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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Burden & Anor v Ernst & Young [2001] EWCA Civ 1894 (7 November 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1894.html Cite as: [2001] EWCA Civ 1894

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM COUNTY COURT
(His Honour Judge Alan Taylor)

		Royal Courts of Justice Strand London WC2A 2LL Wednesday 7th November 2001

Wednesday, 7th November 2001

1. LORD JUSTICE WARD: This is a renewed application for permission to appeal, permission having been refused on paper by Sir Murray Stuart Smith. The order against which it is sought to appeal is the order of His Honour Judge Taylor, made on 23rd May 2000, when he dismissed the claimant's appeal from the order of District Judge O'Regan of 24th May and accordingly also struck out the claim as showing no cause of action.
2. In summary, the claim is brought by directors of a company which was put into receivership by the bank. Mr Kelly and Mr Ord were appointed the joint administrative receivers. They were partners in Ernst & Young; and the claim is brought against Ernst & Young for, in effect, the negligence of those two partners. The question is whether "liability" is the personal liability of the administrative receivers or whether, by operation of section 10 of the Partnership Act, the partnership would be vicariously liable for their acts whilst acting in the ordinary course of the business of the firm and with the authority of their co-partners.
3. In his judgment at page nine the judge observed:

"The difficulty with this appeal is that there is no direct authority which simply says, using the name of the parties in this case, Ernst & Young cannot be liable for any default of Mr. Kelly and Mr. Ord. There are cases which I have cited which are concerned with administrative receivers and the like, but there does not appear to be any authority precisely on the point, though it does seem to me, and I agree with the learned district judge, that the case of Ramsey v Maclean is the nearest by far of all the cases which have been cited."

4. The point of law is therefore clearly arguable, and the question is whether because this is a second appeal any point of principle or practice or a compelling reason is shown for that matter to come to this court.
5. In my judgment important points of practice and principle do arise. Administrative receivership forms a vast body of work for accountants and the ambit of personal liability and the firm's liability are therefore worthy of clarification by this court. That is a compelling reason by itself, as this area should be explored.
6. Putting the argument I suppose as the applicant would wish to put it, it would be unusual that firms of accountants, who derive their share of profits from the activities of administrative receivers and share those profits, should not be liable as a firm for the negligence of those receivers acting in that way. It is tenable of looking at.
7. Grounds 2 and 3 relate to the refusal to give permission to amend. Ground 3 relates to the attempt to saddle the firm with vicarious liability, if not for the partners, Mr Kelly and Mr Ord, but for those employees (qualified or unqualified) of the firm who were carrying out work in connection with this receivership. It seems to me arguable that there is not a sufficient change of emphasis to have embarrassed the defendant if that application were made after the period of limitation has expired; and although in ordinary circumstances I would not find a great point of practice or principle, these two matters are so interlinked that, in my view, there is a compelling reason for that to be argued.
8. The second ground of appeal is for the adding of Mr Kelly and Mr Ord personally. The applicant has a difficulty that this matter may be coloured in a way beyond challenge by the decision of this court in Ramsey v Maclean, but he seeks to argue that he was lulled into a false sense of security by the way in which paragraph 1 of the defence was pleaded. Had he been told the nature of the case contended for on the strike out, which was not apparent on the face of the defence, he would have had time to amend.
9. Again, I doubt if I would have given permission on that ground alone, but it seems to me that in simple justice all of these matters are bound up one with another, not much time will be taken for the court to consider grounds two and three and therefore I grant permission to appeal the order on all three grounds.
Order: Application allowed. Costs to be costs in the appeal.