Civil Engineering Reference
In-Depth Information
without the Contractor's written consent. The House of Lords held that, on a true
construction of the contracts, the wording of clause 17 prohibited assignation by
the Employer, without the Contractor's consent, of the benefit of the contract and
the assignation of any cause of action. On the facts this meant there had been no
valid assignation in either case. However, it was held that the original Employer
was nonetheless entitled to recover from the Contractor the loss sustained by the
purchaser.AsthecontractwasexpresslynotassignablewithouttheContractor's
consent, the House of Lords deemed that the Employer and the Contractor should
betreatedashavingcontractedonthebasisthattheEmployerwouldbeentitledto
enforce his contractual rights against the Contractor for the benefit of third parties
who would suffer from defective performance.
The exception established by
Linden Gardens Trust Ltd
was revisited in
Alfred
McAlpine Construction
.PanatownemployedMcAlpinetobuildanoiceblockand
car park on a site owned by Unex Investment Properties Ltd (henceforth Unex),
a member of the same group as Panatown. McAlpine granted a duty of care deed
(nowadays usually called a collateral warranty) to Unex. When Panatown's claim
for substantial damages reached the House of Lords, it was held by a majority that
the exception did not apply because of the existence of the duty of care deed, which
gave Unex a direct contractual claim against McAlpine. When the matter came back
before it in
Alfred McAlpine Construction Ltd
v.
Panatown Ltd (No. 2)
(2001), the
Court of Appeal emphasized that the direct route must be taken if one exists (such as
in a duty of care deed).
hedecisionin
Alfred McAlpine Ltd
wasconsideredintheOuterHouseoftheCourt
of Session in
McLaren Murdoch & Hamilton Ltd
v.
he Abercromby Motor Group Ltd
(2003) and was adjudged to be 'wholly consistent with the principles of Scots law'.
The view was taken that the exception should be conferred as a matter of general legal
policy, rather than based on any considerations of the intent of the parties, and
jus
quaesitum tertio
wasruledoutasageneralsolutionasthiswouldrequirethecon-
tracting parties to set out to benefit a third party, and identify that third party, at the
time of making the contract.
In
Scottish Widows Services Ltd
v.
Kershaw Mechanical Services Ltd and Building
Design Partnership
(2011) the Inner House of the Court of Session considered the
effect of an assignation of a collateral warranty granted by Scottish Widows Fund and
Life Assurance Society (henceforth the Society) in favour of its subsidiary Scottish
Widows Services Ltd (henceforth Services). Services was the occupier of the newly
constructed Scottish Widows HQ building in Edinburgh and in addition to an assig-
nation of the collateral warranty had also been granted by the Society an assignation
of its interest under a sub-lease. Even though the sub-lease imposed no obligation on
Servicestocarryoutrepairs,theInnerHouseheldthatServiceswasentitledtorecover
under the assigned collateral warranty in respect of the costs of rectifying defects to
the building, in the event that liability on the part of the defenders was established.
See also Section 13.2 in relation to collateral warranties.
Although there may be an element of policy underpinning some of the decisions
considered above, their focus is on the extent of the assignor's rights in respect of the
