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Judgment - Jameson and Another v. Central Electricity Generating Board and Others  continued

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But here a second special feature of the case arises. By the time of his death there had been agreement to settle the case, but there had not been payment of the agreed sum. Whether an accord does or does not have the effect of achieving a discharge depends upon the terms of the agreement. The position in a case of contract was explained by Lord Atkinson in Morris v. Baron & Co. [1918] A.C. 1 at p. 35, as follows:

     "There is no doubt that the general principle is that an accord without satisfaction has no legal effect, and that the original cause of action is not discharged as long as the satisfaction agreed upon remains executory. That was decided so long ago as 1611 in Peytoe's Case ((1611) 9 Rep. 77b, 79b). If, however, it can be shown that what a creditor accepts in satisfaction is merely his debtor's promise and not the performance of that promise, the original cause of action is discharged from the date when the promise is made."

It is open to the creditor to insist upon performance by the other party before the discharge is to be effective and in such a case the liability of the other will remain until performance has been made. On the other hand if the creditor has accepted in satisfaction the debtor's promise, as distinct from the performance of his promise, the original cause of action will be discharged from the date when the promise is made. Thus in British Russian Gazette and Trade Outlook Ltd. v. Associated Newspapers Ltd. [1933] 2 K.B. 616, the agreement there made was seen as one where the consideration was an executory promise and was enforceable at least by way of counterclaim. Scrutton L.J. observed (at p. 644) "The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative." As Greer L.J. recognised (at p. 654), the promise is valuable consideration and the agreement is enforceable at law. Looking at the exchange of letters in the present case I consider that the agreement reached by the time of the deceased's death was legally effective to achieve a discharge.

The significance of the accord in such a case as the present where the promise serves as consideration is the substitution of a contractual obligation for the original debt, illiquid in the case of a claim in tort. After the agreement for settlement has been concluded the original claim is superseded and a contractual claim put in its place. What the parties have done is to agree to the substitution for the original right and liability, contingent as they may have been, of a contractual obligation to pay, or even perform, something in return for a surrender of the claim, thereby innovating on the original relationship and superseding it. After the settlement has been agreed the rights and obligations of the parties are governed by the contractual provisions which they have made and unless these require for any reason to be annulled the agreement provides the measure of the respective rights and obligations of the parties in place of any previous claim or liability in respect of the matter in relation to which the settlement has been made. Actual satisfaction is only achieved when payment or performance on the agreed terms has been made. If that is done then the rights and obligations of the parties under the settlement agreement are spent.

A question could arise about the remedies of the creditor if the debtor fails in performance. Greer L.J. in the British Russian Gazette case said at p. 655 that the "only remedy" was to sue for damages if performance was refused. On the other hand where there has been a settlement but satisfaction has not been made it may well be thought that the plaintiff should be enabled to re-open the matter and if necessary seek his damages against another tortfeasor. This has certainly been recognised in Scotland. In Steven v. Broady Norman & Co. 1928 S.C. 351 a worthless decree which had been obtained against one wrongdoer was held to be no bar to an action against another who was alleged to be liable jointly and severally with the other. And in Arrow Chemicals Ltd. v. Guild 1978 S.L.T. 206 it was recognised that recovery from one of two persons alleged to be jointly and severally liable to the pursuer was only precluded where full reparation had been made and the case was continued in order to explore the alleged inability of one of the two to honour a decree which had been pronounced against him for payment.

It may be that the unsatisfied creditor could re-open a settlement on the ground of an implied condition in it for performance, or an implied resolutive condition covering the possibility of a failure in performance; but in the present case the agreed sum was paid and it is unnecessary to express a view on the point.

It was accepted before the Court of Appeal that on the assumption that both Babcock and the Board were liable they were to be regarded as several or concurrent tortfeasors. They would be on that assumption several tortfeasors causing the same damage. I shall refer to them simply as concurrent tortfeasors. It was open to the deceased to have commenced proceedings at the outset against both Babcock and the Board. Or he could have commenced proceedings against the one and either he or the Board could have brought the other into the proceedings at a later stage. But he chose to go only against Babcock. If matters had remained in that state at his death it could be said that he would have been entitled to maintain an action against the Board. But then the settlement intervened and the question is what effect that had.

One approach to the solution is by way of construction of the agreement. Certainly the parties could have expressed their agreement in terms which would have left the matter in no doubt. It could have been expressly provided that this was a settlement only of the deceased's claims against Babcock without prejudice to any claims he might make against the Board or anyone else and without prejudice to any liability Babcock might then incur by way of contribution to such a party in the event of a successful claim being made. Or it could have been expressly stated that the settlement was intended not only to resolve the rights and obligations as between the deceased and Babcock, but was also intended to free Babcock absolutely from any further liability by way of contribution to anyone else. Where the proceedings have been brought against both concurrent tortfeasors release of one may more readily be seen as a reservation of rights against another, as in Townsend v. Stone Toms & Partners (No.2) (1984) 27 B.L.R. 26, where the claims partially overlapped and account had to be taken of the sum recovered by agreement from the one party in the continuation of the action against the other.

