The claim related to the unsuccessful flotation of a motor trading company Swithland Group plc, for which Coopers acted as auditor.
Swithland collapsed with debts of more than £15m and its former chairman John Hayes and former FD David Sharratt jailed in February 1997 for fraudulent trading. Both were disqualified as directors.
But claimant David Hands, who made two unsecured loans to Swithland totalling Pounds 270,000 in 1993, said Coopers should have advised him that if a proposed flotation of Swithland on the stock market in 1993 failed, then the company would not be a going concern.
Hands had agreed to delay repayment of the loan for a period of one year, at the request of the company and Coopers, before Swithland went into receivership in November 1993.
Leolin Price QC, counsel for Hands, argued there was an implied assumption by Coopers that the flotation would succeed and that it failed to provide information as to the state of the company which they knew or ought to have known.
However, the court backed a previous decision of a district judge who dismissed the claim in June last year on the basis that it had no real prospect of success.
Justice Sachs said that the propositions of law to which he had been referred made it ‘abundantly plain that it is not the law of England and Wales that somebody in the claimant’s unfortunate position has any remedy under the law against the auditor in those circumstances’.
Former certified accountant Sharratt, 51, of Thringstone, Leicestershire, was jailed for three and a half years and disqualified from acting as a director for seven years, while Hayes, 39, was jailed for five years and disqualified for ten.
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