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CENTRAL Montreal court case that has the distinction of being Canada's longest-running trial. After 16 years of court proceedings, The long and winding case W ith an eventual total of more than $1 billion in claims at stake, there is a lot riding on the outcome of a a decision is now expected by the end of December or early next year for the case of the estate of the late Peter N. Widdrington v. Elliott C. Wightman, also known as the Castor Holdings case. Wightman is one of more than 250 auditing partners named in what plaintiff lawyers frame as a professional negligence case relating to the review of financial statements from Castor Holdings Inc., a Montreal-based holding company that raised money for Canadian real estate properties before it collapsed and went into bankruptcy in 1992. All worked for Coopers & Lybrand (now part of PricewaterhouseCoopers) whose Montreal office oversaw the auditing of financial statements and share valuation opinions for Castor. The last available financial statements for the privately held company in 1990 showed a loan portfolio of $1.7 bil- lion with net earnings of $31.2 million. In addition to Widdrington, a for- mer chief executive of John Labatt Ltd. whose estate is suing C&L and its for- mer partners for $2.7 million, other plaintiffs with suits against C&L and its Canadian partners include the pension fund of Chrysler Canada Inc., ING Bank Deutschland AG, the B.C. Credit Union Central, Banque Nationale de Paris, and Bayerische Landesbank of Germany. Those cases are on hold pending the outcome of Widdrington v. Wightman, which is viewed as a test case for common legal questions in all of the filings. The case has had a very long and wind- ing road with more than a few bumps since the filing of lawsuits in 1994. In addition to the death of Widdrington in 2005, in late 2006, eight years into a trial that saw some wit- nesses on the stand for months and in one case four years, Paul Carrière, the Quebec Superior Court judge overseeing the case, had to retire because of health reasons. Justice Marie St-Pierre has been running a tight ship since she took over and hearings resumed in January 2008. But the amount of evidence she must consider is extraordinary. There were more than 18,000 exhibits filed in the case and there are tens of thousands of pages of transcripts of testimony — even though a lot of the testimony, with the exception of that of Widdrington and less than a dozen other witnesses from the first set of hear- ings under Carrière, was set aside for the second round. Lawyers from Heenan Blaikie LLP, representing the defendants, argue profes- sional conduct should never be tried with the benefit of hindsight and that profes- sionals are liable for damages caused by negligent conduct only when such conduct has fallen below the standards of a profes- sion that must be considered adequate. They also argue there cannot be indeterminate liability under common law jurisprudence that limits the liability of auditors to third parties like the sharehold- ers of a corporate client. Lawyers from Montreal litigation firm Fishman Flanz Meland Paquin LLP, repre- German financier Wolfgang Stolzenberg is on the lam and still being sought by Interpol in connection with more than three dozen counts of fraud. senting the plaintiffs, maintain that under Quebec civil law it is a question of proving a fault and damages suffered because of it. Investors like Widdrington, they say, relied on alleged materially and misleading auditing statements — that of themselves reportedly did not conform to generally accepted accounting practices — to inform their investment decisions. Even if common law was applied, "the audited financial statements of Castor falsely disclosed that Castor's business was highly successful and profitable," say plain- tiff lawyers. There is no question that there was pervasive fraud at the company founded by former Montreal businessman and German financier Wolfgang Stolzenberg, who disappeared and is still being sought by Interpol on a Montreal police arrest warrant in connection with more than three dozen counts of fraud. What will be watched closely in the Widdrington decision is the court's view of the duties of an auditor and under what circumstances an accounting firm and its partners are liable for losses suffered by investors when the company it is auditing goes bankrupt. — KATHRYN LEGER kathryn.leger@videotron.ca FEEDS LEGAL A daily blog of Canadian Legal News Coming soon to The Blog of & www. C ANADIAN Law ye rmag.com NO VEMBER / DECEMBER 2010 9 wanted canad ian L a w ye canad r L a w Times ianlaw yermag .com