Panatown v McAlpine: Lord Browne-Wilkinson PDF

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Detailed case brief, including page/paragraph references
Topic: Contract- Privity: ...

Description

McAlpine v Panatown (Lord BrowneWilkinson) Area of law concerned:

Privity of Contract

Court:

House of Lords

Date:

July 27 2000

Judge:

Lord Browne-Wilkinson

Judge’s reasoning: Privity- general rule The general rule is that A can only recover compensation for damage that A has suffered. 999 at E

The Contracts (Rights of Third Parties) Act 1999 has changed the legal position but does not affect the current case because it was passed after the events of this case. 999 at F

The Narrow Ground Accepts that A, not owning the land at the date of breach, can show no compensable loss and thus no substantial damage. However, it was held that where A enters into a contract with B relating to property, and it is envisaged by the parties that ownership of that property may be transferred to a third party, C, so that a Black hole may occur, A has a cause of action to recover from B the loss suffered by C. BUT, A is accountable to C for the damages recovered by A from B as a compensation for C’s loss. AND It does not apply where C has a direct remedy against B. Bottom of 999 to top of 1000

The DCD Argued that its purpose was to give purchasers of the site undoubted causes of action for the breach of a tortious duty of care. However, this does not alter the fact that UIPL has a remedy under the DCD. The DCD is fatal to the claim for any substantial damages on the narrow ground. 1001

Broader Ground Panatown argues that they have suffered damage- the loss of the value of the performance of the contract.

Assumes that the broader ground is sound in law, in the ordinary case. However, the DCD means that Panatown still has no right to substantial damages. 1002 at B

If, as in the present case, the whole contractual scheme was designed, inter alia, to give UPIL and its successors a legal remedy against McAlpine for failure to perform the building contract with due care, I cannot see that Panatown has suffered any damage to its performance interest. 1002 C-D

So long as UIPL enjoys this right Panatown has suffered no failure to satisfy its performance interest. 1002 at E

Legal nonsense What if Panatown recovered from McAlpine? Presumably, McAlpine could not also be liable to UIPL for breach of the DCD. Yet, Panatown would not be liable to account to UIPL for the damages it had recovered from McAlpine. The party could who had suffered real, tangible damage could recover nothing but Panatown which had suffered no real loss could recover damages. Allows the appeal...