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COMM 393 (60)

Case Brief - Hercules Managements Ltd. V. Ernst & Young – NEGLIGENT MISSTATEMENT.docx

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University of British Columbia
COMM 393
Patricia Mallia

Hercules Managements Ltd V ErnstYoungNEGLIGENT MISSTATEMENT FactsThe plaintiffs in this case were investors in a firm Northguard Acceptance Limited or NGA that was regularly audited by the defendantsThe plaintiffs used the audited financial statements provided by the defendants to guide their investment decisions thereby leading them into investing in the firm before it went into receivershipThe plaintiffs charge that the defendants negligently prepared the audited statements and as such should be held liable for the economic losses they sufferedThis case is a summary judgment on the courts finding that the defendants werent in fact liable for these damagesIssues1 Is there a real or substantial relationship between the defendants and the plaintiffs or were the auditors aware that the plaintiffs were using their audited statements2 Do the defendants owe the plaintiffs a duty of care for the purposes in which the statements were usedDecisions1 A realsubstantial relationship exists between the auditors and Hercules Managements2 The defendants do not owe a duty of care to the plaintiffs for the purposes in which the audited statements were usedRe
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