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Adams v Bracknell Forest Borough Council

Held that the negligent failure to ameliorate the consequences of dyslexia by appropriate teaching (leading to depression and a lack of self esteem and being disadvantaged in the employment market) could be said to continue an injury and thus could give rise to an action for “personal injuries”. The Court said that an analogy could rightly be drawn with the negligent failure to treat a physical injury which the defendant did not cause. - Adams v Bracknell Forest Borough Council (2004) UKHL 29

ADT v BDO Binder Hamlyn (1996) BCC 808

BDO were auditors of Britannia Security, an acquisition target of ADT. During negotiations ADT insisted on a meeting with Britannia and their auditors. The relevant BDO partner was asked at short notice to attend the meeting. He knew about the negotiations and was told he might be asked about the last audited accounts but was given no agenda or instructions. At the meeting, which lasted less than an hour, the BDO partner confirmed in answer to questions by ADT’s finance director that he “stood by” the audited accounts and that there was nothing else ADT needed to know. ADT proceeded with the acquisition but Britannia turned out to be worth far less than expected. ADT therefore sued BDO. At trial, BDO were found to have assumed a duty of care to ADT and were ordered to pay damages of £65 million, being the difference between the price ADT had paid for Britannia and what would have been paid had the accounts showed the true position. -

Anns & Others v Merton London Borough Council (1977). 492HL

The plaintiffs leased seven flats and maisonettes built in 1962 from Merton. In 1970 structural movements began to occur, resulting in cracked walls. The plaintiffs contended that these were due to inadequate foundations. A claim was made against Merton for damages in negligence: it was argued that a duty of care was owed to the owners or occupiers by the local authority under the Public Health Act 1936. Under that Act authorities had power to inspect foundations to ensure compliance with bylaws. The defendant authority failed to inspect the foundations under the statutory powers vested in it. It was held that authorities exercising their statutory functions and duties to control building work under the Public Health Act 1936 could be held liable for negligent inspection of foundations or failure to properly carry out a building inspection. -

Barings plc v Coopers & Lybrand (2003). EWHC 1319

Deloitte were the auditors for Barings Bank in Singapore. In 1995 Nick Leeson brought down the whole of Barings Bank by engaging in unauthorised derivatives trading, producing huge losses. In an attempt to rectify the situation, he made massive unauthorised bets on the rise of the Japanese stock market. The Kobe earthquake caused the Japanese stock market to plummet, taking Barings with it. Leeson’s own misconduct could not be attributed to Barings; but his superiors had ‘notionally’ been responsible for supervising him. They had also authorised the release of large funds to him, and it was shown that they had failed in their responsibilities. This was particularly important in the later stages of Leeson’s fraud and cover-up. The court held Coopers and Lybrand (since merged with Deloitte) liable but ruled that damages payable should be reduced by 50% in the early stages of the fraud, rising to 80% in the later stages. -

Bolam v Friern Hospital Management Committee (1957) WLR582

Mr Bolam’s leg was broken during electroconvulsive therapy. He argued that the doctors should have provided a muscle relaxant during the process to reduce the risk of such an accident. At trial some practitioners said that the giving of relaxants was necessary but some did not. Bolam lost the case. It was held that where professional skills were involved, negligence was the failure to perform an act that the reasonable professional man would do in the circumstances, or the doing of an act that a reasonable professional man would not do in the circumstances. However, if the use of a special skill or degree of competence was involved, the test was the standard of the ordinary individual exercising that skill, not the highest degree of expertise possible. Negligence, therefore, meant the failure to act in accordance with the current standards of professional competence at the time, or, if there were different but equally acceptable standards, to act in accordance with one of those standards. A professional man is not negligent if he acts in accordance with practice accepted by a responsible body of members of his profession and exercises the ordinary skill of an ordinary competent person in that profession in doing so. -

