28 WWW.LAWYER-MONTHLY.COM | FEB 2022 A CAUTIONARY TALE FOR PROFESSIONAL ADVISERS OVER DUTY OF CARE Over 25 years ago the seminal decision in South Australia Asset Management Corporation v York Montague Ltd (“SAAMCO”) set down the principle that a professional is not liable in negligence or in contract for loss that falls outside the scope of its duty of care. Whilst this so-called SAAMCo principle remained settled law until very recently, practitioners and the Courts have regularly grappled with its application in practice to the particular facts of each case and a wealth of case law followed in its wake. However, perhaps in recognition of the convoluted case law in this area, the scope of duty question was recently re-cast by the Supreme Court decisions in Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20 (“MBS”); and Khan v Meadows [2021] UKSC 21 (“Khan”) and a new test for determining the scope of duty of care of a negligent professional was set down. Thanks to the recent Privy Council decision of Charles B Lawrence & Associates v Interco Commercial Bank Ltd (Trinidad and Tobago) [2021] UKPC 30, practitioners now have helpful guidance on how the Courts will apply the re-cast test for determining scope of duty of care. In particular, this decision shows a willingness by the Courts to depart from SAAMCo principles in favour of the new approach where the facts require it. Background Intercommercial Bank Ltd (the “Bank”) received a request from a borrower for a loan, which was to be secured by way of a mortgage over a piece of land owned by Rafferty Development Limited (the “Guarantor”), who would also guarantee the loan. The Bank instructed Charles B Lawrence & Associates (“CBL”) to value the land for secured lending purposes. CBL valued the land on the basis that: (a) good marketable title could be shown; (b) planning permission would be obtained for the purposes of commercial development; and (c) that the land was unoccupied. CBL negligently assessed the value of the land at $15 million and, in reliance on that valuation, the Bank loaned $3 million to the A Cautionary Tale for Professional Advisers Duty of Care Laura Matthews Partner, Rosling King LLP 55 Ludgate Hill, London EC4M 7JW Tel: +44 0207 246 8031 E: laura.matthews@rkllp.com www.rkllp.com Rosling King partner Laura Matthews examines the implications of a key Privy Council decision on the test for ascertaining the scope of a professional’s duty of care in negligence claims. Laura Matthews is a partner in Rosling King’s Dispute Resolution Group. Laura has significant experience acting for lenders, financial institutions and loan servicers in the field of complex and high value professional negligence. Rosling King LLP is a UK-based law firm specialising in serving the needs of financial institutions and private equity, real estate and construction clients. Over
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