4. Fleming v.
, 2016 ONCA 70 (Feldman, Juriansz and Brown
JJ.A.), January 26, 2016
1. Livent Inc. v. Deloitte &
Touche, 2016 ONCA 11 (Strathy C.J.O, Blair and
Lauwers JJ.A.), January 8, 2016
In April, 2014, Deloitte & Touche was found liable to
Livent Inc. for almost $120 million in losses arising out of
negligently performed audits of Livent's books and records due
to the failure of the auditors to detect the now-notorious fraud.
In an expansive, four hundred and forty paragraph decision, the
Court of Appeal upheld that ruling, addressing a number of issues,
including whether the losses sought to be recovered were those of
Livent or its creditors and shareholders, the purpose of audits of
public companies and the defence of ex turpi causa.
In the 1990s, entertainment moguls Garth Drabinsky and Myron
Gottlieb created and developed a live entertainment empire known as
Live Entertainment Corporation of Canada Inc., or Livent. The
company, which developed stage productions such as The Phantom
of the Opera, appeared to be a successful and vibrant business
enterprise. It was, in fact, a "house of cards", which
toppled in 1998 when new management discovered that Drabinsky and
Gottlieb had been fraudulently manipulating the company's
financial books and records over a number of years in order to
inflate its earnings and profitability. Livent filed for insolvency
protection in Canada and the United States and was placed in
receivership, its assets later sold. Drabinsky and Gottlieb were
convicted of fraud and forgery and sent to prison.
Deloitte & Touche, the auditor for Livent from 1989 to
1998, had issued clean audited financial statements throughout this
Livent – through a Special Receiver appointed in the
insolvency proceedings for various purposes, including bringing
this claim – sued Deloitte for damages in contract and
negligence arising out of its failure to follow generally accepted
auditing standards and discover material misstatements in
Livent's books, records and financial reporting attributable to
the Drabinsky's and Gottlieb's fraud.
After a 68 day trial, the judge found that Deloitte was not
negligent in respect of the pre-1996 audits. He found Deloitte
negligent, but not liable in respect of the 1996 audit; while it
was negligent, that negligence caused Livent no damage. The trial
judge found that Deloitte was liable, however, for damages arising
from negligence in August and September of 1997 and the spring of
1998. He awarded Livent damages of $118,035,770.
Deloitte argued on appeal that it should not be held
responsible for damages that were in fact suffered by Livent's
creditors and shareholders for fraud committed by Livent. It sought
to attribute wrongs committed by Livent officers and employees to
the corporation and to rely on the defence of illegality, or ex
turpi causa. Deloitte also argued that its negligence was not
the factual or proximate cause of damages to Livent. While Livent
became insolvent, it was in a money-losing business. Moreover,
since Livent was insolvent, its creditors were injured, not the
company itself. Livent meanwhile submitted that the trial judge
erred in failing to hold Deloitte liable for negligence in respect
of the 1996 audit and also in reducing the award of damages by 25%
to account for what he called "contingencies".
Writing for the Court of Appeal, R.A. Blair J.A. rejected
Deloitte's submission that Livent was not claiming for its own
losses, but rather advancing a proxy claim, indirectly, for losses
sustained by its creditors and shareholders that would be
recoverable in the company's insolvency proceedings. Blair J.A.
emphasized that the losses sustained were Livent's losses, not
those of its creditors and other stakeholders. The claim for breach
of contract and for negligence was accordingly that of the
corporation, and no such cause of action rested with the
shareholders or creditors, regardless whether they might ultimately
benefit from recovery in the company's action.
