The defenders, a firm of chartered accountants, prepared accounts for a customer of the pursuer bank. The bank claimed damages for negligence having relied upon the accounts. The auditors relied upon the case of Galoo.
Held: It was not necessary for the accounts to have been prepared specifically for the bank, no separate evidence of such an intention was required. Galoo did not refer to the present case where the auditors expressly knew that the bank would be relying on the accounts in making lending decisions. It had been open to the defenders, if they had wished to disclaim any responsibility beyond the statutory duties fulfilled. The auditors had to satisfy themselves that the company could continue, and that required them to test the readiness of the bank to continue its lending, and accordingly also the bank’s reliance upon the audited accounts.
Cited – Galoo 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’ . .
Lists of cited by and citing cases may be incomplete.
Scotland, Banking, Professional Negligence
Updated: 28 April 2022; Ref: scu.174746