| Date | 18 April 2007 |
|
|
| Judgment | Laurence McIntosh Limited v Balfour Beatty Group and the Trustees of the National Library of Scotland |
|
|
| The Issue | Title to sue and assignation (or assignment). |
|
|
| Implication |
Generally speaking only a party to a contract has title to sue under that contract. Assignation (or assignment) will only be effective if it is intimated and consented to by the other contracting party. |
printWhat is in a name? Well I suspect that most of us would not immediately attach any great significance to a name. Try telling that to the unfortunate joinery subcontractor who found out the hard way that the law has a different view on the importance of a name – especially when the wrong name had been used by a party to sue someone. This case concerns the refurbishment of the National Library of Scotland in Edinburgh. In 1997, the Trustees of the National Library engaged Balfour Beatty as the Management Contractor based upon the Scottish Management Contract. In turn, Balfour Beatty entered into a Works Contract with Laurence McIntosh & Sons for the joinery work specified in the Management Contract. In 2000, Laurence McIntosh & Sons wished to transfer their whole business, assets, rights and liabilities from a partnership to a limited liability company and in August of that year they sent a facsimile to the accounts department of Balfour Beatty to advise them that all future payments under the Works Contract were to be paid into an account bearing the name of Laurence McIntosh Limited. Crucially, that facsimile was not addressed to an individual with “contract-making” authority. Equally important was the fact that Laurence McIntosh & Sons did not seek the approval of Balfour Beatty to the assignation (or assignment under English law) of the Works Contract to a new legal entity. Thereafter correspondence in relation to the Works Contract was exchanged between Laurence McIntosh Limited and Balfour Beatty. In May 2001, a claim was submitted to Balfour Beatty founded upon a document, prepared by a claims consultant, in which the client was referred to as “Laurence McIntosh Limited (formerly Laurence McIntosh & Sons)”. It must be assumed that that claim was ultimately unsuccessful as Laurence McIntosh Limited initiated court proceedings in 2005 to have the Management Contract final certificate of September 2003 declared invalid. The Pursuer (or Claimant in English law) also asked the court to find that it was entitled to an extension of time of 67 weeks and a sum of money totalling £636,026.23. The court action against both Balfour Beatty and the National Library of Scotland had been raised in the name of Laurence McIntosh Limited, the name stated on the claim document prepared by the claims consultant. Subsequent to the court action being raised, two former partners of Laurence McIntosh & Sons assigned to the Pursuers their whole rights, title and interest in and to the Works Contract, the assignation said to be effective from April 2000. That assignation was intimated in December 2005 to Balfour Beatty who consented in terms of Clause 3.9 of the Works Contract conditions. The matter came before Lord Drummond Young in the Outer House of the Court of Session. His Lordship had to consider as a preliminary matter the pleas-in-law made by the National Library challenging Laurence McIntosh Limited’s title to sue. After all, the National Library as employer was not an original party to the Works Contract and neither the Pursuer nor the partnership of Laurence McIntosh & Son was a party to the Management Contract. Not surprisingly, the National Library took the view that Laurence McIntosh Limited had no title to sue them under either the Management Contract or the Works Contract. In addressing the pleas-in-law made by the National Library, Lord Drummond Young considered amongst others the following questions:
Furthermore, the correspondence exchanged between the Pursuer and Balfour Beatty did not in itself evidence assignation. That according to the judge was an ad hoc agency agreement whereby one company performed tasks for another within their group of companies. Finally, Lord Drummond Young found that title to sue must exist when the action is raised and that the defect cannot be cured by subsequent assignation. The Pursuer’s attempts at assignation in December 2005 therefore fell on stony ground. In regard to the second question, Lord Drummond Young found that the parties had chosen the particular contractual structures as contained in the detailed terms of the Works Contract and the Management Contract. These contractual structures provided a mechanism under the Works Contract for a claim to be made, on the ordinary principles of privity of contract, by the Works Contractor against the Management Contractor. However, where the Management Contractor has a corresponding claim against the Employer, Clause 4.27 of the Works Contract permits the Works Contractor to borrow the name of the Management Contractor to present the corresponding claim. Laurence McIntosh Limited had failed to employ such contractual mechanisms, notwithstanding that they were not designated as the Works Contractor. In conclusion, Lord Drummond Young found that Laurence McIntosh Limited as Pursuer had failed in all of its arguments. And all because they had used the wrong name in the court action!
CJ-0715
|
|||
|
© Brewer Consulting |
|||
 |
|||