Surrey firm in £1.2m court action
A Surrey accountant is being sued for £1.2m in a negligence action
Mervyn Smith, from Sutton in Surrey, trading as Mervyn Smith & Co, is
facing the claim from Duncan Rushmer, a businessman who faces losing his home
because of his financial problems.
Smith prepared audited accounts for Rushmer’s firm, Audio Visual Asset
Management, and at one point asserted the company had made a profit of £1.6m on
a turnover of just £1.5m, according to a High Court writ.
Rushmer says he was persuaded not to wind up the company because of cashflow
difficulties, as he intended, and that although he queried the large profits
shown by Smith, Smith assured him of their accuracy.
Rushmer increased his borrowings from the Royal Bank of Scotland, the Co-op
Bank, and First National Bank as a result of figures produced by Smith.
According to the writ, Smith breached his duty of care; failed to warn
Rushmer of substantial inaccuracies in the accounts; and knew that the context
in which Rushmer had discussed the accounts was his concern about its cashflow
and whether to wind down its activities.
Smith said this week: ‘I wouldn’t dream of discussing something in the press
which has no basis.’