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Esanda Finance Corporation v Peat Marwick Hungerfords

Esanda Finance Corporation v Peat Marwick Hungerfords

ESANDA FINANCE CORPORATION LIMITED V PEAT MARWICK HUNGERFORDS

[1997] 142 ALR 750

High Court of Australia – 18 March 1997

FACTS

Peat Marwick Hungerford (“Peats”), an auditor, was alleged to have failed to comply with accounting standards when auditing the financial accounts. Esanda relied on the audited accounts and audit report when lending money to Excel.

Esanda sought damages for negligence against Peats and asserted that it would not have entered into the loan transactions but for its reliance on the audited accounts of Excel.

ISSUES

In an action for negligence for pure economic loss is it sufficient to plead that it was reasonably foreseeable by an auditor that creditors and financiers of a corporation might rely on the audited accounts of the company in entering into financial transactions involving that corporation?

Does an auditor owe a duty of care to every member of the class comprising creditors and financiers of the corporation, where financial accounts have audited?

FINDING

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