Judgments - Heaton and Others (Respondents) v. Axa Equity & Law Assurance Society Plc and Others (Appellants)
|
67. Two points emerge clearly from these passages from Lord Hope's speech. 68. First, the reasoning proceeds on the basis that, in certain cases, a settlement between a claimant and one tortfeasor, even though for a lesser sum than would have been awarded on full liability, can have the same effect as a judgment between the claimant and the same tortfeasor in preventing the claimant from suing another tortfeasor for the same injury. Just as the claimant who has been paid the sum of damages awarded by the court for his injuries has everything which he is entitled to and can ask for no more, so, the House held, a claimant who has been paid a sum which was intended to be in full satisfaction of his claim is to be treated as having got everything he is entitled to and cannot ask for any more. 69. Secondly, the effect of any particular settlement agreement depends on what the parties intended. Since that can be determined only by interpreting the agreement in question, in the end the whole issue turns on the interpretation of the agreement in question. That approach is consistent with the wider picture. 70. As the authorities make clear, where his claim has been satisfied, the limitation on a claimant's right to bring successive proceedings follows simply from the nature of actions for the recovery of damages in compensation of a claimant's loss. If he has been paid full compensation, he no longer has any loss that he can seek to recover. The rule does not, therefore, depend on estoppel by record, on res judicata or on any similar technical doctrine. The second tortfeasor who relies on an earlier judgment to stop the action against himself will not have been a party to the earlier proceedings. Frequently, of course, the judge will have said nothing at all about the part played by the second tortfeasor. But if in giving judgment the judge has had occasion to say anything about the actings of the second tortfeasor, his conclusions will not be binding on the second tortfeasor. Similarly, if the second tortfeasor relies on a settlement agreement between the victim and another tortfeasor, which has in fact given the victim full satisfaction, the agreement will usually not even have mentioned him and, in any event, the second tortfeasor will not have been a party to that agreement. 71. Whether a prior judgment has the effect of precluding subsequent proceedings depends on what it decides. For instance, the earlier judgment may have been for only a proportion of the claimant's loss. In which case he is not prevented from seeking the balance of his loss from another tortfeasor. Lord Hope made this point in Jameson under reference to the decision of Lord Cameron in Crawford v Springfield Steel Co Ltd Court of Session, unreported 18 July 1958. It is worth exploring the basis of that decision and the relationship between the cases of Crawford and Balfour v Archibald Baird & Sons Ltd. 72. In both cases the pursuers were steelworkers who were diagnosed as having pneumoconiosis after a mobile x-ray unit carried out an examination of employees of William Beardmore & Co at their foundry at Parkhead Forge in Glasgow in April 1950. Along with ten other workers Mr Balfour and Mr Crawford raised actions in the Court of Session for damages against William Beardmore & Co. Lord Strachan heard the twelve actions together and in April 1956 he gave judgment in all of them. The parts of his opinion dealing with liability and with the award of damages to Mr Balfour and another employee, but not with the damages for Mr Crawford, are reported as Balfour v William Beardmore & Co Ltd 1956 SLT 205. 73. It appears that the pursuers' advisers concentrated their fire on William Beardmore & Co partly, at least, because of uncertainties as to when, exactly, it had become known that inhalation of dust in steel foundries might cause lung disease. The company defended the actions on a number of grounds, one of which was that the various pursuers had worked with other companies and that it could not be said whether they had contracted their illness as a result of their exposure to dust while working with the defenders or while working with someone else. Expert evidence was led in respect of all the pursuers and Lord Strachan dealt with each of them separately. 74. Mr Balfour had worked with William Beardmore & Co from April 1943 until June 1950. In his case Lord Strachan concluded that his disease was contracted only after he had been in the defenders' employment for about three years and that they alone were responsible for Mr Balfour's illness. He therefore awarded him full damages against the defenders for loss of earnings both in the past and in the future, for solatium and for loss of expectation of life. Subsequently, however, the same senior counsel and solicitors raised fresh proceedings in his name, claiming damages for the same disease, against another steel company, Archibald Baird & Sons. That company had employed Mr Balfour from 1927 until April 1943. It was in these circumstances that Lord Cameron and, on appeal, the Second Division of the Court of Session held that payment of the damages awarded by Lord Strachan in the first action precluded Mr Balfour from pursuing proceedings for damages against Archibald Baird & Sons: Balfour v Archibald Baird & Sons Ltd 1959 SC 64. 