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

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The trial judge said that he had reached this result with regret because it might work an injustice on Babcock. I agree. It seems unjust that Babcock should be exposed to the risk of having to pay damages twice for the same harm and that the plaintiffs should be able to obtain for the first named plaintiff what, in the circumstances, would amount to double recovery in respect of the same loss. It seems unlikely that, when the substituted section 4 of the Fatal Accidents Act 1976 was enacted, Parliament contemplated that a person could become entitled to a double recovery in these circumstances.

Did the settlement with one tortfeasor discharge the other tortfeasor?

The basic rule is that a plaintiff cannot recover more by way of damages than the amount of his loss. The object of an award of damages is to place the injured party as nearly as possible in the same financial position as he or she would have been in but for the accident. The liability which is in issue in this case is that of concurrent tortfeasors, because the acts of negligence and breach of statutory duty which are alleged against Babcock and the defendant respectively are not the same. So the plaintiff has a separate cause of action against each of them for the same loss. But the existence of damage is an essential part of the cause of action in any claim for damages. It would seem to follow, as a matter of principle, that once the plaintiff's claim has been satisfied by any one of several tortfeasors, his cause of action for damages is extinguished against all of them. As Lord Atkin said in Clark v. Urquhart [1930] A.C. 28, 66, "damage is an essential part of the cause of action and if already satisfied by one of the alleged tortfeasors the cause of action is destroyed." In that case the plaintiff had received in satisfaction of his claim against one defendant the full amount of damages which he could have received on any of the causes of action against the rest. It was held that his acceptance of the money paid into court was a satisfaction of all the claims in the action and that his damage, in a question with the other defendants, had been satisfied. In Tang Man Sit v. Capacious Investments Ltd. [1996] A.C. 514, 522 Lord Nicholls of Birkenhead discussed the limitations on a plaintiff's freedom to sue successively two or more persons who are liable to him concurrently. He explained the point in this way at p. 522F:

     "A third limitation is that a plaintiff cannot recover in the aggregate from one or more defendants an amount in excess of his loss. Part satisfaction of a judgment against one person does not operate as a bar to the plaintiff thereafter bringing an action against another who is also liable, but it does operate to reduce the amount recoverable in the second action. However, once a plaintiff has fully recouped his loss, of necessity he cannot thereafter pursue any other remedy he might have and which he might have pursued earlier. Having recouped the whole of his loss, any further proceedings would lack a subject matter. The principle of full satisfaction prevents double recovery."

So the first question which arises on the facts of this case is whether satisfaction for this purpose is achieved where the plaintiff agrees to accept a sum from one of the alleged concurrent tortfeasors which is expressed to be in full and final settlement of his claim against that tortfeasor, if that sum is less than the amount which a judge would have held to be the amount of the damages which were due to him if the case had gone to trial and the defendant had been found liable.

In the Court of Appeal [1998] Q.B. 323, 341H-342A Auld L.J., in a careful and impressive judgment, said that he could "see no basis in law or common sense why an agreement expressed to be 'in full and final settlement and satisfaction' between a claimant and one tortfeasor should be regarded as full satisfaction in respect of any claims that he may have against a concurrent tortfeasor who was not a party to [the settlement]." This was because the causes of action against each of the concurrent tortfeasors are separate, not single and indivisible as is the case with joint tortfeasors. He said that satisfaction, as between concurrent tortfeasors, must depend not upon an agreement with one of them but on whether or not the claim against the second tortfeasor has in fact been satisfied. So the judge in the second action was not bound to equate full satisfaction with a figure acceptable to both parties representing their assessment of the risks of litigation.

I follow that reasoning as far as it goes but I do not think, with great respect, that it goes quite far enough. The causes of action are indeed separate. And it is clear that an agreement reached between the plaintiff and one concurrent tortfeasor cannot extinguish the plaintiff's claim against the other concurrent tortfeasor if his claim for damages has still not been satisfied. The critical question, as Auld L.J. was right to point out at p. 342B, is whether the claim has in fact been satisfied. I think that the answer to it will be found by examining the terms of the agreement and comparing it with what has been claimed. The significance of the agreement is to be found in the effect which the parties intended to give to it. The fact that it has been entered into by way of a compromise in order to conclude a settlement forms part of the background. But the extent of the element of compromise will vary from case to case. The scope for litigation may have been reduced by agreement, for example on the question of liability. There may be little room for dispute as to the amount which a judge would award as damages. So one cannot assume that the figure which the parties are willing to accept is simply their assessment of the risks of litigation. The essential point is that the meaning which is to be given to the agreement will determine its effect.

