Immunity clauses contained in audit statements are generally obnoxious. Glustein J. did not permit the chief financial officer of Colt Resources Inc. to rely upon this immunity clause to escape the charge that the CFO failed to inform the shareholders (and the general marketplace), that the CEO had misallocated company money.
Under the Ontario Securities Act, the CFO is required to inform the market of material issues that he knows or ought to know about. The CFO says, thanks to immunity clause, nobody can prove he ‘knew’ that the money was misallocated. Glustein J. properly narrowed the CFO’s ability to escape liability by trying to use the immunity clause to say that such knowledge was a ‘non-core’ issue.
So many other facts in the case indicated that the CFO knew or ought to have known about the misallocation of money so the CFO will have to explain himself at trial.
Kauf v. Colt Resources Inc. (2019) 145 O.R.(3d) 100
