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Business law trends and developments Legal Post is watching in 2016

Deloitte has been ordered to pay Livent's receiver $118 million in a negligence suit

The year has started with a legal bang: the Ontario Court of Appeal’s blockbuster decision upholding the trial judgment in Livent v. Deloitte. That begs the immediate question of whether the accounting firm will this year seek to take the case to the Supreme Court of Canada. But that’s not the only thing Legal Post is looking for in 2016.

Will the Livent v. Deloitte saga continue?

Last week the Ontario Court of Appeal upheld a trial ruling that orders Deloitte pay $118 million in damages and interest to what’s left of Livent. The receiver in Livent sued Deloitte, claiming the auditing firm should have caught the frauds that ultimately resulted in the company’s 1998 filing for bankruptcy protection and the 2009 criminal convictions for the company’s founders Garth Drabinsky and Myron Gottlieb.

Deloitte has fought back, first defending itself at the trial and then arguing the appeal that resulted in last week’s decision. Deloitte says it’s still reviewing the Court of Appeal decision. But it would be little surprise if Deloitte seeks leave to appeal the case to the Supreme Court of Canada, and not just because of the dollars at stake.

Canadian case law says corporate auditors are liable only to the corporations that hire them, and not the company’s investors. The Deloitte case is quirky. Livent’s receiver is directing this case, so it technically is a situation of the company suing its auditors. That said, it’s the creditors who will ultimately benefit from a recovery.

If Deloitte obtains leave to appeal, it opens the door for the Supreme Court to reconsider the relationship between auditors and investors.

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