[1]               This is a billion dollar consolidated action under the Class Proceedings Act, 1992, S.O. 1992, c. 6. In the class action, the Representative Plaintiffs are Canadian Imperial Bank of Commerce (“CIBC”), which was the lead lender of a syndicate of sixty banks that loaned Philip Services Corp. (“Philip”) $ 1.5 billion ($US) in the summer of 1997, and High River Limited Partnership, which is an assignee of the security granted by Philip for its borrowing.

[2]               It is essentially a battle about the application of the law of negligence and negligent misrepresentation as it may apply to auditors that issue audit reports that are used by lenders deciding to lend money to a public corporation. The Defendant auditors in this action are Deloitte & Touche (“Deloitte”),

[3]               The Representative Plaintiffs allege that but for Deloitte’s negligence or recklessness in preparing audit reports, they would not have advanced loans to Philip. A co-plaintiff is Philip by its Receiver and Manager, Robert Cumming. He alleges that but for Deloitte’s negligence or recklessness in preparing the audit reports, Philip would not have undertaken an acquisition program that proved fatal to Philip’s business. The Plaintiffs also allege that Deloitte is liable for breach of contract. 

[4]               There are now two motions before the court.

[5]               The Plaintiffs bring a motion to amend their Statement of Claim by adding new paragraphs 90-100.

[6]               Deloitte brings a cross-motion for an order declaring that the new paragraphs are prohibited by s. 61 of the Chartered Accountants Act, 2010, S.O. 2010, c. 6, Sched. C. Deloitte also seeks a declaration that no evidence, document, record or other information created used or made in connection with a proceeding against a Deloitte partner (Noel Woodsford) before the Institute of Chartered Accountants (the “Institute”), including the Institute’s discipline decision, is admissible in this civil proceeding by virtue of s. 61 of Chartered Accountants Act, 2010.

[7]               Both the motion and the cross-motion ultimately are about the interpretation and application s. 61 of the Chartered Accountants Act, 2010, which states:

[8]               The particular question that the court must address is whether s. 61 of the Chartered Accountants Act, 2010 applies to evidence from a disciplinary proceeding that was completed under the Chartered Accountants Act, 1956, S.O. 1956, c. 7 before the enactment of the Chartered Accountants Act, 2010.

[9]               For the reasons that follow, I dismiss the Plaintiffs’ motion and I grant Deloitte’s motion but only insofar as the court shall declare that the proposed new paragraphs to the Statement of Claim are prohibited by s. 61 of the Chartered Accountants Act, 2010.

[10]           I dismiss the balance of Deloitte’s cross-motion as premature. This dismissal is without prejudice to either party objecting at a hearing or trial of this action that evidence tendered by a party is not admissible because of s. 61 of the Chartered Accountants Act, 2010. As I shall explain below, s. 61 may be the basis for the preclusion of otherwise admissible evidence, but it is inappropriate to make a blanket peremptory order before the trial.    

[11]           Philip was a public company based in Hamilton, Ontario. It was an integrated resource recovery and industrial service business that provided metal recovery and processing services, by-products recovery, and environmental services to major industry sectors throughout North America. Deloitte was Philip’s auditor.

[12]           In the summer of 1997, a syndicate of lenders led by CIBC, which carries on business as a chartered bank in Canada, entered into a $1.5 billion ($US) Credit Agreement with Philip. Some of the members of the syndicate subsequently assigned their securities to others.

[13]           CIBC alleges that in deciding whether to make a loan to Philip, it relied on the audited financial statements prepared by Deloitte. It alleges that the audited financial statements contained significant misstatements, and CIBC states that it would not have made the loan if it had known the truth.

[14]           On May 12, 1998, the Institute of Chartered Accountants of Ontario (the “Institute”), under the hand of Elizabeth Hare, C.A., Associate Director of Standards Enforcement, wrote to Noel Woodsford, the partner responsible for the Philip audits, inviting him to provide comments on the audit of Phillip for 1995 and 1996. The letter indicated that the Professional Conduct Committee would be commencing an investigation.

[15]           In the fall of 1998, Deborah J. Matz, who was Legal Counsel-Risk Management asked the Institute to delay its investigation and suggested that Deloitte had been deceived by Philip’s officers.

[16]           I pause here in the narrative to point out that a material issue in the litigation now before the court is Deloitte’s defence of ex turpi causa. Deloitte, in effect, points an accusatory finger at certain Philip executives. I will return to this point below, but I foreshadow to say that proving Deloitte’s defence may involve it making its own investigation about what was happening at Philip during the relevant time.

[17]           Returning to the narrative, around November 1998, the Institute’s Professional Conduct Committee retained Michael Cashion as an investigator authorized to interview any member and examine any books, documents or working papers. Mr. Cashion’s investigation was subsequently taken over by Jim King.

[18]           In March 1999, legal counsel retained by Deloitte contacted the Institute and suggested that its investigation was a fishing expedition and premature. At the same time, Mr. Woodsford and Ronald McNeil, another chartered accountant at Deloitte, sought and were granted a hearing before the Professional Conduct Committee. They asked the Institute to defer its investigation. This request was refused.  

[19]           Meanwhile, after the revelation of an accounting fraud, Philip defaulted on its loans, its business failed, and on June 25, 1999, it and certain of its subsidiaries sought protection under the Companies’ Creditors Arrangement Act, R.S.C., 1985, c. C-36.

