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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Great North Eastern Railway Ltd v JLT Corporate Risks Ltd  EWHC 1478 (QB) (10 May 2006)
Cite as:  EWHC 1478 (QB)
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QUEEN'S BENCH DIVISION
London WC2A 2LL
B e f o r e :
|GREAT NORTH EASTERN RAILWAY LTD||Claimant|
|- and -|
|JLT CORPORATE RISKS LTD|
|(formerly JARDINE INSURANCE SERVICES LTD)||Defendant/Applicant|
183 Clarence Street Kingston-Upon-Thames Surrey KT1 1QT
Tel No: 020 8974 7300 Fax No: 020 8974 7301
(Official Shorthand Writers to the Court)
MR T WEITZMAN (instructed by Herbert Smith) appeared on behalf of the Defendant/Applicant
Crown Copyright ©
"(a) all of the claimant's claims are time-barred pursuant to sections 2 and 5 of the Limitation Act 1980 since they arise out of the placing of a policy of insurance in February to March 1998 and, as such, are based on causes of action which all accrued more than six years prior to 10 June 2004 when these proceedings were issued; and
(b) that part of the claimant's claim pleaded at paragraphs 13.1 and 13.2 of the Particulars of Claim is an abuse of process because it amounts to a collateral attack on the decision of Gross J in Great North Eastern Railway Ltd v Railcare Ltd  EWCH 1608 (Comm) which determined the quantum of the claimant's loss. The claimant has by way of that judgment been compensated for those losses in full.
Accordingly, the applicant believes that the claimant has no real prospect of succeeding in its claim and there is no other reason why the case should be disposed of at trial. Further, the applicant believes that it is appropriate for the court to exercise its power to strike out the claimant's statement of case because that statement of case discloses no reasonable grounds for bringing the claim and is an abuse of process."
3.1 GNER is the operator of the InterCity East Coast rail service.
3.2 Prior to 1997 GNER retained Fenchurch as its insurance broker. In that capacity Fenchurch effected Breakdown Insurance (including Business Interruption cover) with Avon Insurance plc ("Avon") for the period 1 April 1996 to 31 March 1997. Such cover was on the terms of a standard wording used by Fenchurch ("the Fenchurch Wording"). This was subject to a wide exclusion in respect of:
"Damage of Consequential Loss caused by … faulty or defective design, materials or workmanship, inherent vice, latent defect, gradual deterioration, wear and tear or frost."
3.3 In about January/February 1997 GNER retained JLT as its insurance broker in place of Fenchurch.
3.4 In about March 1997 JLT arranged for the renewal of GNER's Breakdown and Business Interruption Insurance with Avon for the year 1 April 1997 to 31 March 1998 on the same terms as the expiring cover, i.e. as was later held (although GNER did not know it at the time) on the terms of the Fenchurch Wording and subject to the wide exclusion quoted above.
3.5 In October 1997 JLT provided Sea Containers with an Insurance Register in which it summarised the cover it said it had purchased for GNER. This Insurance Register contained the following statement:
"No cover is provided for damage or consequential loss caused by or consisting of: … faulty or defective workmanship, operational error or omission, on the part of Great North Eastern Railways or any employees other than drivers and guards."
3.6 By letters dated 9 and 31 December 1997 JLT asked Avon to agree various changes to the Fenchurch Wording in respect of insurance for the period 1 April 1997 to 31 March 1998 (those changes being unrelated to the disputed exclusion).
3.7 In about March 1998 JLT arranged for the further renewal of GNER's Breakdown and Business Interruption Insurance with Avon for the year 1 April 1998 to 31 March 1999. Prior to such renewal being agreed JLT had in February 1998 provided GNER with a document entitled "Request for Property Insurance Quotations" ("the Request"). This set out the cover sought and provided that that cover be subject to an exclusion mirroring that in the Insurance Register in respect of:
"Damage or consequential loss caused by or consisting of … faulty or defective workmanship, operational error or omission, on the part of GNER or any employees other than drivers or guards."
This exclusion was somewhat narrower than the exclusion in the Fenchurch Wording, in that it applied only to defective workmanship, et cetera, on the part of GNER's own employees.
3.8 On 20 February 1998 a renewal meeting took place between Avon and JLT at which (so HHJ Dean, QC, held) JLT failed specifically to draw to the attention of Avon's underwriter the proposed narrower exclusion set out in the Request.
