Content area
Full Text
Two recent decisions, one from the Full Court of the Supreme Court of Victoria in R W Lowe Lippmann Figdor & Frank v AGC Advances Pty Ltd ( 1992! 2 VR 671) and the second by Rolfe J of the Supreme Court of New South Wales in Columbia Coffee and Tea Pty Ltd v Churchill and Ors ((1992) 10 ACLC 1,659), have highlighted the need for the High Court of Australia to rule conclusively on the very important and highly controversial question of to whom do auditors of companies owe their duties. Ever since the decision in Scott Group Limited v McFarlane ( 1978! 1 NZLR 553), even though a decision of the New Zealand Court of Appeal, there have been strong views put forward that auditors should account in certain circumstances to third parties if they are negligent in their work. That decision was disapproved of by the House of Lords in Caparo Industries Plc v Dickman ( 1990! 2 AC 605). But there has been some criticism of the House of Lords and Vincent J, in the hearing at first instance in the Lowe Lippmann case ((1991) Aust Torts Reports 81-073), indicated that he was not prepared to follow the thrust of the Caparo decision in finding for the plaintiffs in that litigation. He was overturned by the Full Supreme Court. But Rolfe J in the Columbia Coffee case has signalled his unwillingness to be bound by the narrow policy considerations which underpin the decision in the Caparo case. In the United Kingdom there have been decisions which have distinguished Caparo (see, for example, Morgan Crucible Co Plc v Hill Samuel Co ( 1991! 1 All ER 148) but the facts in that case were quite different to Caparo; however, see the later decision in AC Nakis Investments (Jersey) Ltd v Long Croft ( 1990! 3 All ER 32)). This disagreement in interpretation of the law will continue to throw up doubt as to which way courts should rule on this issue--what is needed is a resolution of the issue by our highest court.
The facts in the Lowe Lippmann case are quite familiar in the context of the issue. AGC (Advances) Ltd (referred to as AGC) had provided a finance facility...