[20]           In October 1999, Messrs. Woodsford and McNeil brought an application in the Superior Court to prohibit the investigation of the Institute’s Professional Conduct Committee. In the application materials, they noted that the affairs of Philip were being examined in class actions in Canada and in the United States and were being investigated by the RCMP and the U.S. Securities and Exchange Commission. They submitted that civil actions in Ontario and in the United States involved the same issues being investigated by the Institute. They submitted that the Institute’s investigation risked the disclosure of Deloitte’s privileged information and would compromise Deloitte’s right to have a fair trial of the various civil proceedings in which it was a defendant.

[21]           On March 8, 2000, the Divisional Court dismissed Deloitte’s application to stay the Institute’s investigation. The Institute’s investigation of the performance of its members during the Philip’s audit resumed and continued for years.

[22]           Meanwhile in the CCAA proceedings, all of Philip’s assets, except the right to prosecute this and certain other actions, were transferred to a new company.

[23]           On November 22, 2000, the CIBC commenced a proposed class action against Deloitte and the other Defendants.

[24]           On December 19, 2000, the Receiver commenced an action against Deloitte and the other Defendants.

[25]           The actions were later consolidated into the action now before the court. The gravamen of the actions is the allegation that Deloitte was negligent in performing the audits. With interest growing, the claim against Deloitte now exceeds $1 billion.

[26]           The Plaintiffs allege that Deloitte did not perform its audits in accordance with applicable professional standards and had Philip’s 1995 and 1996 audited financial statements reflected Philip’s true financial position and results, the Original Lenders would not have made their loans.

[27]           On April 22, 2004, Justice Winkler, as he then was, ordered that the class action be certified for the following common issues:

[28]           The Consolidated Statement of Claim was issued on April 28, 2004.

[29]           In January 2007, the Institute brought charges against Mr. Woodsford. The proceedings were under the Chartered Accountants Act, 1956.

[30]           With some charges being withdrawn, on October 16, 2008, the Institute convened a hearing of the charges against Mr. Woodsford. Mr. Woodsford pleaded not guilty, but he did not call evidence with respect to the charges. Mr. King, who had succeeded as investigator, testified for the prosecution. He was not cross-examined.

[31]           On October 16, 2008, the Discipline Committee found Mr. Woodsford guilty of several charges relating to the audit and, in particular, he was found liable for not properly planning or supervising the audit. Mr. Woodsford made submissions with respect to discipline. In the result, he was reprimanded, fined $75,000, and ordered to pay costs of $160,000.

[32]           It is important to note and to keep in mind that the proceedings and the order made against Mr. Woodsford were under the Chartered Accountants Act, 1956. It is also important to take note that there is nothing comparable to s. 61 of the 2010 Act in the 1956 Act.

[33]           The Plaintiffs were not aware of the outcome of the proceedings before the Institute until July 2009, when the Discipline Committee’s decision was published in the press.

[34]           On May 18, 2010, the Chartered Accountants Act, 2010 came into force. It along with the Certified General Accountants Act, 2010 and the Certified Management Accountants Act, 2010, was brought into force pursuant to Bill 158, An Act to repeal and replace the statutes governing the Certified General Accountants Association of Ontario, the Certified General Management Accountants of Ontario and The Institute of Chartered Accountants of Ontario. The new statutes repealed and replaced the predecessor statutes.

[35]           In light of what they now know about the proceedings before the Institute, the Plaintiffs seek to amend their Consolidated Statement of Claim to plead facts giving rise to an issue estoppel.

[36]           The material facts to be pleaded include the facts that: (a) from 1998-2005, the Institute investigated Noel Woodsford and Ron McNeill,  the Deloitte partners in charge of the Philip audits; (b) in 2007, the Institute charged Mr. Woodsford with breaching Rules 206 (professional standards) and 218 (retention of audit records) of the Institute’s Rules of Professional Conduct; and (c) following a hearing, at which Woodsford led no evidence, the Institute by decision dated July 6, 2009, determined that Woodsford had breached Rules 206 and 218.

[37]           Pausing here, it is worth noting that Rules 206 and 218 were adopted under the authority of s. 8 of the 1956 Act and continued, unchanged, under the authority of ss. 63 and 65 of the 2010 Act. In other words, pursuant to s. 65 of the Chartered Accountants Act, 2010, the by-laws enacted under the Chartered Accountants Act 1956 under which Mr. Woodsford was disciplined remain in force today in precisely identical form.

[38]           Discoveries in the action are not completed, and the action has not been set down for trial. Recently, there was a refusals motion. See CIBC v. Deloitte & Touche, 2013 ONSC 917, where - without a discussion of s. 61 of the Chartered Accountants Act, 2010 – I addressed the issue of the relevance of questions about the proceedings before the Institute. In paragraphs 106-108 of my Reasons for Decision, I stated:

[39]           Returning to the point above about Deloitte’s ex turpi causa defence, some of the material that it gathered and prepared for the Institute’s proceeding would appear to be material that it would gather and would prepare for its defence of the negligence and breach of contract claims in the case at bar.        

[40]           Both the motion and the cross-motion turn on the interpretation and application, if any, of s. 61 of the Chartered Accountants Act, 2010 to a discipline proceeding under the Chartered Accountants Act, 1956.

[41]           The Plaintiffs’ major argument is two-branched. The first branch is the submission that s. 61 should be read literally and, accordingly, it has preclusive effect only to proceedings “under this Act”; i.e., to a proceeding under the Chartered Accountants Act, 2010. The Plaintiffs submit that the 2010 Act is not retrospective and that it is clear that it applies to, and only to, proceedings “under this Act”.

