TORONTO – After nearly two decades, an Ontario court has dismissed the last two lawsuits involving the Bre-X Minerals scandal, which resulted in investors losing an estimated $1 billion.
In a ruling Wednesday, Ontario Superior Justice Paul Perell said the case will no longer continue because there is “no reasonable prospect of recovery from any of the defendants, even if the outstanding actions were successful.”
The motions to dismiss were brought by lawyers for the plaintiffs.
The lawsuits alleged Bre-X engaged in “stock fraud” when it reported it had found a major gold deposit in Indonesia. The find was later revealed to be a fake, resulting in the company’s shares nose-diving and losses to thousands of its investors. Bre-X filed for bankruptcy in November 1997.
“It was the greatest fraud ever perpetrated in Canada, and maybe the U.S., and nobody goes to jail and nobody pay any money,” said plaintiff lawyer Paul Pape.
In a motion filed jointly with lawyer Harvey Strosberg, the two said most of the money being held in the Cayman Islands that their clients were pursuing “has been dissipated for living expenses and legal expenses.”
Pape said the more than 5,000 Canadian plaintiffs in the class-action had come to terms a long time ago with not recovering their losses. The majority had losses less than $1,000, while more than 200 plaintiffs suffered losses totalling more than $100,000.
The lawsuits named the estate of Bre-X’s president, David Walsh, who has since died, former geologist John Felderhof and his ex-wife Ingrid Felderhof, who have all maintained their innocence.
“I think it was a perfect storm of circumstances,” Pape said. “Everybody recognized that the losses were so large, billions of dollars, that there wasn’t going to be any pot of money large enough to make any difference to anybody. It was a long time ago that people notionally wrote this off.”
Perell agreed with the plaintiff’s motion to donate to charity the remaining $3.5 million held in trust and owed to the claimants. It was agreed that if those funds were redistributed, it would only mean a recovery of two cents on the dollar for each claimant after fees.
The majority of the money will go to the Access to Justice Fund of the Law Foundation of Ontario, which helps pay for legal aid. Twenty per cent of the money will go to the Telfer School of Management at the University of Ottawa.
Perell also ruled that the plaintiffs’ lawyers will be paid a total of $850,063 for their work on the lawsuits between November 1999 to December 2013, noting that they incurred nearly $2.6 million in fees during this time.
“Quite simply, there is no purpose to be served by continuing the remaining actions,” he wrote in the 19-page decision.
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Note to readers: This is a corrected story. An earlier version incorrectly spelled the name of Justice Paul Perell.