SAAMCO v York Montague [1996]

South Australia Asset Management Corporation v York Montague Ltd and Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1996] UKHL 10, commonly known as the SAAMCO case, addresses issues of causation and remoteness of damage in English contract law. This legal dispute emerged from the property market crash in the early 1990s, with banks pursuing valuers for overpricing properties to recover lost market value.

In the South Australia case, a valuer provided a negligent valuation to a bank, advising that a property, intended as security for a loan, was worth more than its actual market value. The central question was whether the valuer should be held liable not only for losses related to the deficient security but also for additional losses resulting from a general fall in the property market.

The House of Lords held that the valuer was not liable for losses stemming from market fluctuations. Lord Hoffmann, delivering the judgment, outlined the principles guiding the determination of the scope of the valuer's duty. He emphasised the need to construe the agreement as a whole in its commercial setting and defined the scope of the duty based on what the law considers as best giving effect to the express obligations assumed by the valuer.

Lord Hoffmann distinguished between cases where a party assumes liability for all consequences of wrongful conduct and those where liability is limited to the consequences directly attributable to the wrongful act. He illustrated this distinction through an example involving a mountaineer seeking a doctor's advice about the fitness of his knee before embarking on a climbing expedition.

The Court of Appeal's principle, which held the valuer responsible for all consequences of the transaction, was criticised by Lord Hoffmann as being against common sense. He argued that a person under a duty to provide information for someone else's decision should not generally be held responsible for all the consequences of that decision but only for the consequences of the information being wrong.

The SAAMCO principle, as established by this case, excludes liability for damages that are not directly attributable to the inaccurate information provided by the valuer. It emphasises the fairness and reasonableness of limiting liability to the consequences of the information being incorrect, rather than extending it to all foreseeable risks associated with the course of action taken by the relying party.

The significance of the SAAMCO case lies in its impact on subsequent case law, particularly in distinguishing between cases involving the provision of information and those involving advice. The principle has been applied to limit liability in situations where an informant's duty is to supply information rather than to advise on a course of action. However, challenges may arise in precisely demarcating the boundary between providing information and giving directed investment advice in certain contexts.
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