Visit JCPCUKSC/2019/0040
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NEGLIGENCE
Manchester Building Society (Appellant) v Grant Thornton UK LLP (Respondent)
Case summary
Case ID
UKSC/2019/0040
Parties
Appellant(s)
Manchester Building Society
Respondent(s)
Grant Thornton UK LLP
Issue
Was the Court of Appeal was right to hold that the break costs claimed by the Appellant fell outside the scope of the Respondent's duty of care as professional accountants?
Facts
The Appellant is a small mutual building society whose main activity is the provision of mortgage products, while the Respondent was its auditor. The Respondent negligently advised the Appellant that an accounting treatment, "hedge accounting", could be applied to reduce the volatility of the market-to-market (MTM) value of swaps in its accounts.In reliance on that advice, the Appellant entered into various fixed rate mortgages hedged against long term swaps under which it paid a fixed rate but received a variable rate.The 2008 global financial crisis led to a fall in interest rates, with the effect that the MTM value of the swaps became negative. When the Respondent&apo;s negligence was realised, the Appellant ceased to apply hedge accounting, closed out the swaps and, in consequence, had to pay the MTM losses on the swaps and transaction fees for breaking the swaps early.The Appellant brought a claim in negligence against the Respondent. The issue was whether the Respondent was liable for the MTM losses as well as the transaction fees. In the Commercial Court, the judge concluded that the Respondent was not liable for the MTM losses. The Court of Appeal dismissed the Appellant's appeal.The Appellant now appeals to the Supreme Court.
Date of issue
27 February 2019
Judgment appealed
Judgment details
Judgment date
18 June 2021
Neutral citation
[2021] UKSC 20
Judgment links
Judgment summary
18 June 2021
Appeal
Justices
Hearing dates
Full hearing
Start date
14 October 2020
End date
15 October 2020
Watch hearings
14 October 2020 - Morning session
14 October 2020 - Afternoon session
15 October 2020 - Morning session
15 October 2020 - Afternoon session
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Last updated 16 April 2024