Christine Wealands v. CLC Contractors Ltd and others
(England and Wales) Supreme Court of Judicature (Court of Appeal),
Nourse, Mance, Mantell LJJ., 22nd July 1999.
Third party proceedings -
application for a stay under s. 9 Arbitration Act 1996 - whether
claims for indemnity and contribution gave rise to a dispute referable
to arbitration - whether arbitration clause applied to claim for
breach of tortuous duty - whether arbitration clause covered claims
for contributory negligence.
Facts:
The Plaintiff was the widow and administratix of Mr Brian Wealands
who died in a scaffolding accident on a construction site. She
commenced proceedings against the Defendant, the main contractor who
had employed Mr Wealands. The Defendant commenced third party
proceedings against the scaffolding sub-contractor ("the First
Third Party"), seeking an indemnity or contribution under the
Civil Liability (Contribution) Act 1978 for any damages found payable
by it to the Plaintiff. In addition to relying on the express
indemnity clauses in the sub-contract, the Defendant alleged breach of
contract and breach of tortious duties alleged to be owed to it and Mr
Wealands. It also alleged breach of warranty or negligent
misrepresentation arising from the issue to and reliance by the
Defendant on a handover certificate certifying the scaffold's
structural soundness.
The sub-contract for the scaffolding works contained an arbitration
agreement, clause 18. This provided that any dispute arising between
the Contractor and the Sub-Contractor in connection with or arising
out of the sub-contract or the carrying out of the sub-contract works
was to be referred to arbitration. The First Third Party sought a stay
of the third party proceedings against it, pending arbitration.
The judge stayed the third party proceedings. The Defendant
appealed. The following issues arose for consideration by the Court of
Appeal.
a) Was there any dispute between the Defendant and the First Third
Party with respect to any of the claims outlined in the third party
notice?
b) Did the arbitration clause cover the claims for breach of
contract and for indemnity under the express provisions of the
sub-contract?
c) Did the arbitration clause cover the Defendant's claims for
breach of tortious duty allegedly owed to the Defendant and for breach
of warranty or negligent misrepresentation arising from the issue to
and reliance by the Defendant on the handover certificate certifying
the scaffold's structural soundness?
d) Did the arbitration clause cover the Defendant's claims against
the First Third Party for contribution under the Civil Liability
(Contribution) Act 1978?
Held:
The appeal failed in its entirety.
In respect of issue (a), it was possible that the Defendant might
be liable to the Plaintiff in respect of the accident causing Mr
Wealands' death in circumstances in which it was entitled to a
complete indemnity, or damages amounting to a complete indemnity, as
against the First Third Party. But it was also possible to conceive of
a situation in which some degree of fault might attach to the
Defendant so that its claim might be reduced on account of its
contributory negligence and/or it might only be entitled to a partial
contribution. The First Third Party had never admitted liability to
indemnify or cover the Defendant for the full amount of any liability
that the Defendant might be held to have to the Plaintiff. In the
absence of any such admission all the claims in the Defendant's third
party notice had to be taken as in dispute since, under the
Arbitration Act 1996, the court was bound by the majority decision in Halki
Shipping Corporation v. Sopex Oils Ltd [1998] 1 Lloyd's Rep 465.
In respect of issue (b), the arbitration agreement in clause 18(1)
of the sub-contract was wide enough to cover the dispute between the
parties as to responsibility for a personal injuries claim. In so far
as the Defendant's claims might be met in whole or part by a plea of
contributory negligence, there was no doubt that the arbitrator would
also have power to adjudicate on this issue. This was expressly stated
in s. 4 of the Law Reform (Miscellaneous Provisions) Act 1945. In
consequence, the Defendant had no answer to the First Third Party's
application for a stay in respect of the Defendant's claims based on
the First Third Party's alleged breach of contract and on the
contractual indemnity clauses.
In respect of issue (c), the wording of the arbitration agreement
in clause 18(1) of the sub-contract was clearly wide enough to cover
the Defendant's claims in tort.
In respect of issue (d), while it was true that the Civil Liability
(Contribution) Act 1978 referred only to the court, there was nothing
to prevent parties to an arbitration agreement agreeing between
themselves upon the application of the principles of that Act.
Neither, following the reasoning in Soc. Gen. Reassurance v. Eras
International Ltd [1992] 1 Lloyd's Rep 570, was there anything in
the 1978 Act to prevent the parties foregoing, by agreement, any right
they might otherwise have to seek contribution. If, as the Defendant
submitted, an arbitrator appointed under clause 18(1) of the
sub-contract did not have power to award contribution this would not
be a reason for refusing a stay. Neither did it provide any basis for
treating one aspect of the parties' dispute, that involving any claim
for contribution, as falling outside the scope of the arbitration
clause, or as reserved to the court.
In any case, the principle in President of India v. La Pintada C
Nav SA [1985] AC 104, that where parties referred a dispute
between them to arbitration in England they impliedly agreed that the
arbitration was to be conducted in accordance in all respect with the
law of England unless the agreement or reference provided otherwise,
did not just apply to ancillary relief. It extended to claims for
contribution under the 1978 Act. This was the case prior to the
Arbitration Act 1996 and remained the case under that Act. There was
no reason why s. 46(1) of the Arbitration Act 1996 did not preserve
and confer the same general jurisdiction, powers and duties on
arbitrators as the court had recognised them to have, by implication,
under the previous legislation, including the power to award
contribution.
For the Defendant/Appellant: Mr G Brown (instructed by Messrs
Hextall Erskine).
For the First Third Party/Respondent: Mr T Landau (instructed by
Messrs Burges Salmon).
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