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Cite as: [2002] ScotCS 353, 2002 SCLR 1030

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Bee v. T & N Shelf Twenty Six Ltd & Ors [2002] ScotCS 353 (27 August 2002)

OUTER HOUSE, COURT OF SESSION

A3293/01

OPINION OF LORD MACFADYEN

in the cause

GEORGE BEE

Pursuer;

against

T. & N. SHELF TWENTY SIX LIMITED and OTHERS

Defenders:

________________

Pursuer: Marshall, Solicitor-Advocate, Thompsons

First Defender: Ms Paterson, Bishops

Second Defender: Summers, Biggart Baillie

Third Defender: McGregor, Shepherd & Wedderburn, W.S.

27 August 2002

Introduction
[1] This is an action of damages for personal injury. The pursuer claims that during various periods between 1958 and 1974 he was negligently exposed in the course of his employment to asbestos dust, and that as a result of inhalation of that dust he now suffers from asbestosis. The first defenders were formerly known as Turners Asbestos Cement Co. Ltd. The pursuer avers that he was employed by them for a period in about 1958. The second defenders are SGB plc. The pursuer avers that he was employed by them between 1963 and 1965. The third defenders are the successors of the South of Scotland Electricity Board ("SSEB"). The pursuer avers that for various periods between 1967 and 1974 he was employed by various employers in power stations belonging to SSEB.

[2] The pursuer concludes for payment of damages in the sum of £100,000. The form of the conclusion was amended on the unopposed motion of the pursuer at the commencement of the hearing on 20 August 2002. As amended, the conclusion seeks decree against the defenders jointly and severally or severally. It proceeds on the basis of averments that the condition from which the pursuer suffers was "caused or materially contributed to" by negligence on the part of the defenders at common law, breach on the part of the first and second defenders of regulation 84 of the Building (Health, Safety and Welfare) Regulations 1948 and regulation 20 of the Construction (General Provisions) Regulations 1961, and breach on the part of the third defenders of section 63 of the Factories Act 1961.

[3] On 1 October 2001 an administration order under section 11 of the Insolvency Act 1986 ("the 1986 Act") was made in respect of the first defenders in the Companies Court of the Chancery Division of the High Court of Justice in London. A copy of the order is No. 7/8 of process. The circumstances in which that order was sought are explained in a report made pursuant to Rule 2.2 of the Insolvency Rules 1986 by the proposed joint administrators of 133 companies of the Federal Mogul UK Group of Companies, of which group the first defenders are a member. The report is No. 7/9 of process.

[4] The pursuer recognises that by virtue of section 11(1)(d) of the 1986 Act the action cannot proceed against the first defenders without the consent of the administrators, which has not been forthcoming, or the leave of the court (i.e. the High Court), which has not been sought. He also recognises that section 11 would also prevent further proceedings by the other defenders against the first defenders for contribution under the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 ("the 1940 Act"). He wishes, however, to proceed with the action so far as laid against the second and third defenders. Those defenders, however, maintained that the whole action should be sisted. The case was appointed to a whole day By Order hearing on 20 August 2002 to enable those matters to be fully debated.

The legislative framework
[5] Section 8 of the 1986 Act provides inter alia as follows:

"(1)	Subject to this section, if the court -
	(a)	is satisfied that a company is or is likely to become unable to pay its debts ..., and
	(b)	considers that the making of an order under this section would be likely to achieve one or more of the purposes mentioned below,
	the court may make an administration order in relation to that company.
(2)	An administration order is an order directing that, during the period for which the order is in force, the affairs, business and property of the company shall be managed by a person ('the administrator') appointed for the purpose by the court.
(3)	The purposes for whose achievement an administration order may be made are -
	(a)	...
	(b)	the approval of a voluntary arrangement under Part I;
	(c)	the sanctioning under section 425 of the Companies Act of a compromise or arrangement between the company and any such persons as are mentioned in that section; and
	(d)	...
	and the order shall specify the purpose or purposes for which it is made."

I have quoted only paragraphs (b) and (c) of subsection (3), because those are the purposes mentioned in the order of 1 October 2001.

[6] Section 11 provides inter alia as follows:

"(3)	During the period for which an administration order is in force -
	...
	(d)	no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as [the court may impose]."

