Equitable Suing Ernst & Young For Negligence

by Robin Pilgrim, LawAndTax-News.com, London

12 April 2005

Despite the fact that a case brought by Equitable Life against Ernst & Young in 2003 failed in the UK’s High Court, the insurer revealed at the weekend that it plans to launch a new suit against the auditor.

Equitable Life was brought to its knees in 2000 by an unexpected £1.5 billion liability on guaranteed annuity rate (GAR) pensions, and argued that E&Y should have warned the previous management team of the potential size of the GAR liability, which the organisation was unable to pay.

Ruling in February 2003, Mr Justice Langley dismissed Equitable Life's case as 'fanciful' and 'flawed', but left the door open for the company to put its case again.

“In my judgement, if they are to be pursued, Ernst & Young is entitled to have...(the accusations against it) presented with a rigour and reality which is presently lacking,” he explained.

In the new case, launched on Monday, Equitable is taking on Ernst & Young and 15 of its own former directors, making a £2 million negligence claim against the company, and a further £1.7 million claim against the former directors.

According to reports in the UK media at the weekend, the directors named in the suit include previous Millennium Dome chief, Jennie Page, ex-Schroders chairman Peter Sedgwick, and former Booker boss, Jonathan Taylor.

Also named in the suit were David Wilson, who was last year named as one of the UK’s top 100 wealthiest individuals with a fortune of £410m, and Roy Ranson, the former chief executive of Equitable Life.

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