The Court of Appeal  EWCA Civ 181 has upheld the judgment of Mr Justice Lewison dismissing claims against a leading firm of accountants in Pegasus Management Holdings and another v Ernst & Young and another  PNLR 11.
The claims were brought by an individual and the company he had incorporated as part of a reinvestment relief scheme upon which the defendants had advised. The claimants contended that whilst the scheme provided tax benefits, it also had unforeseen tax costs which should have been avoided.
The company's claim was dismissed on the ground that the accountants' duty of care was owed only to the individual and not to the company, which had been incorporated for only a few days by the time the relevant advice allegedly should have been given.
The claim of the individual claimant was dismissed upon determination of a preliminary issue as to limitation. On the facts of this case, actual damage had been suffered when the individual claimant subscribed to shares in the corporate claimant, after which it was too late to take the other steps which the claimants alleged they should have been advised to take.
The claimants argued that the defendant was not financially worse off at the date of the transaction, but the Court of Appeal held that this was not an essential element of a time bar argument in a "wrong transaction" case.
Simon Salzedo represented the successful defendants at first instance and in the Court of Appeal.