Man Nutzfahrzeuge AG & Anor v Freightliner Ltd & Anor

Man Nutzfahrzeuge AG & Anor v Freightliner Ltd & Anor

Ernst & Young (UK) did not owe a special duty of care to Western Star or MAN Nutzfahrzeuge AG in respect of losses arising from fraudulent misrepresentations made by Mr Ellis during the sale of ERF. The knowledge that the audited accounts would be used in the sale did not amount to an assumption of responsibility for the use of those accounts in the context of fraudulent statements outside the share purchase agreement. Foreseeability alone was insufficient, and there was no objective basis for concluding that E&Y assumed responsibility for such losses. Accordingly, Freightliner Limited's claims against E&Y, including for contribution under the Civil Liability (Contribution) Act 1978, failed.

Parties
Claimants/respondents: MAN Nutzfahrzeuge AG and another; Defendant/part 20 Claimant/appellant: Freightliner Limited; Part 20 Defendant/respondent: Ernst & Young (a firm)
Jurisdiction
England and Wales
Judgment Date
12 September 2007
Procedural Posture
Civil Appeal / Appeal From High Court (commercial Court) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Duty of Care, Assumption of Responsibility, Negligent Misstatement, Auditor Liability, Fraudulent Misrepresentation, Vicarious Liability, Damages, Contribution Under Civil Liability (contribution) Act 1978
Tort Law Contract Law Company Law Professional Negligence Duty of Care Assumption of Responsibility Negligent Misstatement Auditor Liability +4 more

Case Brief

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Parties

MAN Nutzfahrzeuge AG and another

Claimants/respondents

Freightliner Limited

Defendant/part 20 Claimant/appellant

Ernst & Young (a firm)

Part 20 Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From High Court (commercial Court) to Court of Appeal

Legal Issues

  1. 1 Whether Ernst & Young (UK) owed a special duty of care to Western Star (and/or MAN Nutzfahrzeuge AG) in respect of losses arising from fraudulent misrepresentations made by Mr Ellis during the sale of ERF.
  2. 2 Whether Ernst & Young (UK) owed a duty of care to Western Star or MAN Nutzfahrzeuge AG in relation to the accuracy of the audited accounts used in the sale transaction.
  3. 3 Whether Freightliner Limited could recover a contribution from Ernst & Young (UK) under the Civil Liability (Contribution) Act 1978.

Ratio Decidendi

Ernst & Young (UK) did not owe a special duty of care to Western Star or MAN Nutzfahrzeuge AG in respect of losses arising from fraudulent misrepresentations made by Mr Ellis during the sale of ERF. The knowledge that the audited accounts would be used in the sale did not amount to an assumption of responsibility for the use of those accounts in the context of fraudulent statements outside the share purchase agreement. Foreseeability alone was insufficient, and there was no objective basis for concluding that E&Y assumed responsibility for such losses. Accordingly, Freightliner Limited's claims against E&Y, including for contribution under the Civil Liability (Contribution) Act 1978, failed.

Court Disposition

Appeal dismissed

Orders

  • Appeal by Freightliner Limited against Ernst & Young (UK) dismissed.
  • No special duty of care found; no contribution recoverable from Ernst & Young (UK).