Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd (The Aliakmo...

Facts

• Leigh & Sillavan Ltd (the buyer) contracted to purchase steel coils from a seller, with shipment from South Korea to the United Kingdom.
• The contract provided that legal property in the goods would transfer to the buyer upon payment, which had not occurred when the goods were damaged in transit.
• The goods were damaged while being transported by Aliakmon Shipping Co Ltd (the carrier).
• The buyer sought to claim in tort against the carrier for negligence causing damage to the goods, despite not yet having acquired legal ownership at the time of the damage.

Issues

1. Whether a buyer who has not obtained a proprietary or possessory interest in goods can sue a carrier in tort for damage to those goods during transit.
2. Whether contractual rights alone, in the absence of a proprietary interest, are sufficient to support a tortious claim against a third party for damage to goods.
3. Whether any exceptions to the doctrine of privity, such as bailment or trust, applied to enable the buyer to claim.

Decision

• The House of Lords held that the buyer, not having acquired property or possession in the goods at the time of damage, could not claim in tort against the carrier.
• It was found that contractual rights without a proprietary or possessory interest do not confer standing to sue in tort for physical damage to goods.
• The court determined that exceptions to privity, such as bailment or trust, were not applicable in this case.
• The judgment affirmed the separation between rights arising under contract and those based on proprietary interests in commercial contexts.

Legal Principles

• Proprietary or possessory interest in goods is necessary to claim in tort for their physical damage; purely contractual rights are insufficient.
• The doctrine of privity of contract precludes third parties (including buyers with no proprietary interest) from enforcing contractual rights or obligations.
• Tortious liability for damage to goods requires the claimant to have suffered direct and personal (not purely economic) loss arising from a proprietary interest.
• Statutory provisions such as the Sale of Goods Act 1979, particularly section 17, determine when property in goods passes from seller to buyer.

Conclusion

The decision in Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd (The Aliakmon) [1986] AC 785 clarifies that only parties with proprietary or possessory interests in goods have standing to claim in tort for damage, reinforcing the importance of both proprietary interest and privity of contract in commercial transactions.