



COURT OF APPEAL FOR ONTARIO

CITATION: Livent Inc. v. Deloitte &
Touche, 2016 ONCA 395

DATE: 20160524

DOCKET: M46130

Strathy C.J.O., (In Chambers)

BETWEEN

Livent
Inc.,

Through Its Special
Receiver and Manager Roman Doroniuk

Plaintiff (Respondent)

and

Deloitte & Touche
and Deloitte &
Touche LLP

Defendants (Appellants)

Alan J. Lenczner and Matthew Fleming, for the appellants

Peter Howard and Aaron Kreaden, for the respondent

Heard: March 17, 2016

Motion for a stay pursuant
to s. 65.1 of the
Supreme Court Act
, R.S.C. 1985, c. S-26.

ENDORSEMENT

[1]

On March 17, 2016 I granted a stay, on terms, of the judgment of the
Superior Court of Justice dated April 4, 2014 and of this courts order dated
January 8, 2016, pursuant to s. 65.1 of the
Supreme Court Act
, R.S.C.
1985, c. S-26, pending determination of the appellants application for leave
to appeal to the Supreme Court of Canada. I advised the parties my reasons
would follow. These are my reasons.

[2]

The trial judge found the appellants liable for damages of
$84,750,000.00, prejudgment interest of $33,285,770.55 and costs in an amount
agreed on by the parties.

[3]

This court dismissed the appellants appeal on January 8, 2016. The appellants
have filed an application for leave to appeal to the Supreme Court of Canada.

[4]

This court discussed considerations on this kind of motion in
Yaiguaje
v. Chevron Corporation
, 2014 ONCA 40. They are those set out in
RJR-MacDonald
Inc. v. Canada (Attorney General)
, [1994] 1 S.C.R. 311 at 334: (1) whether
there is a serious question to be determined on the proposed appeal; (2)
whether the moving party will suffer irreparable harm if the stay is not
granted; and (3) whether the balance of convenience favours a stay.

[5]

It has been held that these factors are not to be treated as watertight
compartments and the strength of one may compensate for weaknesses of another.
The overarching consideration is whether the interests of justice call for a
stay.
In
BTR Global Opportunity
Trading Ltd. v. RBC Dexia Investor Services Trust
,
2011 ONCA 620,
Laskin J.A.
described the test as follows
, at para. 16
:

The moving party  must show that it has raised a serious issue
to be adjudicated, that it will suffer irreparable harm if a stay is not
granted, and that the balance of convenience favours a stay. These three
components of the test are interrelated in the sense that the overriding
question is whether the moving party has shown that it is in the interests of
justice to grant a stay.

See also
Longley v. Canada (Attorney General)
2007 ONCA 149 at paras. 14-15.

[6]

I turn to these factors.

(1)

Serious question to be determined

[7]

As MacPherson J.A. explained in
Yaiguaje
, the serious
question factor is modified in the context of stays pending appeal to the
Supreme Court of Canada to require not simply an assessment of the merits of
the proposed appeal, but also whether it raises an issue of public or national
importance and thus meets the stringent requirements of s. 40(1) of the
Supreme
Court Act.

[8]

Generally, this factor has been described as a low threshold: see
Circuit
World Corp. v. Lesperance
(1997), 33 O.R. (3d) 647 (C.A., Chambers).


[9]

In my view, the proposed appeal gets over the low threshold, even when
the burden under s. 40(1) of the
Supreme Court Act
is taken into
account. The duty of care owed by an auditor of a public company and the
applicable standard of care can reasonably be considered issues of public
importance. The appellants are able to present a serious argument for leave.

(2)

Irreparable Harm

[10]

The irreparable harm requirement refers to harm which either cannot be
quantified in monetary terms or which cannot be cured, usually because one
party cannot collect damages from the other:
RJR-Macdonald
at p. 341,
Fontaine
at para. 36. In Robert J. Sharpe,
Injunctions and Specific
Enforcement
, Looseleaf Edition, Canada Law Book, Toronto, it is stated at
para. 2.411 that [i]t has been held that the courts should avoid taking a
narrow view of irreparable harm.

[11]

In this case, as in
Yaiguaje
, the evidence of irreparable harm
is weak. Nevertheless, I am satisfied that permitting the respondent to
immediately enforce its judgment, while the leave application is pending, would
be sufficiently disruptive of the appellants business to amount to irreparable
harm. While it is weak, it is sufficient to require an assessment of the
balance of convenience.

(3)

Balance of Convenience

[12]

The balance of convenience is just that  a balancing of which party
will suffer the greater harm from the stay being granted or refused. In this
case, in my view, it goes in particular to the question of whether the
interests of justice make up for the weakness of the irreparable harm factor.

[13]

The respondent recognizes that, short of paying the judgment, the provision
of acceptable security for the judgment would eliminate or substantially
mitigate the risk of harm and tip the balance of convenience in favour of a
stay. For this reason, the debate before me centred on the nature of security
to be provided.

[14]

In my view, the security ultimately offered by the appellants was reasonable
and provides the respondent with satisfactory assurance that the judgment will
be promptly paid in full if the application for leave fails.

[15]

The appellants liability insurance covers the full amount of the
judgment. The appellants have purchased a currency hedge contract to cover any
fluctuation in the value of the Canadian dollar (in which the judgment is
expressed) against the U.S. dollar (in which the insurance is expressed). The
appellants insurers have undertaken to indemnify the appellants for the
amounts payable to the respondent within 30 days of the dismissal of the leave
application. The appellants have given a direction to the insurers to pay the funds
directly to the respondent. I have added a term that this direction be
irrevocable. There is evidence that there are no other outstanding claims under
the applicable policies. With one exception, the insurance is with well-known
institutional insurers. The exception is the appellants captive liability
insurer, which has given reasonable evidence of its solvency and of its
statutory surplus. There is no reason to believe that the solvency of any
insurer is at issue. I have made provision that the respondents may apply to the
court to vary or discharge the stay in the event of a material change in
circumstances, which would include a change in the solvency of any insurer. As
a backstop to the insurance, in the unlikely event it is required, the
appellants have provided financial evidence of their solvency.

[16]

Counsel for the appellants acknowledged that the court retains
jurisdiction over them for the purpose of enforcing compliance with the
insurers undertakings. Coupled with the evidence of the appellants own
financial position, this gives the respondent all the protection it can
reasonably require pending the disposition of the leave application.

[17]

For these reasons, it is my view that there is no reasonable likelihood
that the claim will not be immediately paid in full by the insurers if leave is
not granted. As in
Yaiguaje
, it can be anticipated that the Supreme
Court of Canada will deal with the leave application in a timely manner, likely
this fall.

[18]

In the circumstances, the balance of convenience clearly favours the appellants.

[19]

The motion is therefore granted and the judgment of the Superior Court
of Justice dated April 4, 2014 and order of this court dated January 8, 2016 are
stayed, on the terms set forth herein, pending the determination of the
application for leave to appeal to the Supreme Court of Canada.

[20]

Counsel are to provide a draft order incorporating these terms as well
as a form of sealing order with respect to the confidential financial
information filed on the motion. In my view, this is not an appropriate case
for costs, but the parties may file written submissions if costs are sought.