The defenders' pleadings
[7] I have already indicated the terms of the conclusion and in general terms the nature of the pursuer's averments. It is, however, also necessary to take note of the terms of certain aspects of the defenders' pleadings.

The first defenders admit that the pursuer was employed by Turners Asbestos Cement Co. Ltd in 1958, identifying a particular period of about four months. The second defenders deny the averments that they employed the pursuer between 1963 and 1965. The third defenders' response to the averments that the pursuer was employed in power stations owned by the SSEB during various periods between 1967 and 1974 is "not known and not admitted". The response of each of the defenders to the averments about the pursuer's employment by or in the premises of the other defenders is "not known and not admitted".

None of the defenders admit that the pursuer was exposed to asbestos, or that inadequate precautions were taken to protect him from inhalation of asbestos dust.

The first defenders adopt each of the pursuer's cases of fault, so far as laid against the second and third defenders, "on the factual hypothesis on which they proceed".

The second defenders do not adopt any of the pursuer's cases of fault against the first or third defenders.

The third defenders adopt each of the pursuer's cases of fault against the first and second defenders, again " on the factual hypothesis on which they proceed".

The defenders each plead that there should be an apportionment of liability among the defenders. The second defenders' fourth plea is in the following terms:

		"Separatim, esto the pursuer's loss and damage was caused to any extent by the fault et separatim breach of statutory duty of the second defenders (which is denied) it also having been caused by the fault et separatim breach of statutory duty of the first and third defenders any award of damages should be apportioned inter se in terms of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940."
	The first defenders' fourth plea and the third defenders' fifth plea, although worded slightly differently, are mutatis mutandis in substantially the same form (albeit the third defenders' fifth plea erroneously refers to the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985).

[8]

I would make two observations about the defenders' contribution pleas. In the first place, the second defenders, having neither made nor adopted averments of fault against the first and third defenders, have no relevant basis in averment for their fourth plea. In the second place, the first defenders' fourth and the third defenders' fifth pleas are, in my opinion, in inappropriate form to reflect the hypothetical basis on which those defenders have adopted the pursuer's pleadings against the other defenders. Framed as they are, they appear to make a positive assertion that the other defenders are at fault, whereas in their averments all they have done is adopt the pursuers cases "on the hypothesis of fact on which they proceed". The proper form of plea in the circumstances would in my view have been to the following effect:

"Esto the pursuer's loss was caused partly by the fault of the second defenders and partly by the fault of the first and third defenders, the liability of the defenders inter se should be apportioned in terms of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940".

I have taken the view, however, that in addressing the issues that were debated before me I should not base my decision on any formal inadequacy in the form of the defenders' pleadings.

The competency of a partial sist
[9]

Mr Marshall, who appeared for the pursuer, recognised that if he was to persuade me to sist the action so far as directed against the first defenders, but allow the remainder of the action, so far as directed against the second and third defenders, to proceed to proof before answer, he would require to satisfy me that it is competent to sist an action in part. In that connection, he referred to two cases, Jardine's Trustees v Dawson (1864) 2 M 639 and Cookney v Laverty 1967 SLT (Notes) 89. In Jardine's Trustees, in the first of two actions before the court, there was a conclusion, directed against one defender only, for reduction of a transfer of shares in the Carron Company, and a second conclusion, directed against that defender and three others, seeking in the alternative a sum of damages. The three defenders against whom the first conclusion was not directed submitted that the conclusion against them, being contingent on failure of the claim for reduction, should be dismissed, or alternatively that procedure thereon should be sisted. The court granted the alternative part of that motion and pronounced an interlocutor sisting procedure in hoc statu as to those three defenders. In Cookney, the widow of a man killed when the car in which he was travelling was involved in an accident sued the defenders for damages. The defenders called as third parties the insurance company which was, according to their contention, liable to indemnify them in respect of the pursuer's claim. Lord Johnston, having narrated that all parties were agreed that it was desirable that the questions of the defenders' liability to the pursuer and the third parties' liability to the defenders should be tried separately, and having expressed the opinion that it would be convenient to have the second question determined first, allowed a proof before answer on that part of the case and sisted the action so far as it related to the defenders' liability to the pursuer. These authorities, Mr Marshall submitted, demonstrated the competency of a partial sist.

