BRB (Residuary) Ltd v Connex South Eastern Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CRANSTON,Mr Justice Cranston |
| Judgment Date | 23 May 2008 |
| Neutral Citation | [2008] EWHC 1172 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: TLQ/07/1130 |
| Date | 23 May 2008 |
[2008] EWHC 1172 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Cranston
Case No: TLQ/07/1130
Mark James (instructed by Weightmans) for the Claimant
Jonathan Watt-Pringle QC (instructed by Watmores) for the Defendant
Hearing dates: 6, 7 May 2008
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
Say D1 admits liability to C, in the belief that it is legally liable, but at some point in the legal process realises that it has no liability but that D2 is liable. Can D1 recover from D2, what it has already paid to C? In the present case BRB (Residuary) Ltd (“BRB”), the claimant, seeks to recover from the Defendant, Connex South Eastern Ltd (“Connex”), BRB having settled a claim brought against it under the misapprehension that it was liable. As a matter of law liability always rested with Connex. Before discovering the mistake BRB had judgment entered against it on liability although it finally agreed damages only after the mistake became obvious. BRB now sues Connex under section 1 of the Civil Liability (Contribution) Act 1978 for what it paid out in accordance with the judgment. Connex denies that it is in any way liable.
Background
Malcolm Dines died in October 2003 from mesothelioma, a dreadful disease caused by exposure to asbestos. He had been born in 1931 and from the age of 16 spent his entire career working for the railways, except for two years National Service. Initially he worked as a cleaner, then as a fireman and later as a driver. There was no question but that his exposure to asbestos from 1947 until the late 1970s was through his work. So it was a liability going back almost sixty years. His widow, Valerie Dines, brought a claim on behalf of his estate under the Law Reform (Miscellaneous Provisions) Act 1934 and on her own behalf as the sole dependant of her husband under the Fatal Accidents Act 1976. The action was taken by the solicitors, Thompsons, who named as the defendant the claimant in this action, BRB. The proceedings were issued in February 2005 on a conditional fees basis.
Towards the end of Malcolm Dines' career, the railways were privatised under the Railways Act 199The manner in which this occurred was, and remains, controversial. For present purposes it needs simply to be noted that it led to a myriad of contracts with the range of rail operators, train maintenance companies, lessors of railway stock, and so on. One of the contracts was with the defendant in the present action, Connex. Connex had begun life in January 1995 as the South Eastern Train Co Ltd (“South Eastern”). The shares in South Eastern had originally been owned by the British Railways Board (“the Board”), the public authority which had under the Transport Act of 1962 taken over responsibility for the railways from the British Transport Commission. The latter had been formed under the Transport Act of 1947 on nationalisation of the railways. By a transfer scheme dated 20 July 1995 made under s. 85 of the Railways Act 1993, the liabilities of the Board (including any contingent liability to Mr. Dines) were transferred to what was then known as The South Eastern Train Company Limited (“the Company”). This transfer scheme came into effect on 23 July 1995. On the same date there was also 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) Regulations 1981 (TUPE). By share purchase agreement dated 20 August 1996 Connex Rail Limited, Connex's holding company, purchased all of the Board's shares in the Company. This share purchase agreement came into effect on 13 October 1996. The hiving off of companies, and their sale to private interests, was how privatisation of the railways was effected. On, or shortly after, 13 October 1996 the Company changed its name to Connex South Eastern Limited. This was also the date of a deed of indemnity, mentioned shortly between the Board, Connex (then known as The South Eastern Train Company Limited) and Connex Rail Limited. As a result of these changes, Malcolm Dines' employment transferred to The South Eastern Train Co Limited later, of course, Connex, in July 1995 and he continued in Connex's employment until 13 October 1996 when he retired. On 28 January 2001, BRB, 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 Railways Act 1993.
A deed of indemnity, entered in October 1996, was ancillary to the sale of the company by the Board to Connex Rail Ltd. Headed “Deed of Indemnity Relating to Industrial Diseases, Injuries and Third Party Liability” its effect is that BRB (as successor to the Board) indemnifies Connex and Connex Rail Limited against liability for industrial disease to the extent that such liability was caused by the act or omission of the British Railways Board or the British Transport Commission (clause 2). The Board's liability in this regard, including the liability that it inherited from the British Transport Commission, had transferred to South Eastern/Connex as a result of the transfer scheme already mentioned and the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). However, 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 (clause 4.1.1). Connex's franchise had terminated in November 2003, after public controversy about its standard of service. In this case the claim was not notified to BRB until July 200So although Connex had not itself exposed Mr Dines to asbestos, as a result of these various arrangements it was liable in law for the breach of the common law and statutory duties owed by the railways to him, but in his particular case Connex did not qualify for an indemnity from BRB.
Mrs Dines' claim form, issued in late February 2005, named BRB as the defendant. In the brief details on the claim form it was said that the claim was for injuries occasioned to Mr Dines during the course of his employment with BRB, which was clearly wrong, although the matter was spelt out in greater detail in the particulars of claim, that BRB were said to be successors in title to Mr Dines' employers and responsible for their negligence and breach of statutory duty. Even so, BRB was not the correct defendant; that was Connex. Mr Paul Sinclair, a solicitor working part time with BRB, explained in evidence that some 566 industrial disease claims of this nature were brought in the year 2005–6. A feature of many claims was that claimants sued BRB, not the railway relevant company, because ultimately it was BRB who paid. He regarded this as a straightforward claim: Mr Dines had been exposed to asbestos, he had died of mesothelioma and the policy of BRB was to be sympathetic in such cases. There was no need for the claim to be investigated because he was satisfied, given Mr Dines' working history, that this exposure was in the course of his employment on the railways and that there was a liability on their part. On 14 March 2005 he wrote to Weightmans, BRB's solicitors, and instructed them to act on behalf of the Board in dealing with the claim, indicating that all further correspondence should be addressed to BRB's loss adjustors, Crawford and Co (“Crawfords”).
In what I accept was a standard form letter Mr Sinclair told Weightmans that the correct defendant was Connex in whom Mr Dines' employment had vested in 1996 but noted that BRB had a right to defend the claim in Connex's name by virtue of an indemnity. Mr Sinclair has records of railway employees so that he knows their employment history and in whom their employment vested on privatisation. Although the claim named BRB as the defendant, which was incorrect, the experience of BRB from the early days of privatisation was that the Masters of the Supreme Court would resist an amendment of such claims to insert the correct defendant. The Masters' attitude was that they saw claimants needing compensation quickly, and that since BRB would eventually pay under an indemnity it was an internal squabble in the railway industry as to who was named as defendant. Consequently, given the history with the Masters, and the costs of making such application, Mr Sinclair had not on this occasion contemplated seeking to substitute Connex as the correct defendant. Of course the mistake here was that not only was Connex the correct defendant, but they did not have any claim against BRB under the deed of indemnity. I accept Mr Sinclair's evidence that he was under a misapprehension that Connex's liability was to be indemnified by BRB and his explanation as to why Connex were not contacted. Although BRB can conduct the defence of an action under the deed of indemnity it needs under the relevant clauses to do so in the name of the franchisee. Mr Sinclair said that in practice the indemnified railway companies were content for the whole matter to be handled by BRB. Although Mr Sinclair was aware Connex's franchise had been withdrawn, because of the publicity surrounding the withdrawal, he had not associated that with the termination of BRB's indemnity. The deeds of indemnity with the privatised railway companies were not in standard form, although there were similarities between different categories, for example, those with the rail operating companies, the track...
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