to client - Auditing financial statements - [See Professional Occupations - Topic 1463 ].

Torts - Topic 49

Negligence - Standard of care - Particular persons and relationships - Accountants - [See both Professional Occupations - Topic 1464 ].

Torts - Topic 54

Negligence - Causation - Test for (incl. "but for" test and "material contribution" test) - [See first Professional Occupations - Topic 1468 ].

Torts - Topic 60

Negligence - Causation - Foreseeability - [See second and third Professional Occupations - Topic 1468 ].

Torts - Topic 61

Negligence - Causation - Causal connection - [See second and fourth Professional Occupations - Topic 1468 ].

Torts - Topic 6602

Defences - Contributory negligence - Application of contributory negligence statutes - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that Livent was contributorily negligent and the trial judge was required to apportion damages pursuant to s. 3 of the Negligence Act - The Ontario Court of Appeal dismissed the appeal - The fraudulent acts of Drabinsky and Gottlieb were not attributable to Livent - In the absence of attribution, the requirements of the Negligence Act were not met - Deloitte's failure to take third-party proceedings for contribution against the fraudsters and others worked against its unfairness argument - See paragraphs 392 to 397.

Torts - Topic 6995

Defences - Particular defences - Ex turpi causa non oritur actio - The Ontario Court of Appeal reviewed the jurisprudence respecting the doctrine of ex turpi causa - The court concluded that the doctrine was strictly limited in Canada and would "apply only where allowing a plaintiff's claim would introduce inconsistency into the fabric of the law - by 'giving with one hand what it takes away with the other' ..." - See paragraphs 71 to 80.

Torts - Topic 6995

Defences - Particular defences - Ex turpi causa non oritur actio - The Ontario Court of Appeal reviewed the jurisprudence dealing with the use of the corporate identification doctrine to apply the ex turpi causa defence - See paragraphs 112 to 147.

Torts - Topic 6995

Defences - Particular defences - Ex turpi causa non oritur actio - Drabinsky and Gottlieb created Livent Inc., a developer of high-profile stage productions - In 1998, new management discovered that Drabinsky and Gottlieb had been fraudulently manipulating the company's financial books and records in order to inflate earnings and profitability so that they could attract millions of dollars through the capital markets - Livent filed for insolvency protection and was placed in receivership - Deloitte & Touche was the auditor for Livent for the period 1989 to 1998 - It issued clean audited financial statements throughout this period - Livent, through a special receiver, sued Deloitte for damages in contract and negligence arising out of Deloitte's failure to follow generally accepted auditing standards and thereby discover the fraud - The trial judge found Deloitte liable for negligence in 1997 and 1998 and awarded Livent damages of $84,750,000 plus interest - Deloitte appealed, arguing that the corporate identification doctrine should be used to attribute the frauds of Drabinsky and Gottlieb to Livent, thus allowing Deloitte to rely on the ex turpi causa defence - The Ontario Court of Appeal dismissed the appeal - The policy underlying the ex turpi causa doctrine was to maintain the integrity of the justice system by preventing a wrongdoer from profiting from his or her wrongdoing or evading a criminal sanction - Even if Drabinsky and Gottlieb's acts were attributed to Livent, there was no basis for invoking the ex turpi causa defence because it was not required to maintain the integrity of the justice system - Drabinsky and Gottlieb would not profit from their wrongdoing and had not evaded criminal sanction - Livent had suffered a loss and would not profit from the wrongdoing - Further, applying these doctrines would be inconsistent with the contract between Livent and Deloitte, and would risk undermining the value of the public audit process - See paragraphs 149 to 163.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 54].

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1; 2005 SCC 25, refd to. [para. 54].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, consd. [para. 57].

Holman v. Johnson (1775), 98 E.R. 1120, refd to. [para. 71].

Hall v. Hebert, [1993] 2 S.C.R. 159; 152 N.R. 321; 26 B.C.A.C. 161; 44 W.A.C. 161, refd to. [para. 72].

British Columbia v. Zastowny - see X v. R.D.M.

X v. R.D.M., [2008] 1 S.C.R. 27; 370 N.R. 365; 250 B.C.A.C. 3; 416 W.A.C. 3; 2008 SCC 4, refd to. [para. 72].

Meridian Global Funds Management Asia Ltd. v. Securities Commission, [1995] 2 A.C. 500 (P.C.), agreed with [para. 83].

Lennard's Carrying Co. v. Asiatic Petroleum Co., [1915] A.C. 705 (H.L.), refd to. [para. 87].

R. v. Canadian Dredge & Dock Co. et al., [1985] 1 S.C.R. 662; 59 N.R. 241; 9 O.A.C. 321, consd. [para. 91].

Standard Investments Ltd. et al. v. Canadian Imperial Bank of Commerce (1985), 11 O.A.C. 318; 52 O.R.(2d) 473 (C.A.), leave to appeal refused (1986), 65 N.R. 78; 15 O.A.C. 237 (S.C.C.), consd. [para. 100].

373409 Alberta Ltd. et al. v. Bank of Montreal et al., [2002] 4 S.C.R. 312; 296 N.R. 244; 317 A.R. 349; 284 W.A.C. 349; 2002 SCC 81, consd. [para. 104].

Hart Building Supplies Ltd. v. Deloitte & Touche et al., [2004] B.C.T.C. 55; 41 C.C.L.T.(3d) 240; 2004 BCSC 55, not folld. [para. 117].

Moore Stephens v. Stone Rolls Ltd., [2009] A.C. 1391; 396 N.R. 203; [2009] UKHL 39, dist. [para. 126].

Madoff Securities International Ltd. v. Raven & Ors, [2013] EWHC 3147 (Comm.), refd to. [para. 137].