[10]

Miss Paterson, who appeared for the joint administrators of the first defenders, and Mr Summers, who appeared for the second defenders, both submitted that those authorities did not carry the pursuer far enough. They pointed out that what was sought here was a sist of proceedings against one of three defenders against whom a single joint and several conclusion was directed, while proceedings continued against the other two defenders. Neither of the authorities cited warranted the proposition that that was a competent course to follow. Mr Summers, in particular, laid great stress on the absence of any precedent for sisting proceedings against one of several defenders against whom a joint and several conclusion was directed or for sisting proceedings on contribution claims between defenders.

[11]

I am satisfied that it would be competent for me to sist the action in part. I take the view that the authorities cited by Mr Marshall warrant the proposition that it is competent for the court to grant a sist staying some identifiable part of the procedure in an action while permitting the remainder of the action to proceed. Mr Summers was right that in neither of these cases was a sist granted in respect of part of the proceedings under a single joint and several conclusion or in respect of claims by one defender against another. So far as I am aware, he was also correct in his submission that there is no express authority for granting a partial sist of such scope. It does not, however, follow that the interlocutor which the pursuer seeks would be incompetent. In my opinion it is clear that it cannot be said that the only competent form of sist is a sist of the whole proceedings in an action. Whether a particular form of partial sist should be granted in a given set of circumstances is, in my opinion, not a matter of competency, but a matter for the proper exercise of judicial discretion. I therefore hold that it would be competent for me to pronounce the interlocutor which the pursuer invites me to pronounce. I shall return later to whether the difficulties which Miss Paterson and Mr Summers postulate as arising from the sist of the action so far as laid against one of three defenders called jointly and severally or severally, and so far as involving inter-defender claims for contribution against that defender, are such as to justify refusing the pursuer's motion on its merits.

The scope of the impact of section 11
[12]

It was accepted by all parties that the effect of section 11(3)(d) of the 1986 Act is to require that, so long as the administration order remains in force, there should be no further proceedings against the first defenders at the instance of the pursuer. Mr Marshall submitted that it also meant that the second and third defenders could not proceed with the claims for contribution expressed in their fourth and fifth pleas respectively. In that connection he referred to Eastern Holdings Establishment of Vaduz v Singer and Friedlander Ltd [1967] 1 WLR 1017. That case was concerned with the prohibition on proceedings against a company in liquidation without the leave of the court, then contained in section 231 of the Companies Act 1948. The issue was whether an interpleader summons to which the company in liquidation was made a respondent was a "proceeding" against the company within the meaning of section 231. The party who had issued the interpleader summons argued (see 1019C-D) that:

"an interpleader summons is not a proceeding against the respondent to the summons at all. The party who interpleads makes no claims against anyone but stands in a neutral position and merely asks to be protected against claims by others in respect of a subject matter to which the party seeking to interplead asserts no title at all."

Buckley J, in rejecting that argument and holding that the interpleader summons could not proceed without the leave of the court, said (at 1021D-E):

"While it is true that the defendant does not claim any relief in the strict sense against any of the claimants, the object of the interpleader summons is to relieve the defendant of the risk of being sued independently of this action by the claimants, or either of them, and, in that sense, I think, the defendant does seek some relief, I do not say, perhaps, against, but in relation to, the company in liquidation."

While I do not pretend to any very clear understanding of the nature of an interpleader summons, what I do draw from that case is support for a broad interpretation of the word "proceeding" in provisions such as section 231 of the 1948 Act and section 11 of the 1986 Act. It seems to me that the claims for contribution made by the second and third defenders against the first defenders are clearly proceedings within the meaning of section 11. It therefore seems to me that those claims, as well as the pursuer's claim against the first defenders, require to be sisted. I did not understand any party to argue against that proposition. Mr Marshall further submitted, however, that section 11(3)(d) did not prohibit proceedings against the second and third defenders. The section therefore afforded no justification for a sist of the whole action. I accept the first of those propositions. The second, however, calls for further examination of the practicality of proceeding against the second and third defenders while the case is sisted in respect of the first defenders, and whether any of the defenders would be prejudiced by proceeding in that way.

