Sew Hoy and Sons Ltd (in liq and in rec) v Coopers and Lybrand

Background

Sew Hoy & Sons Ltd was placed into receivership, and the receivers later discovered that the auditors Coopers and Lybrand had missed that the stock had been overvalued in its reports.

As result, the receivers argued that the auditors not detecting this, prevented the company from taking considering options such as taking "mitigating steps", or ceasing trading.

The receivers sued the auditors.

Held

The court dismissed the claim, as the plaintiff had not established causation for the loss.