with the assistance of
Yola Ventresca
- Wolfe v. Pickar, 2011 ONCA 347 (per Goudge J.A., Gillese and Watt JJ.A. concurring)
- Pepe v. State Farm Mutual Automobile Insurance Company, 2011 ONCA 341 (per Doherty J.A., Moldaver and Feldman JJ. A. concurring)
- Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344 (per Feldman J.A., Doherty and Moldaver JJ.A. concurring)
- Krawchuk v. Sherbak, 2011 ONCA 352 (per Epstein J.A., Rosenberg and Cronk, JJ.A concurring)
- Barrington v. The Institute of Chartered Accountants of Ontario, 2011 ONCA 409 (per Karakatsanis J.A., Winkler C.J.O. and Lang J.A. concurring)
1. Wolfe v. Pickar, 2011 ONCA 347 (per Goudge J.A., Gillese and Watt JJ.A. concurring)
This case involved an appeal from a decision refusing to stay the plaintiffs' action in Ontario on res judicata, or alternatively, jurisdictional and forum non conveniens grounds.
The respondent, Dr. Wolfe, developed a low dose hormone replacement therapy through research and studies conducted at the University of Western Ontario in London, Ontario. Dr. Wolfe disclosed the confidential research regarding the low dose hormone replacement therapy to the appellants, Wyeth and Dr. Pickar. Dr. Wolfe asserted that the appellants had wrongfully misused this information to develop a commercial product based on the low dose hormone replacement therapy. Dr. Wolfe further asserted that the appellants used this information to file patent applications in a number of countries, including Canada. The appellants took the position that the low dose hormone replacement therapy had been developed by Dr. Pickar at Wyeth's research facilities in Pennsylvania.
An action was commenced in Ontario for, among other things, damages for breach of confidence, breach of contract and breach of fiduciary duty. The appellants brought a motion seeking to stay the Ontario action on jurisdictional and/or forum non conveniens grounds. Wyeth also commenced an action for declaratory judgment in Pennsylvania. In that action, Wyeth sought a declaration from the Pennsylvania court that any claim that Dr. Wolfe might have based on breach of contract, misuse of confidential information or breach of fiduciary duty was barred by the Pennsylvania statute of limitations. Wyeth also sought a declaration on the merits that it had not committed any of these wrongs.
The Pennsylvania court issued its reasons on August 28, 2008. The Pennsylvania court granted in full the order requested by Dr. Wolfe, namely, that had Dr. Wolfe attempted to assert his actions in Pennsylvania, those actions would be barred by the Pennsylvania statute of limitations. The Pennsylvania court allowed Wyeth's motion insofar as Wyeth requested that the Pennsylvania court declare that Dr. Wolfe's claims were barred by the Pennsylvania statute of limitations. The Pennsylvania court denied Wyeth's motion in all other respects; in particular, it declined to decide the merits of Dr. Wolfe's claims.
Following the issuance of the Pennsylvania decision, the appellants amended their notice of motion to include relief on res judicata/abuse of process grounds. The jurisdictional relief became an alternate ground of relief.
The motion judge declined to apply the doctrine of res judicata and issue estoppel. He found that the issue decided in the Pennsylvania court was not the same as the issue before him. In the alternative, he held that he would exercise his discretion not to apply that doctrine because it was open to the appellants to advance their limitation defence at trial. The motion judge also went on to find that the Ontario court could properly accept jurisdiction over the action because the real and substantial connection test was met. He also found that Ontario was a convenient forum for the action.
On appeal, the appellants argued that in adjudicating the action brought by the respondents, the Ontario court must find that their claims were time-barred by the Pennsylvania statute of limitations because of the August 28, 2008 order of the Pennsylvania court. Further, the appellants argued that the Ontario court must recognize and apply that order, in which case, the respondents' action must be dismissed as time barred.
In determining whether the doctrine of issue estoppel applied, the Court of Appeal set out the framework established by the Supreme Court of Canada in Danyluk v. Ainsworth, [2001] 2 S.C.R. 460: (1) the same question has been decided; (2) the judicial decision which is said to create the estoppel was final; and, (3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised.