I take as my starting point the fact that a claim of damages in tort is a claim for unliquidated damages. It remains unliquidated until the amount has been fixed either by the judgment of the court or by an agreement as to the amount which must be paid to satisfy the claim. It cannot be doubted that, once the amount of the damages has been fixed by a judgment against any one of several concurrent tortfeasors, full satisfaction will have been achieved when the judgment is satisfied. The law used to be that the judgment against one joint tortfeasor was itself, without satisfaction, a sufficient bar to an action against another joint tortfeasor for the same cause: Brown v. Wootton (1604) Cro. Jac. 73; Brinsmead v. Harrison (1872) L.R. 7 C.P. 547: Bryanston Finance Limited v. de Vries [1975] Q.B. 703, 721E-H and 730B-C per Lord Denning M.R. and Lord Diplock. In the case of concurrent tortfeasors, a judgment recovered against one of them did not put an end to the cause of action against any of the other tortfeasors until it had been satisfied: Bryanston Finance Limited v. de Vries, p. 730E-F, per Lord Diplock. Section 6(1)(a) of the Law Reform (Married Women and Tortfeasors) Act 1935, which was replaced and extended by section 6 of the Civil Liability (Contribution) Act 1978, altered the common law on these matters. As the law now stands, a plaintiff is barred from going on with a separate action against another tortfeasor if the judgment which he has obtained in the first action has been satisfied.

What then is the effect if the amount of the claim is fixed by agreement? Is the figure which the plaintiff has agreed to accept in full and final satisfaction of his claim from one concurrent tortfeasor open to review by the judge in a second action against the other concurrent tortfeasor on the ground that, despite the terms of his agreement, he has not in fact received the full value of his claim? Or is the fact that that figure was agreed to as the amount to be paid in full and final settlement of the first action to be taken as having fixed the amount of the claim in just the same way as if it had been fixed by a judgment, so that the claim must be held to have been extinguished as against all other concurrent tortfeasors?

As I have said, a claim of damages is a claim for a sum of money, the amount of which must necessarily remain unliquidated until something has been done to fix the amount. Where the claim is adjudicated upon by the court, the amount of the damages is fixed by the judgment which the court makes as to the sum required to make good to the plaintiff the full value of his loss. But it is well known that many claims are settled without the amount due as damages having been adjudicated by the court. They are settled by agreement between the parties. Were it not for the fact that most claims of damages are settled in this way, the parties would be exposed to greater expense and uncertainty and the burden of work on the courts would be intolerable. There is a strong element of public interest in facilitating the disposal of cases in this way.

In the typical case the plaintiff agrees to accept the sum which the defendant is willing to pay in full and final settlement of his claim. Such a settlement normally involves an element of compromise on both sides. Each side will have made concessions of one kind or another to reflect its assessment of the prospects of success if the case were to go to trial. The plaintiff will normally have made a discount from the amount which he regards as full compensation for his loss. He may have withdrawn some elements of his claim, reduced the amounts sought in settlement of others or accepted an overall reduction in the amount claimed. But, whatever the nature and extent of the compromise, one thing is common to all these cases. This is that the agreement brings to an end the plaintiff's cause of action against the defendant for the payment of damages. The agreed sum is a liquidated amount which replaces the claim for an illiquid sum. The effect of the compromise is to fix the amount of his claim in just the same way as if the case had gone to trial and he had obtained judgment. Once the agreed sum has been paid, his claim against the defendant will have been satisfied. Satisfaction discharges the tort and is a bar to any further action in respect of it: United Australia Ltd. v. Barclays Bank Ltd. [1941] A.C. 1, 21 per Viscount Simon L.C.; Kohnke v. Karger [1951] 2 K.B. 670, 675 per Lynskey J. I think that it follows that, if the claim was for the whole amount of the loss for which the defendant as one of the concurrent tortfeasors is liable to him in damages, satisfaction of the claim against him will have the effect of extinguishing the claim against the other concurrent tortfeasors.

There may be cases where the terms of the settlement, or the extent of the claim made against the tortfeasor with whom the plaintiff has entered into the settlement, will show that the parties have not treated the settlement as satisfaction for the full amount of the claim of damages. In the same way a judge, in awarding damages to the plaintiff in his action against one concurrent tortfeasor, may make it clear that he has restricted his award to a part only of the full value of the claim. That was the point which the sheriff, Sir Allan G. Walker Q.C., had to examine in Carrigan v. Duncan 1971 S.L.T. (Sh.Ct.) 33. In that case the pursuer who had accepted a sum from one wrongdoer in full satisfaction of his claim for loss and injury resulting from a road accident raised a fresh action against another alleged wrongdoer in an attempt to recover further damages. Auld L.J. said at p. 339B that this case did not support the submission that the answer to the question whether the claimant had received full satisfaction is to be found in the words of the settlement. I think that, on closer examination, it provides direct support for this submission on grounds which do not appear to be in conflict with any relevant English authority. It has been referred to and accepted as good authority in Australia: Ruffino v. Grace Brothers Pty. Ltd. [1980] 1 N.S.W.L.R. 732; Boyle v. State Rail Authority (N.S.W.) (1997) 14 N.S.W.C.C.R. 374.

