Auditors' Liability To Third Parties: An Alternative Approach

In Canada, the policy analysis at stage two of the Anns duty of care test has typically been limited to concerns about indeterminate liability. By way of contrast, the United Kingdom House of Lords has favoured a flexible approach in determining whether to impose a duty of care generally for negligence causing an economic loss. It allows for a consideration of a greater number of policy factors in cases involving auditors' liability to third parties.

In Customs Excise v. Barclays Bank, [2006] UKHL 28 ("Barclays Bank"), the Customs and Excise Commissioners obtained a Mareva injunction freezing assets of two customers of Barclays Bank. When the Bank allowed funds to be withdrawn from the "frozen" bank accounts in error, the Commissioners sued.  The House of Lords found that the Bank owed no duty of care to the Commissioners and, in doing so, endorsed three distinct tests.