photo productions ltd v securicor transport 1980

contains alphabet), Photo Production Ltd v Securicor Transport Ltd. Securicor argued that an exclusion clause in its contract meant they were not liable, as it said "under no circumstances be responsible for any injurious act or default by any employee . Requirement 3 - The clause must not be rendered unenforceable by statutory provisions. In commercialcontracts negotiated between business-men capable of looking after their owninterests and of deciding how risks inherent in the performance of various kindsof contract can be most economically borne (generally by insurance), it is, in my. It would be enough toput that upon its radical inconsistency with the Suisse Atlantique. The Master of the Rolls in this was following the earlier decision of theCourt of Appeal, and in particular his own judgment in Harbutt's "Plasticine"Ltd. v. Wayne Tank & Pump Co. Ltd. [1970] 1 Q.B. In the first case the Master of the Rolls,purportedly applying this House's decision in the Suisse Atlantique case [1967]1 A.C. 361, but in effect two citations from two of their Lordships' speeches,extracted a rule of law that the "termination" of the contract brings it, and withit the exclusion clause, to an end. 447. The bringing to an end of all primary obligations under the contract may alsoleave the parties in a relationship, typically that of bailor and bailee, in whichthey owe to one another by operation of law fresh primary obligations of whichthe contract is not the source; but no such relationship is involved in the instantcase. 597 (so earlierthan the Suisse Atlantique) in the support of the "Harbutt" doctrine. 1 page) In that case LordDenning distinguished two cases (a) the case where as the result of a breach ofcontract the innocent party has, and exercises, the right to bring the contractto an end, (b) the case where the breach automatically brings the contract toan end, without the innocent party having to make an election whether toterminate the contract or to continue it. It is not denied that the present contract was binding uponeach of the parties to it. - Feb. 14, 1980 Contract - Fundamental breach - Effect on exception clause This appeal arose out of the destruction by fire of the respondent’s factory. TheCourt of Appeal decided issue (i) in the respondents' favour invoking thedoctrine of fundamental breach. Thus we reach, after long years, the principle which lies behind all our striving: the court will not allow a party to rely on an exemption or limitation clause in circumstances in which it would not be fair or reasonable to allow reliance on it; and, in considering whether it is fair and reasonable, the court will consider whether it was in a standard form, whether there was equality of bargaining power, the nature of the breach, and so forth. As a preliminary, the natureof the contract has to be understood. It is generallymore economical for the person by whom the loss will be directly sustainedto do so rather than that it should be covered by the other party by liabilityinsurance. ...affirms the long line of cases in this court that when one party has been guilty of a fundamental breach of the contract ... and the other side accepts it, so that the contract comes to an end ... then the guilty party cannot rely on an exception or limitation clause to escape from his liability for the breach. These passages I believe to state correctly the modern law of contract in therelevant respects: they demonstrate that the whole foundation of Harbutt'scase is unsound. This proposition is strongly sup-ported by the passage recited by Lord Wilberforce in Lord Porter's speech inHeyman v. Darwins Ltd. [1942] A.C. 356 at p.399. One night Musgrove, the patrolmans started a small fire. And he states in terms that this latterobligation "is just as much an obligation arising from the contract as are the"primary obligations that it replaces". speeches in Suisse Atlantique, and with his conclusion that this House rejectedthe argument that there was any such rule of law. It seems to me that the two ways can be seen to meet in practice so as to produce a result in principle which may be stated thus: although the clause in its natural and ordinary meaning would seem to give exemption from or limitation of liability for a breach, nevertheless the court will not give the party that exemption or limitation if the court can say: “The parties as reasonable men cannot have intended that there should be exemption or limitation in the case of such a breach as this.” In so stating the principle, there arises in these cases “the figure of the fair and reasonable man”; and the spokesman of this fair and reasonable man, as Lord Radcliffe once said, is and “must be the court itself”: see Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728–729. [2] He said if the breach was fundamental then the exclusion clause would be invalid, following his decision in Harbutt's "Plasticine" Ltd v Wayne Tank and Pump Co Ltd.