75. Mr Crawford, on the other hand, had worked with William Beardmore & Co from May 1947 until June 1950. Before that, with a gap of one year, he had worked with the Springfield Steel Co from 1928 until 1947. He sued William Beardmore & Co for solatium and loss of expectation of life only. In his case Lord Strachan decided that he had very probably contracted pneumoconiosis before he entered the employment of William Beardmore & Co in May 1947 but that his exposure to dust while employed with them had caused an aggravation of his condition which the judge assessed at 10%. Therefore, on the basis of an approach which he explained in dealing with one of the other employees (1956 SLT 205, 216), Lord Strachan first assessed what the full value of Mr Crawford's claim for solatium and loss of expectation of life due to pneumoconiosis would have been and then awarded him 10% of that amount: Crawford v William Beardmore & Co Ltd (unreported) 30 April 1956. 76. Mr Crawford next raised proceedings for damages against the Springfield Steel Co on the basis that he had contracted the illness due to exposure to dust while working in their premises in the years before 1947. In this action he claimed damages for loss of earnings, both past and prospective, for prejudice to his earning capacity and for solatium, including loss of expectation of life. The company defended the action on the basis that, having chosen to sue William Beardmore & Co and having been paid the damages awarded against them, Mr Crawford could not now proceed against the Springfield Steel Co. In these circumstances Lord Cameron repelled certain of the defenders' preliminary pleas in law and held that the action could proceed, even though some of the heads of damages had been claimed in the earlier action. While indicating a tentative view that Lord Strachan's calculation of solatium would not be binding on the judge assessing damages in the second proceedings, Lord Cameron reserved his opinion on the point and simply allowed a proof before answer in respect of the remaining pleas in law: Crawford v Springfield Steel Co. Although the defenders reclaimed, the action was settled before the Inner House could hear the reclaiming motion. 77. For present purposes the important thing to notice is that in the original action, Crawford v William Beardmore & Co Ltd, the court was able to divide up the harm and to say that the main part had been caused by earlier events and that only the relatively small aggravation had been due to the fault of the defenders. The court then awarded damages for that small aggravation only. The clear inference was that Mr Crawford's exposure to dust in his previous employment with the Springfield Steel Co had caused the rest of his loss and injury. In his first action therefore he had not been awarded any damages for what was in effect the main part of his loss and injury. Not surprisingly, Lord Cameron took the view that Mr Crawford could proceed with his action against the Springfield Steel Co to recover damages for that loss and injury. In that situation there was, of course, no question of double recovery. Cases where the harm can be divided up in this way and attributed to separate and non-contemporaneous wrongdoers raise significantly different issues from cases, such as Balfour, where the pursuer or claimant in the second action would simply be trying to recover damages for the same loss and injury as had been covered by the decree in the first action. I refer to the valuable discussion in Hart and Honoré, Causation in the Law, 2nd ed, (1985), pp 225 - 235. 78. In Jameson the case seems to have proceeded on the basis that, on the available evidence, it would not have been possible to divide up the harm suffered by Mr Jameson as a result of the fault of Babcock, on the one hand, and of CEGB on the other, even though it is clear that Mr Jameson spent only part of his time while employed with Babcock working on sites occupied by CEGB. On the other hand, at first sight, the present case appears to be one where the harm suffered by the respondents can be divided up, at least to a certain extent. In particular, the breach of contract by Target in terminating their agreement occurred over a week before any breach of contract by Equity & Law in terminating the Equity & Law agreement. Any loss and damage caused to the respondents during that intervening period could not, of course, be the result of the alleged breach of contract by Equity & Law and the respondents make no claim for it in the present action. But in the proceedings against Target the respondents adopted the position that in fact Target were responsible for any loss and damage due to the wrongful termination of the Equity & Law agreement since that had come about as a result of the termination of the Target agreement. In effect, it was said, Target's allegations of impropriety led Equity & Law to terminate their agreement with the respondents. The respondents' claim for damages against Target therefore included a claim for this important element of their loss. In their defence to the action against them Target denied that they were responsible for Equity & Law terminating their agreement with the respondents. At the time of the settlement a trial of that issue was pending. None the less Equity & Law submit that, if the settlement agreement is properly to be interpreted as having been intended as full satisfaction of all the respondents' loss and damage flowing from Target's breach of