The Court of Appeal noted that the first requirement in the Danyluk framework was the focus here. The Court of Appeal held that the same question had not been decided. The August 28, 2008, order determined only that the claims would be time-barred if Dr. Wolfe were to assert them in a Pennsylvania court. The Court of Appeal held that the order did not direct that in adjudicating the respondents' claims, the Ontario court should apply Pennsylvania law to find the claims barred by the Pennsylvania statute of limitations. Moreover, the Court of Appeal held that the Pennsylvania order said nothing about the choice of law the Ontario court should apply in adjudicating the claims. Nor was there any reasoning on that issue. Accordingly, the Court of Appeal held that the choice of law question was not a question distinctly put in issue and directly determined by the Pennsylvania court.
Significantly, the Court of Appeal further held that it would not serve the ends of justice to give the Pennsylvania order the effect contended for by the appellants. The Court of Appeal noted that to do so in the circumstances would at least give the appearance of sanctioning forum shopping.
Turning to the jurisdictional question, the Court of Appeal held that the appellants had attorned to the jurisdiction of the Ontario courts by amending their notice of motion to seek relief on res judicata as well as jurisdictional grounds. The Court of Appeal noted that the appellants did not come before the motion judge under duress. Rather, they voluntarily engaged the jurisdiction of the Ontario court by seeking to have the court apply the doctrine of issue estoppel, and as a consequence, permanently stay the Ontario action. Citing with approval the decision of the British Columbia Court of Appeal in Mid-Ohio Imported Car Co. v. Tri K Investments Ltd, 1995 CanLII 2084, the Court Appeal affirmed that when a party to an action appears in court and goes beyond challenging the jurisdiction of the court based on jurisdiction simpliciter and forum non conveniens, the party will be regarded as appearing voluntarily, thus giving the court consent-based jurisdiction.
Notwithstanding its finding regarding consent based jurisdiction, the Court of Appeal also went on to find that the real and substantial connection test had been met. The connection between Ontario and the respondents' claim was clear. Among other things, Dr. Wolfe's research was conducted in Ontario and the negotiations underlying the relationship between the parties took place in Ontario, as did the respondents' loss of profits. The Court of Appeal also affirmed the motion judge's determination that Ontario was a convenient forum for the hearing of this action.
Importantly, in its disposition of the issue of jurisdiction simpliciter, the Court of Appeal cited its earlier decision in Young v. Tyco International of Canada Ltd, 2008 ONCA 709. In that case, the Court of Appeal, in the context of a forum non conveniens motion, held that the "motion judge's assessment and weighing of the forum conveniens factors should be based on the plaintiff's claim if it has a reasonable basis in the record, and not on the defendant's defence to that claim." In Wolfe, the Court of Appeal extended this reasoning to motions regarding jurisdiction simpliciter.
2. Pepe v. State Farm Mutual Automobile Insurance Company, 2011 ONCA 341 (per Doherty J.A., Moldaver and Feldman JJ. A. concurring)
This was an appeal from a motion which held that a driver's girlfriend could provide corroborative evidence of an unidentified driver in order to permit coverage pursuant to the provisions of the Family Protection and Endorsement OPCF 44R ("OPCF 44R"). This appeal is the first to consider the meaning of "other material evidence" and "independent witness evidence" under the OPCF 44R.
The respondent, Massimo Pepe, was injured in a single car accident. His then-girlfriend, Shirley Aguirre, was in the car and also injured. Mr. Pepe claimed that the accident occurred when he swerved to avoid an oncoming vehicle that crossed into his lane.
As a result of the accident, Mr. Pepe brought an action against his insurer, State Farm, claiming coverage for injuries caused by the negligence of the unidentified driver. State Farm took the position that coverage under the OPCF 44R was not available to Mr. Pepe as Ms. Aguirre's evidence could not fulfill the corroboration requirement under section 1.5 of the OPCF 44R. This provision provides as follows:
1.5(c) where an eligible claimant alleges that both the owner and driver of an automobile referred to in clause 1.5(b) cannot be determined, the eligible claimant's own evidence of the involvement of such automobile must be corroborated by other material evidence; and
(d) "other material evidence" for the purposes of this section means
(i) independent witness evidence, other than evidence of a spouse...or a dependent relative...; or ... [emphasis added]
Both parties brought motions pursuant to Rule 21.01(1) for a determination whether Ms. Aguirre's evidence could meet the corroboration requirement in section 1.5 of the OPCF 44R. The motion judge found that Ms. Aguirre's evidence could corroborate Mr. Pepe's claim. State Farm appealed that decision.
