|Judgments - Heaton and Others (Respondents) v. Axa Equity & Law Assurance Society Plc and Others (Appellants)
32. The claims against the appellants in the writs are for (1) damages for breach of the Equity & Law agreement, (2) damages for negligence in publishing from and after 8 February 1993 unfair, inaccurate and untrue reports and references in respect of Inter City/the respondents, (3) in the alternative damages for breach of contract in respect of the same publications, (4) an order that the appellants supply the respondents with a list identifying to whom they had published reports/references (5) an order that the appellants issue a corrective statement retracting the errors and inaccuracies in the reports or references published, and (6) a declaration that the appellants remain liable to pay Inter City commissions on investment contracts introduced by Inter City, notwithstanding the termination of the Equity & Law agreement, and an order for payment of these commissions.
33. The statement of claim sets out loss and damage claimed as a result of the appellants not paying the commissions said to be owed to Inter City and the respondents, the loss and damage suffered by Inter City as a result of the appellants' alleged unlawful conduct, and the loss and damage claimed by the respondents in their personal capacities as a consequence of the appellants' alleged unlawful conduct. The respondents say that they will give the appellants appropriate credit for the sums recovered by the appellants from Target. The total sum recovered by the respondents from Target was £10m. The balance of the respondents' claim which is now being pursued by them in these proceedings is said by the respondents to be worth at least £8m.
34. The appellants, in their defence and counterclaim served on 1 February 1999, alleged that their termination of the Equity & Law agreement was lawful on the grounds that Inter City had been engaged in the improper conduct of churning Target investment policies into Equity & Law investment policies. By a letter dated 22 February 1999 the appellants refused to withdraw their allegation of churning at this stage and observed that if the allegations are proved, then it may be right that they should affect the respondents' reputation and integrity. The appellants have continued at all times thereafter to maintain their allegation of churning against the respondents and did so particularly in the hearing before the Court of Appeal. They declined to alter this position at the hearing before your Lordships. Although the appellants' position is that no further reports or references were given by them in respect of Inter City or the respondents after 1994 by letter dated 29 July 1999, the second respondent's application to become an appointed representative introducer of Allied Dunbar Financial Advisers Ltd was refused on the ground that
The unresolved issues referred to are with the appellants.
35. On 27 January 1999 the appellants commenced third party proceedings against Target. These proceedings have not got beyond the issuing of a third party notice and have been stayed by consent pending the resolution of the preliminary issue in the main proceedings.
36. The preliminary issue ordered to be tried is in these terms:
37. The preliminary issue was tried before Laddie J, who 8 July 1999 declared that the consequence for the respondents' claims in these proceedings of the settlement agreement was that the respondents were precluded from continuing the proceedings, and ordered that the proceedings be dismissed. Laddie J gave permission to the respondents to appeal.
38. On 19 May 2000 the Court of Appeal unanimously allowed the respondents' appeal, the consequence of the Court of Appeal's order being that the settlement agreement does not inhibit the respondents from pursuing their claims in these proceedings against the appellants (save to the extent acknowledged in paragraph 80 of the statement of claim that appropriate credit is to be given to the appellants for the recoveries made from Target).
39. At first sight it would appear that the respondents are entitled to sue the appellants for any damage that they have suffered as a result of what they allege is the unlawful termination of the Equity & Law agreement on 8 February 1993. That agreement was a separate agreement from the target agreement. It was founded on allegations of improper dealings by the respondents which allegations have been adhered to up until the present time although Target has unreservedly withdrawn the allegations that Target had made to a similar effect in support of their termination of the Target agreement. The appellants were not parties to the settlement agreement between Target and the respondents. The submission that the settlement agreement precludes the respondents carrying on the present proceedings is based on the decision of your Lordships' House in Jameson v Central Electricity Generating Board  1 AC 455.
40. That case concerned Mr Jameson who a few days before his death had agreed to accept £80,000 from his former employer Babcock Energy Ltd "in full and final settlement and satisfaction of all the causes of action in respect of which the plaintiff claimed in the statement of claim". These were for negligence and/or breach of statutory duty in causing the disease of malignant mesothelioma from which he died by exposing him to asbestos at various premises at which he had been employed, including those of the defendant, for whom his employer had undertaken work. The fatal disease might have been caused by the negligence or breach of statutory duty of either or both of the employer and the defendant. If the employer was liable for causing the disease he was liable for the full extent of the damage which Mr Jameson suffered.
