Equitable Life Assurance Society v Ernst and Young (A Firm): ComC 10 Feb 2003

The company complained that its auditors had failed to give appropriate warning of the Society’s exposure to risk in awarding larger bonuses than were justified, and that had the true position been known, it xould have put itself up for sale earlier, reducing later substantial losses. The defendant sought to strike out the claims.
Held: The defendant had a statutory duty as company auditor under the Act, the range of which was set out in the South Australia case, and Caparo. The extent should not be restricted below what the client could properly expect, nor extend the duty beyond that expected by the adviser. The auditors duties did include advice as to the values available to support payment of bonuses, but not as to a potential sale. The claimant was given an opportunity to amend its bonus claims.
Duty of care – auditors failing to advise on provision for liabilities to policyholders guaranteed fixed level of income – not liable for losses sustained by directors failing to sell business sooner owing to contingent liabilities but potentially liable for losses caused by payment of overlarge bonuses in reliance on audited accounts
Times 24-Feb-2003, [2003] EWHC 112 (Comm), Gazette 03-Apr-2003
Bailii
England and Wales
Citing:
CitedSouth Australia Asset Management Corporation v York Montague Ltd etc HL 24-Jun-1996
Limits of Damages for Negligent Valuations
Damages for negligent valuations are limited to the foreseeable consequences of advice, and do not include losses arising from a general fall in values. Valuation is seldom an exact science, and within a band of figures valuers may differ without . .
CitedCoulthard, Ashton Shuttleworth, and Dawes v Neville Russell (a Firm) CA 27-Nov-1997
Auditors who were in a position to advise a company’s directors as to the legality of them making loan payments to a shell company which was acquiring there shares had a duty so to advise. The directors of a company sued them for failing to warn . .
CitedGaloo Ltd and Others v Bright Grahame Murray CA 21-Dec-1993
It is for the Court to decide whether the breach of duty was the cause of a loss or simply the occasion for it by the application of common sense. A breach of contract, to found recovery, must be shown to have been ‘an ‘effective’ or ‘dominant’ . .
CitedAllied Maples Group Ltd v Simmons and Simmons CA 12-May-1995
Lost chance claim – not mere speculative claim
Solicitors failed to advise the plaintiffs sufficiently in a property transaction. A warranty against liability for a former tenant’s obligations under leases had not been obtained. The trial judge held that, on a balance of probabilities, there was . .

These lists may be incomplete.
Updated: 02 June 2021; Ref: scu.179107