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TORONTO — The corporate auditor to the once high-flying Livent theatre company run by disgraced mogul Garth Drabinsky was partly responsible for the hundreds of millions of dollars creditors ended up losing, Ontario’s top court ruled Friday.

In upholding an $85.6-million award against Deloitte and Touche — $118 million with interest — the Court of Appeal sided with a judge who found the auditor had been negligent in failing to detect, and act on, the fraudulent behaviour of Drabinsky and his partner, Myron Gottlieb, in the 1990s.

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After all, there had been numerous red flags for several years that Deloitte essentially ignored, the court found.

“Deloitte knew that Drabinsky and Gottlieb were aggressive entrepreneurs who pushed the envelope in terms of accounting and financial measures,” the Appeal Court said in a 100-page judgment.

“It is more likely than not that a careful and objective investigation into Livent’s financial statements, pursued with ‘an attitude of professional skepticism,’ would have revealed the fraud.”