contract, then it must be interpreted as encompassing full satisfaction of their claim for any loss and damage that the respondents suffered as a result of the termination of the Equity & Law agreement. It is as if the respondents had succeeded on this point in their action against Target, had established the necessary causal connexion and had recovered damages for their loss as a result of the termination of the Equity & Law agreement. On that analysis the case resembles Balfour rather than Crawford and, Equity & Law contend, the respondents should therefore not be allowed to seek what would amount to double recovery for this part of their loss. 79. In Jameson, the House proceeded on the analogy of a judgment in the Balfour kind of situation since in any second action Mr Jameson would simply have been trying to recover damages on the basis that, along with Babcock, CEGB had been responsible for his condition as a whole. The House held that the particular settlement was like a judgment giving damages for Mr Jameson's mesothelioma as a whole and that, accordingly, to allow him to recover damages against CEGB would have been to allow double recovery of damages for the same loss. But just as the effect of any prior judgment depends on what its scope actually was, so also the effect of any prior settlement must equally depend on what its scope actually was. As your Lordships have observed, whether a sum accepted in settlement of a claim is intended to fix the full measure of a claimant's loss so as to preclude any further proceedings depends on the proper construction of the particular compromise agreement in the light of all the relevant facts surrounding it. 80. Some at least of the arguments for the parties in the present appeal appeared to me to proceed as if Jameson had been based on a quite different approach. In particular, counsel for the respondents was anxious to demonstrate, from the terms of the agreement, that the parties to it had not intended to discharge the respondents' rights against Equity & Law - and hence that their rights were intact. In developing this argument counsel relied, for instance, on a passage from the judgment of Sir Roy Beldam in the Court of Appeal where he said ([2001] Ch 173, 208, para 81):
In my respectful view, this passage reflects a misunderstanding of the approach of the majority in Jameson, as I have analysed it. They did not hold that Mr Jameson and Babcock had intended to confer a benefit on CEGB by somehow releasing and discharging Mr Jameson's rights against CEGB. Rather, they held that, because the settlement had been intended to be in full satisfaction of the harm due to his mesothelioma, it had extinguished his loss and, with it, any claim for damages against CEGB. Therefore before his death Mr Jameson could not have sued CEGB. So his executors could not do so either. 81. In considering whether a settlement agreement has this effect, the proper question is whether, when construed against the appropriate matrix of fact, the terms of the settlement show that the parties intended that the agreed sum should be in full satisfaction of the wrong done to the claimant. In that connexion, an indication in the agreement - whether express or implied - that the claimant envisages the possibility of further proceedings against another wrongdoer may, of course, be of significance - but only as a pointer to the conclusion that the parties did not intend that the agreed sum should be in full satisfaction of the harm suffered by the claimant. Equally an indication in the agreement to the opposite effect will be a pointer that the parties intended that the agreed sum should constitute full satisfaction. In either event, the court will draw the appropriate conclusion as to the effect of the agreement on any claims against another wrongdoer. 82. In arguing that the terms of the settlement agreement in this case showed that the parties intended that the sum of £10m should be in full satisfaction of all the loss set out in the original statement of claim and in the draft statement of claim, counsel for Equity & Life made much of what he saw as the sweeping terms used in the settlement. He stressed that the payment of the sum was to be "in full and final settlement of all claims and potential claims of whatsoever nature and kind". On the other hand, counsel for the respondents emphasised that, by contrast with Jameson's case, the settlement was not said to be in full and final "satisfaction" of the claims. While the language used by the parties must always be carefully analysed for any light that it throws on their intention, the language of a settlement agreement will only rarely be entirely fresh, with every word selected for the particular proceedings. More often, such an agreement will incorporate language derived from a form of settlement used on previous occasions by the advisers of one or other of the parties. In Bank of Credit and Commerce International SA v Ali [2001] 2 WLR 735, 748 - 749, para 38 Lord Hoffmann alluded to the variety of possible formulae, of greater or lesser complexity and prolixity, which are to be found in such agreements. Since the defendant's advisers will wish to do everything to eliminate the risk of any further proceedings against their client and since the plaintiff will not usually be contemplating any further proceedings against that defendant, the language chosen to express the finality of the settlement between the parties will often be fairly comprehensive, as in the present case. Moreover, a settlement agreement is likely to contain much the same kind of language irrespective of whether or not the settlement is, objectively, favourable to the defendant or to the claimant. Indeed, the worse the settlement from the claimant's point of view, the more the defendant may feel the need to use sweeping language to protect himself against possible future proceedings. For these reasons, the background matrix of fact may often be particularly important when interpreting a compromise agreement and deciding whether the parties intended the agreed sum to be in full satisfaction of the damage to the claimant. The present case and Cape & Dalgleish v Fitzgerald [2002] UKHL 16 illustrate the point. 