Wealands v CLC Contractors Ltd
| Jurisdiction | England & Wales |
| Judge | Nourse,Mantell,Mance L JJ. |
| Judgment Date | 22 July 1999 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 July 1999 |
Court of Appeal (Civil Division).
Nourse, Mantell and Mance L JJ.
Geoffrey Brown (instructed by Hextall Erskine) for the appellant.
Toby Landau (instructed by Burges Salmon) for the respondent.
The following cases were referred to in the judgment of Mance LJ:
Chandris v Isbrandtsen-Moller Co IncELR [1951] 1 KB 240.
Halki Shipping Corp v Sopex Oils Ltd [1998] CLC 583; [1998] 1 WLR 726.
India (President of) v La Pintada Compania Navigacion SAELR [1985] AC 104.
Ram Dutt Ramkissendass v E D Sassoon & Co [1929] WN 27.
Société Commerciale de Réassurance v Eras (International) Ltd (formerly Eras (UK))UNK [1992] 1 Ll Rep 570.
Arbitration — Contribution — Action by contractor for contribution or indemnity from subcontractor — Whether claim for contribution or indemnity could be stayed for arbitration — Civil Liability (Contribution) Act 1978 — Arbitration Act 1996, s. 9.
This was an appeal by a contractor from a decision of Tuckey J ([1998] CLC 808) that proceedings by the contractor for contribution or indemnity from a subcontractor should be stayed for arbitration under the subcontract arbitration clause.
The plaintiff commenced an action against the defendant contractor seeking damages for the death of her husband who had been employed by the defendant as a shot blaster and had died when the scaffold he was working from collapsed. The plaintiff alleged that the scaffold was defective. The defendant denied that the scaffold was defective but if it was alleged that that was the result of the negligence of the subcontractor which erected the scaffold. The defendant did not join the subcontractor as a defendant but issued third party proceedings seeking an indemnity or contribution on several grounds under the subcontract, including inter alia express indemnity clauses in the subcontract, breach of the subcontract and breach of tortious duties. The third party applied to stay the defendant's claim against it under s. 9 of the Arbitration Act 1996 by virtue of cl. 18 of the subcontract which contained an arbitration agreement. Tuckey J stayed the proceedings and the defendant appealed arguing that there was no dispute between the parties capable of being referred or that the third party claims were not within the subcontract arbitration clause or that the arbitration clause did not cover the claim for contribution under the Civil Liability (Contribution) Act 1978.
Held, dismissing the appeal:
1. In the absence of any admission of liability to indemnify the defendant, the claims in the third party notice had to be taken to be in dispute.
2. The arbitration agreement contained in the subcontract was wide enough to cover the defendant's primary claims under the subcontract for breach of the subcontract and under the express indemnity provisions. Clause 18 was a general agreement to refer disputes to arbitration and the dispute between the defendant and third party relating to responsibility for the personal injuries claim was within it. Further an arbitrator would have power to adjudicate any question of contributory negligence. The clause was also wide enough to cover tortious claims for breach of duty of care and misrepresentation.
3. The arbitration clause covered the claim for contribution under the Civil Liability (Contribution) Act 1978. There was nothing in the 1978 Act to prevent the parties to an arbitration agreement agreeing on the application of the principles of the 1978 Act, and nothing to prevent them agreeing to forgo any right they might have to seek contribution. If an arbitrator appointed under cl. 18 would lack the power to award contribution, that was the consequence of the parties having agreed to submit their disputes to arbitration and was not a reason for refusing a stay under s. 9 of the 1996 Act. (Société Commerciale de Réassurance v Eras (International) Ltd (formerly Eras (UK)) (the Eras EIL actions)UNK[1992] 1 Ll Rep 570applied.)
Mance LJ:
1. The claimant in this action is the widow and administratrix of Mr Brian Wealands, who died in an accident on 29 September 1995 involving a scaffold suspended from Hammersmith Bridge where he was working as a shot-blaster. The defendant is the main contractor which employed Mr Wealands. The first third party is the firm of scaffolding subcontractors, which erected the scaffold under subcontract with the defendant. The issue before the court is whether the defendant's claim against the first third party for indemnity and/or contribution must be stayed under the arbitration clause in the subcontract.
2. The claimant's claim against the defendant is made on the basis that the scaffold was defective. If and so far as any defect may have arisen from fault or default of another, the claimant relies on the Employers Liability (Defective Equipment) Act 1969. The defendant denies that any defect in the scaffold led to the accident and avers that the scaffold collapsed through being fouled by a rope from a barge operated by the second third party. But, if the scaffold collapsed due to any defect, the defendant pleads by its defence dated 7 August 1997 that this involved negligence and/or breach of statutory duty and/or breach of contract by the first third party. By notice dated 6 August 1997 the defendant claims indemnity or contribution from the first third party on a number of bases, which I can summarise as follows: (a) breach of express or implied obligations under the subcontract; (b) two express indemnity clauses in the subcontract; (c) breach of tortious duties of care allegedly owed both to the claimant and to the defendant; (d) breach of a warranty or negligent misrepresentation arising from the issue to the defendant and reliance by the defendant upon a handover certificate certifying the scaffold's structural soundness. On 11 November 1997 the first third party applied for a stay of the defendant's claim under s. 9 of the Arbitration Act 1996. The application was dismissed by Master Murray on 21 January 1998, but granted on appeal by Tuckey J on 25 February 1998 ([1998] CLC 808). The matter now comes before this court by permission of a single judge of this court.
3. At some date after the hearing before Tuckey J, the claimant obtained leave to join the first third party as second defendant, but failed, for unexplained reasons, to implement the leave within the relevant limitation period. The issue before us therefore arises in proceedings in which, but for the third party notice, the third party would not be a participant. But the same issue could, and perhaps normally would, arise in proceedings in which the third party would anyway be involved as a co-defendant. That consideration was relied upon by the defendant when submitting that the conclusion reached by Tuckey J could involve inconvenience, if not anomaly.
4. It is convenient at this point to set out certain express terms of the subcontract:
“2 General
(1) The Sub-Contractor shall execute, complete and maintain the Sub-Contract Works in accordance with the Sub-Contract and to the reasonable satisfaction of the Contractor and of the Engineer.
(3) The Sub-Contractor shall indemnify the Contractor against every liability which the Contractor may incur to any other person whatsoever and against all claims, demands, proceedings, damages, costs and expenses made against or incurred by the Contractor by reason of any breach by the Sub-Contractor of the Sub-Contract.
12 Indemnities
(1) The Sub-Contractor shall at all times indemnify the Contractor against all liabilities to other persons (including the servants and agents of the Contractor or Sub-Contractor) for bodily injury, damage to property or other loss which may arise out of or in consequence of the execution, completion or maintenance of the Sub-Contract Works and against all costs...
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