Linden Gardens v Lenesta Sludge [1994] 1 AC 85

Key point

  • No assignment clauses are effective in law; there is no public policy for holding otherwise

Facts

  • This case is a conjoined appeal with St Martins v McAlpine
  • Stock Conversions, the original lessee of a building, used a standard form contract to hire Lenesta (D) to remove asbestos from the premises
  • Clause 17(1) of the contract states: “The employer shall not without written consent of the contractor assign this contract.”
  • Stock Conversions then assigned the building lease to Linden Gardens (C), and at the same time, without D ever having consented, assigned its right of action (against D) to C
  • Later, more asbestos was found in the premises
  • C sued D for breach of contract

Held (House of Lords)

  • C’s claim allowed; substantial damages were awarded

Reasoning

Assignment was not effective

  • The assignment of the contract to C was ineffective; true construction of clause 17(1) prohibited assignment without consent
  • Since a party to such a contract might have a genuine commercial interest in ensuring that contractual relations with the party he selected were preserved, there was no reason for holding the contractual prohibition on assignment as being contrary to public policy

Entitlement to sue

  • The case came under the Albazero exception as the parties had knowledge that the property will be transferred to a third party and damage to the third party was foreseeable