Dairy Containers Ltd v NZI Bank Ltd Dairy Containers Ltd v Auditor-General - [1995] 2 NZLR 30

Contract — Breach — Defences — Auditor failing to conduct company audit to statutory and contractual standard of care — Duties owed to company by auditor — Company suffering losses as a result of employees' frauds — Auditor's breach creating environment for frauds — Claim against auditor for resultant losses — Auditor claiming defence of contributory negligence — Whether company's employees were contributorily negligent — Whether company's directors were contributorily negligent.

Contract — Damages — Defences — Whether auditor in breach of contractual duty able to claim contribution from banks liable in conversion — Whether auditor in breach able to claim contribution from banks on basis of banks' negligence — Whether auditor in breach able to claim contribution against tortfeasors liable in conspiracy — Law Reform Act 1936, s 1 7(1) (c).

Contract — Damages — Defences — Auditor negligent in company audit — Negligence of company — Circumstances in which apportionment of responsibility for losses justified — Contributory Negligence Act 1947, s 3(1).

Bankers and banking — Cheque — Claims against banks for conversion of cheques — Cheques crossed — Banks not making inquiries — Banks raising defence under s 5(1) of Cheques Act 1960 — Whether banks acting without negligence — Whether banks liable for losses even further inquiries would have proved futile — Whether banks could claim estoppel — Whether banks could claim contributory negligence by company account holder — Cheques Act 1960, s 5(1).

Company law — Directors — Duties to company — Directors employed by parent company — Failure to monitor business and management of subsidiary company — Failure to establish investment authority and policy — Laxity causing losses as a result of fraudulent misappropriations by employees — Liability of directors.

Company law — Directors — Whether parent company a "director" of wholly-owned subsidiary — Test of "interference" in subsidiary company's affairs — Companies Act 1955, s 2.

Tort — Vicarious liability — Whether company liable for acts of employee/director.

Tort — Conversion — Banks converting cheques — Whether defence of contributory negligence available to a defendant sued in conversion prior to passing of Contributory Negligence Act 1947 — Whether liability established by Contributory Negligence Act 1947 — Whether negligence has to be causally related to the conversion — Contributory Negligence Act 1947, s 3(1).

Negligence — Contributory negligence — Whether defence available in actions for breach of contract — Contributory Negligence Act 1947, s 3(1).