Some of the looser things they say about issues that are not before them are probably best ignored.

From: Andrew Tettenborn <a.m.tettenborn@swansea.ac.uk>
Sent: 18 June 2021 11:26
To: Robert Stevens <robert.stevens@law.ox.ac.uk>; obligations@uwo.ca <obligations@uwo.ca>
Subject: Re: SAAMCo safe

Not so sure if the majority in the MBS case at [8] are right to suggest that Spartan Steel is a scope of duty case. If loss of profits is outside the scope of the duty to take care not to damage my property, how come I can claim it if I suffer it as well as, and in consequence of, physical damage? Or am I being simply dense? -Andrew

A couple of cases heard together on the SAAMCo principle. Both right I think, with strong majority judgments by Hodge and Sales, with Reed, Black and Kitchin signing up. Leggatt and Burrows give separate concurring judgments with different reasoning. 

 

The cases were pretty straightforward, IMO, if you'd just read Hoffmann.

 

Manchester BS v Meadows. 

 

Building Society seeks accounting advice from an accountant, who tell them that the wheeze of "hedging accounting" is the way to go. As a result of the advice the Society engages in some gambling on interest rate movements via swaps contracts. The exciting accounting procedure hid how badly losing the swaps were. The regulator informs the BS that it can't use this exciting new accounting method to avoid regulatory capital requirements. To extricate itself from its arrangements, the BS ends up closing out the swaps for £32m.

 

 

The easier one is Khan v Meadows.

 

Woman seeks advice on whether she carries the haemophilia gene. Doctor negligently advises that she does not. Child is born who, if the advice had not been given, would not have been, who has both haemophilia and autism. Is the doctor liable for the costs of the autism (it is accepted that they're liable for the costs of haemophilia)?

 

The majority ask: what is the purpose of the duty?

 

In Manchester BS [34] the purpose of the advice was to enable the Building Society to adopt its exciting new business model. The BS failed to understand that they couldn't adopt this because of the auditor's advice. So, when the regulators told them to draw their necks in, the loss was within the purpose of the duty.

 

Khan is really straightforward. Was the purpose of the duty assumed by the doctor (to advise about the haemophilia gene) there to protect against the costs of autism? No [68]

 

Lord Burrows (who cites many academics on this list) would have placed more emphasis on policy matters. Lord Leggatt would have placed more emphasis on the language of  causation. The majority don't agree with them.

 

The majority's approach seems to me to be clearly correct, but they add in an unfortunate six stage "test" for liability in negligence. You'd have thought they'd have learned their lesson with so many previous "tests" having gone down in flames after launch, but apparently not.

 

The reason there was a seven member panel was because it had been originally thought that SAAMCo was going to be challenged (one of the panel writes a textbook very critical of the rule introduced by Lord Hoffmann). This didn't happen, probably because the prospects for it being overturned at this point is zero. Good.

 

As a stylistic matter, I think it would be better if judges returned to just answering the question the facts before them pose. We have now had many cases and judgments attempting to give the "definitive" formulation of the SAAMCo principle (which is in fact relatively straightforward, as the majority make clear).

 

A welcome break from the grind of marking. (And the horror of being chair of examiners. Never see how the sausages are made).

 

Rob