Bolitho v City and Hackney Hospital Authority (1997) AC 232

A two year old boy was admitted to hospital suffering from breathing difficulties. He suffered cardiac arrest and subsequent brain damage before his respiratory and cardiac functions were restored. The doctor had failed to respond to two calls from the nurse. Held: In cases of treatment there are cases where, despite a body of professional opinion sanctioning the defendant's conduct, the defendant can properly be held liable for negligence. What other professionals do is persuasive evidence as to what is acceptable, but a consistent body of expert medical opinion may still be ignored by the judge, if he can be sure that no logical basis for the opinion has been shown to the court: "a plaintiff can discharge the burden of proof on causation by satisfying the court either that the relevant person would in fact have taken the requisite action (although she would not have been at fault if she had not) or that the proper discharge of the relevant person's duty towards the plaintiff required that she take that action." -

Bradford-Smart v West Sussex County Council

Threats had been made to Claimant by other pupils on the way to school, the teachers, when notified, took steps to ensure that Leah was not bullied at school. Unfortunately, she was bullied whilst travelling to and from school and whilst living on a local housing estate by neighbours. Held that in general a school did not owe a duty to its pupils to police their activities once they had left school. There are exceptions to this where, for example, bullying occurs immediately outside the school gates at the end of the day, or on a school trip. A school may also be under a duty to discipline a pupil who bullies another pupil outside school where the latter’s school performance is adversely affected as a result. The Court of Appeal accepted that there may be situations where a school should take such steps as are within its power to combat bullying, even when outside school but that “those occasions will be few and far between.” - CA2003

Buckingham and Others v Ryecoteswood College

Six students brought a claim against the college which provided specialist courses in craft skills areas, including an HND in Vehicle Restoration and Conversion. The claim was for breach of the contract to educate and to deliver what its recruitment literature and interviews had offered by way of an appropriate practical content. The College was held in breach of contract, and damages in excess of £100,000 were awarded. The court related the provision of further education with the supply of holidays via the package tour industry in terms of applying consumer law principles to the student-institution contract, and in awarding damages for “disappointment” with the educational experience and making an award of compensation for mental distress. - 2003

Caparo v Dickman (1990). 2AC 605

Caparo bought the controlling number of shares in Fidelity plc, an electronics company, allegedly in reliance on its audited accounts. In fact Fidelity was not performing as the accounts showed and was making a loss rather than profits. Caparo sued Dickman, Fidelity’s auditors. It contended that as auditors, they should have known or foreseen that Fidelity was vulnerable to a takeover bid and that any potential acquirers would rely on the audited accounts in making their decision. The House of Lords ruled that auditors owe no duty to “members of the public at large who rely on the accounts in deciding to buy shares”. Nor do auditors owe a duty to any individual existing shareholder who chooses to buy more shares. The House of Lords’ ruling was that auditors owe a duty of care to the company whose accounts they are auditing and to the company’s shareholders collectively in their role as supervisors of the management of the company. In the absence of special circumstances, no duty is owed to anyone else. -

Caudle -v- Sharpe (1995) LRLR 433

A Lloyd’s underwriter, Mr Outhwaite, had underwritten many run-off contracts with disastrous results. Claims were made under the syndicate’s professional indemnity insurance. Those insurers in turn claimed under their re-insurance. The issue turned on the meaning of “each and every loss arising out of one event”. Was Mr Outhwaite’s state of mind an event? Or was there an event each time Mr Outhwaite negligently accepted a run-off contract? Lord Justice Evans identified three requirements of a relevant “event”, namely (1) a common factor which can properly be described as an event, (2) which satisfies the test of causation, and (3) which is not too remote for the purpose of the clause. He held that Mr Outhwaite’s “blind spot” or “his failure to conduct the necessary research and investigation” did not fall within the natural and ordinary meaning of the word “event” except by reference to each and every occasion when he entered into a run-off contract. Thus it was held that there were 32 events. -

Cave -v- Robinson Jarvis & Rolf (a Firm) [2003] 1 AC 384 - [2002] UKHL 18

Robinson, a firm of solicitors, were instructed in connection with a sale of land and were specifically retained to draw up legal documentation to enable Mr Cave to enjoy mooring rights for 100 years. The sale went ahead in March 1989 and Mr Cave enjoyed mooring rights for several years until he was denied by the receivers of the purchasing company in February 1994. Proceedings were not issued against Robinson until January 1998. Robinson appealed on the basis that the claim was out of time, but Cave responded that the solicitor had not told him of the circumstances which would lead to the claim, and that deliberate concealment should extend the limitation period. At first instance and in the Court of Appeal, the decision in Brocklesby was followed. The House of Lords was unanimous, in allowing the solicitors’ appeal and overturned the judgments of the lower courts. Lord Millet stated that “A man cannot sensibly be said either to conceal or fail to disclose something of which he is ignorant”. A person should not be considered to be dishonest for the purposes of the new provisions unless the person concealing the fact is aware of what is being concealed and does not wish the claimant to discover it. -

