Auditors Owed No Duty Of Care To "Client's Clients" In Lavender

In its recent decision in Lavender v Miller Bernstein LLP¹, the Court of Appeal for Ontario overturned a summary judgment decision imposing liability on the auditor of a now defunct securities dealer in a class action brought on behalf of the dealer's clients.  The Court of Appeal applied recent authority from the Supreme Court of Canada in Deloitte & Touche v Livent Inc. (Receiver of)² in concluding that there was insufficient proximity between the auditor and the dealer's clients to impose a duty of care.  The Lavender decision provides important clarity to the duty of care analysis in auditor liability cases, and is likely to have broader implications for professional negligence claims brought by third parties not in a personal relationship with the defendant.