Joint and several liability, contribution, and several liability
[13]

Miss Paterson suggested that there was a risk that the position of the first defenders would be prejudiced if the action were allowed to proceed against the second and third defenders while proceedings against the first defenders were sisted. I am not persuaded that that is so. Several scenarios require to be considered.

If the pursuer proceeds against the second and third defenders and obtains a joint and several decree against them, and they satisfy that decree, the pursuer will have no further interest in pursuing the first defender. He will not be entitled to proceed against the first defenders in the hope of obtaining a larger assessment of the value of his loss than he obtained against the second and third defenders (Walker on Delict 115-116; c.f. Balfour v Baird 1959 SC 64). The second and third defenders will, however, in the event of the administration coming to an end, then have an interest in pursuing their claims for contribution against the first defender. None of the defenders will be prejudiced, in that event, by anything decided in light of the proof in respect of the pursuer's claim against the second and third defenders. It will be open to the first defenders to re-open the question of the amount of the pursuer's loss, if they consider that it has been over-estimated in the proceedings between the pursuer and the second and third defenders. It will equally be open to the first defenders to put forward their position on apportionment, unaffected by any apportionment between the second and third defenders made in those proceedings. The position will be no different from that which would have obtained if the pursuer had (as he could have done) raised his action against the second and third defenders alone, and they had subsequently taken proceedings against the first defenders seeking a contribution under section 3(2) of the 1940 Act.
If, on the other hand, the pursuer proceeds against the second and third defenders, and obtains a joint and several decree against them, but they do not satisfy that decree, it will be open to the pursuer (in the event of the administration order coming to an end) to resume proceedings against the first defenders. That is no different from the situation that would have obtained if the pursuer had initially chosen to sue only the second and third defenders, and had obtained decree against them, but they had failed to satisfy it (Walker on Delict 116; Steven v Broady Norman & Co. 1928 SC 351).
If the pursuer proceeds against the second and third defenders, and fails to obtain decree against either of them, then in my view there is nothing to prevent him from resuming (after expiry of the administration order) his proceedings against the first defenders. It would be open to the first defenders to seek at that stage contribution from the second and third defenders, because the fact that they had been assoilzied in respect of the claims against them by the pursuer would not be res judicata in a question of contribution between the first and the second and third defenders.

[14] Mr Summers submitted, in effect, that even if the foregoing analysis was technically correct, there would still in real terms be potential prejudice to the first defenders if the claim against the second and third defenders were allowed to proceed in their absence. Whatever the theoretical position might be, a decision on liability and apportionment reached in proceedings against the second and third defenders, in which those parties would have an obvious interest in minimising their responsibility, and in leading in support of that contention evidence tending to pile responsibility for the pursuer's condition onto the period when the pursuer was employed by the first defenders, would have a material practical impact on the approach to subsequent litigation against the first defenders. There is, I think, some force in that, but it does not, in my view, amount to the sort of prejudice which would render it inappropriate to proceed in the way contended for by the pursuer. There are no doubt many circumstances in which the outcome of one litigation may affect the tactical approach of parties to another, technically separate but practically related, litigation; but that does not justify preventing the first litigation from proceeding.

[15] Miss Paterson also drew attention to the recent decision of the Court of Appeal in Holtby v Brigham & Cowan (Hull) Ltd [2000] 3 All ER 421. There the claimant had developed asbestosis as a result of exposure to asbestos in the employment of several employers. However, he elected to sue only one of those employers. It was held that he was entitled to recover damages from that employer only to the extent that that employer had contributed to his condition. The court's approach, it seems to me, involved holding that where it was possible to identify a part or proportion of the total loss that could be attributed to a particular wrongdoer, that wrongdoer would be liable only for that part or proportion - a matter of causation rather than apportionment among joint wrongdoers (see per Stuart-Smith LJ at 430a-b, paragraph 23). I do not consider that it is necessary for me to express any view on that case, or on how it stands in relation to the recent House of Lords decision in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, [2002] 3 All ER 305, since I heard no submissions on those points. Moreover, there is nothing in the pleadings of any of the parties to the present action (except perhaps the fact that the conclusion is for payment by the defenders "jointly and severally or severally") to suggest that any attempt is to be made to persuade the court to adopt that approach. It is sufficient for the purposes of the issue presently before me that it does not appear to me that, even if that approach were adopted, the course proposed by the pursuer would operate to any party's prejudice. It was suggested that if a partial sist were granted, there was a risk of inconsistent decisions as to the several shares of liability to be borne by the various defenders. I am not persuaded that that is a real difficulty. If the pursuer proceeds against the second and third defenders and obtains several decrees against them for their respective contributions to his loss, that will be the end of the matter so far as they are concerned. They will not be prejudiced by any future, post-administration, resumption of proceedings against the first defenders. Conversely, the first defenders in any such future resumption of proceedings against them will not be prejudiced by the outcome of the proceedings against the second and third defenders. The proportion of the total loss apportioned to the second and third defenders will operate to set a ceiling above which the proportion subsequently attributed to the first defenders could not rise. On the other hand, it would be open to the first defenders to argue that the proportion attributable to them was less than the balance of the loss unattributed in the earlier proceedings. The theoretical risk that the net effect might be that the pursuer recovered less than 100% of the value of his loss is one which he accepts by making the motion that he does.

