Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980]
Court: House of Lords
Facts: Woodar Investment Development Ltd (Woodar) contracted to sell land to Wimpey Construction UK Ltd (Wimpey) for £850,000. As part of the contract, Wimpey paid £150,000 directly to a third party, Transworld Trade Ltd (Transworld). The contract included a termination clause triggered by compulsory purchase proceedings. When the government announced its intention to acquire part of the land, Wimpey rescinded the contract, claiming the compulsory purchase clause as a basis for termination.
Woodar contested the rescission, arguing that Wimpey’s action constituted a wrongful repudiation of the contract. Woodar sought damages, including the £150,000 intended for Transworld. The Court of Appeal awarded Woodar damages for this sum based on the precedent set in Jackson v Horizon Holidays Ltd.
Upon appeal to the House of Lords, the majority found no repudiatory breach by Wimpey and affirmed the right to rescind the contract due to the compulsory purchase. However, in obiter dicta, the Lords discussed the applicability of Jackson v Horizon Holidays and whether Woodar could claim damages for Transworld’s benefit.
Issue: Whether Woodar could claim damages for the £150,000 intended for Transworld, despite the contract being rescinded due to compulsory purchase.
Held: The House of Lords held that there was no repudiatory breach of the contract by Wimpey. In obiter, the Lords expressed reservations about applying the principles from Jackson v Horizon Holidays, particularly regarding the recovery of damages for a third party’s benefit. Lord Wilberforce, Lord Keith, and Lord Scarman all noted that Jackson's broader principles might not be applicable to the current case.
Key Judicial Statements:
Lord Wilberforce: He expressed skepticism about applying Jackson v Horizon Holidays to the current case, noting that the factual context was different and the decision in Jackson might be limited to specific scenarios such as consumer contracts or personal arrangements. He was not prepared to fully dissent from Jackson but acknowledged the need for careful consideration in cases involving third-party claims.
Lord Keith: Emphasized that Jackson did not establish a general rule for recovery of damages on behalf of third parties. He suggested that damages might be recoverable in cases where the deprivation of third-party benefits is a consequence of the loss suffered by the contracting party, but this would not be a general principle applicable to all cases.
Lord Scarman: Proposed that while Jackson might not be applicable in all cases, a contracting party might use the requirement to make payment to a third party as prima facie evidence of their loss. However, he did not endorse a broad application of Jackson's principles to all contractual situations.
💡 Leveluplaw: This case clarifies the limitations of applying the doctrine established in Jackson v Horizon Holidays Ltd, particularly regarding third-party claims. It highlights that while damages for third-party benefits might be recoverable in certain contexts, the broad application of Jackson's principles is restricted. The House of Lords indicated that damages claims on behalf of third parties should be approached with caution and are not universally applicable, reflecting a more nuanced understanding of the privity of contract doctrine and its implications.