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ARTICLE · 24 AUGUST 2012

Carefully Drafted Retainer Prevents Liability To Third Party

Clyde & Co
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KPMG has recently been successful in striking out a claim in the High Court when an investor in a failed company tried to recoup substantial losses from the firm after the company collapsed (Arrowhead Capital Finance Ltd v KPMG LLP).

United KingdomLitigation, Mediation & Arbitration
Simon Konsta
Simon Konsta
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KPMG has recently been successful in striking out a claim in the High Court when an investor in a failed company tried to recoup substantial losses from the firm after the company collapsed (Arrowhead Capital Finance Ltd v KPMG LLP). This matter serves as a reminder of the benefits of appropriately drafted terms of engagement and the law on tortious duties of care.

Facts

KPMG's client was Dragon Futures Limited ("Dragon"). In 2003, Dragon decided to trade in the "grey market" in mobile telephones, a grey market being a trade in branded goods outside of the normal distribution channels authorised by the brand's owners. A typical transaction would involve Dragon buying a consignment of mobile telephones from one party and then selling them on to another party for a profit. This would require Dragon to pay VAT on the purchase price, which it subsequently reclaimed from HM Customs and Excise (HMCE) (as it then was). It was critical to Dragon's business plan

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