On May 24, 2016, the Ontario Court of Appeal issued the latest decision in the ongoing Livent legal saga. Some two years previously, Gans J. of the Superior Court of Justice awarded judgment in favour of Livent's Special Receiver against the company's former auditors. Gans J. found that the auditors were not liable with respect to the pre-1996 audits, and were negligent in respect of the 1996 audit, but caused no damages to the company. The auditors were, however, found liable for negligence in the fall of 1997 and the spring of 1998.
In January of 2016, the Ontario Court of Appeal dismissed an appeal and a cross-appeal from the decision of Gans J.
Now, in Livent v. Deloitte & Touche, Chief Justice Strathy of the Ontario Court of Appeal has stayed that Court’s decision, pending the outcome of the auditors' application for leave to appeal to the Supreme Court of Canada. The stay relieves the auditors from the immediate oblgiation to pay in excess of $118 million.
The decision is notable because the Court found there was not strong evidence that the auditors would suffer irreparable harm if no stay were granted, which often drives the stay analysis. Rather, the decision appears to have turned on the fact that, since the appellants’ insurers were well-known (or in the case of the only one that was not, had proven its solvency and minimum capital), it was sufficient for them to have given an assurance to indemnify the appellants within 30 days of the dismissal of the application for leave, and the appellants gave a direction to the insurers to pay the respondents. The Court included a term that made the indemnities and directions irrevocable.