In the recent decision in Swynson Limited and Michael Hunt v Lowick Rose LLP, Rose J considers the scope of an accountants’ duty where advice provided to an individual funder is acted upon through a company owned by that individual. She also considers the extent to which a claimant must give credit for losses recovered from a third party. 


Swynson was a company owned ultimately by Mr Hunt, a wealthy investor who specialised in lending to businesses considered too risky to borrow from banks on normal terms. 

In 2006, Swynson lent £15 million to facilitate a management buy-out of a US medical device manufacturer and supplier trading as Evo. The loan was made in reliance on advice and positive due diligence reports received from the defendant accountancy firm, which were later conceded to have been negligent. 

While no engagement documentation was in place at the time of the initial advice, letters were later sent in 2007 and back-dated to 2006. The letters were then counter-signed on behalf of Swynson and not by Mr Hunt personally. 

It soon became apparent that Evo’s business was not picking up as projected by the defendant. Various defaults caused Swynson to make further loans of £1.75 million in 2007 and £3 million in 2008, in the hope that Evo’s business would improve. However, that never occurred and, save for the sale of some real property, Evo eventually proved worthless. 

Losses of over £16 million were claimed by both Swynson and Mr Hunt, the latter of whom had personally redeemed the 2006 and 2007 loans in 2008. 


Among others, the issues for the court to determine were:

  • Did the defendant owe a duty of care to Mr Hunt personally?
  • Did Swynson have to give credit for the loan repayments it received from Mr Hunt in 2008?


Rose J held that the defendant had not assumed responsibility, and did not owe a duty of care, to Mr Hunt personally, for the accuracy of its advice. This was because only Swynson had actually entered into the underlying transaction and made the loan. It did not matter that the defendant knew that it was ultimately Mr Hunt’s money at stake and/or that his loss was foreseeable, as foreseeability was not the test. Other relevant factors were that:

  • Looking through Swynson to Mr Hunt would involve lifting the corporate veil, for which there is no support from case law
  • Mr Hunt, as distinct from Swynson, did not appear to have placed any independent reliance on the advice of the defendant

Rose J further held that the 2008 refinancing was not an act of mitigation and did not operate to extinguish the loss Swynson had suffered on the 2006 and 2007 loans. This was because the refinancing arrangement was, in her view, an independent transaction and not one arising from the consequences of the defendant’s breach and in the ordinary course of business.


This recent application of the test of assumption of responsibility, as established in Hedley Byrne & Co v Heller & Partners Ltd, will provide welcome reassurance to accountants and their insurers alike. In particular, the court’s unwillingness to extend duties beyond transacting parties, even where third party recipients were known to be at risk from bad advice, should protect many professionals from what could otherwise have been a series of claims from disgruntled investors who have indirectly lost out through their corporate vehicles. Given the difficult trading conditions faced in recent years, such investors might not have been in short supply and might have sought to recover damages in addition to, or in place of, their corporate vehicles. 

Swynson also serves to remind us that claimants are not obliged to give credit for losses recovered in every instance and that careful consideration should be given in each case to the proximity of the relationship between the underlying transaction and the recovery made.


At the time of writing we understand that an appeal has been issued, which is due to be heard in May 2015. 

Click here to read the judgment in Swynson Limited v Lowick Rose LLP.