Comex Houlder Diving Ltd v Colne Fishing Co. Ltd

Under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940, an agreed settlement embodied in an enforceable decree may constitute the claimant as having been “found liable”. A fully contested determination of liability and damages is unnecessary.

The subsection applies, however, only where liability was established by a Scottish judgment. It alters Scots law concerning the effect of Scottish judgments and does not create contribution rights from foreign judgments, even where the delict occurred in Scotland. The agreed damages do not bind a person from whom contribution is sought. That person may contend that they were excessive, and any excess may affect the contribution deemed just.

A diver drowned during offshore operations in the Scottish sector of the North Sea. His widow and children brought proceedings in Pennsylvania against the respondents and associated companies. The claim was settled for US $234,000, and the Pennsylvanian court approved the settlement and entered judgment for the agreed amounts.

The respondents subsequently sought contributions from the appellants under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940. The Lord Ordinary held that the pleadings disclosed a relevant contribution claim and allowed proof before answer. The First Division unanimously refused the appellants’ reclaiming motion.

The consolidated appeals concerned whether an agreed decree amounted to the respondents having been “found liable” and whether section 3(2) could found a contribution claim upon a foreign judgment.

1. The appeals were allowed unanimously. Lord Keith of Kinkel delivered the leading speech. Lord Fraser of Tullybelton added concurring reasons, and Lords Brandon of Oakbrook, Ackner and Goff of Chieveley agreed.

2. Per Lord Keith, the words “found liable” in section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 do not require a judgment following a fully contested determination of liability and damages. An enforceable decree giving effect to an agreed settlement converts an unliquidated claim into an ascertained debt and is sufficient. Requiring a contested judgment would compel needless litigation and could deprive a defender of the practical protection afforded by a tender.

3. The agreed amount does not bind the person from whom contribution is sought. That person may prove that the damages were excessive. Any collusion or connivance may also be considered when the court determines what contribution, if any, is just. N.C.B. v Thomson was distinguishable because it concerned a common-law claim following a settlement unsupported by any decree and did not decide whether a consent decree satisfied section 3(2).

4. Per Lord Keith, section 3 altered Scots law governing contribution and the effect of Scottish judgments. It did not address the effect of foreign judgments. The expression “any such action as aforesaid” in section 3(2), read with section 3(1), therefore refers only to an action in a Scottish court. A foreign judgment cannot create the statutory contribution right, even where the underlying quasi-delict occurred in Scotland.

5. Lord Fraser agreed that section 3(1) applies directly only to Scottish actions because the Act applies only to Scotland. The same implied restriction necessarily qualifies the cross-reference in section 3(2). There was no sufficient reason to depart from that natural grammatical construction.

6. The Pennsylvanian judgment could not support the respondents’ claim. The House recalled the interlocutors below, sustained the appellants’ relevant pleas and dismissed the action, with costs in the House and expenses in the Court of Session.

1. House of Lords: The consolidated appeals were allowed unanimously. The interlocutors below were recalled and the contribution action was dismissed: [1987] UKHL 19.

2. First Division of the Court of Session: The court adhered to the Lord Ordinary’s interlocutor and refused the defenders’ reclaiming motion.

3. Outer House of the Court of Session: The Lord Ordinary held that the respondents had pleaded a relevant claim for contribution under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 and allowed proof before answer.