Christopher Andrews v Barnett Waddingham LLP (2006) EWCA 93

Mr Andrews had amassed a pension pot of nearly £2m. In 1994 he approached Barnett Waddingham, a firm of actuaries to advise him on what to do on his retirement. He split his fund between an annuity linked to the retail prices index and a with profits annuity, both with Equitable Life. Mr Andrews alleged that he was negligently advised by Barnett Waddingham in relation to the with profits annuity. However, the relevant advice was given when Equitable Life’s problems were still some distance in the future and there was never any allegation that the advice to do so was negligent; nor was there any finding that Barnett Waddingham had assumed a duty to protect Mr Andrews from the possibility that Equitable Life would have financial difficulties. The Trial Judge found that the loss suffered by Mr Andrews was “inextricably linked to the negligently given information” (which was in respect of the Policyholders Protection Act 1975)and awarded him over £1million. The Court of Appeal restated the analysis explained in Saamco that a Claimant must not only show that a duty of care was owed to him and that it has been breached, but also that it was a duty in respect of the kind of loss which was suffered. In this case, the loss suffered by Mr Andrews was unconnected to the fact that the PPA 1975 did not apply to his with profits annuity as he was advised it did. The correct measure of damages was the difference between the loss sustained by acquiring the with profits policy annuity and the loss which would have been sustained if the PPA 1975 applied to the with profits annuity as Mr Andrews was advised it did i.e. nil because Equitable Life was not insolvent. The judgement was set aside on appeal and leave to appeal to the House of Lords was refused. -

Cooperative Insurance Society v Henry Boot Scotland Limited (2003) CLJ 19

Co-operative Insurance Society Ltd (CIS) was the freehold owner of the property at Lomond House, 9 George Square, Glasgow. Under a contract dated 1 September 1995 made between CIS and Henry Boot Scotland Ltd. (“Boot”) Boot agreed to perform for CIS the works described in the Contract as “demolition (including façade retention), design and reconstruction at and of Lomond House, 9 George Square, Glasgow.” On 13 - 14 March 1996, during the carrying out of the Works, water and soil flooded into sub-basement excavations. There were several sub-contractors involved in the contract and the issue in this case was, not whether a liability existed, (which it clearly did) but the construction of the contract. This included the duty of the contractor(s) to check an employer's pre-existing design to be satisfied that it would produce a completed design capable of being constructed. -

D & F Estates Ltd v Church Commissioners for England & Others (1989). 368 HL

The Church Commissioners owned a block of flats built by a firm of contractors (who were the third defendants). The plastering work was subcontracted. Fifteen years after construction the plaintiffs, who were lessees and occupiers of a flat in the block, found that plaster in their flat was loose. As there was no direct contractual relationship between the plaintiffs and the subcontractors an action was brought in tort for the cost of remedial work, both already done and estimated for the future. The Court of Appeal found that the main contractor had employed a competent subcontractor and therefore no duty of care was owed to the plaintiffs. They also found that the cost of replacing the defective plaster was pure economic loss and not recoverable in tort. The House of Lords held that damages were not recoverable in tort in respect of the defect in the product itself, but that such a claim lay only in contract. Damages were recoverable in tort only where a defective product caused damage or injury other than to the defective product itself, -

Donoghue v Stevenson

Snail in bottle of ginger beer. Purchased for friend. Privity of contract prevented claim under contract. Held that manufacturer owed a duty of care not to cause her personal injury. "You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour." (Lord Atkin) - Citation: [1932]SC(HL) 31

Erin McLean v The University of St Andrews

The claimant and her boyfriend walked some distance from ODESSA University where they were studying under an exchange agreement, at 2.00 am in the morning. She was raped by some Russian sailors. She maintained that the University, failed in its duty of care owed to her by sending her to the "pervasive lawlessness" of the Ukraine, and claimed damages of £100,000. Her boyfriend was present during the assault in Odessa, and maintained that as a consequence he has suffered from post-traumatic stress disorder. The Court dismissed her claim on the basis that the defenders only had responsibility to ensure that she was adequately and safely accommodate at the university, and that Odessa was not a battle zone like Baghdad or the Gaza Strip. -