Deloitte sought to use the corporate identification or
attribution doctrine to attribute the frauds of Drabinksy and
Gottlieb to Livent, allowing it to then rely on the ex turpi
causa defence. Justice Blair noted that the policy underlying
the ex turpi causa doctrine is "to maintain the
integrity of the justice system by preventing a wrongdoer from
profiting from his or her wrongdoing or evading a criminal
sanction." In this case, there was no basis for invoking the
ex turpi causa defence through attribution because it was
not required to maintain the integrity of the justice system. The
actual fraudsters would not profit from their wrongdoing and had
not evaded criminal sanction. Nor would Livent profit from their
wrongdoing. In fact, Livent suffered a loss. Moreover, applying the
ex turpi causa doctrine in these circumstances would risk
undermining the value of the public audit process and the integrity
of the justice system.
Blair J.A. also rejected the suggestion that the U.S. bar
orders obtained in the U.S. class action litigation precluded
Livent from advancing its claim. He agreed with the trial judge
that the U.S. litigation was entirely different from the proceeding
at bar and that Deloitte's submission was contrary to
Livent's plan of reorganization, which courts in Canada and the
U.S. had approved and to which Deloitte was deemed to have
The trial judge had disposed of the duty of care question
easily, noting that in the wake of the Supreme Court's decision
in Hercules Management Ltd. v. Ernst & Young,  2
S.C.R. 165, "there can be little doubt that auditors owe a
duty of care to the company for the benefit of the corporate
collective, the shareholders". Deloitte submitted before the
Court of Appeal that the trial judge effectively extended the
auditor's duty of care to its client to include economic
responsibility for losses experienced by those standing behind it,
raising the spectre of indeterminate liability. Blair J.A.
dismissed this submission, however, emphasizing that there was no
dispute that Deloitte owed a duty of care to its client, Livent, to
conduct the audit in accordance with the applicable standard of
care. For the purpose of the duty of care, once it was accepted
that the cause of action being asserted belonged to Livent and was
not being advanced on behalf of third-parties, policy concerns
about imposing indeterminate liability on auditors fell away.
Turning to the matter of the standard of care, Blair J.A.
noted that in the case of publicly-traded corporations, audits not
only serve to ensure a fair and accurate picture of the financial
affairs of the corporation and to provide shareholders with
information, but have an additional, broader objective involving
the responsibilities of securities regulators and the interests of
investors. It is not only the corporation and its shareholders who
need and rely on the auditors' reports; securities regulators
and members of the investing public also rely on them for
disclosure of a fair and accurate picture of the financial position
of the corporation. The auditors' standard of care in such
circumstances must reflect this.
The general standard of care applicable to an auditor's
work has survived for more than a century. As the court held in
In re Kingston Cotton Mill Co. (No. 2),  2 Chapter
279 (Eng. C.A.):
It is the duty of an auditor to
bring to bear on the work he has to perform that skill, care, and
caution which a reasonably competent, careful, and cautious auditor
would use. What is reasonable skill, care, and caution must depend
on the particular circumstances of each case.
Blair J.A. found that the record amply supported the trial
judge's conclusion that Deloitte breached this standard.
Deloitte was negligent in its conduct of the 1997 audit and the Q2
and Q3 1997 engagements. The evidence to that effect was
After an extensive consideration of the trial judge's
causation analysis, including his application of a discount for
"contingencies", Justice Blair concluded that
Deloitte's negligence caused Livent to continue to operate in
circumstances in which it was reasonably foreseeable that the
company would continue to accumulate increased liabilities through
its access to the capital markets and, more significantly, that it
would have no means paying down those liabilities. Deloitte's
negligence created the opportunity for Livent to stay in business
and for Drabinsky and Gottlieb to continue to take the company to
capital markets, increasing its losses. Although the law must not
expose auditors of public companies to unreasonable obligations,
where the proper factual and legal connection between the breach
and the losses exists, the auditor's breach can be the cause of
those losses and give rise to compensable damages. Blair J.A. found
no error with the trial judge's measure and quantum of damages,
or with his decision not to apply the doctrine of contributory
Turning finally to Livent's cross appeal, Blair J.A. found
that the trial judge made no error in failing to hold Deloitte
liable for its breaches of the standard of care in relation to its
1996 audit. His findings, and the conclusions he drew from them,
were supported by the evidence.
