Manchester Building Society loses Court of Appeal judgment

The Court of Appeal has today (January 30) handed down its decision in the case of Manchester Building Society v Grant Thornton UK LLP.

The case related to audit services provided by Grant Thornton, former auditors of Manchester Building Society.

On May 2, 2018, the High Court awarded damages of £335,727 including interest, to the Society, considerably below the £49m amount claimed. Costs were awarded to Grant Thornton.

The Society appealed this decision and the appeal was heard on January 15, 16, 2019.

The Court of Appeal has today dismissed the Society’s appeal and upheld the first instance judgment.

The Society said it is disappointed with this decision.

It is now considering its position as to whether to request leave to appeal this decision.

In relation to costs, the Society has paid £1,973,215 to Grant Thornton to date.

That amount was net of the damages awarded to the Society by the High Court and the interim costs Grant Thornton were ordered to pay to the Society.

The Building Society said it expects that it will have some further liability to pay costs to Grant Thornton following a detailed cost appraisal, the timing of which is not yet known.

It said today: “There continues to be material uncertainty regarding the long term future of the Society.

“The Society will continue to discuss and consult with its regulators on the next steps and on the capital position of the Society.”

It added: “The Society continues to have a strong liquidity position.”

In August last year Manchester Building Society announced a pre-tax loss for the six months to June 30 of £1.629m, compared with a pre-tax loss of £698,000 the previous year.

It said the increased loss was predominantly due to the interim payment following judgment on the legal proceedings against Grant Thornton.

A spokesperson for Grant Thornton said: “We have noted today’s ruling but will not be commenting further.”