More than 15 years after news of allegedly faked gold samples from Indonesia crushed Calgary-based Bre-X Minerals Ltd. and shook confidence in Bay Street, lawyers suing on behalf of burned investors who lost hundreds of millions are finally giving up.
Lawyers with Sutts Strosberg LLP and Pape Barristers P.C. announced Monday that they would be in Ontario Superior Court on Feb. 20, asking a judge to dismiss all the remaining Bre-X lawsuits and release the firms from an undertaking to continue the case.
According to an affidavit filed in court by well-known Windsor, Ont. class-action litigator Harvey Strosberg, the lawyers believe "there is no reasonable prospect of a recovery of money" even if the lawsuits were successful.
Various cases, including one against the company itself, have been previously dismissed as the litigation dragged on and the alleged fraud faded into memory.
Thousands of investors who bought stock in Bre-X in the early 1990s were covered by the lawsuits and allegedly lost more than $1-billion, according to court documents.
But now the only money left is funds held in trust after a settlement with an affiliated company, around $5-million (U.S.), meaning investors would receive next-to-nothing if it were split up among them.
Mr. Strosberg is moving that $4.2-million should instead be donated to the Law Foundation of Ontario's Access to Justice Fund, and that the plaintiffs' lawyers on the lengthy case should be paid $458,515 for fees and expenses.
The remaining Ontario class actions name several of the key players in the drama that captivated the country in the 1990s, including the estate of the late David Walsh, the company's former president who died in the Bahamas in 1998, and John Felderhof and his ex-wife Ingrid. All denied any wrongdoing.
Mr. Strosberg says the class action cases are now not worth pursuing ever since a freeze order, known as a Mareva injunction, was dissolved in the Cayman Islands, where Felderhof family funds were believed to be held. The trustee pursuing the case there ran out of money, the documents say.
"As a result of evidence produced in the derivative action, I believe that most of the money in the Cayman Islands, subject to the Mareva Injunction, has been spent on the living expenses of the Felderhof family and their legal expenses," Mr. Strosberg says in his affidavit.
Only Mr. Felderhof ever faced any kind of prosecution for the allegations in the Bre-X case, and he was acquitted of quasi-criminal Ontario Securities Act charges in 2007, after a lengthy and controversial trial.
Mr. Felderhof has always denied any wrongdoing and now lives in the Phillipines. (His lawyer at that trial, Joe Groia, is appealing professional sanctions levelled against him by the Law Society of Upper Canada for his courtroom behaviour during the case.)
Alan Lenczner, a lawyer for all of the defendants except Mr. Felderhof, said his clients were pleased to put the lawsuits behind them.
Mr. Strosberg said the decision to withdraw is the end of a long road that saw the plaintiffs' lawyers do millions-of-dollars worth of work, but with little in the end to show for it: "It's a sad situation for everyone that invested in the company."