''South Australia Asset Management Corporation v York Montague Ltd'' and ''Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd''
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UKHL 10is a joined English contract law">996
UKHL 10is a joined English contract law case (often referred to as "SAAMCO") on causation and remoteness of damage. It arose out of the property crash in the early 1990s, whereby banks were suing valuers for overpricing houses in order to recover the lost market value. Owners themselves often had little or no money, since they had fallen victim to negative equity, so mortgage lenders would pursue a valuer instead to recover some losses. The legal principle arising from the case is often referred to as the "SAAMCO principle".
Facts
In the South Australia case, a valuer had (in breach of an implied term to exercise reasonable care and skill) negligently advised his client bank that property which it proposed to take as security for a loan was worth much more than its actual market value. The question was whether he should be liable not only for losses attributable to the deficient security but also for further losses attributable to a fall in the property market. The House decided that he should not be liable for this kind of loss.
Judgment
The
House of Lords
The House of Lords, also known as the House of Peers, is the Bicameralism, upper house of the Parliament of the United Kingdom. Membership is by Life peer, appointment, Hereditary peer, heredity or Lords Spiritual, official function. Like the ...
held that the valuer was not liable for the losses resulting from market fluctuations. Lord Hoffmann gave his judgment as follows.
Significance
The effect of the ''SAAMCO'' case was to exclude from liability the damages attributable to a fall in the property market notwithstanding that those losses were foreseeable in the sense of being “not unlikely” (property values go down as well as up) and had been caused by the negligent valuation in the sense that, but for the valuation, the bank would not have lent at all and there was no evidence to show that it would have lost its money in some other way. It was excluded on the ground that it was outside the scope of the liability which the parties would reasonably have considered that the valuer was undertaking.
Subsequent case law has drawn a distinction between cases merely providing information, and those providing advice. The principle in ''SAAMCO'' cannot be invoked in cases where investment advisers specifically direct an investor to make a specific investment (see ''
Rubenstein v HSBC Bank plc
Rubenstein may refer to:
* Alan Rubenstein, British businessman
* Atoosa Rubenstein (born 1972), Iranian-American journalist and editor-in-chief of ''Seventeen'' magazine
* David Rubenstein, American co-founder of The Carlyle Group and one of the ...
'' and ''
Aneco Reinsurance Underwriting Ltd (in liquidation) v Johnson & Higgins Ltd''), though it may be rather difficult to carefully demarcate where information ends and directed investment advice begins.
See also
*
English contract law
English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries ...
*''
Transfield Shipping Inc v Mercator Shipping Inc
''The Achilleas'' or ''Transfield Shipping Inc v Mercator Shipping Inc'' 008 UKHL 48 is an English contract law case, concerning remoteness of damage.
Facts
Transfield Shipping was a charterer. It hired use of Mercator's ship, ''The Achilleas ...
''
008 008, OO8, O08, or 0O8 may refer to:
* The Streetwear Brand @008us , inspired by Ian Fleming & Virgil Abloh
*"030", the fictional 030 Agent of MI6
* '' 038: Operation Exterminate'', a 1965 Italian action film
* '' Explosivo 030'' a 1940 Argentine c ...
UKHL 48
References
External links
*Lindsay MacDonald and Catherine May,
'Professional Negligence: Same horse, different rider? (20.3.2008) legalweek.com
{{DEFAULTSORT:South Australia Asset Management Corporation V York Montague Ltd
English remedy case law
English implied terms case law
House of Lords cases
1996 in case law
1996 in British law
Mortgage industry of Australia