The main issue in the charges was the nature of the Put agreement between Livent and a realty corporation regarding development of the property that would eventually become the Pantages Theatre complex. Livent sought to recognize revenue under the agreement when it was not allowed to do so. The Deloitte accountants informed the company that this was contrary to GAAP but Livent did so anyway.
The Court of Appeal divided the appeals into three issues: whether Mr. Barrington et al had had sufficient notice as regards those charges that the Divisional Court had not quashed, whether the Disciplinary Committee provided adequate reasoning for finding misconduct for other charges against Mr. Power and Mr. Russo, and whether the legislative amendments subsequent to the Divisional Court's decision could retroactively validate the Committee's costs award.
The Court of Appeal first ruled that the Divisional Court had mischaracterized the charges related to the Put agreements. The Divisional Court had stated that the Put-related allegations were effectively a new charge upon the accountants; the accountants themselves agreed and argued before the Court of Appeal that neither the charges nor disclosure nor submissions had put them on notice that the Put would be in issue, and that they therefore did not know the case they had to meet. The ICAO submitted that the Put was relevant to their argument that they had reasonable assurances that the revenues realized would be properly received.
The Court was sympathetic to the ICAO's argument, also adding that the Put was not a new allegation and that the accountants would have to recognize that any investigation into potential disciplinary action would take it into account, that the accountants were not surprised or prejudiced by the the Committee relying on the Put and that the Committee ultimately did not find the accountants guilty of breaching GAAP standards in relation to the Put, but instead of recognizing income that they should not have recognized.
The Court of Appeal then considered the additional charges against Mr. Powers and Mr. Russo which were quashed by the Divisional Court. These charges were in relation to a pair of transactions where Livent transferred receivables owing to another party and which were recorded as sales by Mr. Power and Mr. Russo after some deliberation, but should not have been recorded as sales. The Divisional Court felt that the Committee's charges were unreasonable due to a lack of explanation as to why Mr. Powers and Mr. Russo's actions were an error of judgement, as well as a lack of explanation as to why if there was a breach of the standard, that there was also no explanation as to why it was so great a breach as to constitute professional misconduct.
The Court of Appeal disagreed, pointing out that previously, even in the post-Dunsmuir era of administrative law appeal, the Court had made clear that an administrative tribunal did not have to explain its full decision so long as its "path" taken to reach its decision was clearly laid out, and the Court felt that the "path" in this case was clear.
Finally, the Court of Appeal also overturned the Divisional Court's decision to quash the costs the Committee ordered upon the accountants. The Divisional Court did so as regarded the relevant statutory law at the time, but since that decision the Chartered Accountants Act had been revised, allowing it to take precedence over the Statutory Powers Procedure Act, which had restricted when a tribunal could order costs. The accountants argued that Zadvorny v. Saskatchewan v. General Insurance distinguished between retroactively changing a law and "the extinguishment of a judgement," suggesting that it would take extremely clear language to deprive a respondent of his judgement. The Court of Appeal disagreed, pointing out that the accountants weren't being deprived of the award of a successful action, but instead had been subject to disciplinary proceedings and that therefore the precedent did not apply. Read-the-whole-case rating: 3.