A Bermuda-based reinsurance company has settled its High Court action against three Deloitte and Touche accountancy companies, including Deloitte and Touche Ireland, over alleged losses of some $25 million following the withdrawal of the defendants' auditing services.
ESG Re, which is based in Bermuda, had sued Deloitte and Touche LLP, an accounting firm with headquarters in Connecticut, USA; Deloitte and Touche Bermuda; and Deloitte and Touche Ireland, with offices at Earlsfort Terrace, Dublin.
It had claimed damages under a number of headings, including negligence, breach of contract, misrepresentation and breach of fiduciary duty.
ESG claimed that it sustained losses as a result of the alleged wrongdoing of the defendants and especially from the manner of the defendants' resignation as auditor for ESG in November 2002 and the withdrawal of its audited report.
ESG claimed that, as a result of the actions of the defendants, its shares had been delisted from the US Nasdaq index, its reputation was damaged and contracts were cancelled. All three defendant companies denied the claims and brought a counterclaim.
The case opened before Ms Justice Mary Finlay Geoghegan in the Commercial Court of the High Court on Tuesday and was listed to last 10 weeks.
However, after talks between the sides, the judge was told yesterday by Paul Gallagher SC, for ESG, that the action had been settled. ESG's initial claim for damages was estimated at some $63 million, but in 2006 the company decided not to proceed with some $38 million of the original claim.
ESG had claimed that, because of the withdrawal of Deloitte and Touche's audited opinion, it had sustained losses of more than $28 million through the cancellation of business with National Australia Bank and other substantial losses amounting to a total of some $63 million.
However, in a letter from ESG's solicitors, dated February 13th, 2006, the defendants' lawyers were informed that approximately $38 million of the total original claim was not now being proceeded with.