State Farm argued that the phrase "independent witness evidence" looks not to the nature of the evidence, but to the characteristics of the witness. State Farm contended that Ms. Aguirre was disqualified from giving corroborative evidence both because of her personal financial stake in the outcome of the litigation and because of her close personal relationship with Mr. Pepe at the time of the accident.
The Court of Appeal rejected the contention that Ms. Aguirre's close relationship with Mr. Pepe disqualified her from providing corroborative evidence. The Court of Appeal noted that section 1.5(d)(i) explicitly enumerates the categories of witnesses who are not capable of providing corroborative evidence, namely, spouses or dependent relatives. The Court of Appeal held that nothing in the language of this section could justify extending the very limited and well-defined categories of persons who could not give corroboration to the much broader and less defined group of persons having a close personal relationship with the claimant. Significantly, the Court of Appeal held that there was nothing in the language supporting the appellant's position, an interpretation of this provision which precluded anyone with a close personal relationship with the claimant from providing corroboration and would significantly diminish the circumstances in which coverage would be available.
The Court of Appeal next addressed State Farm's submission that because Ms. Aguirre had commenced her own action against State Farm in respect of the accident, her evidence was not independent and therefore could not be corroborative of the plaintiff's evidence. In her action against State Farm, Ms. Aguirre claimed that her injuries were caused by the negligence of an unidentified driver. Accordingly, Ms. Aguirre argued that pursuant to the terms of Mr. Pepe's policy, State Farm must compensate her for her injuries.
The Court of Appeal noted that there was a long history of requiring corroboration either at common law or by statute, where the evidence of one witness is regarded as insufficient to justify the finding in issue. Corroborative evidence is (a) evidence from a source extraneous to the witness whose evidence is to be corroborated, (b) which is relevant to material fact in issue, and (c) that tends to show that the witness whose evidence needs corroboration is telling the truth.
Applying these principles, the Court of Appeal held that Ms. Aguirre's evidence met these requirements. Her evidence describing the accident was independent of Mr. Pepe's in that it came from a source extraneous to his testimony. Ms. Aguirre's evidence was related to a material matter. The Court of Appeal noted that the error in the appellant's submission was its assertion that it was the witness that must be independent, in the sense of neutral to the outcome. The independence requirement in the context of corroboration has always referred to the independence of the evidence (i.e. that is extraneous to the testimony of the party to be corroborated) and not to the neutrality of the witness. The witness's neutrality, or lack thereof, is relevant to the ultimate credibility of the witness's evidence.
Accordingly, the Court of Appeal held that Ms. Aguirre's evidence was capable of providing the corroboration required by OPCF 44R.
The Court of Appeal did note that while Mr. Pepe's claim for coverage under OPCF 44R could proceed, this did not mean it would necessarily succeed. It would be left to the trial judge to determine whether Ms. Aguirre's evidence actually corroborated Mr. Pepe's evidence that the accident was caused by an unidentified driver. In making that determination, the trial judge would have to assess Ms. Aguirre's credibility. The Court of Appeal noted that Ms. Aguirre's financial stake in the outcome and her personal relationship with Mr. Pepe might figure into that assessment.
3. Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344 (per Feldman J.A., Doherty and Moldaver JJ.A. concurring)
In this case, the Court of Appeal considered the enforceability of restrictive covenants in the employment context. The appellant was terminated for cause after seventeen years of employment with the respondent. Wrongful dismissal litigation between the parties was ongoing at the time of the appeal.
The appellant, Tom Mason, was employed by the respondent, Chem-Trend Limited Partnership ("Chem-Trend"). During his tenure, Mr. Mason worked as a technical sales representative in Canada and the United States. At the time he was hired, Mr. Mason signed a restrictive covenant in which he agreed, for a period of one year following his termination, to not engage in competitive business activities where he would be trying to solicit business from any of Chem-Trend's customers.
Mr. Mason brought an action for wrongful dismissal. In order to try to quickly determine whether and to what extent he was free to compete with the respondent, Mr. Mason brought a separate application asking the court to declare the restrictive covenant in his employment contract unenforceable.
The restrictive covenant clause at issue provided as follows:
I agree that if my employment is terminated for any reason by me or by the Company, I will not, for a period of one year following the termination, directly or indirectly, for my own account or as an employee or agent of any business entity, engage in any business or activity in competition with the Company by providing services or products to, or soliciting business from any business entity which was a customer of the Company during the period in which I was an employee of the Company, or take any action that will cause the termination of the business relationship between the Company and any customer, or solicit for employment any person employed by the Company [emphasis added].
The application judge found that the provisions of the restrictive covenant were enforceable. The application judge determined that the wording of the restrictive covenant was not ambiguous and that Mr. Mason understood its meaning when he signed it. With respect to the broad geographic scope of the covenant, the application judge accepted that it was reasonable because of the world-wide operations of the respondent and many of its customers. The application judge further found that it was reasonable to restrict any activity of the appellant in competition with the respondent because of the appellant's access to significant information about the respondent's business and technical knowledge of the industry. Finally, the application judge found that the one-year temporal restriction was relatively short compared to other cases. He concluded that the more onerous geographic and activity restrictions in the covenant were balanced by the shorter temporal limitation, which, taken together, made the clause a reasonable one.
The Court of Appeal overturned the application judge's finding that the terms of the restrictive covenant were reasonable. The Court of Appeal cited the decision of the Supreme Court of Canada in Shafron v. KRG Insurance Brokers, [2009] 1 S.C.R. 157, where the Supreme Court reiterated that, although covenants in restraint of trade are contrary to the public policy in favour of trade, such covenants will be upheld if they are found to be reasonable in the circumstances. Where the covenant is found in an employment contract it will be subjected to stricter scrutiny than where it is part of the consideration for the sale of a business.
Applying these principles to the facts in this case, the Court of Appeal held that the restrictive covenant was not reasonable. This determination was based on a number of findings.
First, the Court of Appeal noted that, when examined as a whole, there were other terms of Mr. Mason's employment that would protect the respondent's confidential information. Specifically, Mr. Mason had agreed to a covenant that protected trade secrets and confidential information. The Court of Appeal held that this clause contained significant protection for the company and must have been intended to work in conjunction with the restrictive covenant following the appellant's departure from the respondent's employ.
Second, the prohibition contained in the restrictive covenant which prevented Mr. Mason from dealing with businesses who may be former customers was overly broad when it was taken into account that Mr. Mason was a seventeen year employee of Chem-Trend. The Court of Appeal found incongruence between a one-year restriction on competition which barred Mr. Mason from contacting any former customer from his seventeen year tenure with Chem-Trend.
Third, the Court of Appeal found that Mr. Mason was a part of the technical sales force of a large company. The Court found that Mr. Mason's role did not fall within the category of employee (e.g. CEO or President), whose position would justify a broader prohibition on competition following the cessation of employment.
Finally, the Court of Appeal held that given the wording of the covenant, it was not possible for Mr. Mason to know which potential customers he was prohibited from doing business with. This was due to the fact that the restriction was not limited to Mr. Mason's customers, but rather all of the customers of the respondent during Mr. Mason's seventeen year tenure. The Court of Appeal noted that Mr. Mason did not have access to the company's customer list.
4. Krawchuk v. Sherbak, 2011 ONCA 352 (per Epstein J.A., Rosenberg and Cronk, JJ.A concurring)
The decision of the Court of Appeal in Krawchuk v. Sherbak impacts significantly the duty of real estate agents to advise and disclose of latent defects in a home. The primary issue of importance raised in the appeal was the duty of a real estate agent to verify information provided by the vendor about the property.
The plaintiff, Zoriana Krawchuk, purchased a home from the defendant vendors, the Scherbaks. Shortly after moving in, Ms. Krawchuk discovered serious structural problems. The City of Sudbury issued an order requiring the problems be rectified. Plumbing problems were also subsequently discovered. These costs exceeded the amount she had paid for the property. Ms. Krawchuk recovered most of these costs through the claim she submitted under her title insurance.
Notwithstanding this recovery, Ms. Krawchuk sued the Scherbaks for breach of contract or, in the alternative, for fraudulent or negligent misrepresentation. She also sued Wendy Weddell, the agent acting for both her and the Scherbaks, and the brokerage for which Ms. Weddell worked, Re/Max Sudbury Inc. (collectively, the "real estate defendants"), for fraudulent or negligent misrepresentation and negligence. The Scherbaks and the real estate respondents brought cross claims against one another.
