English cases on auditors’ liability to third parties and on architects’ liability

England’s CMS Cameron McKenna, whose free ‘Law Now’ service is well worth subscribing to, have a couple of interesting articles on their website about auditors’ liability to third parties. Apparently, England has devised legislation, the Company Law Reform Bill, providing for ‘Liability Limitation Agreements. The big new auditors’ liability case discussed is MAN Nuzfahrzeuge AG v Freightliner Ltd [2007] EWCA Civ 910, a decision of the Court of Appeal upholding the decision at first instance ([2005] EWHC 2347). They assert the following elements are required in England before an auditor will owe a duty of care to a third party:

‘i)      the loss must be foreseeable;

ii)    there must be a relationship of considerable proximity;

iii)   it must be fair, just and reasonable in all the circumstances to impose a duty of care;

iv)   the auditor must be expressly made aware of the third party’s likely reliance on the accounts for the particular purpose; and

v)    the auditor should have intended that the third party rely on the accounts for that purpose; absent intention an auditor may still, viewed objectively, be found to have assumed responsibly to a third party.’

And there is a discussion of a new English Court of Appeal decision about architects’ duties to subsequent purchasers of buildings they design, Pearson Education Limited v. Charter Partnership Limited [2007] EWCA Civ 130, and of an earlier case raising similar issues, Baxall v. Sheard Walshaw Partnership [2002] BLR 100 (CA).

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