Kirkintilloch Equitable Cooperative Society Ltd v Livingstone [1972] ScotCS CSIH_1 (02 March 1972)

Kirkintilloch Equitable Cooperative Society Ltd v Livingstone [1972] ScotCS CSIH_1 (02 March 1972)

Partners in a firm of accountants are vicariously liable under section 10 of the Partnership Act 1890 for the negligence of a partner acting as an official auditor, where the audit is within the ordinary course of the firm's business, the work is performed with the knowledge and authority of the other partners, and the audit fee is paid to the firm, even if the statutory appointment is personal to the partner.

Citation
[1972] ScotCS CSIH_1
Parties
Pursuer: Kirkintilloch Equitable Co-operative Society Ltd; Defender: Livingstone; Defender: Hardie, Cuthbertson & Co.; Defender: Fourth, Fifth, Sixth and Seventh Defenders (partners of Hardie, Cuthbertson & Co.); Defender: Third Defender (official auditor, partner of Hardie, Cuthbertson & Co.)
Jurisdiction
Scotland
Judgment Date
02 March 1972
Procedural Posture
Civil Appeal (reclaiming Motion) / Interlocutory (relevancy of Averments, Proof Before Answer)
Outcome
Reclaiming motion refused; proof before answer allowed against the fourth, fifth, sixth and seventh defenders.
Legal Topics
Vicarious Liability of Partners, Scope of Partnership Business, Auditor Liability, Statutory Interpretation
Partnership Law Professional Negligence Vicarious Liability of Partners Scope of Partnership Business Auditor Liability Statutory Interpretation

Case Brief

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Parties

Kirkintilloch Equitable Co-operative Society Ltd

Pursuer

Livingstone

Defender

Hardie, Cuthbertson & Co.

Defender

Fourth, Fifth, Sixth and Seventh Defenders (partners of Hardie, Cuthbertson & Co.)

Defender

Third Defender (official auditor, partner of Hardie, Cuthbertson & Co.)

Defender

Procedural Posture

Civil Appeal (reclaiming Motion) / Interlocutory (relevancy of Averments, Proof Before Answer)

Legal Issues

  1. 1 Whether partners in a firm are vicariously liable under section 10 of the Partnership Act 1890 for the negligence of a partner acting as an official auditor under statutory appointment.
  2. 2 Whether the auditing of accounts by a partner, where the appointment is personal but the work is paid for by the firm and assisted by its staff, is within the ordinary course of the firm's business or with the authority of co-partners.

Ratio Decidendi

Partners in a firm of accountants are vicariously liable under section 10 of the Partnership Act 1890 for the negligence of a partner acting as an official auditor, where the audit is within the ordinary course of the firm's business, the work is performed with the knowledge and authority of the other partners, and the audit fee is paid to the firm, even if the statutory appointment is personal to the partner.

Court Disposition

Reclaiming motion refused; proof before answer allowed against the fourth, fifth, sixth and seventh defenders.

Orders

  • Adhered to Lord Ordinary's interlocutor allowing proof before answer against the fourth, fifth, sixth and seventh defenders.
  • Refused reclaiming motion to dismiss action against those defenders.