3.9 By an exchange of faxes on 5 and 6 March 1998 Avon agreed with JLT to renew cover for the period 1 April 1998 to 31 March 1999. As was held in the subsequent Avon Proceedings (see below) that renewal was on the terms of the Fenchurch Wording, including the wide exclusion in respect of defective workmanship contained in that Wording rather than the narrower contained in the Request.
3.10 JLT wrote to GNER on 6 March 1998 confirming that Avon had agreed to the renewal.
3.11 On 12 March 1998 there was a telephone conversation between JLT and GNER in which JLT again confirmed the renewal and GNER requested certificates of insurance.
3.12 On 13 March 1998 JLT issued certificates of insurance and summaries of cover to GNER stating (incorrectly) that the business interruption cover placed included a faulty workmanship exclusion in the narrow form and not the wide exclusion which in fact applied.
3.13 On 16 March 1998 there was a telephone conversation between JLT and Avon confirming the agreed business interruption deductibles.
3.14 On 30 March/1 April 1998 the 1998 Material Damage/Business Interruption policy incepted.
3.15 On 3 April 1998 JLT wrote to GNER enclosing invoices for the renewal.
3.16 On 6 April 1998 JLT wrote to Avon chasing for a response to its earlier letters of 9 and 31 December 1997 suggesting various changes to the terms of cover.
3.17 On 22 April 1998 Mr Grace of Avon responded apologising for the delay, responding to some of the proposed changes but saying that others would need to be raised with Avon's underwriters.
3.18 On 28 May 1998 Mr Lord wrote to JLT stating that because of sickness and holidays he had been unable to resolve the outstanding queries.
3.19 On 16 June 1998 GNER's 17:30 service from King's Cross was derailed at Sandy in Bedfordshire, when the wheel of one of the coaches disintegrated. Railcare subsequently admitted that the derailment was caused by its negligence in failing properly to debur and chamfer the edges of a balance hole drilled by it in the web of the wheel of one of the coaches, when overhauling and balancing the wheel-set. This led to the initiation of a fatigue crack in that wheel, which then propagated to the rim of the wheel and caused the wheel to break up. Mercifully, no one was injured in the derailment. It did, however, result in substantial disruption to GNER's business.
3.20 On 30 June 1998 (after the derailment) Mr Lord wrote again to JLT to state that because of sickness he had been unable to take matters forward.
3.21 JLT sent a further chasing letter on 3 September 1998, following up Mr Lord's letter of 30 June, but no substantive response to that letter was ever received from Avon.
The Avon Proceedings
3.22 GNER initially sought to claim its losses from Avon under its Breakdown and Business Interruption Insurance.
3.23 On 30 September 1998 Avon wrote to JLT declining GNER's claim on the basis of the broad faulty workmanship exclusion.
3.24 On 27 August 1999 GNER commenced proceedings against Avon in the Commercial Court (Action 1999 Folio No. 1073). GNER contended that following the 1998 renewal its insurance cover was subject to the narrower exclusion set out in the Request and that its claim did not fall within that exclusion (because the derailment was not the result of any faulty workmanship on the part of an employee of GNER).
3.25 On 25 July 2000 HHJ Dean, QC held that the wide exclusion set out in the Fenchurch Wording applied to GNER's cover with Avon. He reached this conclusion on the basis that the difference between the exclusion in the Fenchurch Wording and that contained in the request had not been sufficiently brought to the attention of Avon's underwriter and that Avon had not agreed to any change in the terms of cover.
3.26 On 7 August 2000 GNER's then solicitors, DJ Freeman, wrote to Vyvienne Wade of JLT indicating that, in light of HHJ Dean's judgment, JLT was in breach of its duties in that it had failed to procure the insurance coverage it was engaged to obtain and had misled GNER by informing it that the required coverage had been placed.
3.27 On 8 August 2000 Ms Vyvienne Wade wrote to DJ Freeman requesting details of the claim.
3.28 On 14 August 2000 DJ Freeman wrote to Vyvienne Wade of JLT agreeing to provide information on quantum and details of the recovery action which GNER intended to bring against Railcare. DJ Freeman asserted that JLT was liable for the costs of the Avon action and would be severally liable, with Railcare, for the losses caused by the derailment.
