Southern China Livestock Inc.
The motion for certification of this action as a class proceeding was denied by Perell J. with Reasons for Decision released on July 8, 2014. A copy of the Reasons are available under the “Documents” tab, below.
In a split decision by the Divisional Court, the Plaintiff’s appeal from the denial of certification was also denied. The Reasons for Decision of the Divisional Court dated June 15, 2015 are available under the “Documents” tab, below.
The Plaintiff is now seeking leave to appeal to the Court of Appeal.
Nature of the Claim
On October 31, 2012, a claim was commenced against the Canadian accounting firm of Schwartz Levitsky Feldman LLP.
The claim alleges that Schwartz Levitsky Feldman LLP was negligent in failing to exercise the care, skill and diligence of a reasonably competent auditor of a public company, and that it breached its duty of care to investors by providing an unqualified “clean” audit opinion in respect of the Chinese operations of Southern China Livestock Inc., when, in fact, the financial statements were not a fair presentation of the business. Excalibur’s claim on behalf of the proposed class of investors is that none of the investors would have invested in the company but for their reliance on the clean audit report negligently prepared by Schwartz Levitsky Feldman LLP.
This claim is advanced on behalf of a proposed class of investors who purchased investment units in a U.S. company called Expedite 4, Inc. through a private placement financing in 2010. In total, investors paid USD $7,594,965 for investment units in Expedite 4, Inc., and the units are now worthless.
On March 29, 2010, Expedite 4, Inc. acquired a company which operated commercial hog farms in China in a reverse takeover transaction, and simultaneously engaged in the private placement financing aimed at raising USD $10 million.
The reverse takeover was intended to permit the Chinese company to instantly become a public entity in the U.S. The private placement financing was purportedly to grow the commercial hog farm operations in China, through the sale of shares and warrants in the company.
Expedite 4, Inc. is now known as Southern China Livestock Inc.
In fact, investors later learned that Southern China Livestock Inc. had little, if any, control over its hog farm operations, and the business was highly susceptible to theft and fraud. Notably, the sale of hogs in China was primarily in cash and the cash was handled by employees who maintained the funds in their own bank accounts. This fact, the claim alleges, should have been known to Schwartz Levitsky Feldman LLP, and would have precluded a clean audit opinion.
The Defendant delivered its statement of defence on September 13, 2013 and the Plaintiff’s reply was delivered on October 1, 2013. Copies of these documents are available under the “Documents” tab.
If you purchased units of Expedite 4, Inc. through the 2010 private placement, then you are a member of the proposed class, and we would like to hear from you. Please ensure that you keep copies of your subscription agreement, and proof of purchase of the units.
- Leave to maintain action pursuant to s. 28 of the Limited Partnership Act granted June 4, 2013.
- Statement of Claim issued October 31, 2012
- Statement of Defence delivered September 13, 2013
- Reply delivered October 1, 2013
- Certification Motion argued June 26-27, 2014
- Certification Denied July 8, 2014
- Appeal Denied June 15, 2015
- Motion for Leave to Appeal to Court of Appeal, pending