Alabama Atlantic Group Limited (Alabama) is interested in acquiring all of the shares in Mining Company Limited (MCL).To fund the purchase of shares in MCL, Alabama intends to borrow money as well as raise equity by issuing further shares in itself.Alabama engages an accounting firm, Heat Parwick Mungerfords (HPM), to advise it on the tax attributes of MCL, and tells the relevant partner at HPM that it will provide a copy of the tax attribute advice to potential lenders to Alabama.The contract between Alabama and HPM provides that HPM will not act negligently, and that HPM's liability under the contract for any loss suffered by Alabama as a result of the Commissioner of Taxation taking a different interpretation of the tax law, is limited to twice HPM's fees.

HPM subsequently provides advice to Alabama that MCL has significant tax losses that MCL will be able to utilise on acquisition.What this would mean is that MCL would obtain a benefit of roughly 30% of the value of those tax losses (since the losses could be set off against its assessable income).This would mean that MCL's assets would be increased by that benefit and so would increase the value of MCL's shares.

Alabama provides a copy of the advice, along with MCL's financial statements and income projections to Big Bank Ltd.Based on these documents and its own preliminary investigations, Big Bank loans $100 million to Alabama in the form of a non-recourse loan, which means that Alabama's liability for the loan is limited to the shares in MCL, not any of Alabama's other assets.Big Bank expects to receive $130 million back once Alabama has repaid the loan plus interest.

Alabama spends $150 million buying the shares in MCL.However, HPM fails to realise that MCL has significantly changed its business, which means that MCL will not be able to use the majority of MCL's tax losses.Due to MCL's inability to use the tax losses, it cannot pay dividends to Alabama and Alabama is forced to forfeit the MCL shares (now worth $90 million) to Big Bank.

Advise whether HPM is liable in negligence to Big Bank (DO NOT CONSIDER CONTRIBUTORY NEGLIGENCE OR VOLUNTARY ASSUMPTION OF RISK).

A's to argue from HPM's perspective.

B's to argue from Big Bank's perspective.