Court Of Appeal Clarifies 'Advice' Vs 'Information' Distinction When Applying SAAMCO Principle In Advisers' Negligence Cases

The Court of Appeal has confirmed that an auditor was not liable for break costs incurred as a result of its negligent advice in relation to the accounting treatment of interest rate swaps, as those costs fell outside the scope of the auditor's duty of care - upholding the decision of the High Court (considered here), but on different grounds: Manchester Building Society v Grant Thornton UK LLP [2019] EWCA Civ 40.

The judgment helpfully clarifies the approach to be taken in cases involving the application of the principle established in South Australia Asset Management Corpn v York Montague Ltd [1997] AC 191 (SAAMCO) as expanded upon in Hughes-Holland v BPE Solicitors [2017] UKSC 21.

In particular, the court should consider at the outset whether it is anadvice or aninformation case. It will be an advice case if the adviser is responsible for considering what matters should be taken into account in deciding whether to enter into the transaction, and for guiding the whole decision-making process...