$4.$ Southguard Ltd$.($SL$)$ and Soughtguard Holdings Ltd$.($SHL$)$ carried on business lending and investing money on the security of real property mortgages. The GC Finance Ltd$.$ was the sole shareholder of SL while HM Managements Ltd$.$ shareholder of $($SHL$).$ At all relevant times, ownership in the corporations was separated from management. The firm E & Y was originally hired by SL and SHL to perform annual audits of their financial statements and to provide audit reports to the companies$$ shareholders. A few years later, SL & SHL went into receivership. Receivership is a remedy available to secured creditors to recover amount outstanding under secured loan. The shareholders of SL & SHL brought an action against E & Y alleging that audits of the corporations$$ financial statements had been negligently prepared, and that in consequence, they had incurred investment losses. The court held that:

a$.$

There was a contractual relationship between the auditors of a corporation and its shareholder and E & Y vicariously liable for the negligence of its auditors.

b$.$

The auditors owed no duty of care in respect of their personal investment.

c$.$

There was no contractual relationship between the auditors of a corporation and its shareholder.

d$.$

A & C