The disclosure from the vendors that formed the factual basis for this appeal were contained in the Seller Property Information Sheet ("the SPIS"). As completed by the Scherbaks, with the assistance of Ms. Weddell, the SPIS provided the following information germane to this appeal. With respect to the structural integrity of the home, the question was: "Are you aware of any structural problems?" The Scherbaks' response was: "NW corner settled. See note *". Under "additional comments" they added: "*to the best of our knowledge the house has settled. No further problems in 17 years". Concerning the plumbing, the question was: "Are you aware of any problems with the plumbing system?" The Scherbaks answered "No".
At trial, the judge found the Scherbaks liable for negligent representation and awarded Ms. Krawchuk damages of $110,742.32. The court dismissed Ms. Krawchuk's claim and the Scherbaks' crossclaim against the real estate defendants. The trial judge did not address the real estate defendants' crossclaim against the Scherbaks, which was moot given his dismissal of Ms. Krawchuk's claim against them.
The Scherbaks appealed the trial judge's finding of negligent misrepresentation. Ms. Krawchuk cross-appealed the trial judge's dismissal of her claim against the real estate defendants. The Scherbaks also appealed the dismissal of their crossclaim against the real estate defendants. On appeal, the real estate defendants continued to assert their claim for contribution and indemnity from the Scherbaks if they were found liable to Ms. Krawchuk. The real estate defendants argued that any misrepresentations made to Ms. Krawchuk were as a result of the failure of the Scherbaks to disclose pertinent information regarding the property.
Turning first to the issue of the trial judge's finding of negligent misrepresentation against the defendant vendors, the Court of Appeal held that the trial judge did not err in finding the Scherbaks liable as Ms. Krawchuk had specifically pleaded negligent misrepresentation and the trial judge's findings concerning the Scherbaks' liability for negligent misrepresentation were supported by the evidence. Additionally, the Court of Appeal held that the trial judge correctly found that the purchaser was able to recover damages at trial notwithstanding her recovery from her title insurer, which had released its subrogation rights.
With respect to Ms. Krawchuk's claim against the real estate defendants, the Court of Appeal held that the trial judge erred in his dismissal of this claim. Specifically, the trial judge erred in concluding that he could identify the applicable standard of care without the benefit of expert evidence. He also erred in his failure to identify the standard of care that he thought was applicable. Significantly, the Court of Appeal held that the agent was liable to Ms. Krawchuk in negligence as she took no steps to verify the accuracy of the information supplied by the Scherbaks or to otherwise protect herself from the adverse consequences of the inaccurate information. With respect to the crossclaims, the Court of Appeal found that neither the defendant vendors nor the real estate defendants were entitled to full indemnity from the other as they were both negligent in their dealings with Ms. Krawchuk. Ms. Weddell's negligence in her representation of the Scherbaks and the Scherbaks' failure to satisfy their disclosure obligation to the agent rendered them equally liable for the plaintiff's loss.
Accordingly, the defendant vendors' appeal from the judgment against them in favour of Ms. Krawchuk was dismissed. Ms. Krawchuk's cross-appeal from the dismissal of her claims against the real estate respondents was allowed. The defendant vendors' appeal from the dismissal of their crossclaim for contribution and indemnity from the real estate respondents and the real estate respondents' crossclaim for contribution and indemnity from the vendors were dismissed.
5. Barrington v. The Institute of Chartered Accountants of Ontario, 2011 ONCA 409 (per Karakatsanis J.A., Winkler C.J.O. and Lang J.A. concurring)
This appeal arose from professional discipline proceedings brought against Barrington, Power and Russo (collectively, the "members") by the Institute of Chartered Accountants of Ontario (the "ICAO"). The members were senior members of the Deloitte audit team responsible for the 1997 audit of Livent Inc. The financial statements from the audit were subsequently found to be fraudulent. After a 37-day disciplinary hearing, the ICAO's Discipline Committee found all three members guilty of professional misconduct for two instances of failing to ensure that the 1997 financial statements were in accordance with Generally Accepted Accounting Standards ("GAAP"). Mr. Power and Mr. Russo were also convicted of a third breach of GAAP and five instances of failing to perform an audit in accordance with Generally Accepted Auditing Standards ("GAAS").
The key issue with respect to the charges brought by the ICAO was the Put Agreement between Livent and Dundee Realty Corporation regarding the development of the Pantages complex. Livent sought to recognize revenue under its agreement with Dundee in a manner which was not permitted. The Deloitte team advised Livent of the impropriety of this course of action. Notwithstanding this advice, Livent proceeded to recognize the revenue.