3.29 The same day Ms Wade wrote to DJ Freeman explaining that GNER was obliged to mitigate its losses by first recovering from Railcare (in which event the claim against JLT would be limited to costs to be assessed) and offering to fund the costs of an application for permission to appeal the Avon judgment.
3.30 On 15 August 2000 DJ Freeman wrote to Ms Wade accepting JLT's offer to fund an application for permission to appeal.
3.31 On 23 May 2001 DJ Freeman wrote to Ms Wade indicating that in the event of an unfavourable decision from the Court of Appeal in the Avon proceedings, GNER would be issuing proceedings against JLT.
3.32 On 24 May 2001 the Court of Appeal dismissed an appeal by GNER against the decision of HHJ Dean QC. Longmore LJ, who gave the judgment of the court, held that:
"(a) Avon's agreement to renew was to be construed as an agreement to renew on existing terms; and
(b) Avon had not agreed to the narrower exclusion set out in the Request in circumstances where (as HHJ Dean QC had found) Avon's underwriter had not read the Request and the change to the terms of the exclusion set out in the Request had not been referred to at a renewal meeting between him and JLT on 20 February 1998 (it being the evidence of the JLT broker concerned that it was incumbent upon him specifically to draw any change to the terms of the exclusion to the attention of Avon's underwriter)."
3.33 In late 2001/early 2002 JLT paid to GNER the sum of £418,655.94 in respect of the costs of the Avon Proceedings.
The Railcare Proceedings
3.34 On 25 September 2000 GNER commenced proceedings against Railcare (Case No. 2000/762). As set out above, Railcare ultimately accepted that the derailment had been caused by its negligence. However, Railcare disputed the quantum of GNER's claim. It also asserted that GNER had been contributorily negligent in failing to detect the fatigue crack prior to the derailment.
3.35 On 5 June 2002 Ms Wade wrote to GNER setting out JLT's position in relation to GNER's claim, namely that although JLT was in breach of its duties to GNER, it was clear that recovery from Railcare and JLT's payment of both GNER's and Avon's costs of the Avon Proceedings would extinguish GNER's claim. Ms Wade ended by saying:
"We must reserve the right to rely upon this letter in the event that GNER commences proceedings against Jardines. Jardines' position is that it is inappropriate for proceedings to be commenced against it given its acceptance of a breach of duty and the payments in respect of costs."
3.36 The trial of the Railcare Proceedings took place before Gross J between 24 March and 10 April 2003. A total of seven witnesses of fact and ten experts were called to give evidence. The hearing occupied 11 court days.
3.37 On 15 July 2003 Gross J gave judgment. He dismissed Railcare's allegation of contributory negligence. So far as quantum was concerned, Gross J found for GNER on some issues but on other issues either found for Railcare or reached a decision which represented what was in effect a mid-point between the parties' respective contentions. He awarded GNER damages of £2,407,600 in total. He also ordered that Railcare pay 70 per cent of GNER's costs and that GNER pay 20% of Railcare's costs (to reflect the parties' respective degree of success on the issues argued at trial). Railcare has subsequently satisfied that judgment by paying to GNER the sum of £2,059,000 in respect of damages and interest and the sum of £700,000 in respect of costs.
The Present Proceedings
3.38 As set out above the Claim Form in the present proceedings was issued on 10 June 2004. On 6 October 2004 GNER obtained an order extending its time for service of that Claim Form from 4 to 5 months. This was on the basis that it was awaiting receipt of a report from Forensic Accounting LLP as to the quantum of its claim and that it was likely to wish to withdraw its claim if:
"Forensic Accounting advise that the value of the insurance recovery to which [GNER] would have been entitled had the insurance policy been placed in accordance with its instructions is equivalent or less than [GNER's] recovery under the Judgment [in the Railcare Proceedings]."
3.39 On 5 November 2004 Mr Trumper of Forensic Accounting issued his report. This quantified GNER's claim against JLT in respect of its uninsured losses in the sum of £2,974,000 after giving credit for the recoveries made from Railcare. This was on the basis that GNER's total losses as a result of the derailment amounted to £5,381,600 (£2,974,000 + £2,407,600 awarded by Gross J).
3.40 On 9 November 2004 GNER served JLT with the Claim Form together with the Particulars of Claim. The claim for damages set out in the Particulars of Claim was based on the figures given by Mr Trumper in his report.
