A grab bag of fraud, human rights and contract disputes

Written By Ranjan Agarwal and Ethan Schiff

The Supreme Court of Canada’s Winter Term begins on January 11. The most notable case on the docket is Deloitte & Touche v Livent Inc. In 2014, Ontario trial judge Justice Gans awarded Livent's receiver $118 million in damages for Deloitte's negligence in its work as the company's auditor. The Court of Appeal upheld the decision. The case has been closely watched because Canadian investors had found it difficult to sue auditors after the Supreme Court's 1997 ruling in Hercules Management. We will see if the Supreme Court is prepared to revisit Hercules and lower the bar for auditor's negligence claims.

Other scheduled hearings that may interest the business community are described below:

• The Court will consider the validity of an unlimited renewal clause giving only one party the power to terminate. In Uniprix Inc v Gestion, the appellants terminated an agreement where the contract did not include any provisions for termination by the appellants. The Quebec Court of Appeal held that perpetual agreements are lawful in Quebec.
• The Court will consider necessary evidence to establish psychological damage in Saadati v Moorhead. Mr. Saadati was unable to testify at the trial. The trial judge relied on testimony by the plaintiff’s family and friends to establish psychological injury. The British Columbia Court of Appeal overturned the decision, holding that a party must show a recognizable psychiatric or psychological condition.
• Peers v Alberta Securities Commission and Aitkens v Alberta Securities Commission will be heard together. The Court will consider whether a defendant to prosecution by the Alberta Securities Commission may be entitled to a trial by jury. Section 11(f) of the Canadian Charter of Rights and Freedoms entitles a defendant to a jury trial where the potential punishment for conviction is five years imprisonment or “a more severe punishment”. These cases involved potential punishment of five years imprisonment less a day and a $5-million fine.
• Teva Canada Limited v TD Canada Trust deals with various defences under the Bills of Exchange Act available to banks facing liability for the tort of conversion of fraudulently cashed cheques. The case involves proper application of the “fictitious payee” rule. The Court will revisit its decisions in Boma Manufacturing Ltd v Canadian Imperial Bank of Commerce, [1996] 3 SCR 727 and Royal Bank of Canada v Concrete Column Clamps (1961) Ltd, [1977] 2 SCR 456.
• The Court will consider the jurisdiction of the Human Rights Tribunal in British Columbia Human Rights Tribunal v Schrenk. The complainant was a civil engineer who worked as a supervisor for a construction company of which Mr. Schrenk was the foreman. The complainant alleged that Mr. Schrenk made derogatory statements about his place of origin, religion and sexual orientation. The complainant alleged discrimination with respect to employment by Mr. Schrenk and that the construction company tolerated the discriminatory behaviour. Mr. Schrenk sought to dismiss the case. The British Columbia Court of Appeal held that the tribunal did not have jurisdiction to address the complaint, as Mr. Schrenk was not in a position to force the complainant to endure discriminatory conduct as a condition of the complainant’s employment.