Recovery of third party losses - Revision history

Editor at 16:51, 18 August 2021

2021-08-18T16:51:19Z

← Older revision		Revision as of 16:51, 18 August 2021
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	Lord Jauncey and Lord Clyde appeared to be saying that carrying out repairs was a precondition to recovery and that consequential losses were not recoverable unless they came within the expenditure of the repair costs. Lord Goff could see no reason why consequential losses should not be recovered, for example delay damages. As to the first question he felt it appropriate to have regard to such matter when the reasonableness of the plaintiffs claim to damages was under consideration (per Lord Lloyd in Ruxley Electronics v Forsyth). Lord Millet considered it to be a question of reasonableness.		Lord Jauncey and Lord Clyde appeared to be saying that carrying out repairs was a precondition to recovery and that consequential losses were not recoverable unless they came within the expenditure of the repair costs. Lord Goff could see no reason why consequential losses should not be recovered, for example delay damages. As to the first question he felt it appropriate to have regard to such matter when the reasonableness of the plaintiffs claim to damages was under consideration (per Lord Lloyd in Ruxley Electronics v Forsyth). Lord Millet considered it to be a question of reasonableness.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Assignment.		* Assignment.
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	* Joinder.		* Joinder.
	* Legal and equitable assignment.		* Legal and equitable assignment.
		+	* Onerous contract.
	* Reasonable skill and care.		* Reasonable skill and care.
	* Third party rights.		* Third party rights.

	[[Category:DCN_Case_Law]] [[Category:DCN_Commentary]] [[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Case_law]] [[Category:Property_law]] [[Category:Contracts_/_payment]]		[[Category:DCN_Case_Law]] [[Category:DCN_Commentary]] [[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Case_law]] [[Category:Property_law]] [[Category:Contracts_/_payment]]

Designing Buildings at 09:52, 5 October 2020

2020-10-05T09:52:36Z

← Older revision		Revision as of 09:52, 5 October 2020
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	* Third party rights.		* Third party rights.

−	[[Category:~~Case_law~~]] [[Category:~~DCN_Case_Law~~]] [[Category:Property_law]] [[Category:Contracts_/_payment]]	+	[[Category:DCN_Case_Law]] [[Category:DCN_Commentary]] [[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Case_law]] [[Category:Property_law]] [[Category:Contracts_/_payment]]

Editor at 14:25, 28 July 2016

2016-07-28T14:25:13Z

← Older revision		Revision as of 14:25, 28 July 2016
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	Contrast this with the House of Lords decision in Ruxley Electronics v Forsyth where it was accepted that 'the courts are not normally concerned with what a plaintiff does with his damages' (see also the Court of Appeal in Dean v Ainley).		Contrast this with the House of Lords decision in Ruxley Electronics v Forsyth where it was accepted that 'the courts are not normally concerned with what a plaintiff does with his damages' (see also the Court of Appeal in Dean v Ainley).

−	NB See also St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd which includes additional analysis in relation to the position of the assignee where there was no breach of contract prior to the~~<br />~~	+	NB See also St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd which includes additional analysis in relation to the position of the assignee where there was no breach of contract prior to the
−	assignment.	+
		+	assignment.

	= Alfred McAlpine Construction Limited v Panatown Limited (2000) =		= Alfred McAlpine Construction Limited v Panatown Limited (2000) =
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	* Breach of contract.		* Breach of contract.
	* Collateral warranties.		* Collateral warranties.
		+	* Common law.
	* Consequential losses.		* Consequential losses.
−	* ~~Contract~~.	+	* Construction contract.
	* Contribution and apportionment.		* Contribution and apportionment.
	* Damages.		* Damages.
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	* Third party rights.		* Third party rights.

−	[[Category:Case_law]] [[Category:Property_law]] [[Category:Contracts_/_payment]]	+	[[Category:Case_law]] [[Category:DCN_Case_Law]] [[Category:Property_law]] [[Category:Contracts_/_payment]]

Editor at 16:26, 22 January 2016

2016-01-22T16:26:27Z

Show changes

Designing Buildings at 12:42, 2 September 2013

2013-09-02T12:42:49Z

← Older revision		Revision as of 12:42, 2 September 2013
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	*Fitness for purpose.		*Fitness for purpose.
	*GUS Property Management Ltd v Littlewoods Mail Order Stores Ltd.		*GUS Property Management Ltd v Littlewoods Mail Order Stores Ltd.
		+	*Legal and equitable assignment.
	*Reasonable skill and care.		*Reasonable skill and care.
	*Third party rights.		*Third party rights.