In holding that the second action was incompetent the sheriff distinguished two previous cases where a second action to recover further damages had been held to be competent. The first was Dillon v. Napier, Shanks & Bell (1893) 30 S.L.R. 685, where the court examined the terms of the receipt and the correspondence regarding the settlement which showed that the pursuer's claim against the second wrongdoer was expressly reserved and the payment made was not a payment in full satisfaction of all possible claims for the injury. The second was Crawford v. Springfield Steel Co. Ltd., 18 July 1958 unreported, where Lord Cameron held that the obtaining of a decree against one employer did not debar a later claim against another employer because the judge in the first action had made it clear in his judgment that he had granted decree for only 10 per cent. of the pursuer's total loss due to the disease which he had contracted on the footing that the defenders in that action were only 10 per cent. to blame for the pursuer's incapacity. In Carrigan v. Duncan on the other hand the pursuer had brought his action against the defender in the first action on the basis that that defender was entirely to blame for the accident. It was said on his behalf that he did not intend the settlement of the earlier action to be in full satisfaction of his claim for loss and injury arising from the accident. But the pleadings and the terms of the settlement, looked at objectively, showed that the sum which he obtained under it had been accepted in full satisfaction of his claim.

In these circumstances the sheriff applied the decision of the Court of Session in Balfour v. Baird & Sons 1959 S.C. 64, where the judgment which the pursuer had obtained against one employer in the first action made it clear that the award of damages was for the whole of the damage which he had suffered as the result of his pneumoconiosis and the second action which had been raised against another employer was dismissed as incompetent. Relying on the principle which was explained in that case that the claim is extinguished against all the wrongdoers once the damages have been satisfied in an action against any one of them, the sheriff held that the claim had been satisfied by the settlement of the first action and that in this case also the second action was incompetent. He did not, as Auld L.J. noted at p. 339D, hear any evidence that the sum which had been accepted in settlement was less than the full amount of his loss. But it is clear from the sheriff's judgment that he would have held that evidence to that effect was excluded by the terms of the settlement.

I think that these cases demonstrate the limits of the inquiry which the judge may undertake in the event of a subsequent action being raised against another alleged concurrent tortfeasor. He may examine the statement of claim in the first action and the terms of the settlement in order to identify the subject matter of the claim and the extent to which the causes of action which were comprised in it have been included within the settlement. The purpose of doing so will be to see that all the plaintiff's claims were included in the settlement and that nothing was excluded from it which could properly form the basis for a further claim for damages against the other tortfeasors. The intention of the parties is to be found in the words of the settlement. The question is one as to the objective meaning of the words used by them in the context of what has been claimed.

What the judge may not do is allow the plaintiff to open up the question whether the amount which he has agreed to accept from the first concurrent tortfeasor under the settlement represents full value for what has been claimed. That kind of inquiry, if it were to be permitted, could lead to endless litigation as one concurrent tortfeasor after another was sued on the basis that the sums received by the plaintiff in his settlements with those previously sued were open to review by a judge in order to see whether or not the plaintiff had yet received full satisfaction for his loss. Different judges might arrive at different assessments of the amount of the damages. The court would then have to decide which of them was to be preferred as the basis for the apportionment between the various tortfeasors. I do not think that this can be regarded as acceptable. The principle of finality requires that there must be an end to litigation.

The question therefore is, as Mr. McLaren Q.C. for the C.E.G.B. put it, not whether the plaintiff has received the full value of his claim but whether the sum which he has received in settlement of it was intended to be in full satisfaction of the tort. In this case the words used cannot be construed as meaning that the sum which the deceased agreed to accept was in partial satisfaction only of his claim of damages. It was expressly accepted in full and final settlement and satisfaction of all his causes of action in the statement of claim. I would hold that the terms of his settlement with Babcock extinguished his claim of damages against the other tortfeasors.

Was the effect of the settlement suspended until payment?

