St Martins Property Corporation Ltd v Sir Robert McAlpine & Sons Ltd [1994] 1 AC 85, 115

Contract - Building - Third Party Entitlement - Assignment - Standard form Contract

Facts:

St Martins, the first plaintiff, began working on a development which included shops, offices and flats. A 150-year leasehold was granted on completion by the council. St Martins entered into a contract with McAlpine. The contract stated that the contract could not be assigned unless there had been written consent of the contractor. The first plaintiff assigned their contract with McAlpine to the second plaintiff all of their rights under the contract. McAlpine did not consent to the assignment. Sometime after the assignment, the building was found to be defective with remedial work required. The first and second plaintiffs brought action against McAlpine. Initially the assignment was held to be ineffective and the first plaintiff was only entitled to nominal damages. The second defendants in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1993] UKHL 4 and McAlpine cross-appealed.

Issues:

Whether the assignment of the contract gave rise to an entitlement for substantial damages to the second plaintiff and whether both of the defendants could cross-appeal for a breach of contract.

Held:

The cross-appeal by the defendants was dismissed. The original assignee to the contract was entitled to the damages granted, as under the terms of the contract, St Martins would have been entitled to damages for any defect that caused them to suffer loss. Even though the contract did not allow for the assignment of rights, as consent to an assignment was not obtained, St Martins were entitled to seek damages and enforce against the defendants on the behalf of the second plaintiff (the third party), was unable to acquire rights under it even though their loss was foreseeable.