BusinessCorporate FinanceEquitable relies on expert evidence

Equitable relies on expert evidence

Equitable Life to explain what its directors would have done to resolve financial crisis

Equitable Life will rely heavily on expert evidence to explain what its
directors would have done to resolve its financial crisis, in its case against
Ernst & Young in the High Court.

In response to suggestions that directors would not have pursued any
alternative courses of action had E&Y advised them differently, Equitable
said that its directors would have done what Chris Headdon, the mutual’s former
executive director, would have told them.

He in turn would have relied on experts, whom the society intends to call
when the case resumes in September.

‘The thrust of the evidence…from the directors was that unless something
struck them as being particularly odd they would have followed the
recommendation of Mr Headdon,’ Iain Milligan QC, for Equitable, said.

‘We accept the thrust of the evidence, and what one then has to ascertain is
what Mr Headdon would have recommended… and that will depend in part on what you
learn from the experts,’ Milligan said.

Mark Hapgood, for E&Y, said that the emphasis on Mr Headdon was ‘slightly
surprising’.

The argument hinges in particular around ‘Policyholders’ Reasonable
Expectations’ (PRE). Equitable claims directors would have introduced cuts
consistent with PRE, a concept to be explored with experts.

Hapgood said: ‘To try and build a case by putting to a witness a vague
question such as “any cuts consistent with PRE”, but not then explain to the
witness what PRE permits in terms of actual numbers, and then to say, “I am now
going to call an expert to tell us what the PRE means,” leaves a gaping void in
the way the case has been put.’

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