This is the second question which arises on the facts of this case, because the sum due under the settlement which the deceased entered into before he died on 21 April 1988 was not paid until 29 April 1988. When he died the debt which was due under the settlement had not been satisfied. Section 1 of the Act of 1976 requires that the question whether the defendant would have been liable to the deceased in damages if death had not ensued must be addressed as at the date of the deceased's death. As Lord Dunedin said in British Electric Railway Co. Ltd. v. Gentile [1914] A.C. 1034, 1041, the punctum temporis at which the test is to be taken is at the moment of death, with the idea fictionally that death has not taken place. But the problem in this case is not due to any failure on Babcock's part to perform its obligations under the settlement. It is simply one of timing.

The argument for the C.E.G.B. was that the date of the settlement agreement should be held to be the effective date for the discharge of the tort. I do not think that it would be right to regard what the deceased accepted in settlement of his claim for damages as no more than a promise by Babcock that it would perform its obligations under the settlement. What he agreed to do in satisfaction of his claim was to accept payment of the sum which Babcock had agreed to pay to him. So it was open to him to say that until that sum had been paid to him his claim of damages had not been satisfied. As Lord Diplock explained in Bryanston Finance Limited v. de Vries [1975] Q.B. 703, 730E-G, that is the rule which applied at common law where the plaintiff had recovered a judgment against one of two or more concurrent tortfeasors. The judgment did not put an end to the cause of action until it had been satisfied. So long as it remained unsatisfied it was not a bar at common law to a subsequent action against any other of the tortfeasors.

Examples of the application of a similar rule can be found in the Scottish authorities. In Steven v. Broady Norman & Co. 1928 S.C. 351 it was held that the fact that a decree had been obtained against one of a number of joint and several obligants did not preclude a fresh action being brought against the others, if satisfaction had not been got under the decree. In Arrow Chemicals Ltd. v. Guild 1978 S.L.T. 206 Lord McDonald applied the same rule in a case where the first action had been settled by the pursuer's acceptance of a sum which had been tendered to him in full of the conclusions of the summons. He held that the pursuer would be precluded from proceeding against the defender in the second action if he had already received full reparation of his loss from the first, but that he would be able to proceed with the second action if he had been able to recover nothing under the decree which he had obtained in the first action or had recovered less than his full loss under it. We were not referred to any English case in which this question had arisen in a case where the plaintiff had entered into a settlement in his action against the first concurrent tortfeasor. But it seems to me that it would have to be answered in the same way. To do otherwise would clearly produce hardship and inequity.

But the question of timing which arises in this case raises a different problem. A further analysis of the terms and effect of the settlement is needed in order to resolve it. The issue, it seems to me, is whether the settlement was subject to a condition which suspended its effect for any purpose until the sum due to be paid under it had been fully paid up by Babcock, or whether it was subject to a resolutive condition that the discharge of the plaintiff's claim was to be treated as void ab initio if the sum due under it was not paid.

The settlement itself was silent on these matters, but I think that the correct view of its nature was that it was to take effect as soon as the agreement was made as having disharged the deceased's claim of damages, subject to an implied resolutive condition which would render it void ab initio if the debt which was due under it was not satisfied. In Liverpool City Council v. Irwin [1977] A.C. 239, Lord Wilberforce had regard to what the nature of the contract itself implicitly required in the search for the obligation which should be read into the contract, as essentials of the tenancy. At p. 270 Lord Fraser of Tullybelton said that the obligation was to be implied as a legal incident of the kind of contract which those landlords and those tenants had entered into. I think that the nature of a settlement of the kind which was entered into in this case requires that terms be read into it, subject only to a resolutive condition in the event of the debt not being satisfied, to the effect that the settlement puts an end to any further proceedings between the parties to it except those which are needed to enable the action to be stayed and the case taken out of court, and that the deceased's claim of damages are to be treated as satisfied so that the defendant is not exposed to the risk of contribution proceedings by any other concurrent tortfeasor. The same view would be taken if the plaintiff's claim had been dealt with by means of a judgment. The issuing of the judgment would be a bar to any further proceedings for damages for the same tort against the defendant or any other concurrent tortfeasor as from the date of the judgment, subject only to a resolutive condition in the event that the judgment was not satisfied.

In Reg. v. Turner [1974] A.C. 357, 367H-368A Lord Reid said that, where a person takes a cheque in discharge of a debt, the discharge is presumed to be subject to a resolutive condition that if the cheque is dishonoured the discharge is void ab initio and the debt revives in its original form. That also was a case where the nature of the transaction required of necessity that an implied resolutive condition should be read into it. I would apply the same reasoning here and hold that the date as from which the claim of damages is to be treated as having been satisfied by reason of the settlement with the first concurrent tortfeasor is the date when the settlement was entered into, subject only to a resolutive condition which would deprive the settlement of that effect if the plaintiff was unable to recover the payment due under the settlement.