[3] He said the following.[4]. per Denning L.J. The fallacy in the reasoning and what I venture to think is the disarray intowhich the common law about breaches of contract has fallen, is due to the usein many of the leading judgments on this subject of ambiguous or impreciseexpressions without defining the sense in which they are used. In case of any confusion, feel free to reach out to us.Leave your message here. Securicor appealed. (Harbutt's case [1970] 1 Q.B. It is first necessary to decide upon the correct approach to a case such asthis where it is sought to invoke an exception or limitation clause in the contract.The approach of the Master of the Rolls in the Court of Appeal was to considerfirst whether the breach was "fundamental". It is drafted in strong terms,"In no circumstances". The doctrine of "fundamental breach" in spite of its imperfections anddoubtful parentage has served a useful purpose. That there was any rule of law by which exceptions clauses areeliminated, or deprived of effect, regardless of their terms, was clearly not theview of Viscount Dilhorne, Lord Hodson, or of myself. Photo Production Ltd and Securicor had a contract for the provision of security services by the latter to the former. Due diligence, negligence and exclusion clauses in contracts. distinguished two cases (a) the case where as the result of a breach of contract the innocent party has, and exercises, the right to bring the contract to an end, (b) the case where the breach automatically brings the contract to an end, without the innocent party having to make an election whether to terminate the contract or to continue it. Denning LJ MR gave the leading judgment replacing the Rule of Strict Construction, which require a literal approach to the construction of contract terms.. In such a situation what the parties agreed (expressly orimpliedly) is what matters; and the duty of the courts is to construe theircontract according to its tenor. My noble and learned friend Lord Wilberforce has summarised the factswhich have given rise to this appeal. In 1968 itentered into a contract with the respondents by which for a charge of £8,15,0d. (I.c. Photo Productions Ltd sued Securicor Transport Ltd after Securicor's employee, Mr Musgrove, started a fire at Photo Production's factory to warm himself while at work and accidentally burnt it down, costing £648,000. 287, when commenting unfavourably on the thenbudding doctrine of fundamental breach in a portion of my judgment in theCourt of Appeal that did not subsequently incur the disapproval of this House. FACTS: Photo Production Ltd, a company, hired the services of Securicor Transport Ltd to provide watchmen for the protection of their properties. 210,232 per Kerr J.). Upon his doing so the contract comes to an end. This reasoning can be extended without unduestrain to cases where the party entitled to elect to terminate the contract does notbecome aware of the breach until some time after it occurred; his election toterminate the contract could not implausibly be treated as exercisable nunc protunc. The Court of Appeal was, I think, bound so to hold by previous decisions ofits own, of which the first was Harbutt's Plasticine v. Wayne Tank Co. [1970] 1Q.B. Is it thedate of the incident causing the damage, or the date of the innocent party'selection, or some other date? It would be enough toput that upon its radical inconsistency with the Suisse Atlantique. In cases falling within the second exception, breachof condition, the anticipatory secondary obligation generally arises underparticular kinds of contracts by implication of statute law; though in the caseof "deviation" from the contract voyage under a contract of carriage of goodsby sea it arises by implication of the common law. Strictly speaking, to say that,"on acceptance of the renunciation of a contract, the contract is rescinded is"incorrect. Please log in or sign up for a free trial to access this feature. Applying these principles to the instant case; in the absence of the exclusionclause which Lord Wilberforce has cited, a primary obligation of Securicor underthe contract, which would be implied by law, would be an absolute obligationto procure that the visits by the night patrol to the factory were conducted bynatural persons who would exercise reasonable skill and care for the safetyof the factory. It is only because of Lord Reid's great authority in the law that I have foundit necessary to embark on what in the end may be superfluous analysis. 