2. Goldsmith v. National Bank of
Canada, 2016 ONCA 22 (Weiler, Pardu and Benotto
JJ.A.), January 13, 2016
Ontario's Securities Act provides a right of
action against an "influential person" who
"knowingly influenced" the release of a document
containing a misrepresentation. In this decision, the Court of
Appeal considered whether the appellant should be permitted to
commence such an action against National Bank of Canada
Poseidon Concepts Corp. was created in 2011 through a
reorganization of Open Range Energy Corp., which operated a tank
rental business and an oil and natural gas exploration and
production business. The company completed a successful public
offering, announcing in early 2012 that it had sold common shares
for gross proceeds of over $82.5 million.
Poseidon's success was fleeting. In a series of corrective
disclosures beginning at the end of 2012, the company revealed that
it had materially overstated revenues and accounts receivable. In
April, 2013, it filed for protection under the Companies'
Creditors Arrangement Act, R.S.C. 1985, chapter C-36. Poseidon
was delisted in May, 2013. Its shares are now worthless.
Since the company's collapse, 13 separate class actions
alleging misrepresentations in Poseidon's financial statements
and corporate disclosure documents were initiated. In this action,
the appellant, Joanna Goldsmith, alleged that Poseidon's
revenue was materially overstated in its Circular and Prospectus,
and submitted that the respondent, National Bank of Canada, was
liable for these misrepresentations under the Securities
Act, R.S.O. 1990, chapter S-5.
As the Supreme Court noted in Canadian Imperial Bank of
Commerce v. Green, 2015 SCC 60, Part XXIII.1 of the
Securities Act provides a carefully calibrated head of
liability for secondary market misrepresentations.
creates a statutory cause of action for the benefit of those who
acquired or disposed of a responsible issuer's securities
between the time a document containing a misrepresentation was
released by the responsible issuer and the time of its correction.
In addition to allowing suit against the responsible issuer and
each director and officer who "authorized permitted or
acquiesced in the release of the document" containing the
misrepresentation, section 138.3(1) also provides a cause of action
against each "influential person" who "knowingly
influenced" the responsible issuer to release the document.
The appellant claimed that the respondent was such a party, as a
"promoter", defined as "a person or company who,
acting alone or in conjunction with one or more other persons,
companies or a combination thereof, directly or indirectly, takes
the initiative in founding, organizing or substantially
reorganizing the business of an issuer."
Actions under section 138.3 may only be commenced with leave.
A court will only grant leave where it is satisfied that the action
is being brought in good faith and that "there is a reasonable
possibility that the action will be resolved at trial in favour of
While the motion judge accepted that the appellant's
action was being brought in good faith, he denied her leave to
commence it because she failed to demonstrate a reasonable
possibility of success. Specifically, he concluded that the
appellant had not offered a plausible interpretation of the term
"promoter" in the Securities Act. The motion
judge held that in order to succeed at trial, a plaintiff must show
that the defendant bank or professional advisor provided more than
just conventional banking or advisory services, and "directly
or indirectly took the initiative in founding, organizing or
substantially reorganizing the business of the issuer." The
appellant failed to do so.
Writing for the Court of Appeal, Pardu J.A. rejected the
appellant's submission that the motion judge adopted an overly
narrow interpretation of the promoter provisions. She held that, in
fact, the text, context and purpose of these provisions, as well as
the applicable jurisprudence, all supported the conclusion that a
person or company that merely provides advice to or assists during
an issuer's organization or reorganization cannot be a
promoter. A promoter is not someone casually connected with the
issuer, but rather is a person or company that played a driving
role in founding an issuer and who wields influence comparable to
that of an officer or director. Anything less is insufficient
– merely being involved in organizing or reorganizing a
business is not enough, even if that involvement includes providing
important services or support.
