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It takes two to SAAMCO!

05 January 2021
This article explores the significance of two imminent Supreme Court decisions concerning the scope of duty in claims involving professional negligence.

During October and November 2020 the Supreme Court heard submissions in two separate appeals which, despite initially seeming unrelated, are connected by the important SAAMCO 'scope of duty' principle. Vicki Swanton and Alastair Prince consider the implications of these much anticipated judgments which could have far-reaching implications upon those involved in professional negligence litigation, particularly for those in the healthcare arena.

Introduction

The SAAMCO principle established in the landmark professional negligence case of South Australia Asset Management Corporation v York Montague Ltd [1997] ] UKHL 10 ("SAAMCO") placed important restrictions on the losses which could be claimed  against a professional who supplies inaccurate information,  such losses  being limited by the scope of the duty owed.  

In SAAMCO, which concerned a dispute between a bank and property valuer, Lord Hoffmann used the analogy of an injured mountaineer to demonstrate the scope or extent of the duty of care that could be owed by a professional person. The distinction he made was between a professional having a duty to provide information (to enable the client to decide on a plan of action) versus a duty to advise (directing the client as to the action they should take). A professional with a duty to inform will only be responsible for the foreseeable consequences of that information being wrong. A professional with a duty to advise will be responsible for all the foreseeable consequences of that course of action. Returning to the analogy of the injured mountaineer, consider a patient consulting a doctor with concerns about his knee and the doctor negligently pronouncing the mountaineer fit. The mountaineer embarks on his climb (which, but for the doctor's error, he would have foregone) and sustains a climbing injury which was nothing to do with his knee. Lord Hoffman's distinction means that as the doctor was asked to provide information as to the knee only, not to advise as to all foreseeable risks of climbing, they would not be liable for the injury.

The Grant Thornton Case

In Manchester Building Society v Grant Thornton UK LLP [2019] EWCA Civ 40, accountants, Grant Thornton were alleged to have provided negligent advice regarding the accounting classification for hedged lifetime mortgages. As a result, Manchester Building Society claimed losses of £32.7 million. The issue in question was whether Grant Thornton had provided information or advice, if the latter they would be liable for the market losses. 

The Meadows Case

In  Khan v Meadows [2019] EWCA Civ 152  ('Meadows') Dr Khan was sued for clinical negligence by Mrs Meadows who wished to find out whether she was at risk of giving birth to a child with a blood disorder. She underwent a blood test which was correctly reported as normal, however, when her GP notified her of the result she failed to convey that more (genetic) tests would need to be done before she could proceed with a pregnancy without the fear of a blood disorder being passed on to her child. Mrs Meadows subsequently gave birth to a child who not only suffered from haemophilia (a blood disorder), but was also diagnosed with autism. It was accepted on behalf of Dr Khan, applying the SAAMCO principle, that the losses stemming from the condition of haemophilia were recoverable, on the basis that the information conveyed in relation to the blood disorder was negligent, but disputed that Dr Khan's duty extended to advising as to other risks associated with pregnancy so that she was not additionally liable for losses associated with the child's autism. 

Is providing information or advice a valid control mechanism?

The starting point for both of appeals is to define the precise scope of the duty of care which is owed. 

Historically, SAAMCO has been applied to commercial professional negligence claims but typically has not featured in the clinical negligence arena. Meadows changes that and argues that to fail to apply it in appropriate cases misses out an important step in the analysis of the  negligence. Effectively, the scope of duty test is a step that links the duty of care owed to the extent of losses that are recoverable, and that link to damages is broken where losses are coincidental.

For professionals, particularly in healthcare, the awaited judgments will be critical in determining whether a distinction is recognised between the provision of information to a client/patient versus advice. The difference could have huge financial implications for those involved in professional negligence litigation. Claimants will no doubt argue that there are enough hurdles to be overcome and that in particular the simple 'but for' test is sufficient to limit recoverable damages. Defendants, still reeling from the impact of the movement of the discount rate into negative territory, will see the scope of duty argument as a potential 'lifesaver' in cases where the distinction can be legitimately applied and the extent of financial losses limited.

If the SAAMCO principle is upheld and the approach taken by the Court of Appeal followed by the Supreme Court then the questions to be asked will be:-

  1. What was the purpose of the procedure/information/advice alleged to have been provided negligently?
  2. What was the appropriate apportionment of risk?
  3. What losses would have been sustained if the correct information/advice had been conveyed?

We await the judgments of the identically constituted supreme court with anticipation, if not the level of excitement of those celebrating the winner of the glitterball trophy in Blackpool!

Finally, for those who are watching developments in the wrongful conception and birth space, the preliminary issue dealt with by Mrs Justice Lambert on 21 December 2020 in the matter of Evie Toombes v Philip  Mitchell [2020]  provides an interesting read as to the scope for a disabled child themselves to bring a claim under the Congenital Disabilities (Civil Liability) Act 1976 (s.1 (2)(a), rather than the claim being limited to an action by a parent for the cost of dealing with those disabilities and will explored in a forthcoming article.

Vicki Swanton- Healthcare Partner 
Alastair Prince- Healthcare Paralegal


For further insight and commentary on other leading authorities in this area please see our legal updates below:

Further Reading

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