So I would hold that, as the settlement which the deceased entered into before his death was implemented in full by Babcock, nothing which it had agreed to pay having been left unpaid, its effect was to discharge the claim of damages against the other concurrent tortfeasors with effect from the date of the settlement. The plaintiffs cannot therefore satisfy the requirements of section 1(1) of the Fatal Accidents Act 1976, because the C.E.G.B would not have been liable, if death had not ensued, to an action of damages brought by the deceased in respect of the same tort. I would allow the appeal.

LORD CLYDE

My Lords,

The respondents are the executors of the late David Alan Jameson ("the deceased"), who died on 24 April 1988 as a result of a malignant mesothelioma. Before he died he had commenced proceedings against his former employers Babcock Energy Ltd ("Babcock"). In those proceedings he had claimed damages for the mesothelioma which he averred he had developed through the negligence of Babcock as a result of contact with asbestos in the course of his employment with them during four periods between 1953 and 1958. These periods related respectively to work at Battersea Power Station, at Dewrance & Co.'s factory in South London, at Babcock's welding school in Birmingham, and at Castle Donnington Power Station in Derbyshire. On 30 March 1988 Babcock's solicitors paid £75,000 into court. The notice recording this which was sent to the deceased's solicitor stated that that sum, which included interest, was "in satisfaction of all the causes of action in respect of which the plaintiff claims." On 19 April 1988 his solicitors negotiated an oral agreement to settle the action for £80,000 plus costs. They sent a letter, without prejudice, to Babcock's solicitors by fax on that day, including a statement of their costs. On 20 April 1988 Babcock's solicitor wrote confirming the settlement at £80,000 plus costs at the stated sum which they also agreed. They enclosed a draft order for consent and return. That draft provided for the staying of all further proceedings (save for enforcing the terms of the order) upon certain terms including the payment of £80,000 in 14 days "in full and final settlement and satisfaction of all the causes of action in respect of which the plaintiff claims in the statement of claim." Four days later the deceased died. After that, payment was made of the balance of the settlement sum of the cost.

Thereafter his executors commenced proceedings against the Central Electricity Generating Board ("the Board"). The claim was for damages suffered by his widow in respect of loss of dependency and for bereavement. The case was based on the development by the deceased of mesothelioma as a result of the negligence of the Board during the periods between 1953 and 1954 when he worked at Battersea Power Station and between 1957 and 1958 when he worked at Castle Donnington Power Station, both of which power stations had been owned or occupied by the Board. These places and periods were the same as two of the places and periods referred to in the proceedings against Babcock. The proceedings initially included a claim under the Law Reform (Miscellaneous Provisions) Act 1934, but that was later abandoned as it was more than balanced by the money which had been received in the settlement and that sum had to be taken into account. There remained a claim under the Fatal Accidents Act 1976. Babcock was joined as a third party in the action. It was accepted that by virtue of section 4 of that Act (as amended by section 3(1) of the Administration of Justice Act 1982) no credit needed to be given for the money received in the settlement from Babcock. This feature in the case makes it a remarkably unattractive one from the point of view of the defendants. If the plaintiffs are correct in their submission the widow stands to gain not only the damages obtained by the deceased from Babcock but in addition the whole damages he could have recovered from the Board without any deduction in respect of the settlement with Babcock. It was suggested that if the result was inequitable an allowance might be made for the inheritance, but in strict law there seems to be no obligation to do so. It was not suggested that the terms of section 4 of the Act of 1976 should be so construed as to exclude the settlement sum. It was argued that for the executors now to proceed against the Board would be an abuse of process. But it seems to me too difficult to maintain such an argument. If the deceased would have been entitled to sue the circumstance that the settlement sum has passed to his widow where Parliament has provided that no deduction is to be made on that account does not in my view render the executors' claim an abuse of process. But this peculiarity of double recovery in the present case should not distract one from the critical issue of the entitlement of the deceased to have commenced proceedings against the Board. Had he so disposed of his estate that the widow did not inherit the sum precisely the same issue would remain. Accordingly I approach the matter without regard to this special feature.

Section 1(1) of the Act of 1976 imposes a liability to an action for damages for a wrongful act, neglect or default where the deceased if he had not died would have been entitled to maintain an action and recover damages in respect of that wrongful act, neglect or default against the person who would have been liable. It thus becomes critical for the executors that the deceased would have been entitled to take these proceedings against the Board at the moment of his death.

 
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