Equitable cleared to sue former directors
The High Court has ruled that insurance company Equitable Life can proceed with a negligence claim against nine ex-directors.
Justice Langley said on Friday that Equitable could press on with its £3.3 billion claim. He said that the directors had put forward some strong arguments, but added, “I do not think they were so powerful as to justify the relief they seek.”
However, he warned the ruling “does not mean I think Equitable’s case is right or even probably right”.
Equitable nearly collapsed in 2000 after the courts ordered the firm to honour expensive, guaranteed annuity policies. The company has accused the former non-executive directors of negligence and breach of duty.
The decision is likely to have major repercussions for UK boardrooms, raising issues of non-executive liability.
The non-executive directors will join six former directors of the Equitable in court.
The nine had denied the charges and had asked the court to throw out the lawsuit brought against them by the new management.
Six of the ex-Equitable non-executives, represented by law firm Allen & Overy, issued a statement saying they were “disappointed” with the ruling.
Vanni Treves, Equitable Life chairman, said: “We are pleased, but not surprised, that Mr Justice Langley agrees that this case should proceed to trial.
“The Board believes there is a strong claim against the former directors and in the interests of policyholders it has a duty to proceed.”
In a separate action, Equitable has sued Ernst & Young, its former auditors, for negligence. The accountants denied the claim and succeeded in getting a large part of it thrown out Mr Justice Langley. However, the Court of Appeal over-ruled the judge, saying it could not conclude that there was no realistic prospect of success at trial.
