Singapore's Court of Appeal struck out a claim by oil trader Hin Leong Trading seeking S$3.4 billion [1] from its former auditor, Deloitte & Touche.
The ruling marks a significant legal victory for the accounting firm and clarifies the limits of auditor liability regarding a company's operational trading losses.
The apex court dismissed the claim, which is also valued at US$2.6 billion [2]. The legal action sought to hold Deloitte responsible for trading losses Hin Leong incurred over a period spanning from November 2015 to mid-April 2020 [1].
Deloitte was not liable for these specific financial losses [1], the court said. The decision effectively ends the attempt by the oil trader to recover billions in damages from its former auditing partner.
This case centers on the accountability of auditors when a firm suffers massive losses due to trading activities. By striking out the claim, the court determined that the auditor's role did not extend to guaranteeing the success or stability of the company's trades, a distinction that protects auditing firms from being treated as insurers for their clients' business failures.
The dispute involved one of the largest trading losses in the region's history. The losses cited in the claim occurred over nearly five years, culminating in the mid-April 2020 period [1].
“Singapore's apex Court of Appeal struck out Hin Leong Trading's claim for S$3.4 billion.”
This ruling reinforces the legal boundary between an auditor's responsibility to report financial accuracy and a company's responsibility for its own commercial risks. By dismissing the US$2.6 billion claim, the Singapore Court of Appeal has signaled that auditors cannot be held liable for a client's trading losses, preventing a precedent where accounting firms would be financially responsible for the operational failures of the companies they audit.
