Linden Gardens BC v Lenesta Sludge Disposals Ltd [1994] 1 AC 85

• X contracted with Defendant for Defendant to remove asbestos in its buildings, and it did the job badly i.e there was remaining asbestos even after performance.

• IN X and Defendant’s contract, X undertook not to assign its rights on the properties to another party. In fact X assigned its interests and rights to the properties concerned to Plaintiff, who then sued Defendant for breach of contract in failing to remove all the asbestos.

• Issue was whether the assignment in breach of contract was valid and hence whether Plaintiff was a party to the contract and could sue.

• HL held that for legal and policy reasons, the contractual prohibition on assignment was valid, therefore the assignment was invalid, and therefore Plaintiff had no ability to claim damages from Defendant.

• However in the second case, where Plaintiff had contracted Defendant to remove the asbestos, which it had failed to do, Plaintiff also tried to assign its rights. The assignment was held ineffective, but Plaintiff was still entitled to substantial damages on behalf of the loss suffered by the 3rd parties who now occupied the buildings. 

Lord Browne-Wilkinson

• There is a policy argument for allowing such clauses to be effective: some people might prefer only to deal with a particular party and might want to avoid a relationship with a party that they find unreasonable to work with etc.

• On Plaintiff’s claim for TP’s damages in the second case, he said that the Dunlop principle no longer applied to cases of goods conferred under a “bill of lading” and it is to be extended here to construction contracts since, when the non-assignment clauses apply, there would be no other remedy (why is this not true of all types of contracts?).

RELATED CASES

• Alfred McAlpine Construction Ltd v Panatown Ltd

• St Martins Property Corporation v Sir Robert McAlpine & Sons Ltd

• Darlington BC v Wiltshier Northern LTD

• Dunlop Pneumatic Tyre Co LTD v Selfridge