[42]           Thus, the Plaintiffs submit that s. 61 does not apply to the proceedings in the case at bar that occurred and were completed under the Chartered Accountants Act, 1956. Since s. 61 does not apply, there is no reason not to grant leave to add ten paragraphs about the proceedings before the Institute.

[43]           In support of the first branch of their argument, the Plaintiffs rely on the decision of Justice J. Macdonald in L.D. v. S.K, [1998] O.J. No. 5672 (S.C.J.), discussed below.

[44]           The second branch of the Plaintiffs’ argument, which is also responsive to the cross-motion, is that in any event, s. 61 does not apply to “facts” associated with the proceedings before the Institute that are relevant to the Plaintiffs’ claim of negligence and breach of contract and Deloitte’s defence of ex turpi causa.

[45]           In what I regard as a minor argument, the Plaintiffs’ also argue that Deloitte’s reliance on s. 61 of the Chartered Accountants Act, 2010 is an impermissible collateral attack on the order I made on the refusals motion.     

[46]           Deloitte’s argument for opposing the amendment to the Statement of Claim and in aid of its cross-motion for declarations is multi-faceted. Deloitte submits that s. 61 cannot be read literally because to do so would produce absurd results and such a reading would be contrary to giving s. 61 a purposive meaning consistent with its public policy purpose of separating proceedings before the Institute and civil proceedings before the Superior Court.

[47]           Deloitte submits that s. 61 is in para materia with other administrative law statutes that advance a public policy that the evidence and the decisions of disciplinary proceedings by an administrative tribunal are to be kept separate from court proceedings.

[48]           Deloitte relies on case law, including several decisions of the Court of Appeal, where provisions similar to s. 61 have been interpreted and applied to preclude the evidence from disciplinary proceedings in subsequent civil actions.

[49]           Deloitte submits that in the case at bar, the proceeding before the Institute was a “proceeding under this Act;” i.e., under s. 61 because s. 61 deals with a matter of procedure and therefore applies retrospectively.

[50]           Further, Deloitte submits that pursuant to s. 52(4) of the Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, the procedure established by a new or amended Act shall be followed in proceedings in relation to matters that happened before the replacement or amendment. It submits that the relevant “proceeding” is the one now before this Court and the relevant “matter” is the Institute’s proceedings under the Chartered Accountants Act, 1956.

[51]           Deloitte submits that it would be incongruous to conclude that s. 61 of the 2010 Act should apply only to proceedings then extant under that Act and it should not matter whether the Institute’s proceeding was concluded one day before or one day after the 2010 Act took effect.

[52]           Deloitte submits that while literally correct, the Plaintiffs’ interpretation of s. 61 produces absurd results and results that are inconsistent with the public policy advanced by s. 61 of the Chartered Accountants Act, 2010 and other statutes, which is to keep separate the adjudicative work of administrative tribunals from that of the court.  

[53]           The motion and the cross-motion raise three major issues.

[54]           The first issue considers the effect, if any, of s. 61 of the Chartered Accountants Act, 2010 on the motion to amend the Statement of Claim in the consolidated action now before the Superior Court.

[55]           As the discussion below will reveal, the answer to the first issue is that if s. 61 applies, then the Plaintiffs should not be granted leave to amend their Consolidated Statement of Claim.

[56]           As a corollary to the first answer, the denial of the amendment would, in turn, deprive the Plaintiffs of being able to assert that there is an issue estoppel that precludes Deloitte from denying that it was negligent as found by the Institute in its decision in the proceedings against Mr. Woodsford.

[57]           Correspondingly, the Plaintiffs’ inability to plead issue estoppel or abuse of process against Deloitte would allow Deloitte to enjoy the benefit of s. 61 of the Chartered Accountants Act, 2010, which would not have been the case if the Plaintiffs’ ponderously moving 2000 actions had been tried before May 2010, when the new Act came into force.

[58]           The second major issue is whether as a matter of statutory interpretation, s. 61 of the Chartered Accountants Act, 2010 applies to a completed proceeding that had been initiated under the repealed and replaced predecessor 1956 Act.

[59]           As the discussion below will reveal the answer to the second issue is that s. 61 of the Chartered Accountants Act, 2010 does apply to the circumstances of the case at bar.

[60]           This answer to the second major issue entails that the Plaintiffs’ motion for leave to amend should be dismissed.

[61]           The third major issue is having determined that s. 61 of the Chartered Accountants Act, 2010 applies to the circumstances of the case at bar, what declarations, if any, should be made in Deloitte’s cross-motion. The general issue here is what is the effect of s. 61 of the Chartered Accountants Act, 2010 on the case at bar.

[62]           As the discussion below will reveal, my conclusion on the third issue is that although the pleas of issue estoppel or abuse of process are untenable because of s. 61 of the Chartered Accountants Act, 2010, the further application of s. 61 should be left to the trial judge.

[63]           Pursuant to rule 14.01(4) of the Rules of Civil Procedure, a party may rely on a fact that occurs after the commencement of an action and, if necessary, may move to amend a statement of claim to allege the fact. The Plaintiffs rely on this rule insofar as the proceedings before the Institute occurred after the commencement of their actions.

[64]           Under rule 26.01, leave to amend a pleading is available at any stage of an action and “shall be granted in the absence of prejudice that cannot be compensated by costs or an adjournment.”

