Two weeks into the most expensive case in English legal history, Equitable Life chief executive Charles Thomson takes the witness stand at the High Court in London tomorrow.

Mr Thomson will be giving evidence in Equitable's £3.7 billion case against its former auditors, Ernst & Young, and 15 of its former directors who presided over the mutual society's near-collapse in 2000. Equitable is claiming negligence.

A House of Lords judgment at the time forced Equitable, the UK's oldest mutually owned insurance company, to honour promises to guaranteed-annuity policyholders. Equitable almost collapsed in 2000 after amassing £1.1 billion in liabilities as a result of selling pension policies that proved too expensive for the mutual to honour.

Equitable, headed by Mr Thomson and its chairman, Vanni Treves, is suing Ernst & Young for £2 billion, alleging that its accountants were guilty of negligence since it did not force Equitable to provide for the full cost of honouring its promises.

The mutual is claiming £1.75 billion from 15 of its former directors. Mr Thomson has said that Equitable faces a £100 million bill if it loses the case against its former directors and auditors.

The insurer has set aside about £30 million to cover its legal costs but no extra money has been reserved should it need to pay the costs of E&Y and the former directors. The entire bill could total between £75 million and £100 million.

Equitable has already forked out £22 million on the case and E&Y has spent about £20 million, while costs for the former directors are expected to average more than £1 million each. Mr Thomson's testimony and cross-examination could last all this week.

Both Ernst & Young and the former directors deny the allegations.

The 16 cases, being heard by Mr Justice Langley and run concurrently, are expected to run for 27 weeks. There will then be a judgment next year.

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