Farley v Skinner (2001) WLR 899

Farley instructed a surveyor to inspect a house which was within a 15-mile radius of Gatwick Airport and asked him specifically to ascertain whether the property was affected by aircraft noise. The surveyor stated in his report that the property was unlikely to be suffer greatly from noise from the flight path. Farley sought £70,000 by way of special damages for diminution in value as well as general damages for distress and inconvenience. The House of Lords agreed with the court at first instance which held that although negligence was established, there was no diminution in the value of the house and only awarded Farley general damages of £10,000 for distress and inconvenience. -

Galoo Ltd v Bright Grahame Murray (1994) 1 WLR 1360

Galoo had a subsidiary known as Gamine. Various share purchases and loans were made by third parties based on the audited accounts of the companies. One company, Hillsdown, purchased 51% of the shares in Gamine, with the price fixed by reference to Galoo’s profits, as stated in the accounts. Hillsdown alleged that the auditors were aware of their (Hillsdown’s) intention to purchase the majority of the shares in Gamine. It was held, and confirmed by the Court of Appeal, that a duty of care existed. -

Haward and others -v- Fawcetts (A Firm) and others [2006] UKHL 9

In October 1994, a partner in Fawcetts, a firm of accountants, gave professional advice to Mr Haward regarding the proposed acquisition by Mr Haward of a company, Kings Stag Engineering Ltd. On 9 December 1994, in reliance on the advice of Fawcetts, W. J. Haward Ltd, subscribed for the controlling interest of Kings Stag. In addition a Haward family Trust acquired the freehold of the leasehold premises from which the Kings Stag carried on business. Fawcetts were appointed auditors to Kings Stag, then called Haward Architecture Ltd. It was known that an injection of money into the company was needed, but substantial investment failed to bring the company to profitability. In 1998 Mr Haward asked a specialist in corporate rescues to look into the matter of the company's ever-mounting losses. This led eventually to a claim for damages for professional negligence being made against Fawcetts. Proceedings were commenced on 6 December 2001. The claim was both in contract and in tort. Fawcetts' defence denied negligence and also raised the defence that the claims based on breaches of contract, and tortious claims for losses accruing prior to 6 December 1995 were both statute barred. The case went to the House of Lords and it was held that the relevant date was not when the claimant first knew he might have a claim for damages, but an earlier date when he first knew enough to justify starting to investigate the possibility that the defendant’s advice was defective -

Hedley Byrne & Co. Ltd. V. Heller and Partners (1964) 575 HL

Hedley Byrne were advertising agents who needed to check the creditworthiness of a prospective client. The bankers, Heller, provided a favourable reference headed ‘Without responsibility’. The plaintiff relied on this reference and lost a large amount of money. They sued the bankers. The House of Lords held that there is liability for negligent misstatement where the provider of the information knows that it will be relied upon. However, in this case, Heller were able to avoid liability through their endorsement of ‘Without responsibility’. -

Henderson and Others v Merrett Syndicates Ltd (1994).145HL

Merrett Syndicates Ltd. acted as both Members’ Agents and Managing Agents. The plaintiffs were Lloyd’s ‘names’ who were either placed on Merrett’s own syndicates or through other Managing Agents. The relationship was evidenced by agency and sub-agency agreements that gave the agent absolute discretion in respect of underwriting business conducted on behalf of each ‘name’. It was accepted that there was an implied term that the agents would exercise reasonable skill and care in the carrying out of their duties. The plaintiffs alleged that the defendants had been negligent in the management of the plaintiffs’ syndicate and sought to establish a duty of care in tort in addition to any contractual duty. The issues were:- 1. Whether members’ agents owed a duty of care to their members notwithstanding contractual relationships; 2. Whether managing agents appointed as sub-agents by members’ agents had a duty of care to indirect ‘names; 3. Whether members’ agents were responsible to ‘names’ for any failure to exercise reasonable skill and care by the managing agents to whom underwriting was delegated by the members’ agents; 4. Whether the members’ agents were required to exercise care and skill only in relation to those activities which members’ agents by custom and practice actually performed for the ‘names’ personally. The House of Lords held that the relationship between the parties was itself sufficient to give rise to a duty to exercise reasonable skill and care. Managing agents therefore owed a duty of care to ‘names’ who were members of syndicates under their management. The agreements that gave the agent absolute discretion in respect of underwriting business did not exclude a duty of care. The discretion defined the scope of the agents’ authority, not the standard of skill and care required. Members’ agents were responsible to names for any failure to exercise reasonable skill and care by managing agents to whom underwriting was delegated and an independent tortious duty of care between parties is not necessarily prevented by the existence of a contract between them. -

