Candidates must fill in correctly the heading on the front of each booklet and envelope provided. Failure to do so may result in the answers not being read.

Please indicate your section on the front of the envelope

THIS EXAMINATION PAPER MUST BE HANDED IN TO THE INVIGILATORS AT THE END OF THE EXAMINATION.

• This examination is "open book".
• Please write on every other line of the examination booklets.
• If you find ambiguity in a question, say so in your answer and make any reasonable assumption consistent with the facts given.
• This examination is worth a total of 60 marks.

This 6 page examination paper consists of:

Part I - (Questions 1-11), and

Part II - (one question).

The news was bad, very bad. Last year, Frank’s bank manager at the TIBC, Paula Pleasant, recommended that he stop investing in Canada Savings Bonds and put his RSP holdings in Gre-X, a skyrocketing mining stock on the North York Exchange. Gre-X is the majority owner of an as yet undeveloped gold mine in Downsorneo. "A sure thing," she said, "trust me, you don’t have to know a thing about investing in the market, everyone’s getting in on the action."

Today, the trading frenzy was so fierce, it crashed the Exchange computer for the third day in a row. Frantic, Frank dialed her number at the Bank and listened, stunned, while a stranger’s voice in a recorded message reported, "Manager Paula Pleasant has taken an indefinite leave of absence. Please direct all inquiries to Head Office."

The next number he dials is yours...

Frank instructs you to commence an action for negligence against Paula Pleasant and the TIBC to recover his lost savings. His friend Janet, who had bought into Gre-X two years ago on the advice from her broker also wishes to sue her broker and his employer for giving negligent advice.

May they join together as plaintiffs? Explain.
(8 minutes - 4 marks)

On reflection, Frank finds that he is also very angry with Andrea, his accountant. When she prepared his tax return in April 1996, she saw that he had moved his investments into Gre-X but she said nothing to warn him about making such a risky investment. The claim has been filed but he wants to add Andrea as a defendant.

What must be done to add Andrea as a defendant?
(6 minutes - 3 marks)

Andrea is served as a defendant in the action with the Statement of Claim alleging that she was negligent in not warning Frank. Andrea brings a motion to strike out the statement of claim on the ground that it discloses no reasonable cause of action. Her factum in support of the motion argues that it is clear from decided case law that in these circumstances she owed no duty to Frank to advise him with regard to the type and quality of his investments.

In her affidavit in support of the motion she states she was retained by Frank to prepare his income tax return and she refers to her standard letter of engagement, appended as an exhibit to the affidavit, which states that Frank agrees that she is retained for the purpose of preparing his annual personal income tax return and for providing income tax advice and for no other purpose.

On hearing this motion, how will the court respond to the evidence presented and the relief requested? Why?
(8 minutes - 4 marks)

Assume the court grants the relief requested by Andrea, but the action continues against the other defendants.

Would the court’s order be final or interlocutory? What is the impact of the order being characterized as final or interlocutory?
(6 minutes - 3 marks)

Assume that Andrea has been denied relief but then brings another similar motion based on the following provision in The Chartered Accountants Protection Act:

No action for negligence or malpractice in respect of services rendered by an Accountant shall be brought more than six months after the events giving rise to the claim.

On what grounds would you resist the motion? Are you likely to be successful?
(8 minutes - 4 marks)

The process server you directed to serve Paula reports back to you that on several visits she found nobody at home at Paula’s house, the mailbox overflowing, newspapers strewn about her front door and a sign hanging on the door handle saying "Sold short, made a bundle, gone fishing".

How do you ensure that Paula is properly served?
(6 minutes - 3 marks)

You read a newspaper account that Paula has retired to the French Riviera.

Can Frank still sue Paula? How?
(6 minutes - 3 marks)

The Bank feels cheated by being named in the action. It relied on the same information as everyone else: Gre-X’s glowing statements as to the quality and extent of the gold assays of their mine in Downsorneo. Consequently the Bank makes a third party claim against Gre-X.

Gre-X’s Chief Financial Officer files an affidavit in one of the motions brought in the action. During the cross-examination on that affidavit he states that the crash in the price of Gre-X shares was a result of false information disseminated by McCaul-Jones Inc. This is the company to which the Indonaysian government forced Gre-X to assign a 40% interest in the gold mine in Downsorneo and which is also to become operator of the mine. The Chief Financial Officer states that McCaul-Jones disseminated false information that the mine was likely worthless with the intent of depressing the value of Gre-X shares and it has been the major purchaser of Gre-X shares in the now highly depressed market, through the use of many different agents and numbered offshore companies.

May the plaintiff Frank use the cross-examination referred to above in support of a motion to join McCaul-Jones as a defendant in his pending action?

If he decides to bring to bring a separate action against McCaul-Jones, could he use the cross-examination in that action?
(12 minutes - 6 marks)

It seems that Paula has returned. Assume you have named only the Bank as a defendant and you now have to decide who to examine for discovery.

What are the pros and cons of requesting to examine Paula for discovery as an officer of the Bank?

Can the Bank avoid presenting Paula for examination? How? On what grounds?

Would it make any difference if the Bank had fired Paula?

If it did make a difference is there another way you could examine Paula?

(12 minutes - 6 marks)

During the pendency of the action, the North York Stock Exchange imposed regulatory sanctions upon Gre-X’s directors. After holding a hearing into the matter it concluded that the directors and officers of Gre-X had made false and misleading statements as to the estimated reserves in the proposed Downsorneo gold mine. An order was made that the directors and officers of Gre-X be suspended from trading of shares on any stock exchange in North America for 5 years.

Can the Bank use the stock exchange ruling - that the directors and officers made false and misleading statements - in its third party claim against Gre-Ex?
(8 minutes - 4 marks)

Assume that Frank was the sole plaintiff and no third party claim was made. Instead, the Bank offered to settle the matter for $30,000 but, since he felt confident that he would succeed at trial in obtaining the $50,000 he was seeking, Frank rejected this offer. Frank has just been awarded $24,000 in damages.

How much will Frank likely receive in total? Why?
(10 minutes - 5 marks)

Major procedural innovations in recent years include provision for:

(i) summary judgment,

(ii) class proceedings,

(iii) simplified procedure,

(iv) case management, and

(v) mandatory alternative dispute resolution.

Discuss any two of these procedural innovations as follows:

a) To what extent do they support the objectives identified in the interpretive principle set out in Rule 1.04?

b) Does promoting one of the Rule 1.04 objectives necessarily entail compromising one of the other objectives? and

c) Do these innovations change the meaning of "a determination of every civil proceeding on its merits"?

Copyright 1999 Janet Walker