PracticeAccounting FirmsE&Y seeks six-figure damages

E&Y seeks six-figure damages

Ernst & Young will tomorrow launch a claim to recover the huge costs incurred as a result of the failed attempt by former audit client Equitable Life to claim damages from the firm.

Link: E&Y in landmark victory

The move comes after one part of Equitable’s application against E&Y for damages was struck out at the High Court on Monday. E&Y will also appeal against a decision not to strike out the entire claim. ‘We will be going for costs relating to the claim which has been struck out,’ an E&Y spokesman confirmed.

The firm is understood to be seeking costs amounting to six figures.

Equitable began the action against E&Y because the firm was auditor during the period in which a £1bn hole appeared in the life assurer’s accounts.

On Monday, High Court judge Justice Langley struck out the £2.6bn Equitable claim over lost sales in 1998. But a lesser claim relating to the declaration of bonuses remains, although it must be ‘presented with a rigour and reality which is presently lacking,’ according to Langley. In his report, Langley described the latter as being ‘fanciful in approach and amount’ and that E&Y should not be expected to defend claims which can be shown to have ‘so many basic flaws’.

A spokesman for Equitable Life remained upbeat, saying it was ‘early days’ and that ‘the case continues’.

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