3.41 On 22 December 2004 JLT served its Defence. In that Defence JLT admitted that it had been negligent in failing to obtain cover that was subject to the narrower exclusion set out in the Request but asserted that GNER's claim: (a) was time-barred under the Limitation Act 1980; and/or (b) had been extinguished by the recovery made by GNER in the Railcare Proceedings and the payment of £418,755.94 referred to above made by JLT in respect of the costs of the Avon Proceedings.
3.42 On 11 February 2005 GNER served its Reply. In that Reply it asserted that its claim had nonetheless not been extinguished and was not time-barred.
3.43 On 18 July 2005 the present application was issued by JLT.
Limitation: Analysis and Conclusions
"The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if:
(a) it considers (i) that the claimant has no real prospect of succeeding on the claim or issue ... and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial."
In my opinion there are compelling reasons why the limitation issue should be disposed of at a trial. Expert evidence as to the relevant practice of brokers is likely to inform and assist the court as to the extent and nature of any continuing duties of JLT in relation in particular (but without limitation) to the need to obtain an agreed policy wording and provide it to the claimant. The fact that the court has regard to the general practice of insurance brokers in appropriate circumstances is reflected in paragraph 14-034 of Jackson and Powell on Professional Negligence, 5th Edition.
Christopher Henley in The Law of Insurance Broking, 2nd Edition at paragraph 2-016 states under the heading "Post-Placement Obligations":
"In some cases the broker's obligations to the insured end shortly after the contract of insurance has been concluded, when the administrative requirements have been satisfied by the broker. These will usually include sending the policy document to the client and advising him of any unusual or onerous terms with which he must comply. Whether or not the broker has any continuing obligations to inform his clients of any impending insolvency in the selected market, or indeed any rumours concerning the ability of that market to pay, is rarely addressed by the parties. It is probably logical to say that where the broker has a continuing obligation to process claims through insurers on behalf of his clients, he should be under a concurrent duty to advise if he becomes aware that any of the market is or may become unable to pay, since there is, of course, no point in attempting to process a claim against a market that is effectively insolvent or simply refuses to pay. The insured is entitled to attempt to replace the insurance elsewhere.
There is no English authority for the proposition that the broker is obliged to monitor the security. Phillimore LJ said in Osman v J Ralph Moss Ltd that:
'It was the broker's duty in the circumstances to give Mr Osman a plain warning in the strongest terms and to tell him that they were ready to account to him for the premium that he had paid. If they had been concerned to do their duty by him, they would have taken further and urgent steps to ensure that he realised the position, but they did not.'
This obligation can be qualified by the fact in this case that the brokers were aware that the insurer was financially unsound when the insurance was placed. The Australian case of Lewis v Tressider Andrews Associates considered various English authorities and concluded that the broker is obliged to inform the insured of any information which he receives which indicates that the insurer may not remain financially sound, even if the broker is personally satisfied that no real problem exists. The court stated that 'so long as the relationship of broker and client subsists there is a continuing duty of care'."
"Existence of cover":
"An insurance broker should keep the client properly informed as to the presence or absence of cover. If the insurance broker is unable to effect insurance at all or, alternatively, is unable to effect insurance on the specific terms required, he is under a duty to notify the client promptly. Where a broker receives information casting doubt on the reliability or solvency of an insurer of one of his clients, he should pass that information to his client even if he is personally satisfied with the insurer. Where, however, the insurance broker receives instructions from a trade union or association of which the insured is a member, his duties to keep the insured informed are necessarily more restricted."
"Where client becomes uninsured. If the client becomes uninsured for any reason, the broker should notify him as a matter of urgency."
"Terms of cover. If any onerous term or restriction is included in the policy, this should be notified to the client either before the insurance is effected or as soon as possible thereafter. If necessary the broker should explain to his client the nature and effect of any significant or unusual restrictions or exclusions in the policy."
"In the present case the brokers negotiated the terms of the Superhulls cover on behalf of the prospective reassured and drew up the slips and, subsequently, the formal contract wording to be embodied in the policy. The brokers were bound to exercise reasonable skill and care in drafting these documents so as to ensure that they gave clear expression to the terms that had been agreed. They failed to do so."