[65]           The language of rule 26.01 is mandatory, and amendments to a pleading shall be allowed in the absence of prejudice.

[66]           In the case at bar, Deloitte did not expressly argue that it would be prejudiced by the proposed amendments; rather, it relied on a line of authorities that holds that notwithstanding the mandatory language of rule 26.01, leave to amend will not be granted if the proposed pleading is legally unsound or non-compliant with the rules of pleading. See: Brookfield Financial Real Estate Group Ltd. v. Azorim Canada (Adelaide Street) Inc., 2012 ONSC 3818 at para. 24; Marks v. Ottawa (City), 2011 ONCA 248 at para. 19; F. (M.) v. S. (N.) (2000), 2000 CanLII 16840 (ON CA), 49 O.R. (3d) 414 at para. 40; Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, (1st ed.) (Markham, Ontario: LexisNexis, 2010) at pp. 360-61.

[67]           I agree with Deloitte’s argument that if s. 61 of the Chartered Accounts Act, 2010 applies to the pleading proposed by the Plaintiffs, then leave to amend should not be granted.

[68]           There is a line of cases where amendments to a pleading have not been allowed because the proposed amendment would be contrary to a statutory provision similar to s. 61.

[69]           For example, F. (M.) v. S. (N.), supra was decided under s. 36(3) of the Regulated Health Professions Act, 1991, S.O. 1991, c. 18, which is substantively similar to s. 61 of the Chartered Accountants Act, 2010. Section 36 (3) of the Regulated Health Professions Act, 1991, states:

[70]           There are at least seven other statutes in Ontario that have similar language to s. 61 of the Chartered Accountants Act, 2010. Visualize: (1) Ontario College of Teachers Act, 1996, S.O. 1996, c. 12, s. 48(3); (2) Social Work and Social Service Work Act, 1998, S.O. 1998, c. 31, s. 50(6); (3) Early Childhood Educators Act, 2007, S.O. 2007, c.7, Sched. 8, s. 51(6); (4) Ontario College of Trades and Apprenticeship Act, 2009, S.O. 2009, c. 22, s. 62(5); (5) Certified General Accountants Act, 2010, S.O. 2010, c. 6, Sched. A, s. 63; (6) Certified Management Accountants Act, 2010, S.O. 2010, c. 6, Sched. B, s. 66; and (7) Retirement Homes Act, 2010, S.O. 2010, c. 11, s. 113(6).

[71]           In F. (M.) v. S. (N.), the defendant physician pleaded certain matters that had occurred in a prior discipline proceeding against him before the College of Physicians and Surgeons in relation to a complaint by the plaintiff.  The Court of Appeal upheld the motions court judge’s and the Divisional Court’s determinations that those pleadings should be struck out. It is informative to note that in F. (M.) v. S. (N.), that it was the defendant, who one would think is the natural beneficiary of s. 36(3) of the Regulated Health Professions Act, 1991, that unsuccessfully sought to avoid the operation of the provision. 

[72]           F. (M.) v. S. (N.) has been followed in subsequent cases in respect of  legislative provisions that are like s. 61 of the Chartered Accountants Act, 2010. See: Conroy v. College of Physicians & Surgeons (Ontario), 2011 ONSC 324 (CanLII), 2011ONSC 324 at para. 51-57, aff’d 2011 ONCA 517 at para. 1; Lipsitz v. Ontario, [2009] O.J. No. 4353 (SCJ), at para. 30-34, aff’d 2011 ONCA 466 at para. 94-103; MacNeil v. Humber River Regional Hospital, 2011 ONSC 6691 at para. 36-46; Kernohan v. Ontario, [2009] O.J. No. 3000 (SCJ), at para. 17-24.

[73]           I conclude that if s. 61 of the Chartered Accountants Act, 2010 applies to the circumstances of the case at bar, then the Plaintiffs’ proposed amendments are legally untenable and their motion for leave to amend should be dismissed.

[74]           For convenience, I will set out again the text of s. 61 of the Chartered Accountants Act, 2010, which is the provision to be interpreted. It states:

[75]           The question of statutory interpretation is: Does s. 61 of the Chartered Accountants Act, 2010 apply to proceedings under the Chartered Accountants Act, 1956?

[76]           In answering this question, it is significant to note that there is no provision comparable to s. 61 in the Chartered Accountants Act, 1956. The 1956 Act contains no prohibition on production or admissibility of charges, transcripts, exhibits, decisions or orders of the Institute’s Discipline Committee.

[77]           It is also significant to note that although the Chartered Accountants Act, 1956 is not referred to in s. 61 of the Chartered Accountants Act, 2010, it is referred to in three sections of the 2010 Act; namely sections 38 (4) (order for costs), 63 (1) (by-laws) and 65 (transition – bylaws), which state:

[78]           As noted several times above, the question to be determined is whether s. 61 of the Chartered Accountants Act, 2010 applies to completed proceedings under the Chartered Accountants Act, 1956. This critical question is a matter of statutory interpretation.

[79]           The principles of statutory interpretation direct that the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42 (CanLII), [2002] 2 S.C.R. 559, at para. 26.

[80]           The words of a statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the statute, the object of the statute, and the intention of the Legislature: R. v. Lewis, 1996 CanLII 243 (SCC), [1996] 1 S.C.R. 921; R. v. Heywood, 1994 CanLII 34 (SCC), [1994] 3 S.C.R. 761 at p. 784; R. v. Z. (D.A.), 1992 CanLII 28 (SCC), [1992] 2 S.C.R. 1025; Stubart Investments Ltd. v. The Queen, 1984 CanLII 20 (SCC), [1984] 1 S.C.R. 536.

