Alfred McAlpine Construction Limited v. Panatown Limited, (2000)

 
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HOUSE OF LORDS

Lord Clyde Lord Goff of Chieveley Lord Jauncey of Tullichettle Lord Browne-Wilkinson Lord Millett

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

ALFRED McALPINE CONSTRUCTION LIMITED

(APPELLANTS)

v.

PANATOWN LIMITED

(RESPONDENTS)

ON 27 JULY 2000

LORD CLYDE

My Lords,

Panatown employed McAlpine to build a building on land owned by UIPL. The work was defective. Panatown has sought to terminate the contract on the ground of McAlpine's failure in performance. Panatown has suffered no loss. UIPL owns a defective building, which requires a significant expenditure for its repair, and has been unable for a considerable period to put the building to a profitable use. Panatown now seeks to recover, by way of an arbitration, from McAlpine the loss which UIPL has suffered. The appeal thus concerns the circumstances in which the employer in a contract of services may claim from the contractor on the ground of breach of contract damages in respect of a loss which has been suffered by a third party.

I find no reason to question the general principle that a plaintiff may only recover damages for a loss which he has himself suffered. But there are exceptions to that principle. One is where the one party expressly enters a contract as agent or trustee for another. The existence of this category of case was recognised in Woodar Investment Development Ltd. v. Wimpey Construction U.K. Ltd. [1980] 1 W.L.R. 277. In such a case the contracting party may be entitled to recover damages for all the loss which his principal has suffered. But a solution along the lines of a formal agency is not available in the present case. Although the Duty of Care Deed expressly records that Panatown was acting on behalf of the building owner, that is UIPL, any relationship of agency was disowned by the respondents. The precise analysis of the relationships which may have existed between the companies associated with the employer remains obscure. The issue in the case has required to be resolved against the unsatisfactory background of that obscurity.

The exception which is invoked by the respondents, Panatown, is the one which was identified in The Albazero [1977] A.C. 774. It arose in the context of the carriage of goods by sea but has more recently been developed in the context of building contracts. It may be useful first to consider its antecedents. The decision in The Albazero was plainly heavily influenced by what was seen as the doctrine, or the rule, in Dunlop v. Lambert (1839) 6 Cl. & F. 600. But the use of the word "rule" in such a context may lead to confusion. If anything, Dunlop v. Lambert provides an exception to the general rule, rather then constituting a rule in itself. The trouble may lie in the ambiguity of the word "rule," which may serve both to refer to a principle of general application and to a ruling, or decision, which may truly not be prescribing any general principle. It appears that the case has come to be seen as authority for the proposition that a consignor may recover substantial damages from the carrier where there was privity of contract between the consignor and the carrier, even although the goods were neither his property nor at his risk. Consideration of Dunlop v. Lambert gives rise to a real question whether it propounded any new principle at all.

Dunlop v. Lambert concerned the loss of a cargo consisting of a puncheon of whisky while in course of carriage by sea between Leith and Newcastle. The pursuers, William Dunlop and Co., wine and spirit merchants in Edinburgh, shipped the puncheon on board a vessel owned by the defenders. The bill of lading bore that the puncheon was to be delivered to "Robson or his assigns" and that the freight had been paid by the pursuers. The pursuers sent the bill of lading to Robson. They also sent to him an invoice informing him that they had drawn on him by bill at three months, which Robson accepted. The invoice included the cost of the freight and the cost of insurance. After the loss of the puncheon the pursuers shipped to Robson another puncheon, the price of which together with the freight was slightly higher than the cost of the first puncheon, with its freight and insurance. Dunlop advised Robson that if he wished to insure the second puncheon he should do that in Newcastle. Robson stated in a deposition that the first puncheon was to be delivered safely on the quay at Newcastle before he could consider it as his property, that the second puncheon was expressly sent to replace the first, that the bill drawn for the first was renewed on account of the second and that he, Robson, had lost nothing. The pursuers claimed damages against the shipowners on the ground that they were liable to the pursuers in damages for wrongfully failing to deliver the puncheon to Robson. The pursuers stated in their pleadings that they "undertook by their agreement, and were answerable to the said Matthew Robson, for the safe delivery of the said puncheon."

