Independents' Advantage Insurance Company Ltd. v Cook & Anor

Independents' Advantage Insurance Company Ltd. v Cook & Anor

The pleaded facts, if established, could arguably give rise to a duty of care owed by the auditors to the claimant as a provider of bonds/insurance, given the alleged knowledge and industry practice. The case is at or near the margin of existing authority and should proceed to trial for full factual determination.

Parties
Claimant/respondent: Independents’ Advantage Insurance Company Limited; Defendants/appellants: The Personal Representatives of Michael John Willis Cook (deceased) and another (Colin White-Adams)
Jurisdiction
England and Wales
Judgment Date
24 July 2003
Procedural Posture
Civil Appeal / Appeal From High Court Decision on Application to Strike Out and for Summary Judgment
Outcome
Appeal dismissed
Legal Topics
Duty of Care, Negligent Misstatement, Auditor Liability, Summary Judgment, Strike Out Applications
Tort Law Professional Negligence Duty of Care Negligent Misstatement Auditor Liability Summary Judgment Strike Out Applications

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Parties

Independents’ Advantage Insurance Company Limited

Claimant/respondent

The Personal Representatives of Michael John Willis Cook (deceased) and another (Colin White-Adams)

Defendants/appellants

Procedural Posture

Civil Appeal / Appeal From High Court Decision on Application to Strike Out and for Summary Judgment

Legal Issues

  1. 1 Whether the auditors owed a duty of care at common law to a third party (the provider of bonds/insurance) who relied on audited financial statements prepared for their client.
  2. 2 Whether the pleaded facts disclosed reasonable grounds for bringing the claim against the auditors for professional negligence.

Ratio Decidendi

The pleaded facts, if established, could arguably give rise to a duty of care owed by the auditors to the claimant as a provider of bonds/insurance, given the alleged knowledge and industry practice. The case is at or near the margin of existing authority and should proceed to trial for full factual determination.

Court Disposition

Appeal dismissed

Orders

  • The defendants’ appeal against the order of Mr Justice Lloyd dated 11th November 2002 is dismissed.
  • The defendants are to pay the claimant’s costs of and occasioned by the appeal, such costs to be assessed on a standard basis if not agreed.