Gore v Van der Lann [1967]

Court: Court of Appeal

Facts: Liverpool Corporation issued free bus passes to pensioners, which included a condition that the recipients waived any liability of the corporation's employees. An elderly woman fell while boarding a bus and subsequently sued the bus conductor for damages. Liverpool Corporation sought to stay the proceedings, arguing that the waiver excluded their liability and, therefore, should relieve the bus conductor from the claim.

Issue: Whether Liverpool Corporation was entitled to a stay of proceedings under section 41 of the Supreme Court of Judicature (Consolidation) Act 1925, based on the liability waiver included in the bus pass terms.

Held: The Court of Appeal rejected Liverpool Corporation's application for a stay. Harman LJ held that Liverpool Corporation was not liable to indemnify the bus conductor for any compensation payable to the injured woman. Consequently, Liverpool Corporation did not have a legal interest that would entitle it to relief in the form of a stay of proceedings.

Key Judicial Statement: Harman LJ emphasized that the exclusion of liability benefiting a third party (Liverpool Corporation) could not be enforced by a contracting party (the bus conductor) to prevent legal action. The waiver of liability by the pensioners did not create a direct relationship between the bus conductor and the pensioners, and thus Liverpool Corporation had no grounds for seeking a stay.

💡 Leveluplaw: This case highlights that contractual terms designed to exclude or limit liability for the benefit of third parties cannot be invoked by contracting parties to prevent legal action from third parties. The principle reinforces that the rights and obligations arising from a contract are typically confined to the parties involved, and exclusion clauses benefiting third parties may not be enforceable in the context of legal proceedings initiated by third parties.