Broadcasting Investment Group Ltd & Ors v Smith & Anor [2021] EWCA Civ 912 (18 June 2021)

Broadcasting Investment Group Ltd & Ors v Smith & Anor [2021] EWCA Civ 912 (18 June 2021)

Section 4 of the Contract (Rights of Third Parties) Act 1999 prevents the right conferred on a third party under section 1 from affecting the promisee's right to enforce the contract. The rule in Prudential cannot be invoked to bar the promisee's claim where the company's right arises solely by virtue of section 1. Therefore, BIG's claims under the Agreement are not barred by the rule in Prudential and should not have been struck out.

Citation
[2021] EWCA Civ 912
Parties
1st Appellant: Broadcasting Investment Group Limited; 2nd Appellant: Visual Investments International Limited; 3rd Appellant: Mr Kenneth Burgess; 1st Respondent: Mr Adam Smith; 2nd Respondent: Mr Dan Finch
Jurisdiction
England and Wales
Judgment Date
18 June 2021
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From High Court (chancery Division)
Outcome
Appeal allowed; cross-appeal dismissed
Legal Topics
Reflective Loss, Privity of Contract, Rights of Third Parties, Shareholder Claims, Specific Performance
Company Law Contract Law Reflective Loss Privity of Contract Rights of Third Parties Shareholder Claims Specific Performance

Case Brief

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Parties

Broadcasting Investment Group Limited

1st Appellant

Visual Investments International Limited

2nd Appellant

Mr Kenneth Burgess

3rd Appellant

Mr Adam Smith

1st Respondent

Mr Dan Finch

2nd Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From High Court (chancery Division)

Legal Issues

  1. 1 Whether the rule in Prudential bars a shareholder's claim where the company has a concurrent right under the Contract (Rights of Third Parties) Act 1999
  2. 2 Whether section 4 of the 1999 Act preserves the promisee's right to enforce the contract despite the company's right under section 1
  3. 3 Whether the rule in Prudential applies to claims for specific performance as well as damages

Ratio Decidendi

Section 4 of the Contract (Rights of Third Parties) Act 1999 prevents the right conferred on a third party under section 1 from affecting the promisee's right to enforce the contract. The rule in Prudential cannot be invoked to bar the promisee's claim where the company's right arises solely by virtue of section 1. Therefore, BIG's claims under the Agreement are not barred by the rule in Prudential and should not have been struck out.

Court Disposition

Appeal allowed; cross-appeal dismissed

Orders

  • The order striking out BIG's claims is set aside.
  • BIG's claims under the Agreement are reinstated.