41. If the defendant was liable the damage caused by its negligence or breach of statutory duty would be included in the damage for which the employer was liable as the exposure at the defendant's premises was included in the exposure which Mr Jameson had suffered in his employment. The £80,000 was significantly less than the full liability value of the claim and in argument it was pointed out that the difficulties of establishing liability in negligence or breach of statutory duty against an employer for exposure to asbestos going back to the 1950s giving rise to mesothelioma were illustrated in a case such as Bryce v Swan Hunter Group plc  1 All ER 659. The House by majority held that Mr Jameson's agreement in the settlement to which I have referred precluded a claim by him against the defendant. Lord Browne-Wilkinson and Lord Hoffmann agreed with Lord Hope of Craighead whose detailed speech supported that result. Lord Clyde also delivered a detailed speech supporting the result but on somewhat different grounds and Lord Lloyd of Berwick dissented. I read the majority decision as authority for the proposition that where an action is founded on specified damage suffered by the claimant and the existence of that damage is essential to the success of the action, if the claimant has entered into an agreement under which he accepts a sum as full compensation for that damage, the action cannot proceed. Whether a particular agreement has that effect is a question of construction of the words, in the light of all the relevant facts surrounding it.
42. The argument for the appellants before your Lordships is substantially that the decision in the Jameson case precludes the present action against them just as the settlement in Mr Jameson's case precluded an action by his executors against the CEGB. The principal clause of the agreement by which the Target proceedings was settled is so far as material in these terms:
43. Clause 3 is a confidentiality clause which does not provide for disclosure of the settlement agreement to the appellants. Clause 5 is in these terms:
44. The agreement contains no reference to any claims against the appellants.
45. The contractual damages for the destruction of Inter City's business claimed in the Equity & Law action in respect of the termination of the Equity & Law agreement are wholly encompassed within the damages claimed in respect of the termination of the Target agreement. Indeed the Target claim was more extensive than the Equity & Law claim but it included all items of loss which are now claimed against Equity & Law under this general head. There are minor differences between the parallel claims made in this action and those in the Target action referred to by Chadwick LJ in the Court of Appeal. At the hearing before your Lordships, counsel for the respondents was content to accept that the claims for money in respect of those matters in both actions were the same. There are claims in the Equity & Law action which were not made against Target. These are the claims in respect of Equity & Law's refusal to withdraw or correct what was said to be the unfair and untrue allegations of churning and other serious misconduct. It has not been suggested that the appellants here were responsible for any damage caused by the termination of the Target agreement but it was alleged against Target that if the Target agreement was terminated Target should have had in contemplation that the Equity & Law agreement would be terminated in consequence.
46. In my opinion the damage on which the present action against the appellants is based is damage following on their termination of the Equity & Law agreement and the position which they have taken up and maintained in respect of allegations of churning and other serious misconduct. Similar allegations by Target made at an earlier stage were as I have said withdrawn unreservedly before the Target settlement was made.
47. In my opinion the damage for which Equity & Law are responsible to the respondents is the damage caused to them by the termination of the Equity & Law agreement and Equity & Law's maintenance of their position with regard to the allegations on which that termination was based to which they have adhered up until the present time. The claim against Target which has been settled was in respect of Target's conduct and the damage occasioned to the respondents by that. I cannot see that the decision of this House in the Jameson case provides any basis for saying that the action against the present appellants should not proceed. It is true that the contractual damages claimed in respect of the termination of the Equity & Law agreement are wholly encompassed within the damages claimed in respect of the termination of the Target agreement. The respondents here accept as I have already mentioned that they must give credit for sums paid by Target in respect of matters covered in the claims against the present appellants.
48. In respect of the claim for destruction of Inter City's business I do not find it possible to extract from the agreement with Target the inference that Target were necessarily accepting the full responsibility for that destruction and it is perfectly possible to read the settlement as a settlement of the claim for Target's part in that destruction not necessarily amounting to the full responsibility for that destruction.
49. The claim that Target is responsible in damages for the consequences of the termination of the Equity & Law agreement was denied in their defences by Target. That denial was not withdrawn as part of the settlement. The claims against the appellants, were the subject of a separate head in the assignation of Inter City's claims to the respondents. There was a separate action in court at the instance of the appellants against the respondents. The appellants had a contingent claim in the liquidation of Inter City. Although there is a provision in the settlement agreement protecting directors and employees of Target, there is no mention whatever of the appellants, and it appears that these appellants made no contribution whatever to the funds required to be paid by Target under the settlement.
