Law:

Section:

(a) Torts--- ----Professional negligence---Pure economic (financial) loss, recovery of---Duty of care---Scope---Negligent misrepresentation or performance of service by auditor---General test/framework to be examined by court in cases of pure economic loss arising from an auditor's negligent misrepresentation or performance of a service comprised of two stages; whether a prima facie duty of care existed between the parties, and if so, whether there were any residual policy considerations that may negate the imposition of a duty of care---Principles stated. General framework set out in Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L.), and later refined in Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537, ["Anns/Cooper framework"] applied in cases of pure economic loss arising from an auditor's negligent misrepresentation or performance of a service. Comprising two stages, the 'Anns/Cooper framework' asked whether a prima facie duty of care existed between the parties, and if so, whether there were any residual policy considerations that may negate the imposition of a duty of care. Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L.); Hercules; Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210; Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021; Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537 and Kamloops (City) v. Nielsen, [1984] 2 S.C.R. 2, at pp. 10-11 ref. At the first stage, a prima facie duty of care was recognized where proximity and reasonable foreseeability of injury were established. When assessing proximity, if a relationship fell within a previously established category, or was analogous to one, then the requisite close and direct relationship was shown. If a risk of reasonably foreseeable injury could also be shown, the first stage of the 'Anns/Cooper framework' was complete and a duty of care may be identified. In such circumstances, the second stage of the framework would seldom be engaged because any residual policy considerations would have already been taken into account when the proximate relationship was first identified. Where an established…

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