St Martins Property Corporation Ltd v Sir Robert McAlpine & Sons Ltd [1994]

St Martins Property Corporation Ltd v Sir Robert McAlpine & Sons Ltd [1994] 1 AC 85, 115 revolved around contracts, building developments, third-party entitlement, and the assignment of rights within a standard form contract.

St Martins Property Corporation (the first plaintiff) initiated a development project encompassing shops, offices, and flats, obtaining a 150-year leasehold upon completion from the council. St Martins entered into a contract with McAlpine, the building contractor. Notably, the contract explicitly stipulated that assignment required the written consent of the contractor. Subsequently, the first plaintiff assigned the entire contract to the second plaintiff, including all associated rights, without obtaining McAlpine's consent. Following the assignment, defects in the building were discovered, necessitating remedial work. The first and second plaintiffs then brought legal action against McAlpine.

Initially, the assignment was deemed ineffective, leading to a determination that the first plaintiff was entitled only to nominal damages. This decision was connected to the related case of Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1993], where the second defendants cross-appealed. The primary issues in the case were whether the assignment of the contract conferred substantial damages entitlement to the second plaintiff and whether both defendants could cross-appeal for a breach of contract.

The court held that the cross-appeal by the defendants was dismissed. The original assignee to the contract, namely the first plaintiff, was deemed entitled to the damages granted. Despite the contractual provision prohibiting the assignment of rights without consent, St Martins, as the original party to the contract, could seek damages and enforce against the defendants on behalf of the second plaintiff (the third party). This decision was based on the notion that even though the second plaintiff could not acquire direct rights under the contract, their loss was foreseeable, and St Martins was entitled to act as their representative in seeking damages for any defect causing loss. In essence, the court recognised the enforceability of contractual rights on behalf of third parties in this specific scenario, even without the formal consent to assignment.

In summary, the St Martins Property Corporation case extended the Albazero exception to building contracts, emphasising the foreseeability of property transfer and the absence of a direct right for a third party to sue in determining liability for damages in breach of contract.
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