N.W.T. judge rules that LKDFN claim against accounting firm will go ahead
CBC
An N.W.T. judge has ruled that a complicated dispute involving Lutsel K'e Dene First Nation (LKDFN) and the accounting firm KPMG should mostly be heard in open court, and not through a separate arbitration process.
KPMG is accused of helping Ron Barlas defraud the Lutsel K'e Dene First Nation's (LKDFN) business arm, the Densoline Corporation, out of millions of dollars. The N.W.T. Supreme Court has already found that Barlas abused his authority to bilk the companies during his time as Denesoline CEO.
KPMG served as accountants and tax advisors to Barlas and the LKDFN companies from 2016, when Barlas became Densoline CEO, until 2023 when he left.
LKDFN is seeking damages from KPMG, alleging that the firm was working more in Barlas's interests than the First Nation's, and either knew or was willfully blind to how Barlas was defrauding them.
KPMG, however, insisted the dispute should instead be solely addressed through arbitration focused on its contracts with LKDFN.
In a 68-page written decision issued on Wednesday, N.W.T. Supreme Court Justice N.E. Devlin dismissed KPMG's application to stay court proceedings in favour of arbitration, while preserving a separate set of allegations about KPMG's involvement for arbitration.
LKDFN's lawyer Larry Innes was buoyed by the decision.
"It’s an extremely positive decision for Lutselk’e. And I'll say it's also a very good decision for other Indigenous peoples in Canada who have been taken advantage of and find themselves on the sharp end of the black-letter law," Innes told the CBC when reached for comment.
KPMG’s lawyer did not return the CBC’s call for comment on the decision for publication time.
LKDFN is also seeking damages from Reynolds Mirth Reynolds and Farmer, the law firm that was acting on behalf of the LKDFN companies at the time Barlas was CEO.
Another trial will be held to determine exactly how much money LKDFN lost. The court has said that the evidence to date suggests it could be in excess of $10 million.
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