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BRB (Residuary) Ltd v Connex South Eastern Ltd (formerly South Eastern Train Co Ltd), High Court, 23 May 2008

30 June 2008
The issues

Civil Liability (Contribution) Act 1978 – whether party who had paid damages by mistake was able to recover those damages from the party that was in fact liable.

The facts

Malcolm Dines died in October 2003 from mesothelioma, caused by exposure to asbestos. There was no doubt about the exposure between 1947 until 1970 and that it was due to work. Proceedings were brought on behalf of the Estate and on behalf of the widow, as sole dependant. BRB (British Rail Board) was named as the Defendant. Towards the end of Mr Dines’ career, the railways were privatised and the liabilities of BRB, by a transfer scheme date 20th July 1995, were transferred (in this case) to the South Eastern Train Company Limited. The scheme came into effect in July 1995 when, at the same time, there was a transfer to the company of the board’s contingent liability to Mr Dines under Regulation 5 of the Transfer of Undertakings (Protection of Employment) Regulation 1981 (TUPE). In October 1996 the company changed its name to Connex South Eastern Limited. Although Connex had not itself exposed Mr Dines to asbestos, as a result of the various arrangements, Connex were liable in law for the breach of the common law and statutory duties owed by the railways to Mr Dines. There had been a Deed of Indemnity in October 1996 indemnifying Connex and Connex Rail Ltd against liability for industrial disease, to the extent that such liability was caused by the acts of omission of the British Railways Board. As a result of a quirk in the wording of the Deed, for the indemnity to be effective for some employees like Mr Dines, a claim had to be notified to BRB prior to the expiry of Connex’s franchise period. This ended in November 2003. The claim was not notified until July 2004. Therefore, Connex did not qualify for an indemnity from BRB. BRB admitted liability by its Defence dated 15th April 2005, Judgment being entered in June 2005. An interim payment of damages was ordered by the Court in the sum of £40,000.00, full assessment to occur in October. Subsequently, in mid-July, BRB discovered that, not only were Connex liable but that they had no indemnity against BRB. Negotiations proceeded with Connex with a view to persuading them to take over the claim. Connex, through AON Claims Management, denied any liability on the part of Connex. In September Mrs Dines made a Part 36 offer of £106,000.00. BRB accepted the offer immediately. They had taken the view that, due to the assessment in early October, any Application to resile from the admission of liability and amend the Defence and seek back £40,000.00 and start Part 20 proceedings was doomed.

BRB thereafter brought a claim against Connex under the Civil Liability (Contribution) Act 1978. Connex accepted that the £106,000.00 settlement for Mrs Dines claim could not be said to be excessive.

The decision

BRB could claim a contribution from Connex under the Civil Liability (Contribution) Act 1978. BRB was liable as a result of the Judgment entered against it in Mrs Dines’ favour. Connex were liable to Mrs Dines for the same damage as a result of TUPE and the arrangements for railway privatisation. The terms of Section 1(1) of the Act were satisfied in that BRB and Connex were both liable in respect of the same damage. Moreover, there was a bona fides settlement between Mrs Dines and BRB. The admission of liability and the acceptance of the offer amounted to such a settlement or compromise within the terms of Section 1(4) of the Act. Connex had argued that Connex could resist a claim in contribution, not only in circumstances in which the factual basis of the claim gave no rise to liability in law but also in circumstances in which BRB had a collateral Defence to her claim, arising out of facts which would have been for BRB and not Mrs Dines to establish. Connex argued that in this case BRB would have the benefit of such a Defence by which it could have avoided liability to Mrs Dines. (Arab Monetary Fund v Hashim) In that case, Mr Justice Chadwick had made it plain that factual basis between the Claimant and the Defendant had to be defined by the pleadings. On the pleadings no collateral Defence to liability was raised. BRB would have had to plead positive facts relating to Mr Dines employment with the British Transport Commission; The British Railways Board; The Southern Railway Company and Connex, and to have pleaded the terms of the 1995 transfer of employment to Connex, the effect of the transfer in law and the effect of the TUPE Regulations. This would have been a Defence, but it would not have been a Defence on the existing pleadings. In the particular circumstances of this case the factual basis of Mrs Dines’ claim gave BRB no collateral Defence. BRB therefore could claim a contribution from Connex under Section 1(4) of that Act as well as Section 1(1). The result on both Section 1(1) and Section 1(4) BRB could claim a contribution from Connex. The result, accorded with the policy behind the Act, which was that even if there were a cloud over a Defendant’s legal liability, that should not delay settlement of a meritorious claim while enquiries were made as to whether someone else was liable. Whilst generally the law would not come to the aid of those who made serious mistakes, to reach a different result in this case would have meant that a party was clearly liable in law would avoid having to pay. BRB was therefore entitled to Judgment for the monies paid to Mrs Dines and for Mrs Dines’ reasonable legal costs in pursuing her claim. However, since BRB had no legal liability to Mrs Dines and could have defended her claim for costs, if it had not made a mistake about its own liability it would not be just and equitable in the language of Section 2(1) of the Act for BRB to recover the costs that it had itself incurred in conducting Mrs Dines claim.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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