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England and Wales High Court (Technology and Construction Court) Decisions

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Cite as: [2011] EWHC 1622 (TCC), [2011] PNLR 33

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Neutral Citation Number: [2011] EWHC 1622 (TCC)
Case No: HT-10-188


Royal Courts of Justice
Strand, London, WC2A 2LL

B e f o r e :


(in Creditors' Voluntary Liquidation)
- and -




David Thomas QC and Justin Mort (instructed by Squire, Sanders & Dempsey (UK) LLP) for the Claimant
David Streatfeild -James QC and Christopher Lewis (instructed by Fenwick Elliott LLP) for the Defendant
Hearing dates: 23rd – 25th May 2011



Crown Copyright ©

    Mr Justice Edwards-Stuart:


  1. In this case the claimant ("RCL"), a company in Creditors' Voluntary Liquidation acting by its liquidators, sues the defendant for an indemnity in respect of its liability under a consent judgment that was entered on 28 November 2008 in favour of Eagle One Festival Shopping Ltd and Eagle One Ltd (to whom I shall refer collectively as "Eagle One"). It is alleged that the judgment was entered at the instigation of the defendant with the result that the defendant cannot now challenge the existence or the amount of RCL's liability to Eagle One. These proceedings are brought essentially for the benefit of Eagle One.
  2. The judgment is for a substantial sum: £8,069,822.32. RCL used to carry on business as geotechnical consultants and in 1995 it was engaged by Eagle One Ltd to provide geotechnical engineering services in relation to the proposed development of a shopping centre near the former Ebbw Vale steelworks.
  3. Eagle One proceeded with the development which was built between November 1996 and September 1997, but the buildings subsequently sustained substantial structural damage which Eagle One contends was the result of negligent advice given by RCL. The first that RCL knew about the claim was when it received a letter dated 28 September 2007 from solicitors acting for Eagle One.
  4. RCL and the defendant were both wholly owned subsidiaries of a company called Kennedy & Donkin Holdings Ltd. All these companies are now members of the Parsons Brinckerhoff group of companies ("the PB Group"). By an asset purchase agreement dated 5 September 1997 ("the APA") the defendant, which was then known as Kennedy & Donkin Limited, purchased and took over the whole of the business and assets of RCL as a going concern for the sum of £1,000. By 1997 RCL had already ceased to trade. The notes to RCL's accounts for the financial year ended 24 October 2007 recorded that the company was planning to close prior to 24 October 2008.
  5. At the end of 2007 RCL's only asset was an inter company debt of £1,000, which represented the consideration under the APA. In early 2008 it incurred legal costs in relation to the threatened claim by Eagle One in the sum of about £1,500, but these were in fact paid by another company in the PB Group leaving RCL with an equivalent debt to that company. Since RCL's liabilities exceeded its assets, in March 2008 the decision was taken to put it into Creditors' Voluntary Liquidation, and liquidators were appointed on 24 April 2008.
  6. Since RCL had a negative equity, so that there was no prospect of the payment of any dividend, it was agreed that the PB Group would take over the conduct of the defence to the claim by Eagle One which had served a claim form, together with its Particulars of Claim, on 11 March 2008. By the consent order of 28 November 2008 that claim was compromised for its full value, together with negotiated figures in respect of costs and interest.
  7. The defendant's case is that the reason for the compromise was quite simply that the PB Group wished to ensure that any claim against RCL, which was then insured under the PB Group worldwide professional liability insurance arrangements, would be compromised in an amount that did not exceed the deductible under the worldwide cover of US$ 15 million. Against a background of a fluctuating £ sterling/US dollar exchange rate it was seen as important to ensure that the settlement figure, when converted into US dollars, did not exceed the deductible.
  8. All those concerned within the PB Group, save possibly for the liquidators of RCL, had been advised, both by their solicitors and by leading counsel, that the defendant was under no liability to indemnify RCL under the terms of the APA. So in the light of this legal advice the view was taken that, since RCL had no assets, the amount of any settlement was irrelevant except to the extent that the amount might exceed the deductible under the PB Group worldwide insurance cover. That is said to be why the PB Group was content to compromise the claim by Eagle One at its claimed value without any regard for its likely true value.
  9. On 28 July 2010 this Court directed the hearing of certain preliminary issues relating to the true meaning and effect of the APA. That hearing took place on 11 November 2010 before Akenhead J and on 21 December 2010 he handed down judgment. One of the issues determined by Akenhead J was whether or not the defendant was liable to indemnify RCL against claims made against RCL and, in particular, the claim by Eagle One. He held that by clause 3.1 of the APA the defendant had agreed to indemnify RCL against "all proceedings, claims and demands" in respect of actual liabilities. Thus this Court has held that the legal advice received by the PB Group at the time in relation to any potential indemnity in favour of RCL under the APA was wrong.
  10. The issue raised at this trial is whether or not the defendant, if that is the company that undertook the conduct of RCL's defence to the claim by Eagle One, is estopped from disputing that RCL is liable to Eagle One for the sums set out in the consent order.
  11. Although the court has heard from four witnesses and been referred to a significant number of documents, the basic facts giving rise to the dispute are not really very much in issue. The real question for the court is what legal consequences flow from those facts.
  12. The background

