Leigh Sillavan Ltd v Aliakmon Shipping Co Ltd; The Aliakmon [1986] AC 785

Key Point

  • Only someone with legal title or an immediate right to possession can found a claim in tort for damages for consequential economic loss
  • A beneficiary must therefore attach the trustee (who holds the legal title) as a party to the proceedings before suing a third party in tort

Facts

  • The claimant had purchased steel coils which were to be shipped on The Aliakmon
  • Due to bad stowage, the coils were damaged
  • At the time of the damage, the claimant had only a contractual right to the coils; the title to them had yet to pass from the vendor, and so the claimant had no immediate right to possession
  • The claimant sued the defendant shipowners in negligence; the issue therefore became whether they had the right to sue the shipowners in negligence
  • The Court of Appeal held that the claimant had no right to sue the shipowners; the claimants appealed to the House of Lords

Held (House of Lords)

  • Appeal dismissed; the claimants did not have the right to sue the shipowners in negligence

Lord Brandon

  • “[Counsel for the claimants proposed] that a person who has the equitable ownership of goods is entitled to sue in tort for negligence anyone who by want of care causes them to be lost or damaged without joining the legal owner as a party to the action … In my view, [this proposition] cannot be supported” p.812A; D
  • “There may be cases where a person who is the equitable owner of certain goods has also a possessory title to them. In such a case he is entitled, by virtue of his possessory title rather than his equitable ownership, to sue in tort for negligence anyone whose want of care has caused loss or damage to the goods without joining the legal owner as party to the action: see for instance Healy v Healy [1915] 1 K.B. 938. If, however, the person is the equitable owner of the goods and no more, then he must join the legal owner as a party to the action, either as co-plaintiff if he is willing or as co-defendant if he is not. This has always been the law in the field of equitable ownership of land and I see no reason why it should not also be so in the field of equitable ownership of goods” (emphasis added) p.812D

Commentary

  • Note that Lord Brandon is clear when he says that the equitable title or interest in the goods is not what may found a cause of action; it is only the immediate possessory interest, or legal title