[81]           It is presumed that the legislature avoids superfluous words and that every word in a statute has a role to play: A.G. Quebec v. Carrières Ste-Thérèse Ltée (1985), 1985 CanLII 35 (SCC), 20 D.L.R. (4th) 602 (S.C.C.) at p. 608. Legislation should not be interpreted to leave parts thereof mere surplusage or meaningless: Subilomar Properties (Dundas Ltd.) v. Cloverdale Shopping Centre Ltd., 1973 CanLII 11 (SCC), [1973] S.C.R. 596 at p. 603.

[82]           If the natural or ordinary meaning of the words of a statute leads to an unreasonable or unjust result, it is proper to look for some other possible meaning that will avoid that unreasonable or unjust result: G.T. Campbell & Associates Ltd. v. Hugh Carson Co. Ltd. (1979), 1979 CanLII 1847 (ON CA), 99 D.L.R. (3d) 529 (Ont. C.A.).

[83]           It is a presumption of statutory interpretation that the legislature does not intend to produce absurd consequences; an interpretation can be considered to be absurd if: (a) the interpretation leads to ridiculous or frivolous consequences; (b) the interpretation is illogical or incoherent; (c) the interpretation is extremely unreasonable or inequitable; (d) the interpretation is incompatible with other provisions of the statute; (e) the interpretation is incompatible with the object of the legislation; or (f) the interpretation would defeat the object of the legislation or render some aspect of it pointless or futile: Rizzo & Rizzo Shoes Ltd., 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27 at para. 27.

[84]           Where a statute affects substantive rights, it shall not apply retrospectively unless the statute expressly or by clear implication provides that it shall apply retrospectively: Angus v. Sun Alliance Insurance Co., 1988 CanLII 5 (SCC), [1988] 2 S.C.R. 256; R. v. Bickford, 1989 CanLII 7238 (ON CA), [1989] O.J. NO. 835 (C.A.); R. v. Dineley, 2012 SCC 58 at paras. 10, 66.   

[85]           The intention for a retrospective operation of a statute may be manifested by express language or may be ascertained from the necessary implications of the provisions of the statute, or the subject matter of the legislation or the circumstances in which it was passed may be of such a character as in themselves to rebut the presumption that it is intended to be prospective in its operations: Upper Canada College v. Smith (1920), 1920 CanLII 8 (SCC), 61 S.C.R. 413 at p. 419.

[86]           Under the rule about substantive rights, a statute taking away a right of action shall not be presumed to have a retrospective affect: Upper Canada College v. Smith (1920), 1920 CanLII 8 (SCC), 61 S.C.R. 413. A statute depriving a defendant of a defence shall not be presumed to have a retrospective affect: Foy v. Foy (1978), 1978 CanLII 1394 (ON CA), 20 O.R. (2d) 747 (C.A.); Angus v. Sun Alliance Insurance Co., 1988 CanLII 5 (SCC), [1988] 2 S.C.R. 256. A limitations statute will not be presumed to have retrospective affect: Upper Canada College v. Smith (1920), 61 S.C.R. 413; Merril v. Fisher (1975), 1975 CanLII 724 (ON CA), 11 O.R. (2d) 551 (C.A.).

[87]           In contrast to the rule about substantive rights, where a statute is purely procedural; i.e., it affects only the procedure and practice of the courts and does not affect substantial rights, there is a presumption that the statute shall apply retrospectively: Angus v. Sun Alliance Insurance Co., 1988 CanLII 5 (SCC), [1988] 2 S.C.R. 256; Howard Smith Paper Mills Ltd. v. The Queen, 1957 CanLII 11 (SCC), [1957] S.C.R. 403; R. v. Dineley, supra at paras. 10, 66; Wildman v. The Queen, [1984] 2 S.C.R. 256 at p. 331. The presumption against a retrospective interpretation of a statute does not apply to statutes that relate only to procedural or evidentiary matters: R. v. Bickford, supra.

[88]           At common law and under s. 52 (4) of Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, purely procedural provisions are presumed to have immediate affect and apply retrospectively to existing proceedings, unless a contrary intention is expressed in the legislation: Aylmer Meat Packers Inc. v. Ontario, 2010 ONSC 649 at paras. 12-14.

[89]           As a general rule, procedural enactments apply retrospectively; i.e. they take immediate effect and apply even to matters that were commenced before the new procedure came into force, unless the contrary intention is expressed in the legislation: Onex Corp. v. American Home Assurance Co., (2009), 2009 CanLII 72052 (ON SC), 100 O.R. (3d) 313 (S.C.J.).

[90]           A statute that changes a rule of evidence or that changes the mode of civil procedure are purely procedural except whether they interfere with substantive rights such as lawyer and client privilege or legal presumptions arising out of certain facts: Aylmer Meat Packers Inc. v. Ontario, 2010 ONSC 649 at paras. 18-33.

[91]           A litigant does not have a vested right in procedure or in the manner or mode of proof and rules of procedure and rules of evidence can be changed and will be applied in ongoing proceedings: R. v. Bickford, supra; Howard Smith Paper Mills Ltd. v. The Queen, supra. The law about privileged communications, however, is a matter of substantive law and not just a matter of procedure: Circosta v. Lilly, 1967 CanLII 311 (ON CA), [1967] 1 O.R. 398 (C.A.).