J Rothschild Assurance v Collyear & Others Commercial Court

Plaintiffs sought to identify cases of pensions mis-selling and notified insurers of the 2,500 cases they had under review. Held that they were more than justified in saying that there were circumstances which might give rise to a claim against them. - Citation: [1999] 1 Lloyds Rep. IR 6

Jarvis v Swan Tours Ltd (1973) QB 233

Mr Jarvis had booked a holiday through Swan Tours. The brochure had described the holiday as a “house-party”. During the first week there were only 13 people on the holiday and for the second week he was on his own. To add to this the skiing was not good and the bar was only open for one night. He claimed damages as the holiday had failed to live up to expectations. It was held that in appropriate cases where one party contracts to provide entertainment and enjoyment, including a contract for a holiday, damages can be recovered for mental distress and vexation. Also, the descriptions in the brochure were representations or warranties, and since the 1967 Act it was no longer necessary to decide which since damages were available for either. Mr Jarvis, a solicitor, was awarded £125. -

John D Wood Ltd v Knatchbull (2003) Times 01-16

John D Wood, as estate agent, claimed for the fee due on selling Knatchbull’s property. Knatchbull counterclaimed that the agent had failed to inform him of a nearby similar property having sold for much more. Held: The agent could not be under a duty to tell a client of every scrap of information, but did have a duty to advise on significant changes, such as this. -

Junior Books Ltd v Veitchi & Co. Ltd (1982).520HL

Junior Books commissioned a factory, and their architects nominated Veitchi, as specialist subcontractors, to lay a concrete floor. The subcontractors entered into a contract with the main contractor, but not with the owners. The floor developed cracks and Junior Books brought an action against the subcontractors in negligence. They claimed the cost of replacing the floor and as well as consequential economic loss. The subcontractors claimed that in the absence of a contractual relationship, and as the floor was not a danger to persons or other property, there was no cause of action. The Court of Session held that the owners were entitled to proceed with the action. The subcontractors appealed on the basis that subcontractors were similar to manufacturers or suppliers of goods or work, and the decision would give the same warranty regarding the goods to an indeterminate class of potential litigants. The House of Lords found against the subcontractors. They maintained that there was physical damage as well as consequential economic loss and proximity. The subcontractors were nominated by the owners, and must have known that the owners relied on their skill and experience, therefore the damage was a direct foreseeable result of their negligence. -

Law Society -v- Sephton & Co (a Firm) and Others - [2006] UKHL 22

Prior to 1996 Sephton had been the accountants to a firm of solicitors. The solicitors had a member involved in a substantial fraud. Many calls were later made upon the compensation fund operated by the Law Society, who sought recovery in turn from Sephton. The accountants pleaded limitation in the court of first instance, which was upheld. The Court of Appeal overturned this ruling and the case went to the House of Lords. Held: The Law Society faced a contingent liability on the fund, but that was insufficient to start the limitation period. Damage was an essential part of a claim for negligence, and the damages were not suffered until the Society received a claim. A cause of action in tort did not accrue in the Law Society's favour against Sephtons until the Law Society first received a claim on the Compensation Fund from a client whose money had been misappropriated. The limitation period began at that point. -

McManus Seddon Runhams and Others v European Risk Insurance Company [2013] EWHC 18(Ch)

