LM Investment Management Limited (in liq) v EY (also known as Ernst & Young)

LM Investment Management Limited, in liquidation, was the plaintiff in a case against Ernst & Young (EY), a firm of auditors. The dispute arose out of EY's alleged breach of their obligations as auditors for the Financial Management Investment Fund (FMIF). EY issued a third party notice, attempting to join LM Investment Management Limited (LMIM) as the first, second, and third third party in three different capacities. The primary issue before the court was whether the claim made by EY against LMIM should be allowed to proceed, and if EY had established that their claim raised a serious question to be tried.

The court considered the nature of the claims and the obligations of EY as auditors. EY argued that LMIM's conduct warranted investigation, potentially implicating LMIM in EY's liability. However, the court found that EY's claims did not raise a serious question to be tried, as EY had not provided sufficient evidence to substantiate their allegations. Furthermore, the court noted that EY's attempt to join LMIM as a third party was an improper attempt to circumvent the primary proceedings.

As a result, the court dismissed EY's application for leave to proceed with their claims against LMIM. The third party notice was struck out, and the third party statement of claim was also struck out. LMIM and the other third parties were removed from the proceeding. EY was granted leave to re-plead their third party statement of claim against the remaining third parties. The court's decision ensured that EY's claims against LMIM would not proceed without proper substantiation, and maintained the integrity of the primary litigation process.