[92]           In Howard Smith Paper Mills Ltd. v. The Queen, supra the Supreme Court held that rules of evidence are procedural. In this case, a new provision of the Combines Investigation Act changed the admissibility and effect of documentary evidence, and the Court held that the new provision was purely procedural as it “creates no offence, it takes away no defence, it does not render criminal any course of conduct which was not already so declared before its enactment, it does not alter the character or legal effect of any transaction already entered into; it deals with a matter of evidence only”. The result was that the legislation applicable with retrospective effect.

[93]           As noted above, sections 52 and 64 (1) of Legislation Act, 2006, S.O. 2006, c. 21, Sched. F are also relevant to the statutory interpretation analysis. These sections state:

[94]           As the above principles of statutory interpretation suggest, an important aspect of interpreting legislation is identifying the purpose of the enactment. In this regard, the apparent goals of s. 61 are to prevent evidence from a proceeding before the Institute being admissible in a civil proceeding.

[95]           These goals are similar to the goals of s. 36 (3) of the Regulated Health Professions Act, 1991, discussed above.

[96]           In F. (M.) v. S. (N.), supra, the majority of the Court of Appeal explained the purpose of s. 36 (3) of the Regulated Health Professions Act, 1991 at paras. 29, 31, and 36, as follows:

[97]           The legislative purpose of s. 61 of the Chartered Accountants Act, 2010 is similar to the purpose of s. 36 (3) of the Regulated Health Professions Act. Thus, based on the case law, s. 61 is designed: (a) to encourage citizens to report professional misconduct; (b) to facilitate a full investigation and fair adjudication of the professionalism complaint; (c) to immunize a profession’s regulator and its officers and employees from being summonsed to give evidence in civil proceedings about what was disclosed and ascertained in the disciplinary proceedings; (d) to separate the discipline proceedings from any civil proceedings; and (e) to prevent the disciplinary proceedings from being used as a means of discovery to build or defend a civil case.

[98]            In my opinion, within these identified purposes, particularly within the purpose of separating the disciplinary and the civil proceedings, is the purpose of negating the operation of issue estoppels arising from the decisions of the disciplinary proceedings applying to court proceedings. It is precisely for this reason that s. 61 provides that no decision or order made in a discipline proceedings is admissible in any civil proceeding.

[99]           The policy value of precluding issue estoppels is that the accountant, who is subject to the discipline proceedings, can defend the charges without being concerned about also defending what may be the more serious civil proceedings and without having a reason to delay or stay the disciplinary proceedings, as was unsuccessfully attempted in the case at bar.

[100]      Interestingly, the factual background of the case at bar demonstrates the importance of the policy of separating the discipline proceedings from the civil proceedings. In the case at bar, had a provision like s. 61 of the Chartered Proceedings Act, 2010 been in existence in 2008, then Mr. Woodsford would have had no reason to attempt to delay the Institute’s discipline proceedings.

[101]      But, of course, s. 61 was not in existence in 2008, and the fact that it might usefully have been applied in the case at bar does not answer the interpretative problems of the immediate case. The question remains whether s. 61 can be applied retrospectively. 

[102]      Having ascertained the statutory purpose of s. 61 of the Chartered Accountants Act, 2010, but before completing the exercise of statutory interpretation to determine the scope of s. 61 of the Chartered Accountants Act, 2010, it is convenient and helpful to first consider Justice J. Macdonald’s judgment in L.D. v. S.K, [1998] O.J. No. 5672 (S.C.J.).

[103]      L.D. v. S.K involved a civil action and prior discipline proceedings before the College of Physicians and Surgeons. In that case, Justice J. Macdonald considered a problem analogous to the circumstances of the case at bar. In advancing their argument that s. 61 does not apply, the Plaintiffs rely on L.D. v. S.K. For its part, Deloitte submits that the judgment in L.D. v. S.K is wrong.

[104]      In order to understand the precedential value of L.D. v. S.K, it is important to note that s. 67 (1) of the Health Disciplines Act, R.S.O. 1990, c. H.4 required College personnel to keep information confidential that was obtained during the course of their work and s. 67 (2) provided that College personnel could not be compelled to give testimony in any civil proceeding known to them as a result of their work. With the enactment of new legislation, s. 67 of the Health Disciplines Act was replaced by s. 36 (3) of the Regulated Health Professions Act, 1991.   

[105]      In L.D. v. S.K., in a civil action, the plaintiff sued her former psychiatrist for a sexual assault. During the trial, to discredit the plaintiff’s credibility, the defendant wished to cross-examine her on statements she had made to an investigator for the College acting under the Health Disciplines Act. The defendant argued that the plaintiff’s statements were not within the ambit of s. 67 of the Health Disciplines Act and, therefore, the plaintiff could be cross-examined on what she said to the investigator.  

[106]      Relying, however, on the wider preclusive affect of s. 36 (3) of the Regulated Health Professions Act, 1991, supra, the plaintiff objected to the cross-examination. The plaintiff argued that s. 36 (3) applied retrospectively to the proceeding under the Health Disciplines Act.

[107]      Justice J. Macdonald ruled as a matter of statutory interpretation that s. 36 (3) did not apply. The heart of his ruling is found in paragraphs 16 and 21 of his reasons, which state:

[108]      I have no reason to doubt the correctness of Justice J. Macdonald’s decision in L.D. v. S.K, but I do not think the case is helpful in solving the problems of statutory interpretation in the case at bar. While at first blush the circumstances of L.D. v. S.K and the case at bar seem analogous, the cases are distinguishable.