Designing Buildings at 09:24, 17 August 2013

2013-08-17T09:24:11Z

← Older revision		Revision as of 09:24, 17 August 2013
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	Contrast this with the House of Lords decision in Ruxley Electronics v Forsyth where it was accepted that 'the courts are not normally concerned with what a plaintiff does with his damages' (see also the Court of Appeal in Dean v Ainley).		Contrast this with the House of Lords decision in Ruxley Electronics v Forsyth where it was accepted that 'the courts are not normally concerned with what a plaintiff does with his damages' (see also the Court of Appeal in Dean v Ainley).
		+
		+	NB See also St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd which includes additional analysis in relation to the position of the assignee where there was no breach of contract prior to the<br/>assignment.

	= Alfred McAlpine Construction Limited v Panatown Limited (2000) =		= Alfred McAlpine Construction Limited v Panatown Limited (2000) =
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	Lord Griffiths came to the same result, but on the 'broader ground' that there was a principle that the original contracting party had suffered a loss because he had not received the bargain he had contracted for.		Lord Griffiths came to the same result, but on the 'broader ground' that there was a principle that the original contracting party had suffered a loss because he had not received the bargain he had contracted for.
		+
		+	= Darlington Borough Council v Wiltshier Northern Ltd =

	In Darlington Borough Council v Wiltshier Northern Ltd, Wiltshier, a construction company, entered into two contracts with Morgan Grenfell (Local Authority Services) Ltd for the construction of a recreational centre for and on a site owned by Darlington Borough Council. As pre-agreed, Morgan Grenfell assigned to Darlington all its contractual rights and causes of action against Wiltshier. Darlington claimed damages against Wiltshier for breach of contract relating to building defects. The court held that Darlington, as assignee, was not entitled to claim damages other than nominal damages. The Court of Appeal held that as the building contracts, to the knowledge of both parties, were entered into for the benefit of Darlington and it was foreseeable that damage caused by breach of those contracts would cause loss to Darlington, Darlington as assignee of Morgan Grenfell's rights against Wiltshier, could claim substantial damages for loss caused by Wiltshier's breaches of contract and the damages should be assessed on the normal basis as if Darlington had been a party to the original contracts.		In Darlington Borough Council v Wiltshier Northern Ltd, Wiltshier, a construction company, entered into two contracts with Morgan Grenfell (Local Authority Services) Ltd for the construction of a recreational centre for and on a site owned by Darlington Borough Council. As pre-agreed, Morgan Grenfell assigned to Darlington all its contractual rights and causes of action against Wiltshier. Darlington claimed damages against Wiltshier for breach of contract relating to building defects. The court held that Darlington, as assignee, was not entitled to claim damages other than nominal damages. The Court of Appeal held that as the building contracts, to the knowledge of both parties, were entered into for the benefit of Darlington and it was foreseeable that damage caused by breach of those contracts would cause loss to Darlington, Darlington as assignee of Morgan Grenfell's rights against Wiltshier, could claim substantial damages for loss caused by Wiltshier's breaches of contract and the damages should be assessed on the normal basis as if Darlington had been a party to the original contracts.
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	The judge also considered that what he described as the Linden Gardens exception was not confined to building contracts but could be extended to contracts involving the provision of professional services.		The judge also considered that what he described as the Linden Gardens exception was not confined to building contracts but could be extended to contracts involving the provision of professional services.

−	In Panatown, the House of Lords confirmed the 'narrow ground' basis of recovery of third party losses and approved the 'broader ground' principles enunciated by Lord Griffiths and accepted by Steyn LJ. There was however a 'sting in the tail' for Panatown. Their Lordships held by a majority (Lord Goff and Lord Millett dissenting) that as regards both the 'narrow ground' and the 'broad ground', Panatown's claims failed because UIPL had a direct cause of action against McAlpine because of the DCD, even though the DCD provided for different and less onerous obligations than the principal contract and only gave subsidiary remedies to UIPL.	+	In Panatown (Alfred McAlpine Construction Ltd v Panatown Ltd - above), the House of Lords confirmed the 'narrow ground' basis of recovery of third party losses and approved the 'broader ground' principles enunciated by Lord Griffiths and accepted by Steyn LJ. There was however a 'sting in the tail' for Panatown. Their Lordships held by a majority (Lord Goff and Lord Millett dissenting) that as regards both the 'narrow ground' and the 'broad ground', Panatown's claims failed because UIPL had a direct cause of action against McAlpine because of the DCD, even though the DCD provided for different and less onerous obligations than the principal contract and only gave subsidiary remedies to UIPL.