McManus Seddon took over work and goodwill of Runhams in June 2011. Runhams had taken over Sekhon Firth in October 2010. MS were the successor practice as far as insuring risk of claims against Sekhon Firth. In April 2011 three former members of SF were subject to proceedings before the Solicitors Disciplinary Tribunal. ERIC were insurers from 1st October 2011. Between Nov 2011 and May 2012 17 claims were made relating to SF work. A review OF 110 files was carried out by an independent regulatory consultancy which revealed a consistent pattern of breaches by SF. The Insured notified all 5000 files of SF work. Notification declined by insurers. The judge followed the decisions in Rothschild and Kidsons. The “blanket” notification could not be declined by the Insurer, although the insured did not obtain the declaratory relief they sought. -

Merrett v Babb (2001) EGLR 145

In 1992, a firm received instructions from a building society to inspect a property and to prepare and submit a mortgage valuation report based on that inspection. Mr Babb carried out the inspection on behalf of the firm, where he was employed as a branch manager. Although Mr Babb framed his report in the first person plural (i.e. on behalf of his firm), and a continuation sheet was written on the firm’s stationery, he gave the personal statement required by the Building Societies Act and signed both the pro-forma sheet and the continuation sheet, adding his own name and professional qualifications. The firm’s principal was made bankrupt two years after the report in question was prepared. Following this, the firm’s indemnity insurance cover was cancelled without run-off cover. After having bought the property, Ms Merrett had reason to find the valuation report was negligent and she sought redress from Mr Babb as the signatory of the report. Mr Babb accepted that the purchaser would place reliance on his report but argued that any duty he owed was to his employer and not to the purchaser, and that the latter had in fact relied on the report of the firm and not himself personally. The key question to be resolved, then, in the course of the judicial process was whether Mr Babb, as an employee of the firm which had been engaged to carry out the required work, owed a direct duty of care to Ms Merrett. It was held that Mr Babb was indeed the professional person on whom the purchaser relied to exercise proper skill and judgement. This was despite the fact that no reference to Mr Babb was made in the mortgage report supplied by the building society to the purchaser. -

Murphy v Brentwood District Council (1991) AC398

Mr Murphy had purchased his house from the local council. The house developed serious cracks which appeared in the internal walls, wet patches that appeared in the lawn, and a gas pipe and soil pipe that cracked. It was found that damage had occurred as the result of the design of a concrete raft being defective and unsuitable for the site. The council had negligently relied on consulting engineers who had approved the design of the raft as suitable. The House of Lords found, based on public policy, that there was no course of action in tort. -

Nigel Ingram v Elegant Resorts Ltd (2001)

Mr and Mrs Ingram brought an action for loss of holiday and distress after they were stung by jellyfish in the sea near their hotel in Thailand. They alleged that the defendant holiday company was vicariously liable for the defective supply of hotel services and should have been aware of the risk of jellyfish swarming and multiplying in the sea near the hotel. The court awarded the claimants wasted expenditure of £2,000 for part of the holiday, and £500 to the claimant and his wife for distress. -

Nykredit Mortgage Bank plc v Edward Erdman Ltd (No. 2) (1997), UKHL 53

In March 1990, Erdman were required to value a property on the security of which Nykredit were considering advancing money. They valued the property at £3.5 million and Nykredit advanced £2.45m to the borrower. The borrower defaulted at once, and the Nykredit obtained possession of the property and sold it, in February 1993, for £345,000, the market having fallen substantially. Nykredit brought an action against Erdman for damages in negligence and breach of contract. They maintained they would not have advanced the loan if they had known the true value of the property. The judge found that at the date of valuation the property had been worth £2million, or at most £2,375,000. He gave judgment for Nykredit for a sum including damages in respect of their loss attributable to market fall. The Court of Appeal dismissed an appeal by Erdman. The House of Lords allowed the appeal, holding that the damages should be reduced to the difference between the valuation and the true value of the property at the date of valuation, which was subsequently agreed at £2.1m. On the question of interest, the House of Lords decided that interest should run from the date of accrual of the cause of action in tort. In this case it was the date of the transaction. -

Phelps v Hillingdon London Borough Council

Educational psychologist was in breach of duty of care in failing to diagnose dyslexia and that the absence of a contract was irrelevant. There was a duty of care owed by the employees of the local education authority to students in meeting their educational needs. The local authority was held to be vicariously liable. Damages of £44,000 were awarded for loss of earnings and employment prospects. - (2000) 4 All ER 504 (HL)