Jetivia SA v. Bilta (U.K.) Ltd. (in liquidation), [2015] 2 W.L.R. 1168; 2015 UKSC 23, consd. [para. 137].

In re King, [1963] Ch. 459 (C.A.), refd to. [para. 137].

Ultramares Corp. v. Touche (1932), 174 N.E. 441 (N.Y.C.A.), refd to. [para. 175].

Caparo Industries plc v. Dickman, [1990] 1 All E.R. 568 (H.L.), refd to. [para. 175].

Haig v. Bamford et al., [1977] 1 S.C.R. 466; 9 N.R. 43, refd to. [para. 175].

In re London and General Bank (No. 2), [1895] 2 Ch. 673 (Eng. C.A.), refd to. [para. 185].

Fomento (Sterling Area) Ltd. v. Selsdon Fountain Pen Co. Ltd., [1958] 1 All E.R. 11 (H.L.), refd to. [para. 185].

Pacific Acceptance Corp. v. Forsyth (1970), 92 W.N.(N.S.W.) 29 (S.C.), refd to. [para. 185].

Roman Corp. Ltd. v. Peat Marwick Thorne (1993), 11 O.R. (3d) 248 (Gen. Div.), refd to. [para. 185].

Capital Community Credit Union Ltd. v. BDO Dunwoody, [2000] O.T.C. 25; 4 B.L.R.(3d) 1 (Sup. Ct.), affd. (2001), 151 O.A.C. 32 (C.A.), refd to. [para. 185].

In re Kingston Cotton Mill Co. (No. 2), [1896] 2 Ch. 279 (Eng. C.A.), refd to. [para. 189].

MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd., [1990] 3 S.C.R. 1235; 121 N.R. 1; 70 Man.R.(2d) 241, refd to. [para. 199].

Bloor Italian Gifts Ltd. et al. v. Dixon et al. (2000), 133 O.A.C. 338; 48 O.R.(3d) 760 (C.A.), refd to. [para. 200].

Sherman v. Orenstein & Partners et al. (2005), 205 O.A.C. 75; 11 B.L.R.(4th) 233 (C.A.), refd to. [para. 200].

Revelstoke Credit Union v. Miller & Berry, [1984] 2 W.W.R. 297 (B.C.S.C.), refd to. [para. 214].

Pineridge Capital Group Inc. v. Dunwoody & Co. et al. (1999), 1 B.C.T.C. 270; 1999 CanLII 5925 (S.C.), refd to. [para. 215].

Sydney Co-operative Society Ltd. v. Coopers & Lybrand (2002), 213 N.S.R.(2d) 115; 667 A.P.R. 115; 2003 NSSC 35, refd to. [para. 215].

Dairy Containers Ltd. v. NZI Bank Ltd., [1995] 2 N.Z.L.R. 30 (H.C.), refd to. [para. 216].

Clements v. Clements, [2012] 2 S.C.R. 181; 431 N.R. 198; 331 B.C.A.C. 1; 565 W.A.C. 1; 2012 SCC 32, refd to. [para. 311].

Athey v. Leonati et al., [1996] 3 S.C.R. 458; 203 N.R. 36; 81 B.C.A.C. 243; 132 W.A.C. 243, refd to. [para. 312].

Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114; 375 N.R. 81; 238 O.A.C. 130; 2008 SCC 27, refd to. [para. 324].

Galoo Ltd. v. Bright Grahame Murray, [1995] 1 All E.R. 16 (C.A.), not folld. [para. 325].

Sasea Finance Ltd. (in liquidation) v. KPMG, [2000] 1 All E.R. 676 (C.A.), refd to. [para. 325].

In re CitX Corp. (2006), 448 F.3d 672 (3d Cir.), refd to. [para. 331].

In re Parmalat Securities Litigation (2007), 501 F.Supp.2d 560 (N.Y. Dist. Ct.), refd to. [para. 331].

Official Committee of Unsecured Creditors v. R.F. Lafferty & Co. (2001), 267 F.3d 340 (3d Cir.), refd to. [para. 331].

Bloor v. Dansker (In re Investors Funding Corp. of New York Securities Litigation) (1980), 523 F.Supp. 533 (N.Y. Dist. Ct.), refd to. [para. 336].

Schacht v. Brown (1983), 711 F.2d 1343 (7th Cir.), refd to. [para. 336].

Thabault v. Chait (2008), F.3d 512 (3d Cir.), refd to. [para. 336].

Alexander v. Cambridge Credit Corp. Ltd. (1987), 9 N.S.W.L.R. 310, refd to. [para. 343].

Temseel Holdings Ltd. v. Beaumonts, [2002] EWHC 2642 (Comm.), refd to. [para. 348].

Murano v. Bank of Montreal (1995), 20 B.L.R.(2d) 61 (Ont. Gen. Div.), revd. (1998), 111 O.A.C. 242; 41 O.R.(3d) 222 (C.A.), refd to. [para. 388].

Danecker v. Danecker, [2014] O.A.C. Uned. 221; 2014 ONCA 239, refd to. [para. 389].

Statutes Noticed:

Negligence Act, R.S.O. 1990, c. N-1, sect. 3 [para. 393].

Counsel:

Peter Griffin, Jamie Spotswood and Matthew Fleming, for the appellant/respondent by cross-appeal;

Peter F.C. Howard, Patrick O'Kelly, Aaron Kreaden and David Spence, for the respondent/appellant by cross-appeal.

This appeal and cross-appeal were heard on March 23-26, 2015, before Strathy, C.J.O., Blair and Lauwers, JJ.A., of the Ontario Court of Appeal. Blair, J.A., delivered the following judgment for the court on January 8, 2016.