Esanda Finance Corporation Ltd v Peat Marwick Hungergords – indirect recipient of info
• Facts: financier (Esanda) lent money to Excel in reliance on E’s audited accounts (Peat Marwick) and reports - could not recover money. Sued E’s auditors for alleged negligence.
• Issue: whether auditors owe a duty of care to persons other than their clients who have relied on their unqualified reports in entering various financial transactions.
• Held: Esanda appealing – appeal dismissed  auditors do not owe a duty of care to all users of their info (duty only extends to their clients). o Brennan J: o Mere foreseeability of the possibility that a statement made or advice given by A to B might be communicated to a class of which C is a member and that C might enter into some transaction and suffer subsequent financial loss is insufficient to impose on A a duty of care owed to C in the making of the statement or the giving of the advice. o Following Caparo Industries Plc v Dickman - But, in every case, it is necessary for the plaintiff to allege and prove that:
 the D knew or ought reasonably to have known that the information or advice would be communicated to the P, either individually or as a member of an identified class,
 that the information or advice would be so communicated for a purpose that would be very likely to lead the P to enter into a transaction of the kind that the P does enter into
 and that it would be very likely that the P would enter into such a transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound. o McHugh J:
 Mere act of an auditor supplying a signed audit report stating the company's position, knowing that the company would, in turn, pass the statement on to creditors, is not sufficient to establish a duty of care in the