Facts
Donald Ogilvie was the director of a company called Trevaunance Hydraulic Tin Mines Ltd, which mined tin in Cornwall. He needed more capital, so he put an advertisement in The Times on July 8, 1946, which said,
"£10,000. Established Tin Mine (low capitalization) in Cornwall seeks further capital. Instal additional milling plant. Directorship and active participation open to suitable applicant - Apply"
Mr Candler responded, saying he was interested in investing £2000, if he could see the company's accounts. Mr Ogilvie instructed Crane, Christmas & Co, a firm of auditors, to prepare the company’s accounts and balance sheet. The draft accounts were shown to Mr Candler in the presence of Crane, Christmas & Co’s clerk. Mr Candler relied on their accuracy and subscribed for £2,000 worth of shares in the company. But the company was actually in a very bad state. Ogilvie used the investment on himself and then went bankrupt. Mr Candler lost all the money he invested. He brought an action against the accountants, Crane, Christmas & Co. for negligently misrepresenting the state of the company. As there was no contractual relationship between the parties, the action was brought in tort law for pure economic loss.
Read more about this topic: Candler V Crane, Christmas & Co
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