Justice Pardu cautioned that the expansive definition of
"promotor" proposed by the appellant would capture and
impose the risk of liability on ordinary, everyday activities of
many capital market participants, including lawyers providing
advice about corporate restructuring. The legislature could not
have intended such an outcome when enacting Part XXIII.1. This
interpretation would risk doing significant harm to capital markets
and would undermine the purpose of the Securities Act to
provide protection to investors from unfair, improper or fraudulent
practices and to foster fair and efficient capital markets and
confidence in them. Such a "nebulous, indeterminate and
far-reaching basis for liability" does not respect the balance
struck by Part XXIII.1.
Pardu J.A. agreed with the motion judge that the evidence
offered by the appellant was insufficient to establish that NBC was
a promoter. "Something more" was required.
The motion judge suggested that a plausible interpretation
would require a plaintiff to show that a defendant took steps,
directly or indirectly, to actually found or organize the business
in question, by funding the required incorporations, organizing the
board of directors, actively managing the company or making key
business decisions. Considering the appellant's evidence with
this test in mind, Pardu J.A. found that she did not have a
reasonable possibility of proving that the respondent was a
promoter to justify granting leave to commence her action. Even
interpreted generously, the appellant's evidence failed to
demonstrate that she had a reasonable possibility of establishing
that the respondent took the initiative in founding, organizing or
substantially reorganizing the business of Open Range and Poseidon.
Justice Pardu noted that, in any event, the appellant's motion
could have been dismissed solely on the basis that she has not
provided evidence showing that NBC "knowingly influenced"
the release of the documents at issue.
3. 1250264 Ontario Inc. v. Pet Valu Canada
Inc., 2016 ONCA 24 (Hoy A.C.J.O., MacFarland and
Lauwers JJ.A.), January 14, 2016
In this decision, the Court of Appeal dismissed the Pet Valu
class action, refining both the scope of the duty of fair dealing
imposed on franchisors and the role of case management judges in
defining common issues in class action proceedings.
The plaintiff, 1250264 Ontario Inc., commenced a class action
against Pet Valu Canada Inc., a wholesaler and retailer of pet
supplies. Representing a class of 150 former Pet Valu franchisees,
the plaintiff alleged, among other things, that Pet Valu had not
shared volume rebates it received from suppliers with its
The action was certified as a class action in June,
The certification judge held that the only claim advanced by
the plaintiff that was appropriate for certification was its claim
in relation to the volume rebates. He identified the common issues
arising out of this claim and, when the parties were unable to
agree to appropriate language to express them, released reasons
defining "Volume Rebates" and setting out seven common
Pet Valu brought a motion for summary judgment on the seven
common issues. By the time the motion was heard, more than three
years after the proceeding was certified, a new judge had taken
over the case management of the class action. This judge found in
the defendant's favour, dismissing the claims regarding common
issues 1 through 5. He deferred his decision on common issues 6 and
7 until the plaintiff brought a motion, that the judge himself had
suggested, to amend its statement of claim to add a new common
issue dealing specifically with purchasing power.
While the motion judge dismissed the plaintiff's motion to
amend to add an eighth common issue on the ground of prejudice, he
read language into common issue 6 and, on the basis of that
language, found that Pet Valu had breached its duty of fair dealing
under section 3 of the Arthur Wishart Act (Franchise
Disclosure), 2000, S.O. 2000, chapter 3
("AWA"). The motion judge answered common issues
6(i), (iii) and (iv) in favour of the plaintiff. Common issue 7, on
the matter of damages, remained undetermined.
Pet Valu appealed, arguing that the motion judge erred by
"unilaterally and unfairly" amending common issue 6. It
also asserted that the motion judge made a number of errors in
finding that it breached its duty of fair dealing. The plaintiff
cross-appealed the dismissal of its motion to amend to add an
eighth common issue.
The Court of Appeal ruled in favour of Pet Valu, dismissing
common issue 6 and, with it, the class action. Writing for the
Court, Associate Chief Justice Hoy clarified the scope of the duty
of good faith and fair dealing imposed on franchisors under the
AWA and cautioned against judicial intervention in the
crafting of common issues in class action proceedings.
