Esanda Finance Corporation Ltd v Peat Marwick Hungerfords

Infobox Court Case
name=Esanda Finance Corporation Ltd v Peat Marwick Hungerfords
court=High Court of Australia


date_decided=18 March 1997
full_name= Esanda Finance Corporation Ltd v Peat Marwick Hungerfords
citations= (1997) 188 CLR 241 [http://www.austlii.edu.au/au/cases/cth/HCA/1997/8.html] (1997) HCA 8 [http://www.austlii.edu.au/au/cases/cth/HCA/1997/8.html]
judges=Brennan CJ, Gaudron, McHugh, Dawson, Toohey and Gummow JJ
prior_actions="Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg) (1994) 61 SASR 424"
subsequent_actions=none
opinions=(6:0) Appeal Dismissed with costs, there is no cause of action in negligence for breach of duty available to the appellants.

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords was a High Court case regarding the liability of auditors to third parties. It was decided on 18 March, 1997. The appellant, Esanda Finance Corporation Ltd, loaned money to a corporation in reliance on a report prepared by a finance company, Peat Marwick Hungerfords. When the borrower defaulted on the loan, Esanda turned to the auditors to recover claiming it had acted on reliance of audited accounts which breached mandatory accounting standards in relation to preparing the accounts and but for this breach of duty by Peat Marwick Hungerford. Central to this argument was that Esanda had suffered a loss which would not have occurred if not for reliance on Esanda's audited accounts, which were prepared with a breach of standards.

The Court held that there was no cause of action successfully pleaded by the Appellant and that the appeal should be dismissed with costs. Although this order was unanimous, there were four different judgments emanating from the Court to explain why. This case is generally seen as authority for the proposition that auditors do not owe a duty of care to third parties. However, arguably Esanda could have made its own inquiries, and its loss was due to its own failure to inquire.