Ludowici v Pitcher [2001] NSWSC 728

New South Wales Supreme Court

CITATION : Ludowici v Pitcher [2001] NSWSC 728 revised - 25/10/2001 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50033/00 HEARING DATE(S) : 21.5.01, 22.5.01, 23.5.01, 24.5.01 JUDGMENT DATE : 30 August 2001

PARTIES : Ludowici Limited & Ludowici Mineral Processing Equipment Pty Ltd v R G Pitcher & Ors JUDGMENT OF : Hunter J

COUNSEL : Plaintiffs: I M Jackman SC & S A Goodman Defendants: M Thompson SOLICITORS : Plaintiffs: Clayton Utz Defendants: Herbert Geer & Rundle CATCHWORDS : Contract - duty of care - accountant retained to review financials of target company & perform special audit work in connection with company acquisition - standards of review work - failure to detect major management oversight - company acquired on basis of advice -defendant bound by method of conduct of hearing - entitlement of parent company to sue for loss represented by loss of wholly owned subsidiary. LEGISLATION CITED : Fair Trading Act Trade Practices Act Prudential Insurance v Newman Industries Limited (No 2) (1982) Ch D 204 Gould v Vaggelas (1985) 157 CLR 215 CASES CITED : Morwood v Chemdata Pty Ltd (1995) ATPR 40,827 George Fischer (Great Britain Ltd) v Multi-Construction Ltd [1995] 1 BCLC 260 Hadley v Baxendale (1854) 156 ER 145 Potts v Miller (1940) 64 CLR 282 DECISION : Judgment for the plaintiffs in the sum of $2,320,000 together with interest at schedule rates from 3 August 2001.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST HUNTER J THURSDAY 30 AUGUST 2001