The trial against the auditors in the Livent matter could set precedent if the “equal fault” defence is applied

The long-awaited civil trial in Livent Inc. (Special Receiver) v. Deloitte & Touche could be precedent-setting if the powerful “equal fault” defence ends up being material to the outcome, says Toronto commercial litigation lawyer Bill Pepall in this interview. He says that in certain parts of the United States when the question is asked "Should such advisors be held liable in these circumstances or should a corporation's own fraudulent behaviour bar it from relief?" the answer lies in the in pari delicto defence – a powerful defence to an action in which a corporate plaintiff, or party standing in its shoes, is at least equally responsible for the wrongdoing on which the claim is based. In the Livent case, that defence could be held to apply in Canada because it is grounded in common law and bears a resemblance to another defence – ex turpi causa - which has been applied in a Canadian context.

Bill notes that the evolution of this defence will be of interest to both auditors and lawyers.

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