Thanks James.

The Rubenstein decision is right.

The defendant advised on the particular investment and the fault arose out
of the client wanting a no-risk investment but getting a some-risk
investment. Although the extent of the market crash was surprising to
everyone, it clearly fell within the scope of duty and was not too remote
because it was the manifestation of the risk of the investment, i.e. the
thing that the customer didn't want. The interesting feature which gave the
C of A (Rix LJ's judgment) pause was that the customer had only expected to
need the investment for a year, the bank knew that, but in fact the customer
held it for three years and then the crash happened. The Court rejected the
bank's argument that its scope was limited to consequences within a year,
because the one year the customer was anticipating was never certain (it was
always contingent upon finding a house) and of course the customer keeping
the money in the investment was related to believing it was risk-free.
Contrast Flaux J in Camerata Property Inc v Credit Suisse Securities
(Europe) Ltd [2012] EWHC 7 (Comm) (Flaux J) at paras 100 to 103, rightly
distinguished in Rubenstein as in that case the negligence wasn't to do with
the risk of default but that was the loss-causing event that occurred.

There's also a collateral advantage point discussed at the end of
Rubenstein: the third party investment provider paid out an ex gratia
payment and that was taken into account as part of a continuous transaction
when calculating loss, Needler Finance v Taber [2002] 3 All ER 501 (Morritt
VC) distinguished.

Best,

Adam Kramer
3 Verulam Buildings
Gray’s Inn, London, WC1R 5NT

 

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-----Original Message-----
From: James Lee [mailto:j.s.f.lee@bham.ac.uk]
Sent: 12 September 2012 12:39
To: obligations@uwo.ca
Subject: English Court of Appeal on Remoteness

Dear Colleagues,

The Court of Appeal has handed down judgment in Rubenstein v HSBC Bank Plc
[2012] EWCA Civ 1184 http://www.bailii.org/ew/cases/EWCA/Civ/2012/1184.html,
involving a claim by a consumer whose investment with HSBC did not work out
because of the global financial crisis. The case raises issues of causation,
foreseeability and remoteness, and the leading authorities are surveyed by
Rix LJ, and the Court differs from first instance judge, allowing the
appeal. Mr Rubenstein wins.

Best wishes,
James

--
James Lee
Lecturer and Director of Careers
Academic Fellow of the Inner Temple
Birmingham Law School
University of Birmingham
Edgbaston
Birmingham
B15 2TT, United Kingdom

Tel: +44 (0)121 414 3629
E-mail:
j.s.f.lee@bham.ac.uk<mailto:j.s.f.lee@bham.ac.uk><mailto:j.s.f.lee@bham.ac.u
k>


Web: http://www.birmingham.ac.uk/staff/profiles/law/lee-james.aspx

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