Manchester Building Society v Grant Thornton UK LLP

Manchester Building Society v Grant Thornton UK LLP

The Defendant’s admitted negligence was an effective cause in fact and law of certain losses, but the major losses claimed (costs of breaking swaps and related heads) were not within the scope of the Defendant’s duty of care as auditor/accountant. The Defendant did not assume responsibility for losses resulting from market movements and commercial decisions to enter into long-term swaps. Only limited heads of loss directly attributable to the negligent advice and within the scope of duty are recoverable, subject to a 25% reduction for contributory negligence by the Claimant.

Parties
Claimant: Manchester Building Society; Defendant: Grant Thornton UK LLP
Jurisdiction
England and Wales
Judgment Date
02 May 2018
Procedural Posture
Civil (professional Negligence) / High Court Judgment After Trial on Quantum and Causation (liability Admitted)
Outcome
Claim allowed in part; limited damages awarded subject to contributory negligence.
Legal Topics
Scope of Duty, Causation, Contributory Negligence, Remoteness of Damage, Audit Negligence, Hedge Accounting, Financial Services Regulation
Professional Negligence Accountancy Law Damages Scope of Duty Causation Contributory Negligence Remoteness of Damage Audit Negligence +2 more

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Parties

Manchester Building Society

Claimant

Grant Thornton UK LLP

Defendant

Procedural Posture

Civil (professional Negligence) / High Court Judgment After Trial on Quantum and Causation (liability Admitted)

Legal Issues

  1. 1 Whether the losses claimed by the Claimant were within the scope of the Defendant's duty of care as auditor and accounting adviser
  2. 2 Whether the Defendant's negligence was an effective cause in law of the losses claimed
  3. 3 Whether the losses were too remote

Ratio Decidendi

The Defendant’s admitted negligence was an effective cause in fact and law of certain losses, but the major losses claimed (costs of breaking swaps and related heads) were not within the scope of the Defendant’s duty of care as auditor/accountant. The Defendant did not assume responsibility for losses resulting from market movements and commercial decisions to enter into long-term swaps. Only limited heads of loss directly attributable to the negligent advice and within the scope of duty are recoverable, subject to a 25% reduction for contributory negligence by the Claimant.

Court Disposition

Claim allowed in part; limited damages awarded subject to contributory negligence.

Orders

  • Judgment for the Claimant for 75% of £420,460, namely £315,345 plus interest.
  • All other heads of loss, including the main swap break costs, dismissed as not within scope of duty.