1. Please identify the issues in the following case and make 1 or 2 arguments to support defendant Dino and Dill& Dill, Inc..

Case Study

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation: Doe v. Dill, 2007 BCSC 1669

Date: 20071119

Registry: Vancouver

Between:

John Doe Plaintiff

And

Dino and Dill& Dill, Inc. Defendants

Before: The Honourable Madam Justice Brown

[1] In 2004, Mr. Doe was looking for a business to purchase. His family had been involved in the automobile industry in India and he was looking for an automobile dealership to purchase in the Vancouver area. Mr. Doe learned that the Hyundai dealership in Burnaby may be for sale and he and his son, Jack Doe, met with Mr. Pell, the principal of the business. Mr. Pell's company, API Inc. owned the operating business for the dealership. Another one of Mr. Pell's companies, KE Inc. owned the land and buildings.

[2] In June 2004, Mr. John Doe and his son began meeting with Mr. Pell with a view to purchasing both companies, thereby acquiring the dealership, the land and the buildings. The negotiations continued into November, 2004.

[3] Mr. Dino attended several of the meetings with the Does and Mr. Pell as API's accountant. Mr. Dino is a chartered accountant. API engaged Mr. Dino to issue review engagement reports on API's financial statements for the years ended August 31, 2001 to 2004 (the "Reports"). Mr. Pell told the Does that he was not good with numbers, and referred them to Mr. Dino for questions about API's finances.

[4] The Does say that in the course of the negotiations, Mr. Dino made various statements about the value of the business, such as telling them that people would be lined up to buy the business and producing calculations of the value of the business. They say that on or about September 16, 2004 Mr. Dino told Mr. John that the purchase deposit of $250,000 would be adequately secured by a promissory note from API and Mr. Pell.

[5] The Does say that they received the 2002 and 2003 Reports on September 7, 2004. They say that Mr. Dino brought the Reports to a meeting, took them from his briefcase and handed them to Mr. Pell, who passed them to the Does. Mr. John says that he relied on the Reports and on Mr. Dino's assurance that a promissory note would be adequate security when he paid the deposit directly to API in two instalments on September 28 and October 4, 2004.

[6] The deal between Mr. Pell and Mr. Doe fell through. API and Mr. Pell became bankrupt in 2005. The Deposit was never returned to Mr. Doe and he took the case to court.

[7] Mr. Dino denies producing the Reports in the manner that the Does describe. He says that he thought that the Does had the Reports much earlier. He denies making the statements that the Does attribute to him, and particularly the comment regarding the security of the promissory notes. He says that Mr. John had his own accountants and a lawyer to provide him with advice and that the lawyer had prepared draft purchase agreements which contemplated the deposit to be held in trust by the plaintiff's lawyer. Mr. Dino says that although Mr. Pell asked Mr. John to pay the deposit directly to API, Mr. Dino was confident that Mr. John's lawyer would advise against this course. Mr. Dino says that he was surprised when he learned that Mr. John had paid the deposit directly to API. Mr. Dino acknowledges that the Does were referring to the Reports in their negotiations with Mr. Pell.

[8] On approximately November 2, 2004, Mr. John Doe received the 2004 Reports. Neither the previously received Reports for 2002 and 2003 nor the newly received Reports for 2004 showed a liability of $747,735.62 for unpaid provincial sales tax. This liability was assessed by the provincial government on September 29, 2003. Mr. John Doe says that had he known of this large liability, he would not have paid the deposit.

[9] Mr. John Doe claims against Mr. Dino and his company Dill Inc. for negligent misrepresentation. Mr. Doe says that the review engagement reports prepared by Mr. Dino on the financial statements of the company which Mr. Doe planned to purchase were prepared negligently. Mr. Doe further says that Mr. Dino negligently advised him that the purchase deposit would be adequately secured by a promissory note from the company and its principal.

[10] Mr. Doe says that as a result of these negligent misrepresentations he paid a deposit of $250,000 directly to the company, secured by a promissory note from the company and its principal. When the purchase deal fell apart, the company and the principal failed to return the deposit and subsequently became bankrupt. Mr. Doe's entitlement to the return of the deposit is not disputed in this action. Mr. Doe seeks damages from the defendants.