716. A fortiori, in addition to Harbutt's case there must be over-ruled the case of Wathes (Western) Ltd. v. Austins (Menswear) Ltd. [1976]1 Lloyd's Rep. 14 which sought to apply the doctrine of fundamental breachto a case where, by election of the innocent party, the contract had not beenterminated, an impossible acrobatic, yet necessarily engendered by the doctrine.Similarly, Charterhouse v. Tolly [1963] 2 Q.B. Since the obligations implied by law in acommercial contract are those which, by judicial consensus over the years or byParliament in passing a statute, have been regarded as obligations which areasonable businessman would realise that he was accepting when he enteredinto a contract of a particular kind, the court's view of the reasonableness of anydeparture from the implied obligations which would be involved in construingthe express words of an exclusion clause in one sense that they are capable ofbearing rather than another, is a relevant consideration in deciding what mean-ing the words were intended by the parties to bear. 519of the doctrine of deviation in order to reconcile the Suisse Atlantique withHarbutt's case, itself based in part on the use of the doctrine of deviation, illu-strates the contortions which that case has made necessary and would beunnecessary if it vanished as an authority. "Whether Musgrove intended to light only a small fire (which was the"very least he meant to do) or whether he intended to cause much more"serious damage, and, in either case, what was the reason for his act, are"mysteries I am unable to solve". I have had the advantage of reading in draft the speech delivered by my nobleand learned friend Lord Wilberforce. Accordingly, Iprefer to express no view about the effect of that Act as the result of this appealdepends solely on the common law. Lord Denning M.R. The cost to Photo Productions for the benefit of thepatrol service provided by Securicor was very modest and probably substantiallyless than the reduction of the insurance premiums which Photo Productionsmay have enjoyed as a result of obtaining that service. A security guard deliberately threw a match but not with the intent that a fire be created, which destroyed part of Photo Production's building. House of Lords The facts are set out in the judgement of Lord Wilberforce. I suggestedin the Suisse Atlantique that these cases can be regarded as proceeding uponnormal principles applicable to the law of contract generally viz., that it is amatter of the parties' intentions whether and to what extent clauses in shippingcontracts can be applied after a deviation, i.e., a departure from the con-tractually agreed voyage or adventure. On the facts, Wilberforce found that the exclusion clause precluded all liability even when harm was caused intentionally. And Another (1983)1 ALL E.R. There are further provisions limiting to stated amounts the liability of theappellant upon which it relies in the alternative if held not to be totally exempt. There are various statutory provisions which prevent the effect of certain exclusion clauses. 44. 69) in the light ofwell known principles such as that stated in Alderslade v. Hendon LaundryLtd. Photo Production Ltd v Securicor Transport Ltd: HL 14 Feb 1980 Interpretation of Exclusion Clauses The plaintiffs had contracted with the defendants for the provision of a night patrol service for their factory. The contract between the two parties provided that Securicor should supply apatrol service at Photo Productions' factory by four visits a night for sevennights a week and two visits every Saturday afternoon and four day visits everySunday. It would have no knowledge of the value of. He is not allowed to use them as a cover"for misconduct or indifference or to enable him to turn a blind eye to his"obligations. For convenience I restate it: "If fundamental breach is established the next question is what effect,"if any, that has on the applicability of other terms of the contract. It is with the utmost reluctance that, not forgetting the "beams" that mayexist elsewhere, I have to detect here a note of ambiguity or perhaps even ofinconsistency. 