Indeterminate Liability Of Auditors And The Dangers Of Partial Summary Judgment

Canadian Imperial Bank of Commerce v Deloitte & Touche, 2016 ONCA 922

In a decision released on December 8, 2016, the Ontario Court of Appeal allowed an appeal from partial summary judgment, holding that issues of indeterminate auditor liability should proceed to trial.

Facts

In 1998, an accounting fraud was discovered at Philip Services Corp. ("Philip"), a publicly traded company. The Plaintiffs alleged that Philip's auditors, Deloitte and Deloitte Touche Tohmatsu ("Deloitte") gave unqualified opinions in connection with its audits of Philip's consolidated financial statements for the financial years ending December 31, 1995 and 1996.

Canadian Imperial Bank of Commerce ("CIBC") and High River Limited Partnership ("High River"), together with other lenders (collectively the "Lenders") advanced approximately US $1,000,000,000 to Philip under a Credit Agreement in 1997. Following their discovery of the material misstatement of Philip's financial position, the