Indexed As: Canadian Imperial Bank of Commerce et al. v. Deloitte & Touche et al.

Transcription

1 Canadian Imperial Bank of Commerce, High River Limited Partnership, Philip Services Corp. by its receiver and manager, Robert Cumming (plaintiffs/appellants) v. Deloitte & Touche, Deloitte & Touche LLP, Deloitte Touche Tohmatsu, Deloitte Touche Tohmatsu LLP, and Deloitte Touche Tohmatsu f/k/a/ Deloitte Touche Tohmatsu International (defendants/respondents) (C56940; 2014 ONCA 89) Indexed As: Canadian Imperial Bank of Commerce et al. v. Deloitte & Touche et al. Ontario Court of Appeal Doherty, Goudge and Lauwers, JJ.A. February 3, Summary: The plaintiffs brought an action, alleging that the defendant, Deloitte & Touche (Deloitte) was negligent in preparing the 1995 and 1996 annual statements of Philip Services Corp. (Philip). In 1998, the Institute of Chartered Accountants of Ontario commenced an investigation into Deloitte's audit of Philip for the years 1995 and In 2007, the Institute brought charges against Woodsford, the senior partner at Deloitte responsible for the 1995 and 1996 audits. In 2008, Woodsford was found guilty of professional misconduct. The discipline proceedings were conducted under the auspices of the Chartered Accountants Act (CAA), The CAA, 2010, came into force almost a year after the discipline committee had released its reasons for finding Woodsford guilty of professional misconduct. During the discoveries of Deloitte, the plaintiffs asked questions about the information provided to and generated by the Institute in the discipline proceedings against Woodsford. The defendants refused to answer the questions. The plaintiffs moved to compel answers. The Ontario Superior Court, in a decision reported at [2013] O.T.C. Uned. 917, determined the issues. The plaintiffs moved to amend their statement of claim to set out a history of the discipline proceedings and the findings made against Woodsford (new paragraphs 90 to 100). Deloitte brought a cross-motion for an order declaring that the new paragraphs were prohibited by s. 61 of the CAA, Deloitte also sought a declaration that no evidence, document, record or other information created, used or made in connection with a proceeding against Woodsford before the Institute, including the Institute's discipline decision, was admissible in the civil proceeding by virtue of s. 61 of the CAA, The Ontario Superior Court, in a decision reported at [2013] O.T.C. Uned. 2166, dismissed the plaintiffs' motion and granted Deloitte's motion but only insofar as the court declared that the proposed new paragraphs to the statement of claim were prohibited by s. 61 of the CAA, The court dismissed the balance of Deloitte's motion as premature but without prejudice to either party objecting at a hearing or trial of this action that evidence tendered by a party was not admissible because of s. 61 of the CAA, The plaintiffs appealed. The Ontario Court of Appeal allowed the appeal and granted the plaintiffs leave to amend their statement of claim.

2 [See Statutes - Topic 501, Statutes - Topic 1450, Statutes - Topic 6703 and Statutes - Topic 6708]. Statutes - Topic 501 Interpretation - General principles - Purpose of legislation - Duty to promote object of statute - Section 61 of the Chartered Accountants Act, 2010 (CAA, 2010), rendered material relating to professional discipline proceedings involving the Institute of Chartered Accountants of Ontario inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the Chartered Accountants Act, 1956 (CAA, 1956), the predecessor legislation to the CAA, The motion judge held that interpreting s. 61 as applying only to proceedings under the CAA, 2010, would produce an absurd result in that it would defeat the purpose of the enactment which was to keep the discipline proceedings separate from subsequent civil proceedings - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that the purpose of s. 61 was the creation of an evidentiary barrier preventing the use of material relating to a "proceeding under this Act" in civil proceedings - The plain meaning of s. 61 distinguished, for the purposes of the operation of the exclusionary rule created by s. 61, between proceedings under the CAA, 2010, and proceedings under the CAA, Material relating to the former were inadmissible in civil proceedings, while identical material, if it related to proceedings under the latter, was admissible - This distinction was not arbitrary, but was consistent with the rationale underlying the purpose of s See paragraphs 34 to 45. Statutes - Topic 1450 Interpretation - Construction where meaning is not plain - Aids or methods to determine meaning - Legislative history - Reference to prior versions or amendments - Section 61 of the Chartered Accountants Act, 2010 (CAA, 2010), rendered material relating to professional discipline proceedings involving the Institute of Chartered Accountants of Ontario inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the Chartered Accountants Act, 1956 (CAA, 1956), the predecessor legislation to the CAA, The motion judge held that the express reference to the CAA, 1956, in other sections of the CAA, 2010, was no reason for "inferring that the 1956 Act was deliberately excluded from the scope of s. 61" - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that the reference to the CAA, 1956, in the other sections of the CAA, 2010, did not assist in answering the statutory interpretation question raised here - More precisely, it did not help the defendants' contention that the plain meaning of s. 61 had to

