The Supreme Court of Canada ruled Thursday that the province filed its complaint too late and could not pursue the case. This means New Brunswick has no hope of recovering the $ 50 million from Grant Thornton, the accounting firm the province says it relied on to accept loans and loan guarantees.
In a unanimous 7-0 decision, Judge Michael Moldaver said the province learned in 2011, when it received a draft report from a second accounting firm, that Atcon’s finances were in worse shape than Grant Thornton hadn’t said so.
At that time, he had two years to sue for damages under provincial law, the court found. But he waited more than three years to drop it.
“The Province had actual or suspected knowledge of material facts – namely that a loss occurred and that the loss was caused or contributed to an act or omission of the auditor – when it received the draft. the other cabinet’s report on February 4, 2011, “Moldaver wrote.
“Nothing more was needed to draw a plausible conclusion of negligence. “
Moldaver said he was not in the process of determining whether Grant Thornton was actually negligent. He wrote that it would have been up to trial if New Brunswick had filed the case on time.
“We are delighted with the Supreme Court of Canada’s decision,” said Lindsay Barnes, senior director of Canadian media relations at Grant Thornton. “We will continue to focus on serving our customers in New Brunswick and fostering relationships with its communities.
A spokesman for Attorney General Ted Flemming said “the province is reviewing the decision and has no further comments at this time.”
The Liberal government of Premier Shawn Graham approved the loan guarantees in 2009. The lawsuit was filed in 2014 under the Progressive Conservative government of Premier David Alward.
Auditor General Kim MacPherson later found out that the Graham government ignored warnings from senior officials that lending money to Atcon was risky.
She also found the business to be poorly run, with millions spent on items such as a business jet, jewelry, and vacation property in Aruba.
In 2019, the Court of Queen’s Bench ruled in favor of Grant Thornton’s request to dismiss the case because the province waited too long to take it to court.
But the province argued in the New Brunswick Court of Appeal that the countdown to the two-year deadline did not begin until the second auditor filed a final report in November 2012.
The court of appeal gave its approval in 2020 and authorized the investigation of the case.
Judge Ernest Drapeau wrote that “perceptions or assumptions based on suspicion, conjecture, speculation, or any other lack of knowledge, real or imputed, are insufficient to trigger the two-year limitation period.”
The Supreme Court has now overturned that, saying the February 2011 draft report was enough for the province to understand something was wrong.
“In my opinion, the province’s knowledge of its potential claim has crystallized at this point,” Moldaver said. “The province had enough knowledge to draw a plausible conclusion that Grant Thornton had been negligent. “