Darlington BC v Wiltshier Northern

Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68, 79

Contract – Building – Assignment – Building contracts for benefit of third party – Contractual rights assigned to third party

Facts

Wiltshier Northern Ltd (WNL) were hired to build a recreational centre for Darlington Borough Council (DBC) and entered into two contracts with a finance company. The agreement between WNL and the finance company stipulated that all rights and causes of action against WNL were assigned to DBC. DBC brought action against WNL for breaches of contract where no entitlement to damages was initially found to exist. DBC appealed.

Issue

Whether DBC as assignee to the contract was entitled to substantial damages for breach of contract.

Decision / Outcome

Appeal by DBC was allowed as when the building contracts were entered into, both parties knew that any foreseeable damage would cause loss to DBC and therefore the benefit of signing the contract in the first instance was to DBC. Thus, DBC was entitled to substantial damages for the loss caused by WNL, although they were to be assessed on a normal basis, as if DBC had been party to the contracts. Johnson v Agnew [1980] A.C. 367 was applied in that the general principle for the assessment of damages for a breach of contract is to compensate the plaintiff for any loss or damage arising from the contract. Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] A.C. 847 was distinguished in that, even though generally speaking, a third party cannot sue for damages on a contract they are not party to, DBC were entitled to recover loss as the rights were not only assigned, but the recreational centre was built for them specifically which made them entitled in consideration of the factual context of the case.