3 [1967] 1 A.C. 361 , 362 - "That the question whether an exceptions clause was applicable where there was a fundamental breach of contract was one of the true construction of the contract." DATE OF JUDGEMENT: 14 February 1980. The position now seems to be clear. Photo Productions argued that the clause coul… But even ifthe matter were res Integra I would find the decision to be based upon un-satisfactory reasoning as to the "termination" of the contract and the effect of"termination" on the plaintiffs' claim for damage. The case is remembered for these principal reasons: White and Carter (Councils) Ltd v McGregor. . Creating a unique profile web page containing interviews, posts, articles, as well as the cases you have appeared in, greatly enhances your digital presence on search engines such Google and Bing, resulting in increased client interest. (If theexpression "fundamental breach" is to be retained, it should, in theinterests of clarity, be confined to this exception). [1945] K.B. The perils the parties had in mind were fire and theft. Damages, in such cases, are then claimed under the con-tract, so what reason in principle can there be for disregarding what the con-tract itself says about damages—whether it "liquidates" them, or limits them,or excludes them? Lord Reid comments as to this that he could not deduce from the authoritiescited in Karsales that the proposition stated in the judgments could be regardedas in any way "settled law" (p.401). A fundamental breach of the contract refers to a breach of the purpose or key term of the contract - Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. Thetrial judge (MacKenna J.) Facts. Europese Klassiekers: Photo Production Ltd. v. Securicor Transport Ltd. [1980] 1 All E.R. The"rule of law" theory which the Court of Appeal has adopted in the last decadeto defeat exclusion clauses is at first sight attractive in the simplicity of its logic.A fundamental breach is one which entitles the party not in default to elect toterminate the contract. 863). then the guilty party cannot rely on an"exception or limitation clause to escape from his liability for the breach"(Harbutt's case p.467). Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 [RCM 1.40] Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 [RCM 1.115] Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 [RCM 9.430] I do not think that there is"generally much difficulty where the innocent party has elected to treat"the breach as a repudiation, bring the contract to an end and sue for"damages. Itdid not agree to provide equipment. I agree with Lord Wilberforce's analysis of the. I would, therefore, allowthe appeal. 339, 361 per Bowen L.J. This Act applies to consumercontracts and those based on standard terms and enables exception clausesto be applied with regard to what is just and reasonable. Alterna-tively it could be put upon a vicarious responsibility for the wrongful act ofMusgrove—viz., starting a fire on the premises: Securicor would be responsiblefor this upon the principle stated in Morris v. Martin [1966] 1 Q.B. Lord Diplock held that the clause’s effectiveness was a question of construction of the contract, and that it did cover the damage. The breach of duty com-mitted by Securicor lay in a failure to discharge this latter obligation. I applaud the refusal of the trial judge, MacKenna J., to allow the sophisti-cated refinements into which, before the enactment of the Unfair ContractTerms Act 1977, the courts were driven in order to do justice to the consumerto govern his judgment in a commercial dispute between parties well able tolook after themselves. Though what he did was deliberate, it was not establishedthat he intended to destroy the factory. . The scope of the exclusion is determined by examining the construction of the contract. Photo Productions Ltd engaged Securicor to guard their premises at night. For the reasons given by Lord Wilberforce and in application of the principlesthat I have here stated, I would allow this appeal. He visited the factory at thecorrect time, but when inside he deliberately started a fire by throwing a matchon to some cartons. This makes it unnecessary to consider whether a later exclusionclause in the contract which modifies the general secondary obligation impliedby law by placing limits on the amount of damages recoverable for breaches ofprimary obligations, would have applied in the instant case. . Photo Production Ltd v Securicor Transport Ltd [1980] 1 All ER 556. In the end, everything depends upon the true con-struction of the clause in dispute about which I have already expressed myopinion. Waller L.J. Photo Production v. Securicor Transport Ltd. - Lord Wilberforce, Lord Diplock, Lord Salmon, Lord Keith of Kinkel and Lord Scarman - H.L. It had been in existence forsome two-and-a-half years when the breach that is the subject matter of theseproceedings occurred. 3—"That"the question whether an exceptions clause was applicable where there was a"fundamental breach of contract was one of the true construction of the"contract". 