Hoy A.C.J.O. found that the motion judge did not err in
denying the plaintiff's motion to amend its statement of claim
to add an eighth common issue. As the Court held in Brown v.
Canada (Attorney General), 2013 ONCA 18, in the class action
context the power to amend the statement of claim and other aspects
of the claim, such as the proposed common issues, "should be
exercised with caution and restraint". When an amendment is
sought at the conclusion of an otherwise dispositive summary
judgment motion, even greater caution and restraint is required.
Hoy A.C.J.O. noted that but for the motion judge's suggestion
that the plaintiff move to amend its pleadings, Pet Valu was poised
to obtain complete summary judgment on the existing common issues.
Allowing the addition of a new common issue would have been
"fundamentally unfair" to Pet Valu, causing actual
prejudice to the defendant that was not compensable in costs.
Hoy A.C.J.O. found that the motion judge did err, however, in
interpreting common issue 6(i) as asking if "significant
volume discounts" were received by the franchisor. She noted
that the precise wording of the common issue had been carefully
determined by the certification judge following submissions by the
parties. The motion judge's addition of the words
"significant volume discounts" was material. In fact, the
words mirrored the language in the plaintiff's proposed
amendments to the statement of claim and the proposed common issue
8, which were soundly rejected. Reading in this language, the
motion judge effectively amended common issue 6, on his own
initiative, following the completion of argument on the summary
judgment motion, without advising Pet Valu that he proposed to do
so and without allowing it the opportunity to make submissions. In
Justice Hoy's view, this was akin to giving judgment on an
issue that had never been certified.
Justice Hoy found that the motion judge further erred in
determining that Pet Valu was in breach of section 3 of the
AWA, a conclusion which was rooted in a breach of what he
deemed a representation that it received significant volume
discounts. Even if the motion judge was correct in finding that Pet
Valu had represented to franchisees that it received
"significant volume discounts" in disclosure documents or
in the franchise agreement, he cast the net of section 3 - which
imposes a duty of fair dealing on the franchisor in the
"performance and enforcement" of the franchise agreement
- too widely. The information that the motion judge found that Pet
Valu should have disclosed ought to have been disclosed to the
plaintiffs before they became franchisees. This kind of
pre-litigation oriented duty of disclosure goes well beyond the
scope of section 3. Nor, in Hoy A.C.J.O.'s view, can a failure
to include all material facts in a disclosure document be
characterized as unfair dealing in the "performance" of a
franchise agreement. Further, there was no indication that
non-disclosure, once the plaintiffs became franchisees, adversely
affected them in any way.
Having found in favour of Pet Valu on common issue 6, Hoy
A.C.J.O. noted that there was no need for the Court to address
common issue 7, which asked what, if any, damages Pet Valu was
required to pay if it was in breach of the duties referred to in
4. Fleming v. Massey, 2016 ONCA 70
(Feldman, Juriansz and Brown JJ.A.), January 26, 2016
Derek Fleming appealed the dismissal of his action against the
respondents in connection with injuries he sustained at a go-kart
The respondents, Lombardy Karting and the National Capital
Kart Club, held a go kart event at Lombardy Raceway Park. The
regular race director was unavailable, and the National Capital
Kart Club arranged for Fleming to fill in. The respondent, Andrew
Massey, was driving a go kart when he crashed into the corner of
the track, leaving Fleming injured. In response to Fleming's
action for damages, the respondents argued that he had signed a
waiver releasing them from liability for all damages associated
with participation in the event due to any cause, including
The motion judge dismissed the action, finding that the
appellant was not an employee but rather a volunteer who received a
stipend, that he signed the waiver knowing generally what it would
mean and that the wording of the waiver was broad enough to cover
Fleming's principal submission was that the waiver was
void because it violated public policy, as he was an employee. The
Court of Appeal agreed, finding that the motion judge erred in
holding that the appellant was not an employee, and concluding that
the waiver was void due to the important public policy in favour of
Writing for the Court, Juriansz J.A. held that the appellant
was an employee of National Capital Kart Club, noting that on
discovery the club's representative admitted that Fleming was
indeed an employee on the day of the accident. He then turned to
the question of whether the waiver was voided by the public policy
of the Workplace Safety and Insurance Act, 1997, S.O.
