Canada: Ontario Court Of Appeal Identifies "Potential Danger" In Moving For Summary Judgment

The Court of Appeal for Ontario released its decision last week in Canadian Imperial Bank of Commercie v. Deloitte & Touche.  Thiis was an appeal from the partial summary judgment granted in favour of the defendant, Deloitte, in a case brought by a syndicate of lenders against Deloitte for its alleged negligence relating to audit services provided prior to the collapse of Philip Services Corp ("Philip").

Justice Perell heard the motion earlier this year and granted partial summary judgment dismissing the lenders' claim in negligence against Deloitte.  Our commentary on Justice Perell's decision can be found here.

The appeal, as stated by Associate Chief Justice Hoy, "illustrates a potential danger when a party brings a motion for partial summary judgment". 


A group of lenders, led by CIBC, (the "Lenders") sued Deloitte and Deloitte-Verein for approximately US $1,000,000,000 that was advanced to Philip under a credit agreement dated August 11, 1997 (the "Credit Agreement"). The action was certified as a class action. The Lenders are seeking damages for negligence and reckless or negligent misrepresentation. The alleged negligence relates to unqualified opinions provided by Deloitte regarding the audits of Philip's financials for the financial years ending in 1995 and 1996. It is also not disputed between the parties that the financial statements at issue materially misstated Philip's financial position.

Philip pleaded that it (through its officers and directors) relied on the audited financial statements when it undertook a series of acquisitions and expansion in the late 1990s. Philip further pleaded that if the audits had been performed in accordance with the applicable contract and professional standards, then Philip would not have undertaken the acquisitions that the misstated financial statements made possible.

Deloitte denies that the Lenders and Philip relied on the audited financial statements and also denies that one of the purposes of the audit opinions was "to permit the ... Lenders to make investment or lending decisions in respect of Philip" or to assist Philip's management and directors in "charting the course of the company" or making investment decisions. The Court of Appeal found that these denials were a key factor in the conclusion that the summary judgment motion created a real risk of inconsistent findings at trial.

Summary Judgment was "Inadvisable"

On the motion for summary judgment, the Lenders argued that granting partial summary judgment was inadvisable in the context of the litigation as a whole and risked duplicative or inconsistent findings at trial. The motion judge rejected this argument and held that there was no risk of duplicative or inconsistent findings and carved out the claims relating to Deloitte's recklessness or whether it performed its contractual obligations to Philip as being the issues to be determined at trial. He further held that the duty of care issue relating to the negligence claim was discrete from the issues relating to the reckless misrepresentation and breach of contract claims to be decided at trial and that the mechanisms of the trial would not assist with the duty of care issue.

The Court of Appeal disagreed with the conclusion that there was no risk of duplicative or inconsistent findings and that partial summary judgment was advisable in the circumstances. The Court of Appeal held that while the Lenders' claim for reckless misrepresentation and breach of contract do not involve establishing a duty of care, these claims do arise in the same factual matrix as the Lenders' claim in negligence. The overlap in the factual matrix creates the possibility of duplicative or inconsistent findings at the trial of the reckless misrepresentation and breach of contract claims and this error undermines the motion judge's findings that the summary judgment motion was advisable in the context of the litigation as a whole. The Court of Appeal further points out that the summary judgment motion was long and complex and did not result in any party being released from the proceedings and, further, was not expected to materially shorten the lengthy trial which is currently scheduled for four months.

The Court of Appeal further disagreed on several conclusions made by the motion judge in support of his conclusion that indeterminate liability was a serious concern on the facts of the particular case. The Court of Appeal held that in order to determine the purpose of the audit and who was entitled to rely upon it, a trial judge must consider "the complex factual matrix that emerges at trial, which may include Deloitte's ongoing position as Philip's auditor from 1991 to 1999, Philip's series of credit agreements with CIBC during those years, each providing for increase of credit and each containing similar financial disclosure terms, and Deloitte's knowledge of Philip's borrowing needs".

The Court of Appeal ordered that the Lenders' claims in negligence proceed to trial with the other claims.

Potential Impact

The Court of Appeal's overturning of the partial summary judgment may represent an ebb against the flow of the "cultural shift" encouraged in the Supreme Court of Canada's Maudlin v. Hryniak decision and may provide parties resisting summary judgment with arguments that the summary judgment motion would result in impermissible inefficiency or unfairness.  The decision should further encourage counsel to look not only at the legal issue they wish to have determined on the summary judgment motion, but the impact the determination of this issue will have on the entirety of the litigation.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.