83. Despite the respondents' argument to the contrary, I detect no reason in principle why the approach adopted in Jameson should not be applied in a case, such as the present, where the two claims are for breach of contract. Settlement of the first claim cannot, of course, prevent a claimant from bringing an action for nominal damages for breach of the second contract. But, if the settlement of the first action is to be interpreted as constituting full satisfaction of the loss and injury which the claimant suffered as a result of both breaches of contract, then it must follow, on the Jameson approach, that he has no right to recover substantial damages against the second contract breaker. 84. Counsel for Equity & Law argued that the aim of the settlement agreement between Target and the respondents had been to achieve finality, at least so far as Target were concerned. Having paid the agreed sum, they were to be free from being troubled by any further proceedings relating to the matter. If, however, the respondents were allowed to proceed with their action against Equity & Law, Equity & Law would inevitably seek a contribution from Target. Indeed they had already served a third party notice on Target for this purpose. Target would therefore be left vulnerable, when they should have been made secure by the compromise settlement. To avoid this, as a matter of policy, the settlement with Target should discharge Equity & Law and thereby remove the basis on which they would seek a contribution from Target. In advancing this submission, counsel relied on the comments of Lord Clyde in Jameson ([2000] 1 AC 455, 482H - 483A). As he duly recognised, only Lord Clyde adopted this particular line of reasoning. 85. For my part, I would reject that argument. The problem identified by counsel is simply one example of a kind of legal eternal triangle that was already familiar to classical Roman lawyers. A not dissimilar example, from about the end of the second century AD, is to be found in D.2.14.32, Paul 3 ad Plautium: where a creditor had agreed not to sue the debtor, should the creditor be able to sue a surety for the debt if this meant that the surety would seek to recover from the debtor? As Lord Clyde expressly acknowledged, the key to solving such problems lies not in legal logic but in legal policy. Different legal systems resolve the policy issues in different ways. A succinct account of the issues and of some of the solutions is to be found in Mr Tony Weir's chapter on "Complex Liabilities" in the International Encyclopaedia of Comparative Law (1976) Vol XI-12, pp 69-70, para 12-126. By enacting section 1(3) of the Civil Liability (Contribution) Act 1978, however, Parliament has resolved the policy issue for English law in cases of tort and breach of contract by coming down in favour of allowing contribution proceedings to be taken against a party who has settled and has therefore "ceased to be liable in respect of the damage in question since the time when the damage occurred." That being so, the mere fact that Target may in due course be faced with a demand for contribution from Equity & Law is not a reason for holding that the respondents should be prevented from suing Equity & Law. It should not be forgotten that - as my noble and learned friend Lord Bingham of Cornhill has indicated - a party paying a sum to settle proceedings can protect himself against the risk of contribution proceedings, either by taking an indemnity from the other party or by obtaining an enforceable undertaking from him not to sue anyone else for the same damage. 86. At the end of the hearing of the appeal I was inclined to think that -particularly having regard to the large amount of money paid to the respondents - the proper interpretation of the compromise agreement in this case was that the parties had intended that the sum should be in full satisfaction of the respondents' claim for loss and damage following on Target's breach of contract. This would have included the loss which the respondents suffered as a result of the termination of the Equity & Law agreement. But I have also taken into account the relevant circumstances surrounding the agreement that Lord Bingham of Cornhill and Lord Mackay of Clashfern have identified. Having regard to them, I would not wish to dissent from the view which commends itself to your Lordships, that the settlement with Target should not be interpreted as having been intended to be in full satisfaction of the respondents' loss and damage. On that view, the settlement does not preclude the respondents from proceeding with the present action in the manner envisaged by Lord Mackay of Clashfern.
|
continue previous |