50. In Jameson's case, if his employer had responsibility for the damage caused to him by exposure to asbestos the employer was responsible for the whole of that damage and that damage was the sole basis of the claim. Here, as I have said, the damage claimed against the appellants is not coincident with the damage claimed against Target which was the subject of the settlement and there is nothing in the Target settlement to show the extent to which Target accepted responsibility for the principal item of claim, namely the destruction of the Inter City business.
51. For these reasons I conclude that the Target settlement does not preclude the present action against the appellants.
52. I consider that the action should proceed and in the ordinary way an assessment should be made of the various claims and a value put upon them at the trial. If the total amount awarded in respect of the heads of damage that are dealt with in the Target settlement exceed the amount of approximately £5m appropriated to them in the Target settlement the award to the respondents would be the difference allocated between Inter City and the individual respondents in proportion to their claims. If the amount awarded is less than £5m this case will have been shown to be unnecessary so far as these heads of claim are concerned and no doubt this would be appropriately reflected in the awards of costs.
53. In this action, the respondents claim:
54. Apart from provisions in the statutory scheme for settlement of a defamation action into which a defendant enters voluntarily, this claim is without precedent. It was supported by counsel for the respondents on the basis that the court should fashion a remedy for breach of contract suitable to the circumstances. He accepted that a declaration could serve the purpose required. In my opinion, that is the appropriate remedy, if the relevant claims of fact in the action are proved. Even if the court so holds, the appellants might still genuinely believe the contrary and the court has no power to order a party to make a statement which he does not accept as true, however unreasonable the court may hold his non-acceptance to be. I would make it a condition of further progress if this claim is to be pursued that it be framed as a claim for an appropriate declaration.
55. For these reasons I am of opinion that this appeal should be dismissed.
56. I have read the opinions of my noble and learned friends Lord Bingham of Cornhill and Lord Mackay of Clashfern. I agree that this appeal should be dismissed for the reasons they have given.
LORD HOPE OF CRAIGHEAD
57. I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Bingham of Cornhill, Lord Mackay of Clashfern and Lord Rodger of Earlsferry. I agree that the appeal should be dismissed for the reasons which they have given.
LORD RODGER OF EARLSFERRY
58. I gratefully adopt the account of the facts given by my noble and learned friend Lord Mackay of Clashfern. In light of it I can summarise the main points.
59. The respondents claim damages from AXA Equity & Law Life Assurance Society plc ("Equity & Law") for loss which they allege was caused by Equity & Law's breach of contract and negligence. The respondents sue both as individuals and as the assignees of Glyne Investments Ltd which traded under the name Inter City ("Inter City"). In connexion with the same events Inter City had previously sued the Target Life Assurance Co Ltd ("Target") for damages for breach of contract. Inter City's rights in that action were assigned to the respondents and it proceeded in their name. In April 1998 the action was settled by a compromise agreement and subsequent Tomlin order. In terms of the settlement Target paid the respondents £10m. The respondents did not, as individuals, raise proceedings against Target but, when the settlement of Inter City's claim against Target was being negotiated, a draft statement was drawn up setting out this aspect of the respondents' claim. It is common ground that, when the settlement was reached, it took account of the claims of both Inter City and the individual respondents. As counsel for Equity & Law put it, the statement of claim in the present action is, in effect, an amalgamation of the amended statement of claim for Inter City against Target and the draft statement of claim for the respondents as individuals against Target. In that situation Equity & Law argue, on the basis of Jameson v Central Electricity Generating Board  1 AC 455, that the settlement with Target precludes the respondents from pursuing their claims in the present proceedings against Equity & Law.
