BRYAN EDWARD EVANS v GEOFFREY WILLIAM MUXWORTHY
[2022] EWHC 2866 (Comm)
Amathus Drinks PLC v EAGK LLP & Anor
22 September 2023
[2023] EWHC 2312 (Ch)
High Court
Buyers sued their accountants (EAGK) for messing up an audit, costing them money. The judge said they couldn't win based on a contract, but they *might* win because the accountants continued to work with them after the initial agreement, despite a disclaimer. The judge also ordered the accountants to share their documents to help the buyers build their case.
Key Facts
- •Amathus Drinks PLC and Chariton Platon Georgiou (buyers) acquired Bablake Wines Ltd shares relying on EAGK LLP's audit.
- •EAGK previously worked for the buyers during the acquisition.
- •Alleged fraud inflated Bablake Wines' net assets, leading buyers to overpay.
- •Buyers sued EAGK for professional negligence.
- •EAGK's engagement letter contained a disclaimer limiting liability to the company and its members.
- •The buyers alleged both contractual and tortious liability.
Legal Principles
Summary judgment can be granted if the claimant has no real prospect of succeeding.
CPR r 24.2
Assumption of responsibility is the foundation of liability in tort for negligent misrepresentation.
NRAM Ltd v Steel [2018] 1 WLR 1190; Banca Nazionale del Lavoro SPA v Playboy Club London Ltd [2018] 1 WLR 4041
To establish liability against an accountant who wasn't their client, the claimant must prove awareness of the transaction, knowledge of reliance, and actual reliance.
Jackson and Powell on Professional Liability (9th edn) at 17-050
A disclaimer of liability, like a Bannerman clause, is a relevant factor in determining assumption of responsibility.
Barclays Bank plc v Grant Thornton UK LLP [2015] 1 CLC 180
An auditor generally owes no duty to individual shareholders; claims are brought by the company.
Caparo v Dickman [1990] 2 AC 605
The court has power to order specific disclosure to enable a party to understand the claim or defence.
CPR r 3.1(2)(m); Practice Direction 57AD paragraph 5.11
A claimant can plead alternative sets of facts, provided they are not pure speculation.
Clarke v Marlborough Fine Art (London) Ltd [2002] 1 WLR 1731
Outcomes
Summary judgment granted for the defendants on the contractual claim.
No realistic prospect of showing buyers were parties to the contract with EAGK; engagement letter and schedule indicated a contract solely with the company.
Defendants' application dismissed on the tort claim.
Realistic prospect of showing assumption of responsibility due to ongoing communication between EAGK and the buyers after the initial engagement, distinguishing it from Barclays Bank plc v Grant Thornton UK LLP.
Order for disclosure made.
Necessary to enable claimants to particularise their breach of duty allegations.