Court dismisses claim over restaurant project management dispute

Background of the Case

The High Court of Justice, Business and Property Courts of England and Wales, recently delivered a judgment in the case of Benjamin Goldkorn against MPA (Construction Consultants) Ltd and Kazu Restaurants 1 Ltd. The case revolved around a contractual dispute related to a failed restaurant development project at 61-63 Beak Street, London.

Parties Involved

Benjamin Goldkorn, the claimant, was a former director of Kazu Restaurants 1 Ltd, which was in liquidation. The defendants were MPA (Construction Consultants) Ltd, a company contracted to provide project management services, and Kazu Restaurants 1 Ltd, a special purpose vehicle for the restaurant development.

Legal Issues

The primary legal issue was whether Goldkorn had the title to bring claims against MPA as an assignee of Kazu 1's rights or as a beneficiary of rights held on trust by Kazu 1. The claims were based on alleged breaches of contract and negligence by MPA in their project management role.

Contractual Agreements

The case centred on a project management appointment (PM Appointment) between MPA and Kazu 1, which included a proposal letter and terms and conditions (T&Cs). The T&Cs contained clauses restricting the assignment of rights and enforcement of terms to parties directly involved in the contract.

Assignment and Trust Declarations

Goldkorn argued his right to bring claims based on a Deed of Assignment and a Declaration of Trust executed by Kazu 1 and its liquidator. The Deed of Assignment purported to transfer any claims Kazu 1 had against MPA to Goldkorn, while the Declaration of Trust aimed to establish Goldkorn as a beneficiary entitled to enforce those claims.

Court's Analysis

The court examined whether the assignment was valid under the Law of Property Act 1925 and whether the contractual clauses in the PM Appointment prohibited such assignments. The court found that the assignment was invalid due to the restrictive clauses in the PM Appointment, which precluded the assignment of claims to Goldkorn.

Judgment

Deputy Judge Jonathan Acton Davis KC concluded that Goldkorn did not have the title to bring claims as either an assignee or a beneficiary. The court held that the clauses in the PM Appointment effectively barred any assignment of rights or enforcement by parties not directly involved in the contract.

Implications

This judgment underscores the importance of clear contractual terms regarding assignments and the enforcement of rights. It highlights the challenges faced by parties seeking to pursue claims through assignments or trust declarations when restrictive clauses are present in the original contract.

Learn More

For more information on construction disputes, see BeCivil's guide to Resolving Construction Disputes.

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