Case information

None.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Civil liability — Professional liability of accountants acting as auditors of a corporation — Private international law — Applicable law — Whether law applicable to auditors’ liability is law of province of incorporation of audited corporation or law of province where fault occurred — Whether “law of province where fault occurred” is law of province where negligent auditing work conducted or law of province where financial losses incurred — Whether auditors can be held liable for damages incurred by third parties having relied on audited financial statements and opinions and having incurred losses due to negligence of auditors — Whether Court of Appeal erred in failing to require respondent to bear consequence of his own liability as corporate director — Whether majority of Court of Appeal erred in overturning portion of lower court’s ruling finding applicants’ liable for one of losses incurred by respondent

Castor Holdings Ltd. was a private company incorporated in New Brunswick but which operated internationally out of its head office in Montreal. A Montreal-based team of auditors from the firm of chartered accountants Coopers & Lybrand (Coopers) were responsible for auditing Castor and preparing audited consolidated financial statements and other opinions pertaining to Castor’s financial affairs.
Castor’s sudden collapse and bankruptcy in 1992 generated a series of legal proceedings for professional liability against Coopers and its Canadian partners. Nearly 100 of Castor’s former investors instituted actions claiming a total of over $1 billion from Coopers. Those investors alleged that Coopers was negligent in its auditing of Castor’s financial affairs and statements. The audited consolidated statements and other opinions issued by Coopers were said to have been materially misstated and misleading. The investors affirmed that, but for Coopers’ negligence, they would not have invested in Castor or lent it the amounts claimed.
Mr. Widdrington, a resident of Ontario, was one of those investors. He subsequently became a member of Castor’s Board of Directors. He filed a lawsuit against Coopers seeking to recoup a 2.7 million dollar loss incurred by him when Castor went bankrupt. That action was selected to be the “lead case” in which the professional liability issues common to all similar actions against Coopers would be determined. All other actions were stayed pending the outcome of the present action.