The case went eventually before a jury. There was a question whether the loss occurred through improper stowage or through a peril of the sea, but the jury held that as it had been placed on the deck and not stowed in the hold the defenders were liable for its loss. However, the jury were also asked to decide whether the defenders were liable to the pursuers for the loss. The presiding judge, Lord President Hope, instructed the jury that after the puncheon had been shipped and the bill of lading transmitted to Robson, the puncheon was Robson's property and at his risk. Robson had been charged with the cost of insurance, and that could only proceed on the basis of its being his property at his risk. So the pursuers had no right to recover the value of the puncheon. The jury decided that the defenders had wrongfully failed to deliver the puncheon to Robson, but that the defenders were not liable to the pursuers because they were not at the time of the loss the owners of the goods, the invoice showing that their right in the whisky ceased at the time of shipment. The report of the trial is at First Division (1837) 15 S 884

The pursuers took exception to the direction of the trial judge and the matter came before the First Division (1837) 15 S 1232. The majority of the four judges considered that the direction of the trial judge was correct. Lord Mackenzie and Lord Gillies founded particularly upon the fact the insurance for the first puncheon had been effected at the direction of Robson and to his account. The Lord President stated that it was proved by written contract that the pursuers were free of all risk or liability after shipping the puncheon, the property and the risk being then Robson's. Lord Corehouse dissented. He considered that since the insurance only covered perils of the sea and did not cover the fault or negligence of the mariners, which the pursuer alleged was the cause of the loss, the insurance was not incompatible with the understanding of both parties that the pursuers were to be responsible for the safe delivery. He also considered that the sending of the second puncheon was real evidence of their understanding. The bargain relating to the second puncheon superseded the first bargain and necessarily inferred that Robson had given up all claim for the price of the first.

Dunlop then appealed to this House. The report is in (1839) 6 Cl. & F. 600, and (1839) 3 Maclean & R. 663. The Lord Chancellor first rejected an argument that the liability of the defenders to the pursuers had not been put in issue in the case. The point of that argument was that the question whether the pursuers were the right people to sue should not have been raised as a question for the jury to consider. That question had been raised at an earlier stage of the case as a preliminary point. As appears from the report in Maclean and Robinson at p. 666 the point had been argued at an early stage of the litigation before the Lord Ordinary, Lord Fullerton, and he had held that the pursuer's pleadings were relevant to support their title and interest to sue. The pursuers had accordingly good reason to argue that that issue at least as a matter of law had been disposed of and should not have been re-opened before the jury. However, the Lord Chancellor was satisfied that point was within the scope of the formal issues which had been put to the jury.

The Lord Chancellor then formulated what he saw as the question in the case. His formulation at p. 674 of the report in Maclean and Robinson was whether under the law of Scotland - the law of Scotland being in this respect the same as the law of England:

in a question between a carrier and the person to whom the carrier is responsible in the event of the property being lost, whether it be true in law, that the sending of an invoice to the consignee, by which it appeared that the property had been insured and the freight paid by the consignor, and the amount charged by the consignor to the consignee, deprived the consignor of the power of suing, and of an interest or right to recover the value of the property.

He observed that while in general delivery to the carrier was delivery to the consignee and the risk then passed at p. 675, to the consignee, that position could be varied:

"If a particular contract be proved between the consignor and the consignee, - and it does not follow that the circumstance of the freight and the insurance being paid by the one or the other is to be considered a conclusive evidence of ownership, - as notwithstanding the ordinary rule, of course there may be special contracts; - where the party undertaking to consign undertakes to deliver at a particular place, and if he undertakes to deliver at a particular place, the property, till it reaches that place, and is delivered according to the contract, is at the risk of the party consigning; so although the consignor may follow the directions of...

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