Asbestos – contributions – estoppel – indemnities – liabilities – mesothelioma – railways – settlements – recovery of damages

BRB (Residuary) Ltd v Connex South Eastern Ltd (formerly South Eastern Train Co Ltd): QBD (Mr Justice Cranston): 23 May 2008 The claimant residuary body (B) brought proceedings against the defendant rail company (C) under the Civil Liability (Contribution) Act 1978 to recover damages it had paid out to the estate of a railway worker (H).

H had spent almost his entire career working for the railways, and had died from mesothelioma caused by exposure to asbestos through his work. Towards the end of H’s career, the railways were privatised under the Railways Act 1993, and the liabilities of the public board that had been responsible for the operation of the railways were transferred to C.

After H’s retirement, B, which was a wholly-owned subsidiary of the secretary of state for transport, inherited the residual liabilities of the board as a result of a scheme made under powers contained in the 1993 act. A deed of indemnity was made that had the effect that B indemnified C against liability for industrial disease.

After H’s death, his wife (D) brought a claim for damages on behalf of his estate, naming B as the defendant. B admitted liability, a judgment was entered against it, and a date for a damages assessment hearing was agreed. However, B subsequently discovered that C was liable, and that the terms of the deed of indemnity meant that C was not, in the circumstances, indemnified. B contacted C to discuss how they were to proceed, but C denied liability with regard to the claim. D then made a part 36 offer, which B accepted. During the course of the present hearing, C accepted that the settlement could not be said to be excessive. C submitted that (1) B could not claim a contribution under section 1(1) of the 1978 act as that section required B to be liable in respect of the same damage, yet B was under no liability to D; (2) since B was under no legal liability to D, what they had paid her was equivalent to a voluntary payment, and therefore if C was sued by D it was no answer that she had been compensated already by B’s voluntary payment; (3) B was estopped from bringing the proceedings.

Held: (1) B could claim a contribution from C under section 1(1). D had a judgment against B. Whether before the date of that judgment B was liable was irrelevant: the judgment itself gave rise to liability on the part of B, Abbey National Bank Plc v Matthews & Son [2003] EWHC 925 (Ch), [2003] 1 WLR 2042 considered. As a result of the judgment, B, along with C, were liable in respect of the same damage. C was also liable to contribute under section 1(4) of the 1978 act. The admission of liability amounted to a bona fide settlement within the terms of section 1(4). Also, that section had been interpreted so that C could resist a claim in contribution in circumstances in which B had a collateral defence to D’s claim, Arab Monetary Fund v Hashim (No10), The Times, 17 June (1993) applied. However, in the particular circumstances of the case, the factual basis of D’s claim gave B no collateral defence. (2) It simply did not make sense to say that B’s payment of D’s claim had failed to discharge C’s liability to her, Esso Petroleum Co Ltd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] AC 643 HL distinguished. It was not a matter of B assuming a voluntary obligation to D: payment was made under compulsion of a judgment. The ordinary rule would apply, that B’s payment would have to be brought into account in any claim by D against C, Eastgate Group Ltd v Lindsey Morden Group Inc [2001] EWCA Civ 1446, [2002] 1 WLR 642 applied. B’s payment of compensation under the judgment meant the diminution, indeed elimination, of D’s loss.

(3) There could be no argument that B was estopped by what it did from proceeding against C. B was not making any representations when it contacted C. It set out the options for C once it had been discovered that C, not B, was liable to D. Also, there was no evidence as to how C had relied on what B had told it. As to detriment, given that C accepted that the settlement with D was not excessive, it was not easy to see what that detriment was, apart from the theoretical advantage of C having representatives of its own choosing handling the matter. The essential requirements of estoppel were absent.

Judgment for claimant.

Mark James (instructed by Weightmans) for the claimant; Jonathan Watt-Pringle QC (instructed by Watmores) for the defendant.