3 be abandoned in favour of a meaning that included material relating to the CAA, See paragraphs 46 to 48. Statutes - Topic 6703 Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - What constitutes retrospective or retroactive operation - The plaintiffs brought an action, alleging that the defendant, Deloitte & Touche (Deloitte) was negligent in preparing the 1995 and 1996 annual statements of Philip Services Corp. (Philip) - The claim alleged that Deloitte's negligence caused significant financial loss to Philip and various lenders, who advanced funds on the strength of those audited financial statements - In 1998, the Institute of Chartered Accountants of Ontario commenced an investigation into Deloitte's audit of Philip for the years 1995 and In 2007, the Institute brought charges against Woodsford, the senior partner at Deloitte responsible for the 1995 and 1996 audits - In 2008, Woodsford was found guilty of professional misconduct - The discipline proceedings were conducted under the auspices of the Chartered Accountants Act (CAA), The CAA, 2010, came into force almost a year after the discipline committee had released its reasons for finding Woodsford guilty of professional misconduct - The plaintiffs moved to amend their statement of claim to set out a history of the discipline proceedings and the findings made against Woodsford (new paragraphs 90 to 100) - Deloitte brought a cross-motion for an order declaring that the new paragraphs were prohibited by s. 61 of the CAA, Section 61 rendered material relating to professional discipline proceedings involving the Institute inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the CAA, The motion judge held that the length of time that both the discipline proceedings against Woodsford and this action had taken made this case a "rarity" - Section 61 had to be interpreted with regard to the unforeseen circumstances presented by a rare case like this one - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that there was nothing unusual in the circumstances of this case that was relevant to the interpretation of s The lengthy period of time that had passed since the relevant events occurred and the length of time this action had been ongoing were irrelevant to the proper interpretation of s The interpretative question that arose here would arise in any case where a party sought to introduce documents relating to proceedings under CAA, 1956 in a civil proceeding, regardless of when that proceeding was commenced, or when the relevant events occurred - See paragraphs 49 to 52. Statutes - Topic 6708 Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Procedural and substantive matters defined - Section 61 of the Chartered Accountants Act, 2010 (CAA, 2010), rendered material relating to professional discipline proceedings involving the Institute of Chartered Accountants of Ontario inadmissible in most civil proceedings - The motion judge held that while s. 61 applied

