Assetco Plc v Grant Thornton UK LLP

Assetco Plc v Grant Thornton UK LLP

The Court held that the trading and operational losses suffered by AssetCo were within the scope of Grant Thornton's duty as auditor, as the negligent audit deprived AssetCo of the opportunity to correct dishonest management and avoid continued loss-making trading. The losses were legally caused by the breaches, except for the Jaras payment, which was not sufficiently linked to the audit negligence. The Court upheld the trial judge's approach to loss of a chance, finding the chances of the necessary contingencies so high as to be treated as certainties. However, the Court held that AssetCo must give credit for the proceeds of the July 2009 share issue, as this benefit was legally caused...

Parties
Claimant/respondent: AssetCo plc; Defendant/appellant: Grant Thornton UK LLP
Jurisdiction
England and Wales
Judgment Date
28 August 2020
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal dismissed in part; damages reduced
Legal Topics
Scope of Auditor's Duty, Causation in Negligence, Damages Assessment, Loss of a Chance, Credit for Benefits, Corporate Insolvency, Shareholder Remedies
Professional Negligence Company Law Audit Law Scope of Auditor's Duty Causation in Negligence Damages Assessment Loss of a Chance Credit for Benefits +2 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 12 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

AssetCo plc

Claimant/respondent

Grant Thornton UK LLP

Defendant/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether the losses claimed by AssetCo fell within the scope of Grant Thornton's duty as auditor and were legally caused by its admitted breaches of duty
  2. 2 Whether the trial judge erred in applying the principles for awarding damages for loss of a chance and in his assessment of the chances of specific contingencies
  3. 3 Whether AssetCo should give credit for benefits received, including proceeds of share issues, in the assessment of damages

Ratio Decidendi

The Court held that the trading and operational losses suffered by AssetCo were within the scope of Grant Thornton's duty as auditor, as the negligent audit deprived AssetCo of the opportunity to correct dishonest management and avoid continued loss-making trading. The losses were legally caused by the breaches, except for the Jaras payment, which was not sufficiently linked to the audit negligence. The Court upheld the trial judge's approach to loss of a chance, finding the chances of the necessary contingencies so high as to be treated as certainties. However, the Court held that AssetCo must give credit for the proceeds of the July 2009 share issue, as this benefit was legally caused...

Court Disposition

Appeal dismissed in part; damages reduced

Orders

  • Jaras payment of £1.5 million excluded from recoverable losses
  • AssetCo to give credit for £7,506,000 received from July 2009 share issue