WORKINGTON HARBOUR AND DOCK BOARD v. TRADE INDEMNITY COMPANY, LTD.

(1938) 60 Ll.L.Rep. 209

HOUSE OF LORDS.

Before Lord Atkin, Lord Thankerton, Lord Russell of Killowen, Lord Macmillan and Lord Maugham.

Contract-Breach - Res judicata - Surety bond guaranteeing performance of contract -Construction of works by K & R on plaintiffs' dock premises at Workington -Instructions to persons tendering that contractor must make his own independent inquiries as to the site and the water therein, and that the plaintiffs would not be bound by any representation that their engineers or their employees or the plaintiffs' employees might make to the contractors, unless in writing by the clerk to the plaintiffs -Tender by K & R-K & R notified that tender would be accepted if they provided guarantee-Surety bond for £50,000 entered into by defendants guaranteeing K & R's performance of contract-Failure of K & R to complete contract-Work completed by plaintiffs -Claim under bond - Evidence of agreements for loans made by plaintiffs to K & R during course of contract work-Indebtedness of K & R to plaintiffs denoted by final certificate issued by plaintiffs' engineers, certifying that £78,785 was due - Sum including balance due upon loans for principal and interest-Decision of H.L. that the loan agreements were outside the original contract and did not come

within the defendants' obligations under their bond, and that therefore the engineers' certificate, which included unknown sums due under the loan agreements, was not binding on the defendants-Further action brought by plaintiffs on bond, plaintiffs alleging that by reason of the breach of the general undertaking by K & R to carry out the terms and obligations of the contract, they (the plaintiffs) had suffered loss and damage-Plea by defendants of res judicata-Correct procedure upon such a plea-Order of C.A. (Greer and Slesser, L.JJ., MacKinnon, L.J., dissenting), reversing Lewis, J., and affirming Master, that proceedings must be stayed.