[16] In summary, therefore, I am not persuaded that to allow the case against the second and third defenders to proceed to proof while the case against the first defenders is sisted would operate to the prejudice of any of the defenders.

Delay
[17] Mr Marshall submitted that to sist the whole case would delay the pursuer's recovery of damages and infringe his rights under Article 6 of the European Convention on Human Rights. Article 6 provides inter alia that:

"In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time ...".

Mr Marshall pointed out that administration was intended to be a temporary measure (In re Atlantic Computer Systems plc [1992] Ch 505; Scottish Exhibition Centre Ltd v Mirestop Ltd 1993 SLT 1034). Here the administration had already been continuing for some ten months, and the best information that Miss Paterson could provide was that "it was hoped that matters might move forward in 2003". The prospect of such indefinite delay pointed, Mr Marshall submitted, to the desirability of limiting the sist consequent on the administration order to the proceedings against the first defenders, and allowing the case to proceed against the second and third defenders. In my opinion it is clear, without any need to examine the relevance of Article 6 in any detail, that to sist the action as a whole would considerably delay the pursuer in pursuing his claim for damages. Such delay would, in my view, clearly be prejudicial. I am therefore of opinion that the desirability of avoiding such delay is an important consideration in deciding whether the whole action should be sisted as the first and second defenders submit it should.

Discussion
[18] It seems to me to be clear that in light of section 11(3)(d) of the 1986 Act it is necessary to sist all proceedings against the first defenders. That in my view includes not only the claim for damages advanced by the pursuer against the first defenders but also the claims for contribution advanced by the second and third defenders against the first defenders. On the other hand, section 11(3)(d) has no direct effect on the action so far as it comprises proceedings against the second and third defenders. Prima facie, therefore, the section affords no good reason for sisting the action so far as laid against the second and third defenders. Moreover, the undesirability of sisting proceedings against the second and third defenders is strongly reinforced by the prejudicial effect which it would have in delaying the pursuer in the pursuit of his claim for damages. It therefore seems to me that the pursuer's motion should be granted, unless it appears either (1) that the course which he proposes is incompetent, or (2) that to follow that course would deprive one or more of the defenders of the ability to advance (a) a legitimate defence against the pursuer's claim or (b) a claim for contribution. For the reasons which I have already set out, I am satisfied that it is not incompetent to sist an action in part. Moreover, I am not satisfied that to grant the pursuer's motion would deprive any of the defenders of the opportunity of defending themselves fully against the claims made against them. I shall therefore grant the pursuer's motion.

Result
[19] In order to give effect to my decision I shall pronounce an interlocutor (1) sisting proceedings against the first defenders in respect of (a) the pursuer's claim for damages against them and (b) the claims for contribution under section 3 of the 1940 Act made (i) by the second defenders in their fourth plea-in-law and (ii) by the third defenders in their fifth plea-in-law; and (2) allowing to the pursuer and the second and third defenders a proof before answer of their respective averments relating to (a) the pursuer's claim for damages against the second and third defenders and (b) the second and third defenders' claims for contribution inter se. I should record that counsel were agreed that, if I held that it was appropriate to grant such a partial sist, it would be appropriate to allow a proof before answer to the extent mentioned. Finally, I shall reserve meantime the question of expenses.