As a result of Livent's actions, Deloitte threatened to resign from the audit. In subsequent meetings with Deloitte representatives, Livent agreed to remove the Put from its agreement with Dundee. Notwithstanding this, the Put was re-established in a side agreement with Dundee. A Deloitte partner working on the audit of Dundee was provided with a copy of the "Put Side Agreement". It included a confidentiality clause. Livent had not disclosed this document to Deloitte during its audit.
Deloitte held an emergency internal meeting to address the issue and decide whether its relationship with Livent should continue. It was determined by the audit team that specific criteria were required to satisfy them that the Put had been rescinded by the end of the third quarter of 1997. Relying upon evidence that fell short of its own criteria, the audit team concluded that it had been cancelled by this time.
At first instance, the ICAO's Discipline Committee concluded that all three members were guilty of professional misconduct. The members appealed to the ICAO's Appeal Committee, which affirmed the Discipline Committee's decision.
The members then brought applications for judicial review to the Divisional Court, which were partly successful. The Divisional Court quashed four of the eight convictions against Mr. Power and Mr. Russo and all of the convictions against Mr. Barrington. The Divisional Court also quashed the Discipline Committee's cost order and directed that the Discipline Committee reconsider the penalty imposed on Mr. Power and Mr. Russo.
Mr. Power and Mr. Russo appealed the remaining charges to the Court of Appeal. The ICAO, in turn, appealed from the Divisional Court's decision, seeking to have the Discipline Committee's convictions and costs award reinstated. The Court of Appeal allowed the ICAO's appeal. Mr. Power's and Mr. Russo's appeals were dismissed.
The Court of Appeal determined that the Divisional Court erred by mischaracterizing the nature of the charge related to the Put Agreements. The Divisional Court had taken the view that the Put-related allegations were effectively new allegations and that the members had been denied procedural fairness with respect to this issue. At the hearing before the Court of Appeal, the members argued that they had not been put on notice that the Put would be in issue. Accordingly, it was their submission that they did not know the case they had to meet.
The Court of Appeal held that the Put was not a new allegation and was within the knowledge of the members. The members could not have been prejudiced or surprised when the Discipline Committee relied on the Put in its consideration of the charges against them. The Court of Appeal noted that the Discipline Committee did not find the members guilty of breaching GAAP standards in relation to the Put. Rather, they had been found guilty of recognizing income which should not have been recognized.
The Court of Appeal next turned to consider the additional charges against Mr. Power and Mr. Russo which had been quashed by the Divisional Court. These charges were in relation to a transaction where Livent transferred receivables owing from another party. After deliberating this issue with their management team, these transactions were recorded as sales by Mr. Power and Mr. Russo. The Committee found that this determination was improper and that the transfers should not have been treated as a sale under GAAP. The Divisional Court quashed Mr. Power and Mr. Russo's convictions on these two charges due to a lack of explanation or line of reasoning as to why Mr. Power and Mr. Russo's actions amounted to a breach of standard, or why the error in judgment was so significant a departure from the standards of the profession so as to constitute professional misconduct.
The Court of Appeal overturned this decision and held that the Divisional Court erred in finding the Discipline Committee's decision was unreasonable because it did not provide adequate reasons for its decision. While brief on the analysis of the particulars, the reasons of the Discipline Committee disclosed the basis for its decision.
Finally, the Court of Appeal also overturned the Divisional Court's decision to quash the costs the Committee ordered against the members. The Divisional Court concluded that the Discipline Committee did not have jurisdiction to order costs because s. 17.1 of the Statutory Powers Procedure Act ("SPPA") prevailed over the Discipline Committee's by-law adopted pursuant to s. 8 of the Chartered Accountants Act, 1956.
Before the Court of Appeal, the ICAO took the position that the decision of the Divisional Court should be overturned in light of s. 38 of the Chartered Accountants Act, 2010, which was enacted two months after the Divisional Court's decision. Section 38 of the Chartered Accountants Act, 2010 expressly provides that s. 38 takes precedence over section 17.1 of the SPPA which restricts when a tribunal may order costs. The Court of Appeal affirmed that this provision had retroactive effect. As a result, the Discipline Committee's cost award was validated.
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