I would say that the policy justification for this result is that the Court understands shareholders role as supervising management as an acting body in respect of the corporation’s interests rather than as individual shareholders in respect of their own ends.
In this case, Hercules and Mr. Freed clearly indicated that their claim against EY was initiated because of harm to themselves as individuals. The Court could not allow shareholders to act outside of their mandate as per the Salomon principle, that a corporation is an independent legal entity not to be identified with its shareholders, without breaking that rule.
I think the results would have been different if the shareholders, representing the companies, would have come forth with a claim against EY for their negligence. In the decision, the Court recognized that Ernst & Young sought dismissal on the ground, inter alia, that the claims asserted by the plaintiffs could only properly be brought by the corporations themselves and not by the shareholders individually. If that would have been the case, the corporation would have recovered for the damages, not the individual shareholders.
This decision is aligned with the principle in Salomon, and it is a good example of how Courts understand the role of shareholders within the corporate structure to play out.
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