The SCC Monitor (02/08/2016) - A Commentary On Recent Legal Developments By The Canadian Appeals Monitor

Since our last post, the Supreme Court has granted and denied leave in a few significant cases that will be of interest to our readers.

Leave to Appeal Granted

Auditor Liability: Livent Inc v Deloitte & Touche

The SCC granted leave to appeal from the judgment of the Ontario Court of Appeal in Livent Inc v Deloitte & Touche, 2016 ONCA 11, which is an important decision concerning the liability of auditors for negligence.

The case is extremely complex (indeed, the Court of Appeal's judgment is more than 150 pages). It arose out of the collapse of Livent, a well-known theatre production company headquartered in Toronto. The principles of the company engaged in an elaborate accounting fraud, which was uncovered in the late 1990s. Deloitte was Livent's auditor. Livent, through a special receiver appointed in insolvency proceedings, brought an action against Deloitte for negligence in failing to discover the financial fraud being perpetrated by Livent's principles.

Following the decisions by the Ontario Superior Court and Court of Appeal, the SCC has now agreed to hear this matter. This will be the Court's first chance to address auditor negligence since Hercules Managements Ltd v Ernst & Young, [1997] 2 SCR 165. That decision, which has been cited over 770 times since it was released, effectively blocked nearly all negligence claims against auditors based on public policy concerns of indeterminate liability. Depending on how the SCC rules, it may open the door to other claims against auditors or it may shut that door for good.

Leaves to Appeal Dismissed

Patent Legislative Regime is a Complete Code: Low v Pfizer Canada Inc

The SCC denied leave to appeal from the judgment of the British Columbia Court of Appeal ("BCCA") in Low v Pfizer Canada Inc, 2015 BCCA 506 ("Low"), an appeal of a class action certification based on "unlawful abuse of the patent system". The BCCA reversed the trial decision and held that the patent legislative regime was a complete code that foreclosed private-law consumer remedies based on breaches of the Patent Act.

The class action in Low sprung in part from a prior SCC decision, Pfizer Canada Inc v Novopharm, 2012 SCC 60, which held that Pfizer's patent for Viagra was invalid for insufficient disclosure contrary to the Patent Act. Consequently, generic drug manufacturers were able to enter the market at a lower price. The proposed class in Low was defined by the time period in which the generic version of Viagra - sildenafil - was prohibited from market entry as a result of Pfizer's invalid patent. This tenacious class action sought to hold Pfizer accountable to consumers for the difference between the revenue...