Photo Production Ltd v Securicor Transport Ltd
House of Lords
Citations: [1980] AC 827; [1980] 2 WLR 283; [1980] 1 All ER 556; [1980] 1 Lloyd’s Rep 545; (1980) 124 SJ 147; [1980] CLY 353.
Facts
The claimants hired the defendants to provide a night patrol service for their factory. The main purpose of the patrol was to avoid fire and theft. The contract used the defendant’s standard terms, which included an exclusion clause.
The exclusion clause stated that the defendants would ‘under no circumstances…be responsible for any injurious act or default by any employee….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 … fire or any other cause, except insofar as such loss is solely attributable to the negligence of the company’s employees acting within the course of their employment.’
One of the defendant’s employees started a small fire. He lost control of the fire, which burned down the factory. The employee had satisfactory references when the defendant hired him. The claimant sued for £648,000 for breach of contract and negligence. The defendants attempted to rely on the exclusion clauses.
Issue(s)
- Did the facts of this case fall within the scope of the exclusion clause?
Decision
The House of Lords held that the facts of this case did fall within the scope of the exclusion clause. Properly interpreted, the clause covered both negligence and deliberate acts. As such, even though the defendant was in breach of an implied duty to act with due regard to the premises’ safety, the exclusion clause rendered them non-liable.
This Case is Authority For…
Lord Denning in several prior cases (including the Court of Appeal in this case) had argued that contract law has a doctrine of ‘fundamental breach’: J Spurling Ltd v Bradshaw [1956] 1 WLR 461. This doctrine meant that if a contract was terminated because of a repudiatory breach, the parties’ ability to rely on any exclusion or limitation clauses terminated also.
Lord Wilberforce in this case affirmed that there is no such doctrine in English law. He affirmed that the doctrine was abolished in Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361. He noted that the doctrine had previously mitigated against injustices. However, its role in this respect had been usurped by the Unfair Contract Terms Act 1977.
Lord Wilberforce explained that the ability of a party to rely on a limitation or exclusion clause in a terminated contract depends on the construction of that contract. Generally, it should be assumed that parties of equal bargaining power are free to apportion risk as they see fit.
Other
This case notes the contra proferentem rule. This holds that unclear exclusion clauses should be interpreted against the party seeking to rely on them. This was not necessary in this case, because the wording of the clause was clear.
Modern cases have stressed that the contra proferentem rule should only be applied in exceptional cases where the clause is truly ambiguous BNY Mellon Corporate Trustee Services Ltd v LBG Capital No 1 Plc [2016] UKSC 29.