1997, chapter 16, Schedule A (WSIA), because the appellant
signed it as an employee.
The parties agreed that the appellant was not an insured
worker under the statute: go-kart tracks are classified as
"non-covered" by the Workplace Safety and Insurance Board
and workers at these facilities are not insured unless their
employer has applied for WSIA coverage. The respondent
track had not applied for coverage. Accordingly, it and the
appellant were governed by Part X of the statute which provides at
section 114(1) that, unlike insured employees, workers may sue
their employers for workplace accidents.
Fleming submitted that public policy prevented workers from
contracting out of the protection afforded by that provision. The
WSIA explicitly states that purpose of the statute is to
ensure that employees injured in workplace accidents receive
compensation. Allowing Part X employers to require their employees
to waive their right to seek compensation would frustrate this
public policy goal.
Juriansz J.A. agreed. Courts must exercise great caution in
interfering with the freedom to contract on the grounds of public
policy. However, given workers' compensation legislation's
"sweeping overriding of the common law" and "the
broad protection it is designed to provide to workers in the public
interest", it would be contrary to public policy to allow
employers and workers to contract out of the protection afforded
them by the regime, absent some legislative indication to the
While the legislature did address the subject of waiver in
section 16 of the WSIA, which prohibits waiving the
entitlement to benefits under a worker's insurance plan, Part X
of the statute contains no equivalent provision.
Nonetheless, Juriansz J.A. held that reading the WSIA
as a whole does not support the interpretation of section 16 as
impliedly indicating that the legislature intended to permit the
waiver of the statutory actions created by Part X. It was apparent
that the objective of the statute was to ensure that injured
workers have access to compensation, whether they are insured or
governed by Part X. For the former, the regime provides workers
with an insurance plan and eliminates workers' civil actions.
Accordingly, it was necessary to prohibit the waiver of benefits
under the plan. Part X, on the other hand, makes numerous changes
to the common law to achieve the same statutory objective by
providing workers with rights of action for damages. Applying the
implied exclusion principle to section 16 to infer that a worker
can waive the rights provided by Part X would fundamentally
undermine the intent of the legislation.
Section 116(1) of the WSIA provides that an injured
worker shall not be considered to have voluntarily incurred the
risk of injury in his employment "solely" on the grounds
that, before he injured, he knew about the defect or negligence
that caused the injury.
Reading section 116(1) together with section 116(2) and in the
overall context of the statute, Juriansz J.A. surmised that the
inclusion of the word "solely" - or "only" in
other versions of the legislation - was intended as "an
emphatic rejection of the common law principle that the
worker's knowledge could be the sole or only basis for invoking
the voluntary assumption of risk doctrine." Interpreting s.
116(1) otherwise would permit a worker to contract out of an
employer's negligence, but not the negligence of coworkers for
which the statute makes the employer responsible. The provision
must therefore be interpreted as a rejection of the common law
approach to the voluntary assumption of risk, rather than as
allowing workers to contract out of Part X.
With no legislative indication otherwise, it would be contrary
to public policy to allow workers to contract out of the provisions
of Part X of the WSIA
5. U.S. Steel Canada Inc. (Re), 2016
ONCA 68 (Hoy A.C.J.O., Blair and Lauwers JJ.A.), January 26,
The Investment Canada Act governs the review of
significant investments in Canada by non-Canadians. This appeal
concerned the scope of privilege in section 36 of the
Investment Canada Act with respect to information obtained
by the Minister of Industry or an officer or employee of the Crown
in the course of the administration and enforcement of that
U.S. Steel Canada Inc. ("USSC") is subject to a
protection order under the Companies' Creditors Arrangement
Act, R.S.C., 1985, chapter C-36 ("CCAA").