"I have only had time to read the skeleton arguments in outline. There is however one point I would invite the parties to consider. A central issue in relation to the limitation defence is whether the defendant owed any relevant continuing duty after about March 1998. In some cases this type of issue is illuminated or assisted by independent expert evidence. I have an entirely open mind as to whether this is such a case, but I would expect the point to be addressed in argument. IF this were such a case a possible procedural route would be to direct a trial of a preliminary issue (as to limitation) with provision for oral expert evidence."
Extinction, Collateral Attack, Abuse of Process
"The claimant's claim is an abuse of process because it amounts to a collateral attack on the decision of Gross J ... which determined the quantum of the claimant's loss. The claimant has, by way of that judgment and the defendant's payment of its costs associated with the unsuccessful claim against insurers, been compensated for its losses in full."
That part of the claimant's claim pleaded at paragraphs 13.1 and 13.2 of the Particulars of Claim is an abuse of process because it amounts to a collateral attack on the decision of Gross J … which determined the quantum of the claimant's loss. The claimant has, by way of that judgment, been compensated for those losses in full."
"Insurers will pay to the Insured … the amount of loss resulting from the interruption of or interference with the Business carried on by the Insured at the Premises in consequence of the Damage …"
"The amount by which the Gross Revenue during the Indemnity Period shall in consequence of the Damage fall short of the Standard Revenue ... less any sum saved …"
and the Standard Revenue is defined as being:
"The Gross Revenue during that period in the twelve months immediately before the date of the Damage which corresponds with the Indemnity Period to which such adjustments shall be made as may be necessary to provide for the trend of the Business and for variations in or other circumstances affecting the Business ... so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the Damage would have been obtained during the relative period after the Damage."
"…additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the loss of Gross Revenue which but for that expenditure would have taken place during the Indemnity Period in consequence of the Damage …."
Thus it is necessary to distinguish between lost revenue and increase in cost of working.
(1) Gross J assessed GNER's loss on the basis that the derailment affected GNER's business for the periods P6, 7 and 8 (adopting the four-week period system used by the Rail industry). Mr Trumper contends that the derailment also affected GNER's business in P9. In this respect it is to be noted that GNER did not make any claim in respect of P9 in the Railcare proceedings, apparently because its preferred measure of the level of sales that would have been achieved, the forecast, did not show any disruption in period P9. In effect, therefore, GNER is now seeking to resile from a deliberate decision made by it in the Railcare proceedings, for what no doubt then seemed to be good tactical reasons, to continue its claim to periods P6, 7 and 8.
(2) Gross J assessed the level of sales which GNER would, but for the derailment, have achieved in periods P6, 7 and 8 by reference to what he described as "the Winspeare approach". Miss Winspeare was the forensic expert instructed by Railcare. That approach was based on the figures in the GNER budget, but uplifted to allow for GNER performing ahead of budget. In reaching this conclusion, Gross J rejected GNER's contention that the level of lost sales should be assessed by reference to the Forecast. Mr Trumper now argues for a yet further measure of lost sales, namely the Budget uplifted by a factor of 2.33 per cent. In effect, what has happened is that GNER has gone to a new forensic accountant, Mr Trumper, who has suggested a different measure of lost sales than that suggested by the forensic accountant who acted for GNER in the Railcare proceedings.
(3) Gross J held that various fees incurred by Railcare in respect of defects in wheels other than deburring and chamfering were not recoverable as a matter of causation. Mr Trumper expresses the view that such costs were incurred in consequence and/or as a result of the derailment. In effect, therefore, GNER seeks simply to ignore the finding of Gross J.
(4) GNER could and should have joined JLT as a defendant to the Railcare proceedings if it wished to pursue its present claim for uninsured losses against JLT. In this respect, it is significant that JLT expressly informed GNER on 5 June 2002 that it considered that GNER's recovery from Railcare would:
"... entirely extinguish any claim for damages it has against JLT relating to the value of the lost insurance claim."
"additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the loss of Gross Revenue which but for that expenditure would have taken place in the Indemnity Period in consequence of the Damage ..."
Extinction, Collateral Attack, Abuse of Process: Analysis and Conclusions
"It may very well be, as has been convincingly argued (Watt, 'The Danger and Deceit of the Rule in Henderson v Henderson: A new approach to successive civil actions arising from the same factual matter'  19 CLJ 287), that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question of whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice."
"… if A, having sued B for damages for breach of contract, enters into a settlement with B expressed to be in full and final settlement of all its claims against B, is A thereafter precluded from pursuing against C a claim for damages for breach of another contract to the extent that this claim is for damages which formed part of A's claim against B?"
