Equitable Life Assurance Society v Ernst & Young

Equitable Life Assurance Society v Ernst & Young

The Court of Appeal held that Equitable’s claims for lost sale and bonus declarations should not be summarily struck out. The lost sale claims must be reformulated as loss of a chance claims, and both types of claims raise complex factual and legal issues unsuitable for summary disposal. The scope of E&Y’s duty, causation, and quantum are matters for trial. The judge below erred in striking out the lost sale claims and in limiting the bonus declaration claims to £500 million at this stage. Both claims should proceed to trial, subject to the qualifications in the judgment.

Parties
Claimant/appellant: Equitable Life Assurance Society; Defendant/respondent: Ernst & Young
Jurisdiction
England and Wales
Judgment Date
25 July 2003
Procedural Posture
Civil Appeal / Appeal From Commercial Court (queen’s Bench Division) to Court of Appeal
Outcome
Appellant’s appeal allowed in part; Defendant’s appeal and cross-appeal dismissed.
Legal Topics
Auditor's Duty of Care, Damages for Negligent Audit, Scope of Duty, Causation, Loss of Chance, Bonus Declaration, Goodwill Valuation
Professional Negligence Company Law Insurance Law Auditor's Duty of Care Damages for Negligent Audit Scope of Duty Causation Loss of Chance +2 more

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Parties

Equitable Life Assurance Society

Claimant/appellant

Ernst & Young

Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From Commercial Court (queen’s Bench Division) to Court of Appeal

Legal Issues

  1. 1 Whether Equitable's claims for lost sale and bonus declarations should be struck out as unsustainable in law or fact
  2. 2 Whether the alleged losses fall within the scope of E&Y’s duty of care as auditors
  3. 3 Whether Equitable suffered recoverable loss and/or mitigated its loss

Ratio Decidendi

The Court of Appeal held that Equitable’s claims for lost sale and bonus declarations should not be summarily struck out. The lost sale claims must be reformulated as loss of a chance claims, and both types of claims raise complex factual and legal issues unsuitable for summary disposal. The scope of E&Y’s duty, causation, and quantum are matters for trial. The judge below erred in striking out the lost sale claims and in limiting the bonus declaration claims to £500 million at this stage. Both claims should proceed to trial, subject to the qualifications in the judgment.

Court Disposition

Appellant’s appeal allowed in part; Defendant’s appeal and cross-appeal dismissed.

Orders

  • Lost sale claims restored in principle, to be formulated as loss of a chance claims.
  • Bonus declaration claims restored in their entirety, subject to the qualification in para 81 of the judgment.