Rubenstein v HSBC Bank plc [2012] EWCA Civ 1184

Rubenstein had sold his house and instructed the bank that he required an investment that would not risk his capital. The bank recommended AIG’s ERVF – the only product recommended. In 2008 financial market turmoil led to a fall in value. Held that a fall in the value of the investment was foreseeable - it was mentioned in the product literature. The advice given by HSBC had caused Rubenstein’s loss The fact that because of market forces the loss was larger than might have been foreseen did not matter SAAMCo did not apply – HSBC had recommended the investment not just given information -

Ruxley Electronics & Construction Limited v Forsyth (1995).AC344

Mr Forsyth engaged the plaintiff builder to build a swimming pool. It was an express term of the contract that the deepest point of the pool should be 7ft 6in. When constructed the maximum depth of the pool was only 6ft 9in. The trial judge thought it unreasonable for the pool to be demolished and rebuilt and awarded Mr Forsyth £2,500 as special damages for loss of amenity. The Court of Appeal disagreed and awarded Mr Forsyth £21,560, the full cost of demolishing and rebuilding the pool. The House of Lords held that the cost of reinstatement was economically wasteful and not the only possible measure of damage for defective performance under a building contract. In this case it was not the appropriate measure of damage where the expenditure would be out of all proportion to the benefit to be obtained. Accordingly the House of Lords held that Mr Forsyth was not entitled to the cost of demolition and rebuilding the pool. Further there was no diminution in value as a result of the pool being 9in shallower than it should have been. The House of Lords also held that the trial judge had been entitled to make an award for loss of pleasure and amenity on the grounds that the contract was one for the provision of a pleasurable amenity. -

South Australia Asset Management Corporation -v- York Montague Ltd; [1997] AC 191 - Gazette 1996-09-04 - Times 1996-06-24 - [1996] 3 WLR 87

This was one of the many cases arising out of the 1980’s property boom and subsequent fall. York Montague had valued some Docklands property at £15 million. SAAMCO relied on this to finance a development, which was defaulted on. The sale of the site realized less than £3million and SAAMCO claimed £9,753million with interest against York. The case for establishing causation was the "but-for" test in which a defendant will be liable only if a claimant’s damage would not have occurred "but for" his negligence. Alternatively, the defendant will not be liable if the damage would, or could have occurred anyway, regardless of his or her negligence. The illustration was used:- “A mountaineer about to undertake a difficult climb is concerned about the fitness of his knee. He goes to a doctor who negligently makes a superficial examination and pronounces the knee fit. The climber goes on the expedition, which he would not have undertaken if the doctor had told him the true state of his knee. He suffers an injury which is an entirely foreseeable consequence of mountaineering but has nothing to do with his knee. The doctor's negligence does result in the mountaineer running a risk which he otherwise would not have done, but this is insufficient to incur liability. The purpose of the doctor's duty to take care is to protect the mountaineer against injuries caused by the failure of the knee, not rock falls. Even though the injury might be reasonably foreseeable, the doctor is not liable”. It was held that a valuer provides an estimate of the value of the property at the date of the valuation. He does not undertake the role of a prophet. It is unfair that merely because for one reason or other the lender would not otherwise have lent, the valuer should be saddled with the whole risk of the transaction, including a subsequent fall in the value of the property. -

Synergy Health (UK) Ltd v CGU Insurance (t/a Norwich Union) & Others (2010) EWHC 2583 (Comm)

Synergy was insured for material damage and business interruption for the years 2005/06, and renewed for the years 2006/07. Following an insurers’ risk assessment in 2005, Synergy confirmed by letter that work to install an intruder alarm would be completed by the end of December but it was not installed by the time of a fire in February 2007. Insurers sought to avoid the policy on the grounds of misrepresentation. The court concluded that in this case, the insured was well aware of the need to provide full disclosure of all material matters and not make any misrepresentation, and that the failure to install the alarm was caused by internal miscommunications at the insured – a comedy of errors. However, the insured were successful in their action against insurers as the insurers could not show inducement. The judge went on to deal with the claim against the brokers in the event that the claim was pursued in a higher court. He found that in the circumstances there was not an immutable requirement to give oral advice regarding the failure to warn regarding non-disclosure as this was too inflexible. Also, any such breach would not have been causative of the loss. and that with the rather than any breach of duty on the part of the broker. As such, each of the allegations of negligence against the broker failed. - [2010] EWHC 2583 (Comm)

