Firms open to damages.
A Court of Appeal decision has opened the way for damages claims against accountants involved in due diligence work on business acquisition, writes GAvin Hinks.The decision revolves around work carried out by top 20 firm Smith & Williamson for the Eastgate Group when Eastgate bought a #51m stake in Hambro Legal Protection from the Lindsey Morden Group.
Eastgate sought damages from Lindsey Morden because it claimed the actual worth of its stake in Hambro was less than the #51m it paid.
Lindsey then claimed against Smith & Williamson, a legal move the Court of Appeal said this month was permissible therefore reversing an earlier court judgement.
Oscar Harrison-Hall, a partner at Davies Arnold Cooper Reinsurance and Professional Indemnity, said the ruling indicated that ‘if the stakes are high enough’ it was worth having a go at the accountants because it might work.