Galoo Ltd v Bright Grahame Murray [1994] 1 WLR 1360
Citation:Galoo Ltd v Bright Grahame Murray [1994] 1 WLR 1360
Rule of thumb 1: Can you sue an auditor for negligence? Yes, however, although you may indeed be able to prove technical mistakes in their work, this is often not enough to prove that the losses were caused by this.
Rule of thumb 2: Can you a professional for negligence for making one mistake? Yes, however, even if you can point to one technical mistake they made, it is still extremely difficult to prove that this small mistake was the cause of the future losses suffered. Often several technical mistakes by a professional are required to be proved in order to win a professional negligence action.
Judgment:
This is a well known case and is often referred to by defenders in professional negligence actions. It was a case that concerned the negligent auditing of two companies' accounts, but it is useful because it formulated the ‘effective’ or ‘dominant’ principle in professional liability generally. The Court in this case held that very minor mistakes that are not the ‘effective’ or ‘dominant’ cause of a client’s loss are not deemed to be professional negligence – this ensures that mere imperfections in a piece of professional work are not grounds for a successful professional negligence claim with them, ‘The passages which I have cited from the speeches in Monarch Steamship Co Ltd v Karlshamns Oljefabriker A/B [1949] AC 196 make it clear that if a breach of contract by a defendant is to be held to entitle the plaintiff to claim damages, it must first be held to have been an "effective" or "dominant" cause of his loss. The test in Quinn v. Burch Bros. (Builders) Ltd [1966] 2 Q.B. 370 that is necessary to distinguish between a breach of contract which causes a loss to the plaintiff and one which merely gives the opportunity for him to sustain the loss, is helpful but still leaves the question to be answered "How does the court decide whether the breach of duty was the cause of the loss or merely the occasion for the loss?"The answer in my judgment is supplied by the Australian decisions to which I have referred, which I hold to represent the law of England as well as of Australia, in relation to a breach of duty imposed on a defendant whether by contract or in tort in a situation analogous to breach of contract. The answer in the end is 'By the application of the court's common sense'." Glidewell LJ
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.