	Lord Clyde considered that 'there was a plain and deliberate course adopted whereby the company with the potential risk of loss was given a distinct entitlement directly to sue the contractor and the professional advisers' and therefore he 'did not consider that an exception can be admitted to the general rule that substantial damages can only be claimed by a party who has suffered substantial loss'. Lord Clyde was not impressed with the 'broader ground' and did not feel it necessary to express a view on the effect of the DCD on that principle of recovery.		Lord Clyde considered that 'there was a plain and deliberate course adopted whereby the company with the potential risk of loss was given a distinct entitlement directly to sue the contractor and the professional advisers' and therefore he 'did not consider that an exception can be admitted to the general rule that substantial damages can only be claimed by a party who has suffered substantial loss'. Lord Clyde was not impressed with the 'broader ground' and did not feel it necessary to express a view on the effect of the DCD on that principle of recovery.
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	*Consequential losses.		*Consequential losses.
	*Contract.		*Contract.
−	*Contribution and apportionment.	+	*Contribution and apportionment.
	*Damages.		*Damages.
	*Defects.		*Defects.

Designing Buildings at 06:48, 15 August 2013

2013-08-15T06:48:01Z

← Older revision		Revision as of 06:48, 15 August 2013
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	*Consequential losses.		*Consequential losses.
	*Contract.		*Contract.
		+	*Contribution and apportionment.
	*Damages.		*Damages.
	*Defects.		*Defects.

Designing Buildings at 05:33, 15 August 2013

2013-08-15T05:33:50Z

← Older revision		Revision as of 05:33, 15 August 2013
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	Subsequent to practical completion of the podium deck on 1 November 1979, substantial defects were discovered in the structure requiring remedial costs in excess of £800,000. Both Corporation and Investments brought proceedings against McAlpine to recover the cost of the remedial works.		Subsequent to practical completion of the podium deck on 1 November 1979, substantial defects were discovered in the structure requiring remedial costs in excess of £800,000. Both Corporation and Investments brought proceedings against McAlpine to recover the cost of the remedial works.

−	The court held in Linden Gardens that the claimant was entitled to recover the cost of remedial works carried out by Stock Conversions in 1985 (£22,205) and also the works carried out by Linden Gardens (£236,000) after the date of the assignment of the rights of action in January 1987. In St Martins the court held, inter alia, that as Corporation had sold the property for market value to Investments, Corporation could only recover nominal damages. In both Linden Gardens and St Martins Property Corporation the purported assignments of the contractual rights were held to be invalid ~~for reasons set out in paragraph 4.43~~, therefore the courts were looking at the right to recover damages by the original contracting party after a disposal of the relevant property at market value and where the remedial costs had been incurred, in part or in whole, by a third party. The House of Lords confirming the Court of Appeal's decision (although reversing the Court of Appeal on the meaning of the contractual prohibition) held that a party to a building contract was entitled to recover substantial damages from the contractor in breach even though that party had disposed of the damaged property and had not incurred the remedial costs, since the parties were to be treated as having entered into the contract on the footing that the original contracting party would be entitled to enforce contractual rights for the benefit of those who suffered from defective performance but who, under the terms of the contract, could not acquire any right to hold the defendants liable for breach.	+	The court held in Linden Gardens that the claimant was entitled to recover the cost of remedial works carried out by Stock Conversions in 1985 (£22,205) and also the works carried out by Linden Gardens (£236,000) after the date of the assignment of the rights of action in January 1987. In St Martins the court held, inter alia, that as Corporation had sold the property for market value to Investments, Corporation could only recover nominal damages. In both Linden Gardens and St Martins Property Corporation the purported assignments of the contractual rights were held to be invalid, therefore the courts were looking at the right to recover damages by the original contracting party after a disposal of the relevant property at market value and where the remedial costs had been incurred, in part or in whole, by a third party. The House of Lords confirming the Court of Appeal's decision (although reversing the Court of Appeal on the meaning of the contractual prohibition) held that a party to a building contract was entitled to recover substantial damages from the contractor in breach even though that party had disposed of the damaged property and had not incurred the remedial costs, since the parties were to be treated as having entered into the contract on the footing that the original contracting party would be entitled to enforce contractual rights for the benefit of those who suffered from defective performance but who, under the terms of the contract, could not acquire any right to hold the defendants liable for breach.