4 only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the Chartered Accountants Act, 1956 (CAA, 1956), the predecessor legislation to the CAA, The motion judge held that s. 61 was a purely procedural provision and, by virtue of the common law principles of statutory interpretation and s. 52 of Legislation Act, 2006, the section should be interpreted retrospectively - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that s. 61 was an evidentiary provision, part of procedural law, and the presumption of immediate application applied - However, the presumption did not have any bearing on the interpretation of the phrase "a proceeding under this Act" in s The presumption spoke only to the proceedings in which the evidentiary rule created by s. 61 would apply - By virtue of the presumption, the exclusionary rule created by s. 61 applied to all civil proceedings (except those specifically exempted) regardless of whether the civil proceeding commenced before or after the enactment of the CAA, The presumption of immediate application, however, had no role to play in determining the scope of the exclusionary rule created by s. 61 or, more specifically, the meaning of the phrase "a proceeding under this Act" - See paragraphs 16 to 33. Cases Noticed: Forget v. Sutherland (2000), 134 O.A.C. 117; 188 D.L.R.(4th) 296 (C.A.), refd to. [para. 10]. Schaeffer et al. v. Wood et al., [2013] N.R. TBEd. DE.014; [2013] O.A.C. TBEd. DE.027; 2013 SCC 71, refd to. [para. 14]. Reference Re Broadcasting Act, [2012] 3 S.C.R. 489; 437 N.R. 124; 2012 SCC 68, refd to. [para. 14]. R. v. Hajivasilis (I.) (2013), 302 O.A.C. 65; 114 O.R.(3d) 337; 2013 ONCA 27, refd to. [para. 14]. R. v. Dineley (S.), [2012] 3 S.C.R. 272; 436 N.R. 59; 297 O.A.C. 50; 2012 SCC 58, refd to. [para. 24]. R. v. Wildman, [1984] 2 S.C.R. 311; 55 N.R. 27; 5 O.A.C. 241, refd to. [para. 25]. R. v. E.(A.W.) - see R. v. Endicott. R. v. Endicott, [1993] 3 S.C.R. 155; 156 N.R. 321; 141 A.R. 353; 46 W.A.C. 353, refd to. [para. 25]. R. v. Bickford (1989), 34 O.A.C. 34; 51 C.C.C.(3d) 181 (C.A.), refd to. [para. 25]. Penner v. Niagara Regional Police Services Board et al. (2013), 442 N.R. 140; 304 O.A.C. 106; 2013 SCC 19, consd. [para. 26]. Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 34]. Statutes Noticed: Chartered Accountants Act, S.O. 2010, c. 6, sect. 61 [para. 1]. Authors and Works Noticed: Sullivan, Ruth L., Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 304 to 306

5 [para. 34]; 696 to 698 [para. 24]. Counsel: Thomas J. Dunne, Q.C., John Callaghan and Joe Thorne, for the plaintiffs/appellants, Canadian Imperial Bank of Commerce et al.; Robb C. Heintzman, Michael Schafler and Mark Evans, for the defendants/respondents, Deloitte & Touche et al.; Brian P. Bellmore and Paul F. Farley, for the intervener, the Institute of Chartered Accountants of Ontario. This appeal was heard on November 8, 2013, by Doherty, Goudge and Lauwers, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Doherty, J.A., on February 3, Editor: Anick Ouellette-Levesque Appeal allowed. Section 61 of the Chartered Accountants Act, 2010 (CAA, 2010), rendered material relating to professional discipline proceedings involving the Institute of Chartered Accountants of Ontario inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the Chartered Accountants Act, 1956 (CAA, 1956), the predecessor legislation to the CAA, The motion judge held that interpreting s. 61 as applying only to proceedings under the CAA, 2010, would produce an absurd result in that it would defeat the purpose of the enactment which was to keep the discipline proceedings separate from subsequent civil proceedings - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that the purpose of s. 61 was the creation of an evidentiary barrier preventing the use of material relating to a "proceeding under this Act" in civil proceedings - The plain meaning of s. 61 distinguished, for the purposes of the operation of the exclusionary rule created by s. 61, between proceedings under the CAA, 2010, and proceedings under the CAA, Material relating to the former were inadmissible in civil proceedings, while identical material, if it related to proceedings under the latter, was admissible - This distinction was not arbitrary, but was consistent with the rationale underlying the purpose of s See paragraphs 34 to 45.

