The Standard of Reasonable Care and Skill Expected of an Accountant
The case concerns the standard of reasonable care and skill expected of an accountant, and the tests for causation, contributory negligence, and concurrent wrongdoing. The accountant in this case advi...
Abstract
The case concerns the standard of reasonable care and skill expected of an accountant, and the tests for causation, contributory negligence, and concurrent wrongdoing. The accountant in this case advised a company to advance money to another company without first reaching an informed opinion as to its present financial health, and failed to warn of the risks and circumstances of which it was or ought to have been aware. The trial Judge held that the accountant had been negligent in firstly not reaching an informed opinion, and secondly not taking appropriate steps, consisting of requesting detailed information from the company, advising the cessation of the advancement of money, and resignation. This was upheld by the appellate Judges. The appellate Judges found contributory negligence on the part of the company, noting that the parties were knowledgeable businessman who had attended the board meetings and therefore would have understood the risk of advancing money. It was also held that it was open to the trial Judge to find concurrent wrongdoing with regards to a director of the company, finding a Hedley Byrne duty even though such a duty was not pleaded. It was also held that there is no requirement under the Wrongs Act 1958 section 24AH that there must be a causal relationship between the loss caused by one wrongdoer and the loss caused by the other.
Abstract
The case concerns the standard of reasonable care and skill expected of an accountant, and the tests for causation, contributory negligence, and concurrent wrongdoing. The accountant in this case advised a company to advance money to another company without first reaching an informed opinion as to its present financial health, and failed to warn of the risks and circumstances of which it was or ought to have been aware. The trial Judge held that the accountant had been negligent in firstly not reaching an informed opinion, and secondly not taking appropriate steps, consisting of requesting detailed information from the company, advising the cessation of the advancement of money, and resignation. This was upheld by the appellate Judges. The appellate Judges found contributory negligence on the part of the company, noting that the parties were knowledgeable businessman who had attended the board meetings and therefore would have understood the risk of advancing money. It was also held that it was open to the trial Judge to find concurrent wrongdoing with regards to a director of the company, finding a Hedley Byrne duty even though such a duty was not pleaded. It was also held that there is no requirement under the Wrongs Act 1958 section 24AH that there must be a causal relationship between the loss caused by one wrongdoer and the loss caused by the other.
Publication Details
Authors: Glen Wright
Venue: Global Corporate Law Bulletin Year: 2010 Number: 159
