The council owned land on which it wanted to build a recreational centre. Construction contracts were entered into not by the council but by a finance company, the building contractors being the respondents Wiltshier Northern Ltd. The finance company then assigned to the council its rights under the building contracts, and the council claimed damages from the builders for breach of the contracts. The builders took the point that the council, as assignee, had no greater rights under the contracts than the finance company had and that, as the finance company did not own the site, it had suffered no loss.
Held: A third party may sue on a contract to recover damages for defects if the benefit of a building contract was intended for them and had been assigned to him. Where there is a right to have an assignment of any cause of action accruing to the employer against the contractor, the exception in Albazero may still apply so as to enable the assignee to recover substantial damages. The fact that the innocent party did not receive the bargain for which he contracted is itself a loss: ‘he suffers a loss of bargain or of expectation interest.’
Steyn LJ: ‘in the case of a building contract, the prima facie rule is cost of cure, i.e., the cost of remedying the defect: East Ham Corporation v. Bernard Sunley and Sons Ltd. [19661 A.C. 406. But where the cost of remedying the defects involves expense out of all proportion to the benefit which could accrue from it, the court is entitled to adopt the alternative measure of difference of the value of the works . . .’
Judges:
Dillon, Waite and Steyn LJJ
Citations:
Times 04-Jul-1994, Independent 29-Jun-1994, Gazette 12-Oct-1994, [1995] 1 WLR 68
Jurisdiction:
England and Wales
Citing:
Cited – Albacruz (Cargo Owners) v Albazero ‘The Albazero’ HL 1977
The House was asked as to the extent to which a consignor can claim damages against a carrier in circumstances where the consignor did not retain either property or risk. To the general principle that a person cannot recover substantial damages for . .
Applied – Dunlop v Lambert HL 16-Jun-1839
A cargo of whisky was lost in carriage by sea between Leith and Newcastle. A second shipment was made and the loss was claimed. The House was asked whether ‘in a question between a carrier and the person to whom the carrier is responsible in the . .
Cited – East Ham Corporation v Bernard Sunley and Sons Ltd HL 1965
In cases in which the plaintiff is seeking damages for the defective performance of a building contract, which is a contract for labour and materials, the normal measure of his damages is the cost of carrying out remedial work, or re-instatement. . .
Cited by:
Cited – Alfred Mcalpine Construction Limited v Panatown Limited HL 17-Feb-2000
A main contractor who was building not on his own land, would only be free to claim damages from a sub-contractor for defects in the building where the actual owner of the land would not also have had a remedy. Here, the land owner was able to sue . .
Cited – Ruxley Electronics and Construction Ltd v Forsyth HL 29-Jun-1995
Damages on Construction not as Agreed
The appellant had contracted to build a swimming pool for the respondent, but, after agreeing to alter the specification to construct it to a certain depth, in fact built it to the original lesser depth, Damages had been awarded to the house owner . .
Cited – Pegler Ltd v Wang (UK) Ltd TCC 25-Feb-2000
Standard Conract – Wide Exclusions, Apply 1977 Act
The claimant had acquired a computer system from the defendant, which had failed. It was admitted that the contract had been broken, and the court set out to decide the issue of damages.
Held: Even though Wang had been ready to amend one or . .
Cited – Lowick Rose Llp v Swynson Ltd and Another SC 11-Apr-2017
Losses arose from the misvaluation of a company before its purchase. The respondent had funded the purchase, relying upon a valuation by the predecessor of the appellant firm of accountants. Further advances had been made when the true situation was . .
Lists of cited by and citing cases may be incomplete.
Contract, Construction
Updated: 24 November 2022; Ref: scu.79806