Background
The Wine Enterprise Investment Scheme Limited, acting through its joint liquidators, brought proceedings against its former auditor, Crowe UK LLP, concerning Crowe’s alleged failure to detect and report fraud involving the company’s directors. The substantive judgment was handed down in March 2026, followed by a July judgment addressing costs and some proposed grounds of appeal.
After further written submissions, the company sought permission to appeal on its remaining and expanded grounds, including challenges concerning its proposed case that Crowe should have reported directly to shareholders, the routes by which shareholders might have learned of the fraud, and the allocation of costs. Crowe separately sought permission to appeal the refusal to award it indemnity costs, both before and after the expiry of its Part 36 offer.
The Court’s Holding
The High Court refused the company permission to appeal on every ground. It held that the proposed direct-reporting case required an amendment, introduced a new cause of action based on materially different facts, and could not be added after expiry of the limitation period. The judge also concluded that the proposed duty to report directly to shareholders had no sufficient foundation in statute, authority, professional texts, or auditing standards, and that the company’s challenges to the factual and case-management findings had no real prospect of success.
The court also rejected the company’s challenge to the costs order, finding no error of principle in treating Crowe as the successful party for the relevant period. It likewise refused Crowe permission to appeal the denial of indemnity costs. The earlier decision had applied the correct “out of the norm” test, considered the claim’s strength, the parties’ conduct, and the Part 36 offer, and reached a discretionary conclusion that was properly open to the trial judge and adequately explained.
Key Takeaways
- A proposed allegation that an auditor owed a duty to report suspected fraud directly to shareholders was a new claim requiring proper pleading, not merely a refinement of causation.
- The court found no real prospect of establishing the asserted direct-reporting duty on the legal and professional materials relied upon.
- Neither dissatisfaction with the allocation of costs nor rejection of a Part 36 offer, without conduct sufficiently outside the norm, justified appellate intervention or indemnity costs.
Why It Matters
The decision illustrates the difficulty of introducing a materially different auditor-duty case after limitation has expired. A claimant cannot avoid the rules governing late amendments by characterising new duties, communications, and hypothetical consequences as alternative routes of causation.
It also underscores the deference given to first-instance costs decisions. Permission to appeal will not ordinarily be granted where the judge applied the established principles, considered the relevant circumstances, and reached a result within the permissible scope of judicial discretion.