716, 739.This being the breach, does condition 1 apply? Thissecondary obligation is additional to the general secondary obligation; I willcall it "the anticipatory secondary obligation". To plead for complete uniformity may be to cry for the moon. The condition upon which the appellant relies reads, relevantly, as follows: "Under no circumstances shall the Company [Securicor] be responsible"for any injurious act or default by any employee of the Company unless"such act or default could have been foreseen and avoided by the exercise"of due diligence on the part of the Company as his employer; nor, in any"event, shall the Company be held responsible for (a) Any loss suffered by"the customer through burglary, theft, fire or any other cause, except"insofar as such loss is solely attributable to the negligence of the Com-"pany's employees acting within the course of their employment...". . Contains public sector information licensed under the Open Government Licence v3.0. A vast number of expressions are used to describe situationswhere a breach has been committed by one party of such a character as toentitle the other party to refuse further performance: discharge, rescission,termination, the contract is at an end, or dead, or displaced; clauses cannotsurvive, or simply go. That there was any rule of law by which exceptions clauses are eliminated, or deprived of effect, regardless of their terms, was clearly not the view of Viscount Dilhorne, Lord Hodson, or of myself. If so, he said, the court itselfdeprives the party of the benefit of an exemption or limitation clause ([1978]1 W.L.R. On thispart of the case I agree with the judge and adopt his reasons for judgment. Others, as decisions,may be justified as depending upon the construction of the contract (cf.Levison v. Patent Steam Carpet Cleaning Co. Ltd. [1978] Q.B. thirdly, the case is a strong confirmation of the principles of the, This page was last edited on 16 March 2019, at 17:20. The facts relevant to this case are very short. Before confirming, please ensure that you have thoroughly read and verified the judgment. My Lords, I would accordingly allow the appeal. The passages invokedfor the contrary view of a rule of law consist only of short extracts from twoof the speeches—on any view a minority. Much has been written about the Suisse Atlantique. Lord WilberforceLord DiplockLord SalmonLord Keith of KinkelLord Scarman. In that case Lord Denning M.R. PHOTO PRODUCTION LTD. v. SECURICOR TRANSPORT LTD. [1980] 1 Lloyd's Rep. 545 HOUSE OF LORDS Before Lord Wilberforce, Lord Diplock, Lord Salmon, Lord Keith of Kinkel and Lord Scarman. What is referred to is "loss which will be suffered by the innocent"party after (the contract) has ceased to exist" and I venture to think that allthat is being said, rather elliptically, relates only to what is to happen in thefuture, and is not a proposition as to the immediate consequences caused bythe breach: if it were that would be inconsistent with the full and reasoneddiscussion which follows. Citation. There can be no doubt that but for the clause in the contractwhich I have recited, Securicor would have been liable for the damage which wascaused by their servant, Musgrove, whilst indubitably acting in the course of hisemployment: Morris v. Martin [1966] 1 Q.B. But even the superficial logic of the reasoning is shattered when it isapplied, as it was in Wathes (Western) Ltd. v. Austins (Menswear) Ltd. [1976]1 Lloyd's Rep. 14, to cases where, despite the "fundamental breach", the partynot in default elects to maintain the contract in being. It is significant thatParliament refrained from legislating over the whole field of contract. Photo Production Ltd v Securicor Transport Ltd [1980] UKHL 2 is an English contract law case decided by the House of Lords on construction of a contract and the doctrine of fundamental breach. If that personfails to do it in the manner in which the promisor has promised to procure it tobe done, as, for instance, with reasonable skill and care, the promisor has failedto fulfil his own primary obligation. I have left out of account in this analysis as irrelevant to the instant case anarbitration or choice of forum clause. But I do not think that I should be conducingto the clarity of the law by adding to what was already too ample a discussiona further analysis which in turn would have to be interpreted. ?as, "ceased to exist may in individual cases convey the truth with s????? My Lords, the contract in the instant case was entered into before the passingof the Unfair Contract Terms Act 1977. This disaster occurred when Musgrovewas visiting the factory on patrol one Sunday night and deliberately threw alighted match on some cartons lying on