This was an appeal against a ruling on a preliminary issue. Technotrade Ltd had produced a site investigation report dated 14/12/98 on a sloping site. The report found that it was satisfactory for the proposed development of a number of two storey houses and contained no prohibition against assignment.
When the report was produced the freehold of the site was owned by Starglade Ltd, who sold it on 21 June 1999 to Larkstore Ltd. Larkstore then developed the site. Larkstore came into possession of Technotrade鈥檚 report in June 1999 and used it without seeking Technotrade鈥檚 consent.
Larkstore then engaged Bess Ltd under a design-and-build contract to carry out works to the site. On 13 October 2001, while the works were being carried out by Bess on the site, a landslip occurred causing damage to adjoining properties who sued Larkstore. Extensive stabilisation works then had to be undertaken by Larkstore for purposes of the proposed development.
On 23 February 2004, Starglade and Larkstore entered into a deed of assignment assigning all the benefits under the Technotrade report including the right to sue in respect of Technotrade鈥檚 breaches. In consideration for making the assignment, Larkstore agreed to pay Starglade half of the net monies received from Technotrade. Notice of the assignment was given to Technotrade.
Was Larkstore, by virtue of the assignment from Starglade, able to recover the loss, or any part of the loss, suffered by it from Technotrade?
Reference
Larkstore had the right to sue Technotrade for damages for breach of contract in respect of the loss alleged to have been suffered as a consequence of the landslip. The assignment between Starglade and Larkstore was for cause of action against Technotrade and the legal remedies for it and was not an assignment of loss. The cause of action was the right to sue Technotrade for breach of contract in respect of the preparation of the soil inspection report on the site. The remedy in damages for breach of contract was not, in principle, limited to the loss suffered as at the date of accrual of the cause of action or as at any particular point of time thereafter.
*Full case details: Technotrade Ltd v Larkstore Ltd [2006] EWCA Civ 1079 (Mummery LJ, Rix LJ and Peter Smith J)
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
Postscript
Technotrade had sought to argue that the Larkstore could not recover more than the Starglade. The court did not believe that this assisted on the facts of this case as this legal principle was not intended to enable a contract breaker/debtor (Technotrade) to rely on the fact of the assignment in order to escape all legal liability for breach of contract.
In order to avoid these problems arising after the sale/purchase of the land, the purchaser should ensure that they carry out all necessary enquiries to ensure that any soil investigation reports etc are assigned to them or alternatively that they carry out their own independent enquiries verifying the surveys/reports.
