OTTAWAThe Supreme Court of Canada has agreed to hear an appeal of an Ontario Court of Appeal ruling that was seen as a big win for directors and officers of Canadian companies and their insurers when it reversed a lower court ruling that could have led to a substantial increase in D&O claims.
The lower court ruling in Douglas Kerr vs. Danier Leather Inc. had significantly expanded financial disclosure requirements for Canadian companies and, the Court of Appeal court ruled, failed to give any deference to the business judgment of directors and officers, leaving them vulnerable to lawsuits challenging such judgments.
The Court of Appeal overturned the lower court decision in December 2005 (BI, Jan. 2) and set a less rigorous standard for financial disclosure.
"It's a case of interest to a lot of people, so it's not surprising that they would grant leave," said Alan J. Lenczner, a partner with Lenczner Slaght Royce Smith Griffin L.L.P. in Toronto, which represented Danier Leather Inc., the company for which disclosure practices had been challenged.
Mr. Lenczner said he anticipates the Supreme Court of Canada will hear oral arguments in the case around May 2007.