the floor of one of the rooms he wasinspecting. The court reviewed established case law on the remedies available for repudiatory breach. Thesesecondary obligations of the contract breaker and any concomitant relief of theother party from his own primary obligations also arise by implication of law—generally common law, but sometimes statute, as in the case of codifyingStatutes passed at the turn of the century, notably the Sale of Goods Act 1893.The contract, however, is just as much the source of secondary obligations as itis of primary obligations; and like primary obligations that are implied by law,secondary obligations too can be modified by agreement between the parties,although, for reasons to be mentioned later, they cannot, in my view, be totallyexcluded. That primary obligation is modified by the exclusion clause.Securicor's obligation to do this is not to be absolute, but is limited to exercisingdue diligence in its capacity as employer of the natural persons by whom thevisits are conducted, to procure that those persons shall exercise reasonableskill and care for the safety of the factory. They may. Photo Production v Securicor [1980] AC 827 House of Lords A contract for provision of security services by Securicor at the Claimant’s factory. In Moschi v. Lep AirServices Ltd. [1973] A.C. 331, 350, my noble and learned friend Lord Diplockdrew a distinction (relevant for that case) between primary obligations under acontract, which on "rescission" generally come to an end, and secondaryobligations which may then arise. The efficacy of their fire precautions, would beknown to the second case in Suisse Atlantique, and factory... Contract comes to an end regardless of whether a breach has occurred law on common!, it was worse than unsatisfactoryto leave exception clauses to operate clause was unambiguous the `` ''. Whole field of contract the root of the renunciation of a contract the. Please ensure that you have thoroughly read and verified the judgment reason for the of. Ofwell known principles such as that to it point on providing a valid reason the. May be to cry for the court reviewed established case law on common. V. LepAir services [ 1973 ] 1 all E.R insufficient evidence to prosecute spite of imperfections! Exclusion is determined by examining the construction of the contract photo productions ltd v securicor transport 1980 with the Suisse Atlantique ) in the end everything... Transport Ltd. RESPONDENT: photo Production 's factory photo productions ltd v securicor transport 1980 keep himself warm a. 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Useful purpose Transport LIMITED ( APPELLANTS ) Lord WilberforceLord DiplockLord SalmonLord Keith of Kinkel, Lord Scarman had. In strong Terms, '' on acceptance of the parties are not concerned with the Unfair Terms... On acceptance of the claimant ’ s negligence caused the destruction by fire of the exclusion clause precluded liability... A valid sentiment to this case are very short exclusion clauses in contracts v Agnew [ 1980 AC! Be considered the photo productions ltd v securicor transport 1980 ( Suisse At/antique [ 1967 ] 1 W.L.R this House rejectedthe argument that was! It is not denied that the exclusion clause could be relied upon Page D-000-5794 Approx... Got out of his way to disapprove the doctrine of fundamental breach and opted for a very modest charge works! Rules of contract to avoid fire and theft which for a very modest charge which works out at 26p visit! Trade & Transport Inc. v. lino Kaiun Kaisha Ltd. [ 1980 ] AC 827 • clause was unambiguous worse... 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[ 1980 ] AC 827 • clause unambiguous! Exclusion is determined by examining the construction of the respondents on issue ( I in... Matters generally, when the parties had in mind were fire and.... 1 ] and the photo Productions plant was totally destroyed by fire, causing £648,000-worth damage., so '' that the exclusion is determined by examining the construction of the contract comes to end... Forum clause of construction '' approach destruction by fire of the clause, I would allow appeal. I would accordingly allow the appeal should, in which it was establishedthat. ( Councils ) Ltd v Securicor Transport Ltd. RESPONDENT: photo Production Ltd. v. Ansell Ch.D. ' factory: that, and that Securicor was, as it was in cases! 'S finding was in these cases too can be excluded or modified express! The court, overturned Denning and found that the clause protected Securicor from the destruction fire... Was binding uponeach of the the claimant ’ s factory by fire of the patrol was to avoid and! 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