Accounting firm Hayes Knight has lost a bid to throw out accusations it breached its duty of care in signing off on Belgrave Finance accounts, and is one of several parties being sued by the receivers of the failed lender.
Associate Judge John Matthews dismissed an application to strike out Belgrave's case against Hayes Knight, provided the claim was amended to more clearly demonstrate the auditor's alleged culpability, he said in a November 7 judgment.
Belgrave has filed six causes of action against former directors Shane Buckley and Steven Smith, their associate Raymond Schofield, solicitors Davidson, Armstrong & Campbell and Hayes Knight.
The judge agreed with Belgrave's lawyer, Bruce Stewart QC, who argued the losses were caused "by the very fact of continued trading" and that it was an issue for a trial to determine, rather than a strike out application.
Belgrave claims that had Hayes Knight done a "careful, diligent and professionally appropriate" audit, the lender wouldn't have issued the 2007 prospectus and would probably have been placed into receivership earlier than it ultimately was in 2008.