[109]      In the case at bar, unlike the situation in L.D. v. S.K., the prior legislation; i.e. the Chartered Accountants Act, 1956, is silent about what use, if any, could be made of evidence and statements made in discipline proceedings. In the case at bar, unlike the situation in L.D. v. S.K, the new legislation; i.e. the Chartered Accountants Act, 2010 adds something that was not addressed at all in the old Act.

[110]      In contrast to the case at bar, in L.D. v. S.K, the prior statute; i.e. the Health Disciplines Act, addressed the matter of the use of evidence and then in the new Regulated Health Professions Act, 1991, the Legislature made a decision about the scope of the new legislation that manifestly did not include the Health Disciplines Act.

[111]      In L.D. v. S.K, Justice J. Macdonald did not decide and he did not need to decide whether the prohibitions in s. 36 (3) of the Regulated Health Professions Act, 1991, were procedural or substantive because the Legislature made it clear that s. 36 (3) did not apply to proceedings under the Health Disciplines Act by its statutory definition of "a proceeding under ... a health profession Act," which did not include the Health Disciplines Act. 

[112]      In contrast, in the case at bar, the parties debate whether s. 61 is substantive or procedural and they debate the scope of the words “a proceeding under this Act” in s. 61 in a statute that does not expressly define the words “a proceeding under this Act”. This is a different statutory interpretation problem than determining the scope of "a proceeding under a health profession Act," where “health profession Act” is a defined term.

[113]      In the case at bar, the matter of statutory interpretation is more complicated than it was in L.D. v. S.K, and I cannot avoid addressing  the questions of whether s. 61 of the Chartered Accountants Act, 2010 is purely procedural and whether the Legislature intended s. 61 to apply to proceedings completed under the Chartered Accountants Act, 1956.

[114]      With the above background, it is now possible to address the essential question of whether, as a matter of statutory interpretation, s. 61 of the Chartered Accountants Act, 2010 applies to a discipline proceeding that was begun and was completed under the Chartered Accountants Act, 1956.

[115]      The Plaintiffs argue that reading s. 61 literally and giving it its plain meaning, it applies to discipline proceedings “under this Act,” which, they submit, can only refer to the Chartered Accountants Act, 2010.

[116]      The Plaintiffs point out that the Legislature could have expressly referred to the 1956 Act in s. 61, as it did in three other sections of the Act. They submit that had the Legislature intended s. 61 to apply to the 1956 Act, it would have done so explicitly, as it did in those three provisions.

[117]      The Defendants do not dispute, and I agree with the Plaintiffs that giving s. 61 its literal and plain meaning, it does not apply to proceedings under the Chartered Accountants Act, 1956.

[118]      I also agree with the Plaintiffs that the Legislature could have explicitly referred to the 1956 Act in s. 61, but it did not do so, as it did in three other sections of the Chartered Accountants Act, 2010.

[119]      However, I do not think that anything can be gleaned about what the Legislature intended about the scope of s. 61 from the fact that it referred to the 1956 Act in three sections where there was an obvious or manifest need to address the transition to the new Act.

[120]      It would appear that the three provisions that expressly refer to the 1956 Act are substantive provisions about costs orders and by-laws, and thus these three provisions would need an express provision to make them operate retrospectively. Put somewhat differently, in my opinion, the legislature’s failure to mention the 1956 Act in s. 61 but mentioning it is other sections is not grounds for inferring that the 1956 Act was deliberately excluded from the scope of s. 61.

[121]      Further, a legislature will not and cannot anticipate every consequence of its legislation and the circumstances in which the legislation will be applied. The scope of the legislation may have to be interpreted for unforeseen circumstances.

[122]      The circumstances of the case at bar are, one would hope, a rarity. The circumstances for the possible application of s. 61 in the case at bar were that the alleged negligence occurred in 1997 (year 1), the discipline proceedings began in 1998 (year 2), the civil proceedings began in 2000 (year 3), the discipline proceedings concluded in 2008 (year 11), and the civil proceedings have not yet been set down for trial in 2013 (year 16). It becomes a matter of interpretation whether and how s. 61 applies in these rare circumstances.  

[123]      The application of s. 61 to a discipline proceeding under the 1956 Act is also not excluded by the general principle that legislation is not to be interpreted retrospectively. That general principle does not apply to legislation that is purely procedural.

[124]      In my opinion, s. 61 of the Chartered Accountants Act, 2010 is a purely procedural provision. The Plaintiffs did not have any vested substantive rights that would be taken away if s. 61 applied to the Institute’s 1997 to 2009 discipline proceedings.

[125]      The legislative presumption that applies in the case at bar is that the Legislature intended s. 61 to apply retrospectively. That presumption also explains why it was not necessary in s. 61 of the Chartered Accountants Act, 2010 to make explicit reference to the 1956 Act as it was necessary for in the three substantive provisions. The Legislature could rely on the common law and on sections 52 and 64 (1) of Legislation Act, 2006.

[126]      The presumption that the legislature does not intend to produce absurd results also supports the interpretation that s. 61 of the Chartered Accountants Act, 2010 applies to proceedings under the Chartered Accountants Act, 1956. That interpretation is logical, coherent, equitable, reasonable, and advances the purposes of s. 61.