6 Reference to prior versions or amendments - Section 61 of the Chartered Accountants Act, 2010 (CAA, 2010), rendered material relating to professional discipline proceedings involving the Institute of Chartered Accountants of Ontario inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the Chartered Accountants Act, 1956 (CAA, 1956), the predecessor legislation to the CAA, The motion judge held that the express reference to the CAA, 1956, in other sections of the CAA, 2010, was no reason for "inferring that the 1956 Act was deliberately excluded from the scope of s. 61" - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that the reference to the CAA, 1956, in the other sections of the CAA, 2010, did not assist in answering the statutory interpretation question raised here - More precisely, it did not help the defendants' contention that the plain meaning of s. 61 had to be abandoned in favour of a meaning that included material relating to the CAA, See paragraphs 46 to 48. The plaintiffs brought an action, alleging that the defendant, Deloitte & Touche (Deloitte) was negligent in preparing the 1995 and 1996 annual statements of Philip Services Corp. (Philip) - The claim alleged that Deloitte's negligence caused significant financial loss to Philip and various lenders, who advanced funds on the strength of those audited financial statements - In 1998, the Institute of Chartered Accountants of Ontario commenced an investigation into Deloitte's audit of Philip for the years 1995 and In 2007, the Institute brought charges against Woodsford, the senior partner at Deloitte responsible for the 1995 and 1996 audits - In 2008, Woodsford was found guilty of professional misconduct - The discipline proceedings were conducted under the auspices of the Chartered Accountants Act (CAA), The CAA, 2010, came into force almost a year after the discipline committee had released its reasons for finding Woodsford guilty of professional misconduct - The plaintiffs moved to amend their statement of claim to set out a history of the discipline proceedings and the findings made against Woodsford (new paragraphs 90 to 100) - Deloitte brought a cross-motion for an order declaring that the new paragraphs were prohibited by s. 61 of the CAA, Section 61 rendered material relating to professional discipline proceedings involving the Institute inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the CAA, The motion judge held that the length of time that both the discipline proceedings against Woodsford and this action had taken made this case a "rarity" - Section 61 had to be interpreted with regard to the unforeseen circumstances presented by a rare case like this one - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that there was nothing unusual in the

7 circumstances of this case that was relevant to the interpretation of s The lengthy period of time that had passed since the relevant events occurred and the length of time this action had been ongoing were irrelevant to the proper interpretation of s The interpretative question that arose here would arise in any case where a party sought to introduce documents relating to proceedings under CAA, 1956 in a civil proceeding, regardless of when that proceeding was commenced, or when the relevant events occurred - See paragraphs 49 to 52. Section 61 of the Chartered Accountants Act, 2010 (CAA, 2010), rendered material relating to professional discipline proceedings involving the Institute of Chartered Accountants of Ontario inadmissible in most civil proceedings - The motion judge held that while s. 61 applied only to material relating to proceedings under the CAA, 2010, properly interpreted, s. 61 reached material relating to discipline proceedings conducted under the Chartered Accountants Act, 1956 (CAA, 1956), the predecessor legislation to the CAA, The motion judge held that s. 61 was a purely procedural provision and, by virtue of the common law principles of statutory interpretation and s. 52 of Legislation Act, 2006, the section should be interpreted retrospectively - This appeal turned on the proper interpretation of s. 61 of the CAA, The statutory interpretation question came down to: "do the factors identified by the motion judge justify departing from the plain meaning of the words 'a proceeding under this Act' in s. 61?" - The Ontario Court of Appeal held that s. 61 was an evidentiary provision, part of procedural law, and the presumption of immediate application applied - However, the presumption did not have any bearing on the interpretation of the phrase "a proceeding under this Act" in s The presumption spoke only to the proceedings in which the evidentiary rule created by s. 61 would apply - By virtue of the presumption, the exclusionary rule created by s. 61 applied to all civil proceedings (except those specifically exempted) regardless of whether the civil proceeding commenced before or after the enactment of the CAA, The presumption of immediate application, however, had no role to play in determining the scope of the exclusionary rule created by s. 61 or, more specifically, the meaning of the phrase "a proceeding under this Act" - See paragraphs 16 to 33.