New Brunswick can't sue auditor, top court rules
New Brunswick cannot sue accounting firm Grant Thornton over an allegedly flawed audit which led the province to backstop hefty loans to a company that soon ran into financial trouble, the Supreme Court of Canada has ruled.
In a 7-0 decision Thursday, the high court concluded the province did not file its claim against Grant Thornton within the allowable time limit.
Events in the case began when the Atcon group of companies secured $50 million in loan guarantees from the province after Grant Thornton carried out an audit of Atcon's financial statements for the fiscal year ending Jan. 31, 2009.
Atcon ran out of working capital four months later, prompting the bank that loaned the money to seek the total amount of the guarantees, which the province paid in early 2010.
The province hired a second auditor, which found in a February 2011 draft report that Atcon had considerably overstated its financial position. A final report was completed in November 2012. The province took court action against Grant Thornton in June 2014 for its alleged negligence on the first audit.
Grant Thornton disputed the allegations and moved to have the action tossed out, arguing it came too late.
A judge allowed Grant Thornton's motion to halt the action on the basis that more than two years had passed since the province had discovered the relevant facts of its claim, but the decision was overturned by the province's court of appeal.
Writing for a majority of the Supreme Court, Justice Michael Moldaver said the appeal court had adopted too high a standard for triggering the start of the two-year time-frame set out in provincial law.
A claim is discovered when the plaintiff has knowledge of the material facts upon which "a plausible inference of liability" on the defendant's part can be drawn, Moldaver wrote.
"It follows from this standard that a plaintiff does not need knowledge of all the constituent elements of a claim to discover that claim."
Moldaver said he was satisfied that New Brunswick knew or ought to have known by February 2011 that Grant Thornton might be liable, yet the province did not go to court until more than three years later.
The Supreme Court set aside the appeal court judgment and restored the initial judge's decision to end the province's action.
This report by The Canadian Press was first published July 29, 2021.
CTVNews.ca Top Stories
Minister 'outraged' after AFN national chief's headdress taken from Air Canada cabin
The federal minister of Crown-Indigenous relations is calling on Air Canada to 'make things right' with the national chief of the Assembly of First Nations, who said her headdress was removed from an airplane cabin during a flight this week.
Sophie Gregoire Trudeau on navigating post-political life, co-parenting and freedom
Sophie Gregoire Trudeau says there is 'still so much love' between her and Prime Minister Justin Trudeau, as they navigate their post-separation relationship co-parenting their three children.
BREAKING Stranded orca calf swims out of B.C. lagoon where she was trapped for weeks
An orca whale calf that has been stranded in a B.C. lagoon for weeks after her pregnant mother died swam out on her own early Friday morning.
'Violation': CSIS had officer investigated after she reported a superior raped her
A CSIS officer's allegations that she was raped repeatedly by a superior in agency vehicles set off a harassment inquiry, but also triggered an investigation into her that concluded the alleged attacks were a “misuse” of agency vehicles by the woman.
'Too young to have breast cancer': Rates among young Canadian women rising
Breast cancer rates are rising in Canada among women in their 20s, 30s and 40s, according to research by the University of Ottawa (uOttawa).
'I was scared': Ontario man's car repossessed after missing two repair loan payments
An Ontario man who took out a loan to pay for auto repairs said his car was repossessed after he missed two payments.
Canada recognizes housing as a human right. Few provinces have followed suit
As more Canadians find themselves struggling to afford or find housing, the country's smallest province is the only one that can point to legislation recognizing housing as a human right.
Charlie Woods, son of Tiger, shoots 81 in U.S. Open qualifier
Charlie Woods failed to advance in a U.S. Open local qualifying event Thursday, shooting a 9-over 81 at Legacy Golf & Tennis Club.
Taylor Swift dons Montreal designer's dress in 'Fortnight' video
A pair of Montreal designers' work has now been viewed over 41 million times. Taylor Swift dons a Victorian throwback black gown in her latest music video, 'Fortnight', designed by UNTTLD due Simon Belanger and Jose Manuel Saint-Jacques.