COMM 393 Chapter Notes - Chapter Case: Ernst & Young, All England Law Reports, Vancouver Stock Exchange
COMM 393 Rangen Inc. v. Deloitte & Touche Case Briefs
[1994] B.C.J. No. 1910
[1994] 10 WWR 55
48 BCAC 17
95 BCLR (2d) 182
21 CCLT (2d) 92
British Columbia Court of Appeal
August 26, 1994
Facts
Situation
• In August, September, and October of 1989, Rangen supplied salmon feed to
Royal Pacific Sea Farms Inc. (RPSF). RPSF failed on October 7, 1989 and
Rangen incurred a loss of $300,493.38 USD.
• RPSF was a publicly traded corporation listed on Vancouver Stock Exchange.
Deloitte were the auditors in 1987, 1988 and 1989 who were responsible for the
preparation of audited financial statements and making financial reports of the
company.
• The audited statements were available to the public and may have been used by
its companies for credit purposes with its suppliers. It is reasonably foreseeable
that trade suppliers would rely on these statements and reports in deciding
whether and how far to extend credit.
• After Rangen examined these reports at the request of RPSF and extended them
the credit, they incurred the loss when RPSF failed.
• The reports and statements relied on were negligently and carelessly prepared,
misleading and likely to cause economic loss to persons doing business with the
company who relied upon them.
Initial Judgment
• The trial judge concluded that Rangen’s case would fail if went to trial, and
Rangen is appealing due to an apparent enlargement of Rangen’s right of
recovery since the original trial
Issues
• Do the circumstances contain the proximity necessary to create a duty of care on
the part of the respondent in respect of its role in the preparation of audited
financial statements and financial reports of RPSF?
• Do the allegations of actual and constructive knowledge of the appellant as set
out in paragraphs 8 and 9 of the statement of claim, when taken with other
relevant allegations, state a cause of action which entitles the plaintiff to a trial of
this cause?
Reasons
Law: Kripps v. Touche Ross & Co.
• states that “pure economic loss” is within the scope of recovery in negligence as
defined as loss only to pocket or estate
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Document Summary
In august, september, and october of 1989, rangen supplied salmon feed to. Rangen incurred a loss of ,493. 38 usd: rpsf was a publicly traded corporation listed on vancouver stock exchange. Initial judgment: the trial judge concluded that rangen"s case would fail if went to trial, and. Rangen is appealing due to an apparent enlargement of rangen"s right of recovery since the original trial. Law: kripps v. touche ross & co: states that pure economic loss is within the scope of recovery in negligence as defined as loss only to pocket or estate. The trial judge cites a lack of proximity in dismissing the appelant"s claim. Law: edgeworth construction ltd. v. n. d. lea & associates [1993] 3 s. c. r. 206 (s. c. c. ) requires acceptance of a broader basis of recovery under the principles in hedley. Byrne & co. v. heller & partners ltd. [1963] 2 all e. r. Law: macpherson v. buick motor co. (1916) 217 n. y. 382, 11 n. e.