	The majority of their Lordships felts that this decision was one which did not create new principle, but fell within the exceptions to the rule that a party can only recover its own losses established by the case of Dunlop v Lambert as explained in Albacruz (cargo owners) v Albazero (owners) ('The Albazero'). However, Lord Griffiths was in favour of new principle finding that with contracts for the supply of work, labour and the supply of materials, the recovery of damages for breach of contract was not dependent or conditional on the plaintiff having a proprietary interest in the subject matter of the contract at the date of breach. Further it was irrelevant who actually paid for the repairs and where a tortfeasor's (a person who commits a tort) liability was temporarily discharged by payment by a third party, on the plaintiffs behalf, the plaintiff ought not to be prevented from suing the tortfeasor for damages.		The majority of their Lordships felts that this decision was one which did not create new principle, but fell within the exceptions to the rule that a party can only recover its own losses established by the case of Dunlop v Lambert as explained in Albacruz (cargo owners) v Albazero (owners) ('The Albazero'). However, Lord Griffiths was in favour of new principle finding that with contracts for the supply of work, labour and the supply of materials, the recovery of damages for breach of contract was not dependent or conditional on the plaintiff having a proprietary interest in the subject matter of the contract at the date of breach. Further it was irrelevant who actually paid for the repairs and where a tortfeasor's (a person who commits a tort) liability was temporarily discharged by payment by a third party, on the plaintiffs behalf, the plaintiff ought not to be prevented from suing the tortfeasor for damages.

Designing Buildings at 13:12, 14 August 2013

2013-08-14T13:12:59Z

← Older revision		Revision as of 13:12, 14 August 2013
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	Proceedings commenced by Stock Conversions in July 1985 against Lenesta Sludge were amended in 1987, Linden Gardens becoming the claimant, and McLaughlin and Ashwell the second and third defendants respectively.		Proceedings commenced by Stock Conversions in July 1985 against Lenesta Sludge were amended in 1987, Linden Gardens becoming the claimant, and McLaughlin and Ashwell the second and third defendants respectively.
		+
		+	See Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited and Others for more information.

	= St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd =		= St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd =

Designing Buildings at 10:48, 13 August 2013

2013-08-13T10:48:38Z

← Older revision		Revision as of 10:48, 13 August 2013
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	Construction projects are characterised by a class of future owners outside the ambit of the originating contractual relationships, with potential for a dichotomy between the legal right to recover and the incurring of loss, the 'legal black hole' referred to by Lord Keith in GUS Property Management Ltd v Littlewoods Mail Order Stores Ltd. The problem flows from the general principle that a claimant may only recover damages for a loss which they have themselves suffered (See British Westinghouse Electrical Company Limited v Underground Electric Railways). These issues have now been considered by the House of Lords in Linden Gardens and St Martins Property Corporation Ltd v Sir Robert McAlpine & Sons Ltd (both appeals being heard jointly by the House of Lords and the Court of Appeal – see below) and in Alfred McAlpine Construction Ltd v Panatown Ltd.		Construction projects are characterised by a class of future owners outside the ambit of the originating contractual relationships, with potential for a dichotomy between the legal right to recover and the incurring of loss, the 'legal black hole' referred to by Lord Keith in GUS Property Management Ltd v Littlewoods Mail Order Stores Ltd. The problem flows from the general principle that a claimant may only recover damages for a loss which they have themselves suffered (See British Westinghouse Electrical Company Limited v Underground Electric Railways). These issues have now been considered by the House of Lords in Linden Gardens and St Martins Property Corporation Ltd v Sir Robert McAlpine & Sons Ltd (both appeals being heard jointly by the House of Lords and the Court of Appeal – see below) and in Alfred McAlpine Construction Ltd v Panatown Ltd.

−	= Linden Gardens ~~and St Martins Property Corporation Ltd~~ v ~~Sir Robert McAlpine & Sons Ltd~~ =	+	= Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited and Others =

	In Linden Gardens the lessee of the premises, Stock Conversions Ltd, entered into three contracts for the removal of asbestos:		In Linden Gardens the lessee of the premises, Stock Conversions Ltd, entered into three contracts for the removal of asbestos:
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	Proceedings commenced by Stock Conversions in July 1985 against Lenesta Sludge were amended in 1987, Linden Gardens becoming the claimant, and McLaughlin and Ashwell the second and third defendants respectively.		Proceedings commenced by Stock Conversions in July 1985 against Lenesta Sludge were amended in 1987, Linden Gardens becoming the claimant, and McLaughlin and Ashwell the second and third defendants respectively.
		+
		+	= St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd =

	In St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd, St Martins Property Corporation entered into a contract with McAlpine for a mixed commercial and residential development. The contract was dated 29 October 1974. On 25 March 1976, St Martins Corporation transferred the property and assigned the benefit of the contract to St Martins Property Investments Ltd for its market value.		In St Martins Property Corporation Ltd and Another v Sir Robert McAlpine & Sons Ltd, St Martins Property Corporation entered into a contract with McAlpine for a mixed commercial and residential development. The contract was dated 29 October 1974. On 25 March 1976, St Martins Corporation transferred the property and assigned the benefit of the contract to St Martins Property Investments Ltd for its market value.