Midland Silicones Ltd v Scruttons Ltd

CourtHouse of Lords
JudgeViscount Simonds, Lord Reid, Lord Keith of Avonholm, Lord Denning, Lord Morris of Borth-y-Gest
Judgment Date06 Dec 1961
JurisdictionEngland & Wales

[1961] UKHL J1206-2

House of Lords

Viscount Simonds

Lord Reid

Lord Keith of Avonholm

Lord Denning

Lord Morris of Borth-y-Gest

Scruttons Limited
and
Midland Silicones Limited

Upon Report from the Appellate Committee, to whom was referred the Cause Scruttons Limited against Midland Silicones Limited, that the Committee had heard Counsel, as well on Monday the 9th, as on Tuesday the 10th, Wednesday the 11th, Thursday the 12th and Monday the 16th, days of October last, upon the Petition and Appeal of Scruttons Limited, of Colonial House, 30-34 Mincing Lane, in the City of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 2d of June 1960, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Midland Silicones Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 2d day of June 1960, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

Viscount Simonds

My Lords,

1

The facts in this case are not in dispute. They are fully and accurately stated in the judgment of the learned trial Judge, Mr. Justice Diplock, and I do not think it necessary to restate them. I come at once to the question of law which arises upon them.

2

The question is whether the Appellants, a well-known firm of stevedores, who admittedly by their negligence caused damage to certain cargo consigned to the Respondents under a bill of lading of the 26th March, 1957, can take advantage of a provision for limitation of liability contained in that document. In judgments, with which I entirely agree and to which, but for the importance of the case, I should think it necessary to add nothing, the learned Judge and the Court of Appeal have unanimously answered the question in the negative.

3

The Appellants' claim to immunity (for so I will call it for short) was put in a number of different ways, but I think that I do no injustice to the able argument of their counsel if I say that he rested in the main on the well known case of Elder, Dempster & Co. Ltd. v. Paterson, Zochonis & Co. Ltd. [1924] A.C. 522, contending that that is an authority binding this House to decide in his favour.

4

Let me then get rid shortly of some of the other arguments advanced on behalf of the Appellants.

5

In the first place I see no reason for saying that the word "carrier" either in the bill of lading or in the United States Carriage of Goods by Sea Act. 1936 (which the bill of lading incorporated) means or includes a stevedore. This is a proposition which does not admit of any expansion. A stevedore is not a carrier according to the ordinary use of language and, so far from the context supplying an extended meaning to the latter word, the contrary is indicated, as Lord Justice Hodson points out, by clause 17 of the bill of lading which authorises the carrier or master to appoint stevedores.

6

Then, to avert the consequences which would appear to follow from the fact that the stevedores were not a party to the contract conferring immunity on the carriers, it was argued that the carriers contracted as agent for the stevedores. They did not expressly do so: if then there was agency, it was a case of an agent acting for an undisclosed principal. I am met at once by the difficulty that there is no ground whatever for saying that the carriers were contracting as agent either for this firm of stevedores or any other stevedores they might employ. The relation of the stevedores in this case to the carriers was that of independent contractors. Why should it be assumed that the carriers entered into a contract of affreightment or into any part of it as agents for them?

7

Next it was urged that there was an implied contract between the cargo owners, the Respondents, and the stevedores that the latter should have the benefit of the immunity clause in the bill of lading. This argument presents, if possible, greater difficulties. When A & B have entered into a contract, it is not uncommon to imply a term in order to give what is called "business efficacy" to it—a process, I may say, against the abuse of which the courts must keep constant guard. But it is a very different matter to infer a contractual relation between parties who have never entered into a contract at all. In the present case the cargo owners had a contract with the carrier which provided amongst other things for the unloading of their cargo. They knew nothing of the relations between the carrier and the stevedores. It was no business of theirs. They were concerned only to have the job done which the carriers had contracted to do. There is no conceivable reason why an implication should be made that they had entered into any contractual relation with the stevedores.

8

But, my Lords, all these contentions were but a prelude to one which, had your Lordships accepted it, would have been the foundation of a dramatic decision of this House. It was argued, if I understood the argument, that if A contracts with B to do something for the benefit of C, then C, though not a party to the contract, can sue A to enforce it. This is independent of whether C is A's undisclosed principal or a beneficiary under a trust of which A is trustee. It is sufficient that C is an "interested person". My Lords, if this is the law of England, then, subject always to the question of consideration, no doubt, if the carrier purports to contract for the benefit of the stevedore, the latter can enforce the contract. Whether that premiss is satisfied in this case is another matter, but since the argument is advanced it is right that I should deal with it.

9

Learned Counsel for the Respondents met it, as they had successfully done in the courts below, by asserting a principle which is, I suppose, as well established as any in our law, a "fundamental" principle, as Lord Haldane called it in Dunlop Pneumatic Tyre Co., Ltd. v. Selfridge & Co. Ltd. [1915] A.C. 847, an "elementary" principle, as it has been called times without number, that only a person who is a party to a contract can sue upon it "Our law", said Lord Haldane, "knows nothing of a jus quaesitum tertio "arising by way of contract". Learned Counsel for the Respondents claimed that this was the orthodox view and asked your Lordships to reject any proposition that impinged upon it. To that invitation I readily respond. For to me heterodoxy, or, as some might say, heresy, is not the more attractive because it is dignified by the name of reform. Nor will I easily be led by an undiscerning zeal for some abstract kind of justice to ignore our first duty, which is to administer justice according to law, the law which is established for us by Act of Parliament or the binding authority of precedent. The law is developed by the application of old principles to new circumstances. Therein lies its genius. Its reform by the abrogation of those principles is the task not of the courts of law but of Parliament. Therefore I reject the argument for the Appellants under this head and invite your Lordships to say that certain statements which appear to support it in recent cases such as Smith & Snipes Hall Farm, Ltd. v. River Douglas Catchment Board [1949] 2 K.B. 500, and White v. John Warwick & Co. Ltd. [1953] 1 W.L.R. 1285 must be rejected. If the principle of jus quaesitum tertio is to be introduced into our law, it must be done by Parliament after a due consideration of its merits and demerits. I should not be prepared to give it my support without a greater knowledge than I at present possess of its operation in other systems of law.

10

I come finally to the case which is said to require us to decide in favour of the Appellants. The Elder Dempster case has been the subject of so much analytical criticism and so many different conclusions that one may well despair of finding out what was decided by which of the five noble and learned Lords who took part in it. In the course of the discussion before your Lordships my mind turned to what was said by Lord Dunedin (who was himself a party to the Elder Dempster decision) some four years later in Great Western Railway Co. v. Owners of s.s. Mostyn [1928] A.C. 57 at p. 73. He said:

"If from the opinions delivered it is clear—as is the case in most instances—what the ratio decidendi was which led to the judgment, then that ratio decidendi is also binding. But, if it is not clear, then I do not think it is part of the tribunal's duty to spell out with great difficulty a ratio decidendi in order to be bound by it. That is what the Court of Appeal has done here. With great hesitation they have added the opinon of Lord Hatherley to that of Lord Cairns and then, with still greater difficulty that of Lord Blackburn, and so have secured what they think was a majority in favour of Lord Cairns's very clear view. I do not think that the respect which they hold and have expressed for the judgments of your Lordships' House compelled them to go through this difficult and most unsatisfactory performance."

11

My Lords, Lord Dunedin's was a dissenting speech and at a later date this House...

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