NWT court strikes EPR’s lawsuit against Norman Wells over accounting complaint

The Supreme Court of the Northwest Territories has struck a lawsuit seeking more than $25 million from the Town of Norman Wells and individual defendants over a complaint to the territory’s accounting regulator.

In EPR Yellowknife v. Town of Norman Wells, 2026 NWTSC 60, Justice Karin L. Taylor concluded that the allegations did not disclose a viable claim for fraudulent misrepresentation or misfeasance. She also found that the parallel lawsuit was an abuse of process, at least insofar as it concerned the town, while the professional complaint remained before the regulator.

The September 21 judgment granted the defendants’ motion to strike and denied the plaintiffs’ request to amend their pleading. It did not decide the accounting complaint or impose a professional sanction.

Dispute began with an accounting report

EPR Yellowknife Accounting Professional Corporation and Biswanath Chakrabarty sued after the town complained to the Chartered Professional Accountants Association of the Northwest Territories and Nunavut. The complaint concerned a report prepared in 2018 for the territorial Department of Municipal and Community Affairs, which was then administering the town.

According to the reasons, EPR had been contracted to conduct a forensic audit of payments made to or on behalf of the town’s former senior administrative officer and her use of its corporate credit card. The town relied on the report in litigation against the former officer. EPR subsequently clarified that the document was a review-level report rather than a forensic audit, issued a press release and apologized to her.

The town alleged in its regulatory complaint that the press release was its first notice of that distinction and that EPR had supplied false or misleading information. EPR disputed that account, alleging the defendants already knew the report was not an audit before the town sued the former officer. Those competing allegations formed the background to the court proceeding.

The complaint was referred to a disciplinary hearing on January 6, 2026. EPR filed its lawsuit six days later. The reasons state that the disciplinary hearing had not yet occurred when the court ruled.

Pleading did not establish the required claims

Taylor assessed the proposed amended claim when deciding the motion to strike. For the argument that no cause of action was disclosed, the pleaded facts were assumed to be true unless patently ridiculous or incapable of proof. The question was whether a legally viable claim could follow from them.

EPR’s lawyers clarified that they were pursuing intentional misrepresentation against the town and misfeasance against the individuals, rather than defamation. The judge treated the misrepresentation theory as fraudulent misrepresentation or deceit.

That tort requires, among other elements, a false statement intended to be acted on by the plaintiff and the plaintiff’s reliance on it. EPR said its reliance consisted of having to answer the complaint and participate in the regulatory process, with resulting legal costs and reputational harm. Taylor held that describing the obligation to respond to a complaint did not establish the elements of fraudulent misrepresentation.

The misfeasance claim was also deficient. Although intentional and unlawful conduct was required, the pleading did not identify how the individual defendants’ actions were unlawful.

Regulatory process had to run its course

The court gave additional reasons for striking the claim. EPR’s contention that the town had misrepresented facts could be addressed within the statutory complaint process, where EPR would have an opportunity to respond at the hearing. The legislation also prohibits false or misleading statements to those exercising powers under it.

Taylor concluded that a party should not circumvent that process through a parallel lawsuit. At minimum, EPR should await its conclusion before deciding whether any remaining issues belonged in court.

The judge also relied on section 74(2) of the Chartered Professional Accountants Act, which protects a complainant from liability unless the regulator makes the specified finding that disclosure was malicious and without a factual foundation. No such finding had been made here.

The court left costs for the parties to agree on. If they could not, each could file written submissions of up to five pages within 30 days of the reasons’ release.