In a recent case, the opinion of an expert accountant was overturned because the opinion was based on past accounting errors.
In the recent case of Shafi v Rutherford, the opinion of an expert accountant was overturned because the opinion was based on past accounting errors.
The expert accountant concluded that leases had been incorrectly treated as operating leases in the early accounts. Having identified the error the expert concluded that the earlier accounts had formed the basis of the sale agreement and as there was no mechanism under the agreement for him to amend those accounts. The expert considered that it was outside the scope of his instructions to correct the error and so used the accounts to determine the amount to be paid for the claimant's shares.
The Court of Appeal found that the question of how the leases were to be treated and the impact on the accounts, were within the scope of the expert’s work. They concluded that the expert had committed an error in deciding that he was prevented from applying the correct accounting policy. They could see no reason why the parties would have wished to use accounts which had an incorrect accounting treatment.