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These cases are from the lawindexpro database. They are now being transferred to the swarb.co.uk website in a better form. As a case is published there, an entry here will link to it. The swarb.co.uk site includes many later cases.  















Professional Negligence - From: 1990 To: 1990

This page lists 3 cases, and was prepared on 02 April 2018.


 
 Bell v Peter Browne and Co; CA 1990 - [1990] 2 QB 495
 
Al Saudi Banque v Clarke Pixley [1990] 2 WLR 344; [1990] Ch 313
1990

Millett J
Professional Negligence
An auditor does not generally owe a duty of care in tort to a company's creditors. Millet J referred to the Court of Appeal decision in Caparo: "In my judgment, Caparo's case is binding authority for the following propositions. (i) In cases of negligent mis-statement, foreseeability that the plaintiff or someone in a similar position will rely up on the statement is a necessary but not sufficient condition for liability. (ii) In addition, it is necessary to establish a nexus or relationship between the parties sufficient to create a duty of care. That relationship can only be determined by close analysis in each case. The label applied to such a relationship is 'proximity', but there is no single definitive test. In some cases, it may be useful to consider whether there has been 'a voluntary assumption of responsibility', in others, whether the relationship is 'equivalent to contract'. (iii) The necessary relationship exists between a company's auditors and its members, because the auditors are under a statutory duty to report to the members and know that it is intended to send copies of their report to them. (iv) The relationship may also exist if the circumstances are such that the auditors can be taken impliedly to have represented the accuracy of the accounts to the plaintiff, and perhaps whenever they provide the accounts to the company with intention, or in the knowledge that it is the company's intention, that they are to be supplied to the plaintiff or to persons in a class of which the plaintiff is one. (v) It is not necessary that the auditors should have any particular transaction in contemplation, or should intend the recipient of their report to act upon it in any such transaction. If the necessary relationship exists, it is enough if it is foreseeable that the recipient of the report may rely upon it in some future transaction, whether contemplated by the auditors or not, and whether with reference to his existing shareholding or not. (vi) The necessary relationship does not exist between a company's auditors and potential investors who are not existing shareholders in the company. The fact that it is foreseeable that their report may come into their hands and be relied upon by them is not sufficient without more to create the relationship."
and: "In the present case, the defendants did not make their reports to the plaintiff banks or to any other person with the intention or in the knowledge that they would be communicated to them. The most that can be said is that it was foreseeable that, if any of the plaintiff banks wished to consider the continuance or renewal of existing facilities or the grant of additional facilities, it might well call for copies of the company's latest audited accounts and rely upon them and the accompanying auditors' report . . The fact that the plaintiffs are a small and limited class and known to the defendants reduces the seriousness of the consequences of holding that a duty of care exists and may make it less unjust or less unreasonable to impose such a duty; but it cannot by itself create a relationship between the parties. What needs to be shown is not knowledge of their identity but, at the very least, knowledge of an intention that the information will be provided to them."
1 Citers



 
 Caparo Industries Plc v Dickman and others; HL 8-Feb-1990 - [1990] 2 AC 605; [1990] UKHL 2; [1990] 1 All ER 568
 
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