Securitibank auditor ruling

Press, 24 February 1986, Page 4

Securitibank auditor ruling

PA Auckland Mr Justice Barker has ruled, that the former auditors of the collapsed Securitibank group of companies be included as third parties in the High Court proceedings being taken against the seven former Securitibank directors by the liquidator of the companies, Mr Harold Goodman.

Mr Goodman is seeking compensation of more than tsn.B million from the directors, claiming alleged negligence on the part of the directors of Securitibank, which collapsed in 1976.

Last November it was disclosed in the High Court at Auckland that the auditors of Securitibank, formerly Barr, Burgess and Stewart (now Coopers and Lybrand), had paid the liquidator . $4.29 million as a settlement without acknowledging liability*. Mr Justice Barker’s latest ruling followed on from a hearing last October in which the directors sought an order to have

the auditors joined to the liquidator’s action as third parties. In the judgment handed down last week — his thirty-eighth in the longrunning case — his Honour made the order, which was opposed by the liquidator on various grounds, including one that it would lengthen the proceedings.

His Honour said there would be further delays in the litigation if third parties were introduced. But he said that if the auditors were not joined the directors might be able to issue independent proceedings against them.

“I cannot foresee the proceedings against the directors being resolved inside the next 12 months,” said his Honour. “It would be most undesirable if, when at last the liquidator’s proceedings against the directors were exhausted, there was< still another round of proceedings . involving the directors versus the auditors.” His Honour also said it would be, .possible for the

directors to say in court that their liability ought to be reduced because of alleged negligence by the auditors.

The liability of the auditors, as professional people, would be canvassed without their being in court if they were not joined as parties, he said. “I think that justice to the parties and to the

numerous creditors requires, in the particularly unusual circumstances of this case, that the auditors be before the Court” His Honour said that if the directors, as they had indicated, put allegations as to alleged negligence on the part of the auditors, the auditors should have the chance to refute them.