Coopers & Lybrand has dropped its claim of dishonesty against two Canadian law firms and reached an out of court settlement over its loss of £32.5m.
Toronto-based Fraser & Beatty and Edmonton-based Milner Fennerty reached the settlement with Coopers a quarter of the way into a projected three-month hearing at the High Court in London.
Although the settlement figure is confidential, partners at the two Canadian firms are said to be satisfied.
Coopers brought the action in an effort to retrieve a large part of a £32.5m negligence settlement it paid to KPMG, liquidators of banking group the Wallace Smith Trust Company. Coopers had audited the failed group but it maintained the negligence lay with the Canadian firms, whom it said provided it with “false information in relation to the company's affairs”.
The law firms had been directors of Canadian-owned companies within the Wallace Smith Trust Company and were trustees for the family trusts of Wallace Duncan Smith, the bank's head.
The bank collapsed in 1991 with debts of around £100m and Smith was convicted in 1994 of fraudulent trading and obtaining property by deception.
Coopers was unable to comment on the confidential settlement. But an October press release from the firm said that “agreement was reached… between the remaining parties to the Wallace Smith Trust Co Limited litigation to settle the third party proceedings. In consideration of the agreement, Coopers & Lybrand has dropped its allegations of dishonesty against partners, former partners, employees, former employees and consultants of the Canadian law firms of Fraser & Beatty and Milner & Steer.”