Cases - St Martins Property Corporation Ltd v Sir Robert McAlpine Ltd

Record details

Name

St Martins Property Corporation Ltd v Sir Robert McAlpine Ltd

Date

[1994]

Citation

1 AC 85, HL

Keywords

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

Summary

This case was heard by the House of Lords at the same time as the case of Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd.

In October 1974 St Martins Corporation ('Company A') entered into a contract with Sir Robert McAlpine and Sons Ltd for the construction of the development. The building contract was the JCT 1963 standard form. During the course of construction, Company A transferred its interest in the development to St Martins Property Investment Ltd ('Company B'), a separate legal entity in the same group of companies. Company B appointed Company A as its agents to manage the development.

In 1981 defects were discovered. The remedial works were funded by Company A, which recovered the costs from Company B. It was agreed that any cause of action against McAlpines arose after the date of the assignment to Company B.

The principal issue was whether an original contracting party, or his assignee, could recover substantial damages for breach of contract, when the original party's loss had subsequently been made good to them by somebody other than the defendant.

The House of Lords held that Company A suffered a loss in that it was liable to indemnify Company B for the amount which Company B had expended in remedying the damage caused by McAlpine's breach. Such loss was not too remote.