BRB (Residuary) Ltd. v Connex South Eastern Ltd

A party which has paid compensation under a judgment or bona fide settlement may recover contribution from another person liable for the same damage, even if the paying party was never substantively liable. A judgment creates liability for the purposes of the Civil Liability (Contribution) Act 1978. For a settlement under section 1(4), the paying party must satisfy the statutory factual-basis proviso; this may include consideration of a collateral defence, but only by reference to the pleadings. Payment under a judgment ordinarily reduces or extinguishes the claimant’s loss. Estoppel requires proof of representation, reliance and detriment. Contribution is subject to the requirement that recovery be just and equitable.

BRB admitted liability to a mesothelioma claim brought by Mrs Dines and judgment was entered against it. BRB later discovered that, following railway privatisation and the transfer of employment liabilities under the Railways Act 1993 and the Transfer of Undertakings (Protection of Employment) Regulations 1981, Connex was legally liable. BRB settled Mrs Dines’ claim and sought contribution from Connex under sections 1 and 2 of the Civil Liability (Contribution) Act 1978. Connex argued that BRB had never been liable, that the payment was voluntary, and that BRB was estopped from seeking contribution. The issues were whether the statutory conditions for contribution were met and whether Connex had established estoppel.

1. Contribution under section 1(1). BRB was liable in respect of the same damage as Connex because judgment had been entered against BRB. Section 6 defines liability broadly, whatever the legal basis of liability. A judgment, including a consent judgment, is a final order and establishes liability unless set aside or altered on appeal. The fact that BRB’s liability arose from a mistake did not prevent it being liable for the purposes of the Act.
2. Contribution under section 1(4). BRB’s admission and acceptance of the settlement constituted a bona fide settlement or compromise. The proviso required consideration of whether BRB would have been liable if the factual basis of the claim against it were established. Following Arab Monetary Fund v Hashim, Times Law Reports, 17 June 1993, the inquiry could include facts supporting a collateral defence, but the relevant factual basis was defined principally by the pleadings. BRB had pleaded no collateral defence to liability. Section 1(4) was therefore satisfied.
3. Effect of payment. The case was distinguishable from Esso Petroleum Company Ltd v Hall Russell and Co Ltd, [1989] AC 643, because BRB paid under compulsion of a judgment rather than under a voluntary indemnity. Payment had diminished or eliminated Mrs Dines’ loss, so Connex could not rely on its continuing liability to defeat contribution. This was consistent with Eastgate Group Ltd v Lindsey Morden Group Inc, [2001] EWCA Civ 1446; [2002] 1 WLR 642.
4. Estoppel. BRB had informed Connex of the available options and had not made a representation or election on which Connex was shown to have relied. Connex adduced no evidence establishing reliance or substantive detriment. Estoppel was therefore unavailable.
5. Order. BRB was entitled to judgment for the compensation paid and Mrs Dines’ reasonable legal costs. Under section 2(1), it was not just and equitable to award BRB its own costs of defending and settling the original claim, since it could have defended that claim had it not made the mistake.