[127]      In contrast, the Plaintiffs’ interpretation that s. 61 does not apply to proceedings under the 1956 Act is incompatible with the object of the legislation and indeed would defeat the purposes of the enactment of keeping the discipline proceedings separate from the subsequent civil proceedings.

[128]      I conclude that s. 61 applies to the Institute’s 1997 to 2009 proceedings. It follows that the Plaintiffs’ proposed amendments, which are pleaded as the material facts for an issue estoppel or to preclude Deloitte from denying a binding effect to the decision of the Institute are untenable.

[129]      In arriving at the above conclusion, I have not ignored the Plaintiffs’ argument that Deloitte’s position is a collateral attack on the order I made on the refusals motion.

[130]      While it is perhaps regrettable that the matter of s. 61 was not dealt with at the refusals motion, a refusals motion does not determine whether evidence is admissible at the trial, and the decision on this motion does not change the order I made on the refusals motion, which remains operative. Indeed, I understand that there has been compliance with the order. There is no collateral attack.

[131]      I, therefore, dismiss Deloitte’s motion to amend its Consolidated Statement of Claim.

[132]      It may be some solace to the Plaintiffs to know that they are losing very little by the above ruling. I say this because, it is extremely doubtful that a trial judge would decide Deloitte’s negligence as a matter of res judicata.

[133]      Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 S.C.R. 460 is a leading case on issue estoppel. It adds an element of discretion to the determination of whether there is an issue estoppel. In this case, the Supreme Court of Canada held that where a party establishes the pre-conditions for an issue estoppel, a court must still determine whether, as a matter of discretion, issue estoppel ought to be applied. The court should stand back and, taking into account the entirety of the circumstances, consider whether application of issue estoppel in the particular case would work an injustice.

[134]      The factors that the court may consider include the purpose of the first proceeding compared to the purpose of the subsequent proceeding, the stake or interest of the parties in the first proceeding, the comparative expertise of the decision makers, the comparative nature of the procedures associated with the proceedings, the extent of the party’s participation in the prior proceeding, and the presence or absence of a right of appeal: Penner v. Niagara (Police Services Board), 2011 ONCA 616; Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850

[135]      I find it almost inconceivable that having regard to these factors, a trial judge would decide a billion dollar negligence and breach of contract action based on disciplinary proceedings where a single partner of Deloitte’s was reprimanded and fined.

[136]      Despite some submissions by the Plaintiffs to the contrary, I see no unfairness to the Plaintiffs in obliging them to comply with s. 61 of the Chartered Accountants Act, 2010. They are as capable as they ever were to advance their case against Deloitte’s for negligence and breach of contract, and they have had discovery of the information gathered by the Institute.

[137]      As noted above, one effect of the application of s. 61 of the Chartered Accountants Act, 2010 to the case at bar is that the Plaintiffs’ motion for leave to amend its Statement of Claim should be dismissed. Practically speaking, this takes away the Plaintiffs’ plan to rely on issue estoppel or abuse of process to preclude Deloitte from denying negligence in the case at bar. Deloitte’s cross-motion raises the question of what are the other effects, if any, of s. 61 of the Chartered Accountants Act, 2010 on the case at bar.

[138]      In my opinion, the cross-motion is premature and this question should be answered by the trial judge.

[139]      In the case at bar, the application of s. 61 of the Chartered Accountants Act, 2010 is complicated by the Deloitte’s ex turpi causa defence, which involves not only an investigation of its own activities but an investigation of the activities of Philip.

[140]      As noted above, the information that was gathered from Deloitte and that Deloitte prepared for the proceedings before the Institute may also have been gathered by Deloitte and prepared for its ex turpi causa defence. Thus, a document prepared for the proceedings before the Institute may have also been prepared for or be useful for the ex turpi causa defence.

[141]      The argument that a document prepared for a discipline proceeding will only be inadmissible in civil proceedings if it was prepared exclusively for the discipline proceeding was raised but not decided in F. (M.) v. S. (N.), supra. In that case, Justice Laskin for the majority stated at paras. 24 and 25 of his judgment:

[142]      As may be noted, Justice Laskin did not find the distinction between documents prepared solely for a discipline proceeding and documents prepared only partly for a discipline proceeding “meaningful in this case.” He did not rule that this type of distinction might not be meaningful in other cases.

[143]      In the circumstances of the case at bar, I do not see how it would be feasible, fair, or proper to make a blanket declaration as to how s. 61 of the Chartered Accountants Act, 2010 should be applied to particular evidentiary matters beyond saying that s. 61 makes the issue estoppel pleading untenable.

[144]      It is conceivable that either party or both parties may wish to use some of the documents and records prepared for the Institute and disclosed as part of the discovery process in the civil action.

[145]      It will be for the trial judge to determine on an instance-by-instance basis whether the documents or records are not admissible in the civil proceeding because of s. 61 of the Chartered Accountants Act, 1992.

[146]      For the above reasons, I dismiss the Plaintiffs’ motion and I grant Deloitte’s motion but only insofar as the court shall declare that the proposed new paragraphs to the Statement of Claim are prohibited by s. 61 of the Chartered Accountants Act, 2010.

[147]      I dismiss the balance of Deloitte’s motion as premature but without prejudice to either party objecting at a hearing or trial of this action that evidence tendered by a party is not admissible because of s. 61 of the Chartered Accountants Act, 2010.

[148]      My present inclination is that the costs of the motion and the cross-motion should both be in the cause, but if the parties disagree, they respectively may make submissions in writing within thirty days of the release of these Reasons for Decision.