The Football League Ltd v edge ellison (2006) EWHC 1462 (Ch)

In 2000 the Football League put its broadcasting rights out to tender using various external advisors, including edge ellison for legal advice. A number of broadcasters were bidding for the rights, including ITV Digital. On 14th June 2000 the four broadcasters still apparently interested in the Football League’s rights were given 24 hours to put forward their final bids. Only ITV Digital submitted their bid by the deadline. They paid £315 million for a three year contract even though they were the only bidder. ITV Digital went into administration in March 2002, owing £178.5 million under the broadcast rights contract. The Football League launched an action against Carlton and Granada, who were ITV Digital’s parents. However, they had not been parties to the contract so the Football League turned the £140 million pound action on to edge ellison. The action failed, but a key issue had been raised as to whether edge ellison owed a duty to the Football League proactively to seek its instructions as to whether parental guarantees should be sought. It was held that edge ellison owed no such duty, but Mr Justice Rimer did find that on 15th June 2000 they should have asked for a copy of the contract on which they were advising. Although it was unlikely that such action would have had any impact on the outcome. The decision was welcomed by professionals and their insurers as the High Court took a narrow approach to the scope of duty, confirming that there is no such thing as a general retainer and that only in limited circumstances will a solicitor's duties go beyond the express terms of his retainer. The decision also evidences a serious continued willingness to curtail the circumstances in which a solicitor will bear responsibility for business decisions reached by commercially astute clients. -

Verity and Spindler v Lloyds Bank plc (1995) CLC 1557

A bank manager advised Verity and Spindler to buy a particular property, saying that it would be a viable project for re-development, having previously advised them to turn down another property. Verity and Spindler acted on the advice and borrowed from the bank to fund the work. The work took much longer than anticipated causing them financial loss. It was held that the bank manager had assumed the role of financial adviser and therefore also owes a duty to advise on the wisdom of the proposition. -

White and Another -v- Jones and Another [1995] 2 AC 207

A solicitor was instructed to prepare a will but delayed in so doing. In the meantime the testator died. Lord Browne-Wilkinson stated ‘By accepting instructions to draft a will, a solicitor does come into a special relationship with those intended to benefit under it in consequence of which the law imposes a duty to the intended beneficiary to act with due expedition and care in relation to the task on which he has entered the assumption of responsibility..’ -

Whitehouse v. Jordan (1980) WLR 246

Mrs. Whitehouse was having difficulties with her labour. Mr. Jordan was called out late at night. He had never seen her before. He attempted five or more times to deliver her baby using forceps but eventually had to deliver by caesarean section. As a result, the child was profoundly handicapped. The fact that brain damage was caused in the course of delivery was never in question, but there was a lack of agreement among eminent experts about whether what was done was accepted medical practice. Mr. Jordan was found not to have been negligent, and Mrs. Whitehouse was left to bring up her handicapped child, without any compensation. The case was not resolved until the child was 11 years old. However, to have found Mr. Jordan negligent would have been unjust. He came to the case late at night for the very first time and took a course of action that many medical experts agreed was the right one. -

Yianni v Edwin Evans (1982) QB 438

Mr Yianni applied to a building society for a mortgage advance of £12,000 for the purchase of a property. The building society appointed an independent surveyor to undertake a valuation of the property. The surveyor reported that the property was adequate security for the mortgage. Mr Yianni did not see a copy of the report although he paid the fee for the valuation. The building society made the required mortgage advance and the purchase went ahead. It subsequently came to light that the surveyor had failed to detect serious structural defects that rendered the property virtually worthless. Mr Yianni sued the surveyor directly. The judge found the surveyor liable, even though the building society, and not the purchaser, had employed him. The surveyor knew, however, that the advance would be granted only if his report were favourable and that it was unlikely the purchaser would obtain his own survey. The surveyor was therefore held to have a duty to both Yianni and to the building society. Since this decision, lenders have made valuation surveys available to prospective purchasers, thus widening the liability of surveyors. -