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AssetCo PLC v Grant Thornton UK LLP [2020] EWCA Civ 1151

In an appeal concerning a multi-million pound audit negligence claim, Grant Thornton LLP has succeeded in substantially reducing the damages awarded by Bryan J at first instance, in a recent decision of the Court of Appeal handed down on 28 August 2020.

The Court of Appeal upheld Grant Thornton LPP’s appeal that AssetCo must give credit against its losses for a share issue in which the company raised approximately £7.5 million. In deciding the appeal, the Court of Appeal considered the effect of the recent Supreme Court decisions of Lowick Rose LLP v Swynson Ltd [2017] UKSC 32, The New Flamenco [2016] UKSC 43, and Tiuta Intl Ltd  v De Villiers Surveyors Ltd [2017] UKSC 77 on the law of giving credit for benefits.

The appeal also raised novel issues of law regarding scope of duty and legal causation in the context of audits. In particular, the Court of Appeal accepted Grant Thornton LLP’s submission that the SAAMCO principle should, in most circumstances, be applied to determine whether particular losses come within the scope of the auditor’s duty when signing an unqualified audit certificate. In applying the SAAMCO principle, a defendant will only be liable if the claimant can establish that it would not have suffered the loss if the information contained in the audit certificate had been correct.

Simon Colton QC and Stephanie Wood (led by Simon Salzedo QC and instructed by Clyde & Co LLP) acted for Grant Thornton LLP. The Judgment can be found here.