Had the Board also been a party to the action and the settlement was made only with Babcock, it might more readily be construed that the deceased's rights against the Board, and Babcock's possible liability in contribution were to be preserved. But that was not the situation. The Board was never made party to the action. Nothing was said of any possible claim against the Board. Indeed it is a matter of agreed fact that Babcock was never informed of the possibility that any action would be taken against the Board by the deceased or his executors. The possibility of such further action played no part in the settlement.

I do not find the words used in the agreement in the present case readily open to a construction which solves the question one way or the other. The terms of the letters are too general to do that. The terms of the payment into court refer to all the causes of action, which might seem to be comprehensive, but are then qualified with the words "in respect of which the plaintiff claims" which may limit the scope to Babcock's liabilities to the deceased. That certainly appears to be the scope of the first paragraph of the draft order which the solicitors were exchanging as embodying their agreement before the deceased died. On the other hand in agreeing in terms of the fourth paragraph of the draft order that on payment of the balance of damages and agreed costs Babcock should be "discharged from any further liability in respect of the plaintiff's claim in this action" it may be that even a liability in contribution was intended to be released.

As I have already said, a plaintiff can make it clear in the agreement to settle the action whether or not he is reserving his right to go against another person. The question arises what view the law is to take if he has failed to make the position clear. Is it to be assumed that he is reserving his right, so that he must expressly state that he is not doing so? Or is it to be assumed that he is not reserving his right, so that he must expressly state that he is doing so? Where the matter is not resolved by the words used in the agreement in the context of the particular case one has to resort to considerations of policy and principle.

It is plain matter of policy to secure that litigation should be terminated and successive claims discouraged. That can be illustrated by the provision contained in section 4 of the Civil Liability (Contribution) Act 1978. Further it seems to me that the law should discourage any opening up of settlements which parties have concluded between themselves, with a view to analysing whether they are sufficient to secure what the parties believed they were securing, namely a fair compromise of the differences between them. The problem such as has arisen in the present case can be avoided by taking proceedings against all the potentially liable parties at the one time. As matter of policy it seems to me that where the matter is left in the air a settlement with one of several parties who are jointly and severally liable to the same plaintiff should involve a release of the others.

But beyond all of that the basic consideration both of policy and principle must be that while those injured by a tort committed by others should be compensated through the processes of the law, they should not be enabled to recover damages twice over. Such a result offends the basic principles of reparation, and, while it was accepted as a possible consequence of the operation of section 4 of the Fatal Accidents Act 1976 it is not to be regarded as an acceptable consequence of an accord and satisfaction. The principle is recognised in England in, for example, Bird v. Randall (1762) 3 Burr 1345, in Australia in Boyle v. State Rail Authority (1997) 14 N.S.W.C.C.R. 374 and in the United States of America in Latham v. Des Moines Electric Light Co. (1942) 26 N.W. 2d. 853.

It is necessary also to make some analysis of an agreement to settle. A claim for damages may have a value which does not equate with the quantification of the loss and injury which is claimed. This is not simply because it is an illiquid claim. A claim for an ascertained sum which is due and owing may correspondingly have a value which falls short of the ascertained sum because ,for example, there may be some technical difficulty in the proof of it, or more pragmatically because there is some doubt about the financial position of the debtor. In the case of a claim for damages there may be an uncertainty about the proof of the liability of the defendant there may be a variety of factors affecting the prospects of success and there may always be hazards in the process of litigation. So the value of the claim may well be less than the full amount of the debt. In light of such uncertainties the creditor may well feel that a just result can be achieved by a payment of the value of the claim, thereby avoiding the trouble and the uncertainties of insisting on his right to prosecute the matter to a judicial conclusion. So a settlement may be reached under which he would receive what may be seen as the value of the claim, which may or may not be close to the amount of the claim, depending on an assessment of the various factors, some doubtless imponderable, which may arise in the circumstances of the particular case. Such settlements are of course to be encouraged. If, as ought to be the case, the figure is reached after an arms' length negotiation, it can reasonably be assumed that the figure finally agreed upon does represent the full value of the claim. Each party has to balance the strengths and weaknesses of their respective positions and it is only after an assessment, or even a re- assessment, of these that the eventual figure is eventually identified.

