Equitable life yesterday won the right to appeal the decision made by a High Court judge earlier this week to throw out the majority of its £2.6bn claim against its former auditor, Ernst & Young.
Mr Justice Langley rejected Equitable's arguments that Ernst & Young should have warned the society about the potential cost of guaranteeing annuity rates to customers.
Equitable argued that if its auditor had alerted it to the potential costs in 1998, it would have put itself up for sale for £3.5bn. It was instead left to foot a £1.5bn bill for its guarantees by closing to new business and slashing policy values.
Mr Justice Langley also cast doubt on Equitable's second argument, that it would not have paid such generous bonuses if Ernst & Young had made it aware of their costs. Equitable is appealing to have not only the judgment on its loss of sale claim overturned, but also the recommendation to lower its bonus claim.
Mr Justice Langley had granted Equitable leave to continue with this suit, but for a lower amount. It had hoped to wring £1.6bn from Ernst & Young on this issue, a level called "fanciful" by Mr Justice Langley.
"We believe we have a valid and strong claim, and we will proceed with it," a spokesman for Equitable said. It will, however, submit an amended claim that accommodates the judge's comments alongside its appeal.
Ernst & Young yesterday said it was confident it would win the appeal.
The hearing is set for the end of April.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies