Royal Bank Of Scotland Plc v. Bannerman Johnstone Maclay [2005] ScotCS CSIH_39 (26 May 2005)

Royal Bank Of Scotland Plc v. Bannerman Johnstone Maclay [2005] ScotCS CSIH_39 (26 May 2005)

On the pleadings, the pursuers have averred sufficient facts to entitle them to proof before answer on the existence of a duty of care owed by the auditors to the bank, including the relevance of the absence of a disclaimer and the recoverability of losses from lending to the subsidiary. The case on vicarious...

Source-derived case information.

Citation
[2005] ScotCS CSIH_39
Parties
Pursuers and Respondents: Royal Bank of Scotland plc; Defenders and Reclaimers: Bannerman Johnstone Maclay, Chartered Accountants; and A G Bannerman, G J Johnstone, D J Maclay, R B McKerral, M G MacBeth and M G McCusker, the whole partners thereof as such partners and as individuals
Jurisdiction
Scotland
Judgment Date
26 May 2005
Procedural Posture
Reclaiming Motion (appeal) in Civil Reparation Action / Interlocutory Appeal on Relevancy, Prior to Proof Before Answer
Outcome
Reclaiming motion refused; cross-appeal allowed; case remitted for proof before answer on the whole record.
Legal Topics
Auditor's Duty of Care to Third Parties, Negligent Misstatement, Vicarious Liability, Assumption of Responsibility, Fraud, Reparation (damages)
Tort Professional Negligence Company Law Auditor's Duty of Care to Third Parties Negligent Misstatement Vicarious Liability Assumption of Responsibility Fraud +1 more

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Summary, issues, holding and outcome

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Parties

Royal Bank of Scotland plc

Pursuers and Respondents

Bannerman Johnstone Maclay, Chartered Accountants; and A G Bannerman, G J Johnstone, D J Maclay, R B McKerral, M G MacBeth and M G McCusker, the whole partners thereof as such partners and as individuals

Defenders and Reclaimers

Procedural Posture

Reclaiming Motion (appeal) in Civil Reparation Action / Interlocutory Appeal on Relevancy, Prior to Proof Before Answer

Legal Issues

  1. 1 Whether auditors owed a duty of care to the bank as a third party relying on audited accounts
  2. 2 Whether absence of a disclaimer of liability is relevant to assumption of responsibility
  3. 3 Whether losses from lending to a subsidiary (APC Civils) are recoverable

Ratio Decidendi

On the pleadings, the pursuers have averred sufficient facts to entitle them to proof before answer on the existence of a duty of care owed by the auditors to the bank, including the relevance of the absence of a disclaimer and the recoverability of losses from lending to the subsidiary. The case on vicarious liability for employee fraud should also proceed to proof, as the employment relationship and scope of employment are fact-sensitive and cannot be determined without evidence.

Court Disposition

Reclaiming motion refused; cross-appeal allowed; case remitted for proof before answer on the whole record.

Orders

  • Recall of Lord Ordinary's interlocutor
  • Remit to Outer House for proof before answer on all issues