JEB Fasteners v Marks Bloom - 1983

Legal Case Summary

JEB Fasteners Ltd v Marks Bloom & Co [1983] 1 All ER 583

Tort law – Negligence – Duty of care – Third party

Facts

JEB took control of a company. Marks Bloom & Co. (MBC) were the auditors for the business. One of the primary motivations behind taking over the company was that JEB would be able to acquire the services of two of the company directors. JEB understood at the time that they assumed control of the business that there were some errors with the accounts that had been audited by MBC. Throughout this process, MBC understood that JEB were taking the information in the accounts into their decision-making. The accounts were more inaccurate than JEB had realised and JEB subsequently claimed for damages. The judge, in the initial trial, dismissed JEB’s claim for damages. JEB appealed.

Issue

The issue for the court, in this case, was to understand whether there was a duty of care owed by MBC, the accountants, to JEB, the plaintiff. If this was established, it was important for the court to consider whether the accounts that had been created and maintained by MBC, had been relied upon to the detriment of the plaintiff.

Decision / Outcome

The court affirmed the decision of the trial judge who had dismissed JEB’s claim for damages. The court believed that there was a duty of care owed by MBC to JEB but that there was ample evidence that showed JEB had formed its own opinion on the accounts of the business. On this basis, the court held that JEB would have proceeded to take control of the company nonetheless and therefore they did not have a claim against MBC.