What is then agreed and paid is a sum which represents the full value of the claim so that the indebtedness is thereby extinguished. What is paid is the present value of a possible future award. So it does not seem to me that in the ordinary case after settlement has been made and satisfied with the one defendant there can be a balance of the claim which is recoverable from another possible defendant. What the parties must be seeking to achieve is a conclusion to their respective rights and liabilities so as to extinguish them altogether for the future. It may be that the terms of the agreement for settling the action will themselves make it evident that the debtor is being completely discharged so as to bar the claimant from renewing the claim against him. But apart from that by operation of law it seems to me that having received the full value of his claim a vital ingredient has gone from his original cause of action so that he is no longer able to prosecute his claim. If he was allowed to do so that would offend against the principle that he would be getting all or part of his damages twice over.

Where the case has gone to trial and judgment has been awarded and satisfied the plaintiff should not be entitled to go against another concurrent tortfeasor in the same matter. The whole of his loss will have been assessed and quantified, and after payment his whole claim would be exhausted. This result appears to be in conformity with the position established in Scotland. In Balfour v. Baird & Sons 1959 S.C. 64 a steel dresser was awarded damages from one of his former employers for pneumoconiosis. He then endeavoured to sue another of his employers who had allegedly also caused his contraction of the pneumoconiosis, explaining that he had only received partial damages in the earlier proceedings and now sought to recover the balance from the other employer. His claim failed. It was held that having invited a court to give him full satisfaction for the whole of the loss and damages suffered by him and had won an award of damages that was an end of it. The damage had ceased to exist.

But exceptional circumstances may occur where there is a deficiency in the award and the plaintiff may be entitled to sue another concurrent tortfeasor for the balance of his claim. Such a course was allowed in Kohnke v. Karger [1951] 2 K.B. 670. That was a somewhat special case in so far as the first action had been taken in France where the one defendant, a driver and his employers, resided and where their assets were. The second action was brought in England where the other defendant resided and where it was assumed his assets were. The judge was satisfied that the assessment of damages in French practice would produce an award less than what would be regarded in England as full satisfaction and he made an award in the English action. But the case must be seen as depending upon its own rather unusual circumstances.

In principle it seems to me that where settlement is sought with one alone, where the others are not involved in the proceedings, the intention of the parties should usually be taken to be that they are achieving a complete termination to any claims by the creditor and a complete freedom for the future for the debtor. On the one hand the creditor is being fully compensated for the value of his claim so as to exhaust any right to pursue it further in any direction. On the other hand the debtor is being discharged from any possible liability in contribution so that the creditor would be in breach of the agreement were he to sue a third party and create such a liability. Particular circumstances and particular terms in the agreement may obviate such consequences, but, where the matter has been left open and unclear, it seems to me that those are the consequences which should follow upon the settlement of one co-obligant in a joint and several obligation which has been carried out in the absence of any other co-obligant.

The decision in Balfour v. Baird was carried a stage further in Carrigan v. Duncan 1971 S.L.T. (Sh.Ct.) 33 where the pursuer had settled his action against one party by the acceptance of a tender made in the court process which had been followed by a decree of the court awarding the sum which had been offered and accepted. It was held that where the pursuer had maintained the first action solely against one of the parties who might be jointly and severally liable, despite a defence to the effect that the other party had caused or contributed to the accident which gave rise to the claim, and had accepted a tender "in full settlement of the conclusions of the action," he was not entitled to bring proceedings against the other party although he asserted that the tender had been made on a basis of partial liability. The court held that the intention of the parties to the settlement "must be assessed objectively upon the basis of the decree itself in the context of the pleadings of the parties and of the terms of the tender upon acceptance of which the decree proceeded."

The decision in Carrigan has been followed in Australia. In Ruffino v. Grace Bros Pty Ltd. [1980] 1 N.S.W.L.R. 732 no distinction was recognised between judgments arrived at by settlement and judgments arrived at by judicial determination. Where the plaintiff had received a payment in his first action which could only be regarded as full satisfaction, that exhausted his rights, so that he was not entitled to take further proceedings against another party who might have been jointly and severally liable. A like view was taken in Boyle v. State Rail Authority (1997) 14 N.S.W.C.C.R. 374, where the defendants had all been sued together. The plaintiff settled with eight of the nine defendants, all of whom were jointly and severally liable, and sought to proceed against the ninth, it was held that there was insufficient evidence that the plaintiff had received the amounts of the settlement otherwise than as full compensation for his claim.

This is a case of allegedly concurrent tortfeasors, that is to say several tortfeasors causing the same damage. We were referred to certain cases relating to joint tortfeasors as distinct from several tortfeasors causing the same damage, but it is unnecessary to decide any question about joint tortfeasors in the present case, or indeed any question about concurrent or joint co-obligants in contract, as to which reference could be made to Deanplan Ltd. v. Mahmoud [1993] Ch. 151. For present purposes it is enough to hold that the deceased in the present case would not have been entitled to commence proceedings against the Board at the time of his death. I would accordingly allow the appeal.


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