Sutton and East Surrey Water Plc v Monarch Chemicals Limited & Anor

Under the Civil Liability (Contribution) Act 1978, contribution requires the parties to be liable for the same damage. A company is not jointly vicariously liable for a worker merely because it supplies, trains or benefits from that worker. The question is one of fact and degree, focusing on whether the worker is sufficiently embedded in both organisations, and whether dual responsibility is just.

Where a worker is seconded for a substantial period into the temporary employer’s organisation and performs an embedded role under that employer’s day-to-day direction, the general employer will not normally share vicarious liability. Commercial parties may allocate contribution risks by contract. Standard haulage conditions excluding or limiting liability were incorporated and were reasonable where the parties had broadly equal bargaining power and understood the trade terms.

A water utility claimed substantial losses after the incorrect chemical was discharged at its treatment works. It settled its claim against Monarch Chemicals Limited, which paid £5,637,500, and discontinued its claim against Muztrans Ltd. The trial continued on Monarch’s Part 20 contribution claim against Muztrans.

The agreed issues concerned whether Muztrans owed SESW a duty of care, whether it was jointly vicariously liable for the driver’s negligence, whether the RHA Conditions of Carriage 2009 were incorporated and reasonable under the Unfair Contract Terms Act 1977, and the potential effect of the settlement order under section 1(5) of the Civil Liability (Contribution) Act 1978.

1. Contribution. Monarch’s claim failed. Muztrans neither owed SESW an established duty of care on the evidence nor shared vicarious liability for the driver. Applying Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd, [2006] Q.B. 510, the relevant question was whether the driver was so much part of both employers’ work, business or organisation that it was just to impose dual responsibility.
2. The driver fell within the third category identified in Viasystems: he had been seconded for about five years, was permanently based at Monarch’s premises, drove a Monarch vehicle in Monarch livery, used Monarch’s equipment and procedures, received Monarch’s training, and was directed day to day by Monarch. Muztrans’s employment, payroll, insurance, disciplinary and regulatory functions did not outweigh those factors. Muztrans was therefore not liable for the same damage as Monarch.
3. Contractual allocation. Alternatively, the RHA Conditions were incorporated by the words that all goods were carried under the 2009 conditions. Conditions 6, 9, 11, 12 and 13 allocated the risk of third-party property damage during unloading to the customer, excluded or severely limited the carrier’s liability, required an indemnity for excess claims, and imposed a one-year time limit.
4. The judge respectfully differed from DRL Ltd v Wincanton Group Ltd, [2010] EWHC 2896, on the construction of the limitation provisions, particularly because Campbell v Conoco (UK) Ltd, [2002] EWCA Civ 704, supported a broad meaning for “in connection with”. The RHA terms were not onerous or unusual in this commercial context. They were also fair and reasonable under section 3 of the Unfair Contract Terms Act 1977.
5. The court declined to decide whether the consent order was a judgment conclusive under section 1(5) of the 1978 Act, because the issue was unnecessary to the result and more suitable for an appellate court.
6. In the alternative, Monarch’s strict contractual liability would have excluded contributory negligence, whereas Muztrans’s tortious liability would have been reduced by SESW’s contributory fault, assessed at 33%. A hypothetical contribution would have been apportioned 85% to Monarch and 15% to Muztrans.