Former Bre-X geologist John Felderhof stands outside Osgoode Hall in Toronto. Mr. Felderhof was acquitted of fraud charges after the gold miner’s spectacular collapse in 1997. The last remnants of class-action litigation are dragging through courts.Peter Power/The Globe and Mail
It's the lawsuit that keeps on going.
About 17 years after gold-drilling results from Indonesia were found to be fake, sending high-flying shares in Calgary-based Bre-X Minerals Ltd. into a tailspin and setting off Bay Street's biggest scandal, the case is still in court – barely.
The gold miner's spectacular collapse came back in 1997. And the main drama of the controversial insider-trading case launched against Bre-X geologist John Felderhof by the Ontario Securities Commission is long over, after he was acquitted in 2007.
But other civil litigation against him and other key Bre-X players dating back to the scandal's beginnings is still dragging on – despite the best efforts of all involved.
On Thursday, class-action lawyers acting for burned investors in the company were in a Toronto courtroom, trying to withdraw what they now say is a hopeless case. Only a tiny fraction the at least $1-billion lost has ever been recovered – in settlements with a financial institution and a related company. And lawyers say there is no more money to be found, even if the fraud allegations in the lawsuit were ever proven.
But the judge said he needed more information before granting their wish.
Ontario Superior Court Justice Paul Perell asked the lawyer for the plaintiffs, Paul Pape of Pape Barristers, and the lawyer attending for the trustee overseeing the remains of Bre-X, Angus McKinnon of now-defunct Heenan Blaikie LLP, to return April 2 with more information and proper written arguments.
In addition to wanting to drop the case, the plaintiffs' lawyers are seeking to get out of a commitment they made to an Ontario judge to pursue the case even if the Bre-X trustee chasing the money in the Cayman Islands ran out of cash, which is what has happened. A court freeze order there on Felderhof family assets was lifted, plaintiffs' lawyers said before the hearing, making their case unlikely to succeed.
"The Bre-X matter strikes me as a matter of public interest," Justice Perell said from the bench on Thursday, adding that he did not believe that it would be appropriate for the "action [to] just disappear. It requires some sort of report."
The brief hearing, which was supposed to mark the last gasp of the Bre-X scandal, was attended by just two lawyers, two clerks, the judge, and a newspaper reporter. Before it began, the clerks sifted through the various matters before the court, unable at first to find the Bre-X file.
The lawyers acting for Bre-X investors, Sutts Strosberg LLP and Pape Barristers PC, announced last month that they would be abandoning the long-standing class action lawsuit, marking the end of all litigation related to Bre-X, as similar U.S. actions have also fizzled.
They were asking that $4.2-million of the remaining settlement funds be donated to the Law Foundation of Ontario Access to Justice Fund. And they were requesting about $460,000 for their own legal fees and expenses. How to divide up another small portion of the money – about $500,000 – between the U.S. and Canadian Bre-X actions remains in dispute.
The defendants include the estate of the late David Walsh, the company's former president who died in the Bahamas in 1998, Mr. Felderhof, and his ex-wife Ingrid. All denied any wrongdoing.
Jeff Gray