Technotrade Limited v Larkstore Limited
In the case of Technotrade Limited v Larkstore Limited, Technotrade had produced a geotechnical site investigation and concluded that a site was satisfactory for development. There was nothing prohibiting the assignment of its professional services contract. Technotrade had been appointed by Starglade Limited. Starglade sold the site to Larkstore with the benefit of planning permission and building control consents. Larkstore engaged a builder to carry out works on the site, including Technotrade’s report in the contract document. Larkstore also included the Technotrade report in a further planning application. A landslip occurred during building works requiring extensive stabilisation.
After the landslip Larkstore obtained an assignment from Starglade transferring the Technotrade report and all Starglade’s rights against Technotrade to Larkstore for £1.00. Larkstore sued Technotrade for breach of contract based on the assignment.
There was a trial of preliminary issues in which Technotrade argued that Starglade had suffered no substantial loss when it was entitled to the benefit of the contract with Technotrade and that the landslip causing damage occurred before the assignment to Larkstore. The judge who first tried the issue decided that Larkstore would be entitled to recover damages from Technotrade under the assignment.
On appeal, the Court of Appeal agreed with the judge. What was assigned by Starglade to Larkstore was a right of action for breach of contract. It was not an assignment of a “loss”. The remedy for breach of contract was not limited to loss suffered at the time that the breach of contract occurred. Where the breach of contract was established and the right of action had been transferred, the loss caused by the breach was recoverable.
The case highlights the importance to all professionals, but in particular those carrying out ground and site surveys, of seeking to prohibit, or restrict the number of assignments of, the right to sue under the professional appointment.