60. In Jameson Mr Jameson had been employed by Babcock Energy Ltd ("Babcock") between October 1953 and 1958. During that time he had worked at various places, including two power stations owned and occupied by the Central Electricity Generating Board ("CEGB"). In the course of his work on the CEGB sites and elsewhere Mr Jameson was exposed to asbestos for relatively short periods. In 1987 he was diagnosed as suffering from malignant mesothelioma. He raised proceedings against Babcock in tort for damages for causing his illness. The defendants paid £75,000 into court and, soon after, just before Mr Jameson died, the proceedings were settled for the sum of £80,000 plus costs. The balance of the sum and costs due under the settlement was paid to Mr. Jameson's solicitors five days after his death when the court pronounced a Tomlin order giving effect to the settlement. At the time of the settlement between Mr Jameson and Babcock "the view of both parties' advisers was that the claim, including that for future loss of income, was worth about £130,000 if it were to succeed on liability, a valuation which the judge [in the proceedings against CEGB] said was reasonable." On the other hand, both advisers took the view that there were weaknesses in the claim, mainly because of the short periods of exposure to asbestos and because of doubts as to whether the dangers of exposure to asbestos had been sufficiently widely known at the time ( QB 323, 332C - D per Auld LJ). In due course Mr Jameson's executors raised proceedings against CEGB under the Fatal Accidents Act 1976 for his widow's loss of dependency. In terms of section 1(1) as amended they could do so only if CEGB were a person who "would have been liable" to an action of damages for negligence and breach of statutory duty at the instance of Mr Jameson "if death had not ensued". By a majority, your Lordships' House held that CEGB would not have been liable to an action of damages at the instance of Mr Jameson since the effect of the settlement, when it had been implemented in full by Babcock, was to discharge the claim of damages against "the other concurrent tortfeasors" ( 1 AC 455, 478F). They accordingly allowed the appeal and held that the executors' claim against CEGB was barred by Mr Jameson's settlement with Babock.
61. As that brief summary shows, the issue in Jameson was whether, having settled proceedings against one tortfeasor for less than the value of the claim if liability had been established, Mr Jameson could have sued another tortfeasor for damages on the ground that the tort of the second tortfeasor was also a cause of his mesothelioma. Here, by contrast, the question is whether the respondents, having settled proceedings for their loss caused by Target's breach of contract, can sue Equity & Law for part of that loss, on the basis that the alleged breach of contract by Equity & Law was also a cause of that part of their loss. In Jameson the two sets of proceedings would have been against separate but concurrent tortfeasors for causing the mesothelioma; here the two sets of proceedings are against companies who are alleged to have committed separate and overlapping breaches of contract which caused the part of the respondents' loss claimed in the proceedings against Equity & Law. As I explain in more detail below, the respondents' position in the action against Target was that their breach of contract had led to Equity & Law's breach of contract in terminating the Equity & Law agreement.
62. In Jameson there was a finding as to the value of Mr Jameson's claim for damages if Babcock had been found liable. In the present case, however, there is no similar finding as to the full value of the respondents' claim against Target: the respondents simply contend that their overall loss from the breaches of contract by Target and Equity & Law is £18m.
63. The decision in Jameson has been criticised - for example, in Foskett, The Law and Practice of Compromise, 5th ed (2002), p 122, para 6-49 and by the New Zealand Court of Appeal in Allison v KPMG Peat Marwick  1 NZLR 560. The respondents' written case foreshadowed a possible challenge to Jameson on the basis of these criticisms. In the event, however, counsel did not argue that it had been wrongly decided. Both sides proceeded on the basis that Jameson was correctly decided: inevitably, however, each had a different view as to its effect in the present circumstances. In particular, as part of his argument, counsel for the respondents contended that the decision in Jameson applied only to concurrent tortfeasors and should not be extended so as to apply in the case of concurrent or overlapping contract breakers causing the same loss.
64. In giving the decision of the majority in Jameson my noble and learned friend Lord Hope of Craighead started from the statement of Lord Nicholls of Birkenhead in Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd  AC 514, 522. Discussing the limitations on a plaintiff's freedom to sue successively two or more persons who are liable to him concurrently, Lord Nicholls said:
Statements of the law to the same effect are to be found in Erskine's Institute of the Law of Scotland III.1.15, Steven v Broady Norman & Co 1928 SC 351 and Balfour v Archibald Baird & Sons Ltd 1959 SC 64. As Lord Justice-Clerk Thomson observed in Balfour, at p 73, if the pursuer
65. It is not only a judgment that can have the effect of extinguishing the relevant loss: if one tortfeasor settles the victim's claim by paying him a sum which fully satisfies his right to damages for loss and injury, the victim cannot then sue any concurrent tortfeasor for damages for the same loss and injury. In Allison v KPMG Peat Marwick  1 NZLR 560, 589, para 134 Thomas J put the point in this way:
66. In Jameson ( 1 AC 455, 472F - G) Lord Hope stated the main issue in the case in these terms:
He answered this question by holding that a settlement, even though for less than the amount that a judge would have awarded on full liability, could constitute satisfaction of a plaintiff's claim with the effect of preventing him from suing any other tortfeasor for the same loss and injury. The significance of the agreement would be found in the effect which the parties intended to give it. The meaning which was to be given to the agreement would determine its effect:  1 AC 455, 473B - C. In deciding whether any particular settlement did indeed have this effect, the question was, said Lord Hope ( 1 AC 455, 476E - F),