"For reasons given by … Lord Mackay of Clashfern I do not conclude, on construing the compromise agreement made in this case, that it is to be taken as representing the full measure of the respondents' loss agreed between the parties to the compromise."
"… counsel for the respondents was content to accept that the claims for money in respect of those matters in both actions were the same."
No such concession is made in the present case. On the contrary. The claimant says that the claim in the present proceedings far exceeds the sums awarded by Gross J.
"I consider that the action should proceed and in the ordinary way an assessment should be made of the various claims and a value put upon them at the trial. If the total amount awarded in respect of the heads of damage that are dealt with in the Target settlement exceed the amount of approximately £5 million appropriated to them in the Target settlement the award to the respondents would be the difference allocated between Inter City and the individual respondents in proportion to their claims. If the amount awarded is less than £5 million this case will have been shown to be unnecessary so far as these heads of claim are concerned and no doubt this would be appropriately reflected in the awards of costs."
"In my view these cases establish the following propositions.
(a) A collateral attack on an earlier decision of a court of competent jurisdiction may be but is not necessarily an abuse of the process of the court ….
(c) If the earlier decision is that of a court exercising a civil jurisdiction then it is binding on the parties to that action and their privies in any later civil proceedings.
(d) If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute."
(1) There is no cause of action estoppel or issue estoppel which prevents GNER from pursuing its claim against JLT in the present case;
(2) In the Railcare proceedings, Railcare v Lining admitted that its negligence in failing to deburr and chamfer the wheelset caused the derailment. Gross J assessed the appropriate measure of damages in tort payable by Railcare v Lining to GNER in respect of this admitted negligence. In the present case (subject to the defence of limitation) JLT is liable in contract and tort to GNER for the loss suffered by GNER as a result of its insurance being subject to the wide exclusion as opposed to the narrow exclusion set out in the Request. Thus the claim made in the present proceedings is against a different defendant and on a different basis to that made in the Railcare proceedings.
(3) JLT were not concurrent tortfeasors liable in respect of the same damage.
(4) The present claim does not in all the circumstances constitute an abuse of the process. I refer to the background set out above, to the contents of the witness statements and the correspondence exhibited thereto. There is no unjust harassment of JLT. JLT has not been vexed twice in the same matter.
(5) The principles relating to "collateral attack" are a species or subset of abuse of process. The present proceedings do not involve a collateral attack on the judgment of Gross J. It would not be manifestly unfair to JLT to allow the claims in paragraphs 13.1 and 13.2 of the Particulars of Claim to be litigated. Nor is there any question of the administration of justice being brought into disrepute.
(6) (Subject to the defence limitation), it is common ground that GNER's claims in respect of outstanding costs in relation to the Avon proceedings and the Railcare proceedings must go ahead in any event. (See paragraph (b) of the amended application notice). Thus (subject to the defence limitation), part of the claim for damages must go ahead in any event.
(7) I do not consider that GNER are precluded from making a claim in the present proceedings in relation to period 9 simply because they did not make such a claim in the Railcare proceedings. Nor do I consider it appropriate to attempt to determine in the course of this interlocutory application whether the Interfleet costs (not recovered in the Railcare proceedings) would be recoverable by virtue of the relevant ICOW provision.
(8) I consider that Mr Flaux is correct in his submission that Gross J only determined the extent of GNER's loss recoverable from Railcare for its negligence in the overhaul of the wheelset which led to the derailment. He did not determine the separate question as to what sums GNER could have recovered by way of an indemnity under the Avon policy and, thus, what damage JLT is liable for as a consequence of that indemnity not being available.
(9) If, in relation to the claimant's claim as pleaded in paragraphs 13.1 and 13.2, the subject of the present application, in the event GNER do not recover any sums in addition to those sums recovered in the Railcare proceedings, no doubt this will be appropriately reflected in the award of costs - see Lord Mackay in Heaton v Axa Equity and Law supra at paragraph 52. Thus if at the conclusion of the trial (assuming that GNER overcomes the limitation defence), GNER does not recover in respect the claims in paragraphs 13.1 and 13.2 referred to in paragraph (b) of the amended application notice, any sum above that awarded by Gross J, it may well be that costs will be awarded against GNER on the indemnity basis in respect of such claims.