BCCI (Overseas) Ltd, BCCI Holdings (Luxembourg) SA and BCCI SA (all three appellants in liquidation) v Price Waterhouse and Ernst & Whinney
| Pages | 271-277 |
| DOI | https://doi.org/10.1108/eb024978 |
| Date | 01 March 1998 |
| Published date | 01 March 1998 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 6 Number 3
BCCI:
Court of Appeal ruling on liability of
auditor
BCCI (Overseas) Ltd, BCCI Holdings
(Luxembourg) SA and BCCI SA (all three
appellants in liquidation) v Price Waterhouse
and Ernst & Whinney
Court of Appeal, Civil Division: Nourse LJ, Brooke LJ and Sir Brian Neill
Date of Judgment: 13th February, 1998
Reported at: Times Law Reports, 4th March, 1998
Joanna Gray
Reader in Financial Regulation, University of Newcastle upon Tyne, Newcastle Law School, 21-24
Windsor Terrace, Jesmond, Newcastle upon Tyne NE1 7RU; tel: 0191 222 7685; fax: 0191 212 0064 or
tel:/fax: 01669 650 349; e-mail: joanna.gray@newcastle.ac.uk
FACTS
Sir Brian Neill briefly set out the factual
background to this litigation at the begin-
ning of his judgment:
'In the consolidated action there are three
Plaintiffs - Overseas, BCCI Holdings
(Luxembourg) SA (Holdings) and Bank
of Credit & Commerce International SA
(SA).
Overseas and SA are wholly-
owned subsidiaries of Holdings. All three
companies are in liquidation following
the collapse of the BCCI group in 1991.
The collapse was due to the enormous
losses which resulted from the improper
and imprudent manner in which the
banking activities of the BCCI group
had been conducted in the preceding
years.
These losses had not been revealed
in the accounts of the companies.
The liquidators of the three companies
have brought proceedings against the
former auditors both in contract and in
tort alleging breaches of their duties of
care.
The Defendants fall into two
groups. The first group consists of Price
Waterhouse and certain associated firms
as well as some partners in these firms. I
shall call this group PW. The second
group consists of Ernst & Whinney and
some partners in [certain associated firms]
whom I shall refer collectively as EW.
The principal claims against both groups
of Defendants relate to the audits of the
three companies carried out for the years
1985 and 1986. For these periods EW
was the auditor of both the unconsoli-
dated and the consolidated accounts of
Holdings and also the auditors of SA.
PW was the auditor of Overseas.
The main allegation against PW and
EW is that the audits were carried out
negligently. As a result, it is alleged, the
improper and imprudent operation of
Journal of Financial Regulation
and Compliance, Vol. 6, No. 3,
1998,
pp. 271-277
© Henry Stewart Publications,
1353-1988
Page 271
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