First Interstate Bank of California v Cohen Arnold and Co: CA 11 Dec 1995

If a guarantor’s negligent accountant had not misled the bank by misrepresenting his client’s wealth, the bank would have demanded repayment of its secured loan on 30th June 1990. In the event it did not realise the true position until 17th August. The judge held that if it had not been misled the bank would probably have achieved a satisfactory sale of the secured property in a falling market by the end of September in the sum of pounds 2.7 billion, and he awarded the whole of that sum by way of damages (subject to giving credit for the much lower sale price actually achieved). This court held that he had adopted the wrong approach. ‘. . there was a confusion between causation and damages and a failure to separate out those matters which had to be proved on the balance of probabilities, those which depended upon finding that chances were substantial, and finally the evaluation of the chance itself.’ Damages for loss of chance were recoverable, but must be substantial not speculative.


Ward LJ


Times 11-Dec-1995, [1996] PNLR 45


England and Wales

Cited by:

CitedEquitable Life Assurance Society v Ernst and Young CA 25-Jul-2003
The claimant sought damages from its accountants, saying that had they been advised of the difficulties in their financial situation, they would have been able to avoid the loss of some 2.5 billion pounds, or to sell their assets at a time when . .
Lists of cited by and citing cases may be incomplete.


Updated: 09 December 2022; Ref: scu.80556