Shortly after the bankruptcy of Castor Holdings Ltd. (“Castor”) in 1992, our firm was engaged to act as counsel for the trustee in bankruptcy, numerous Canadian and foreign banks, as well as certain individuals in proceedings instituted in the Superior Court of Quebec against the Canadian partners and firm of Coopers & Lybrand Chartered Accountants (“Coopers”), then one of the Big Six accounting firms globally. The Castor litigation, involving claims of more than $1.5 billion, evolved into the largest and longest auditors’ negligence case in Canada. The judgment which we obtained on the merits in the “test case” is a landmark decision for its articulation of the responsibilities of auditors and accountants working in civil law or common law jurisdictions, the responsibilities of inside/outside directors, as well as the rights of lenders, investors and shareholders who rely on the work of accounting professionals in making their financial decisions. The Quebec Court of Appeal substantially upheld the trial judgment and, in early 2014, the decision became final when the Supreme Court of Canada dismissed Coopers’ application for leave to appeal. Subsequently, court costs of $15.8 million (plus interest) were awarded to the test case plaintiff as well as a special fee of $2.5 million to our firm, constituting by far the largest such special fee awarded in Quebec.
Throughout each step of this 20 year litigation, the lawyers of our firm represented our clients with passion, tenacity, determination and creativity. Our firm aggressively pursued all avenues to enable our clients to recover their losses from Coopers, its individual partners across Canada, its professional liability insurers and against the successor firm of Coopers.
Using this multi-pronged approach, our firm was able to negotiate a global settlement of the Castor-related litigation which was accomplished with the use of the Companies' Creditors Arrangement Act ("CCAA"). In July 2015, the Ontario Court of Justice approved a global settlement in which contributions to a fund were made by Coopers, its approximately 300 former national partners, its insurers and PwC. This novel approach is now acknowledged as exemplifying the flexibility of settling complex claims within the CCAA framework.
Widdrington (Estate of) c. Wightman, 2011 QCCS 1788 (CanLII),
Wightman c. Widdrington (Succession de), 2013 QCCA 1187 (CanLII),
The Globe and Mail, "Auditors negligent in Castor Holdings"
Montreal Gazette, "Investors win big in Castor Holdings auditors' negiligence case"
Canadian Lawyer Magazine, "PwC loses bid to avoid claims in Quebec"