Certain stakeholders in the CCAA proceedings brought a
motion for disclosure of the contents of a settlement agreement
entered into in December, 2011, by USSC, its American parent,
United States Steel Corporation ("USS"), and the Attorney
General of Canada, during litigation to enforce the Investment
Canada Act, R.S.C. 1985, chapter 28
("ICA"). The settlement agreement contained
written undertakings provided by USS to the Minister of Industry
for the purpose of the ICA.
Section 36 of the ICA provides:
36(1) Subject to subsections (3) to
(4), all information obtained with respect to a Canadian, a
non-Canadian, a business or an entity referred to in paragraph
25.1(c) by the Minister or an officer or employee of Her Majesty in
the course of the administration or enforcement of this Act is
privileged and no one shall knowingly communicate or allow to be
communicated any such information or allow anyone to inspect or to
have access to any such information.
(2) Notwithstanding any other Act
or law but subject to subsections (3) and (4), no minister of the
Crown and no officer or employee of Her Majesty in right of Canada
or a province shall be required, in connection with any legal
proceedings, to give evidence relating to any information that is
privileged under subsection (1) or to produce any statement or
other writing containing such information.
At issue on the motion was whether section 36 of the ICA
barred the disclosure of the settlement agreement.
The CCAA judge concluded that it did, and that the
settlement agreement was privileged in its entirety by virtue of
section 36 of the ICA. He dismissed the motion of four key
stakeholders seeking production of the settlement agreement on that
basis, declining to consider whether the agreement was protected by
common law settlement privilege.
The Court of Appeal allowed the stakeholders' appeal,
concluding that section 36 of the ICA did not prohibit
USSC and USS from disclosing the settlement agreement.
Writing for the Court, Hoy A.C.J.O. rejected the
appellants' submission that the CCAA judge erred in
concluding that "information" referred to in section 36
includes undertakings given in enforcement proceedings and that the
undertakings were not privileged. She agreed with the CCAA
judge's conclusion that the legislature intended
"information" to include undertakings set out in a
document given to the Minister. Hoy A.C.J.O. also agreed that
"written undertaking" in section 36(4)(b) defined the
location of the privileged information and did not define the scope
of "information" for the purpose of section 36. That
provision stipulated that section 36 does not prohibit disclosure
of "information contained in any written undertaking"
relating to an investment that the Minister is satisfied or is
deemed to be satisfied is likely to be of net benefit to Canada.
Section 36(4)(b) therefore did not make it clear that undertakings
are not information for the purpose of section 36.
Justice Hoy held that the CCAA judge did err,
however, in concluding that none of the exceptions to the privilege
regime in the ICA applied. While she noted that the
CCAA judge correctly found that the exceptions contained
in sections 36(4)(a) and (d) did not apply, Hoy A.C.J.O. agreed
with the appellants that the effect of section 36(4)(b) was that
USSC and USS were not prohibited from disclosing the settlement
The appellants asserted that USSC and USS could be required to
disclose information contained in the settlement agreement under
section 36(4)(b), even though the Attorney General invoked section
36(5), because section
36(5) only protects the Minister or other government employees or
officers from being forced to disclose information. Hoy A.C.J.O.
agreed, holding that the "exception to the exception" in
section 36(4)(b), created by section 36(5), did not apply to
USSC and USS. Therefore, if not protected by common law settlement
privilege, USSC and USS could be required to disclose information
contained in the settlement agreement.
Hoy A.C.J.O. declined to determine whether disclosure of all
or part of the settlement agreement was barred by common law
settlement privilege, noting that because neither the Court of the
Appeal nor the CCAA judge was provided with a copy of the
settlement agreement, there could be no review or evaluation as to
whether there was a competing public interest in disclosure that
outweighed the public interest in settlement. The question of
whether the agreement was protected by settlement privilege was
therefore remitted to the CCAA judge.
The content of this article is intended to provide a general
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about your specific circumstances.