  13. The Parsons Brinckerhoff group of companies operates worldwide and has its principal headquarters in the United States. The ultimate holding company is Parsons Brinckerhoff Inc. One of the subsidiary companies in the United Kingdom is Parsons Brinckerhoff Overseas Holdings Ltd, which was formerly Kennedy & Donkin Holdings Ltd. Within the PB Group it is known as company 402. For convenience, I shall refer to it hereafter as "402". The two immediate subsidiaries of that company are the defendant, now called PB Ltd and known within the PB Group as "401", and RCL. The principal operating company of the PB Group in the UK is Parsons Brinckerhoff Ltd, company "303".
  14. On 24 April 2008 there was a creditors' meeting in relation to the liquidation of RCL. This was held at the offices of RMT, an insolvency practice that had carried out a lot of work for the PB Group in the past. The statement of the company's affairs showed that it had one asset which was the £1,000 owed to it by the defendant and one liability in the sum of £1,531.59. This was in respect of fees for legal advice given by Watson Burton, who acted as the UK solicitors to the PB Group, in relation to the claim by Eagle One. Since RCL had no assets Watson Burton's invoice was paid by company 303 which was then shown as a creditor of RCL.
  15. The PB Group was, unsurprisingly, concerned as to how it should deal with the claim by Eagle One. One alternative was to defend it. Another alternative was to do nothing. A third alternative was to attempt to compromise it.
  16. During the first few months of 2008 no-one involved within the PB Group had managed to locate a copy of the APA, although it had been provisionally concluded that it probably did not give RCL any right of indemnity against claims by third parties. The problem that seemed to be of more concern was that if the claim was not defended Eagle One might enter judgment in default for a sum that would exceed the deductible under the PB Group professional liability policy with Zurich American Insurance Company ("the Zurich"). Initially, there was some confusion as to what the deductible was under the Zurich policy and the extent to which part of that deductible may have been eroded.
  17. In about mid April 2008 the brokers to the PB Group, Marsh, explained that there was a US$ 15 million deductible that would have to be reached before the Zurich cover was exposed. However, this was at a time when the US dollar was relatively weak compared with sterling and so it was thought that any claim in excess of £7 million plus costs could reach the deductible.
  18. Matters became more complicated in May 2008 because the Zurich appeared to be taking the position that if a default judgment was entered against RCL the wording of the group policy meant that Parsons Brinckerhoff Inc and other members of the group would be liable to meet the claim on RCL's behalf up to the level of the deductible.
  19. Meanwhile, the liquidators wanted an indemnity from the PB Group against any exposure to costs that the liquidators might have personally if the claim by Eagle One was defended. Watson Burton prepared a draft indemnity which was to be given by the defendant, company 401. During the course of his oral evidence Mr Davidson, the company secretary and director of RCL, suggested that Watson Burton had made a mistake in choosing the defendant as the party to give the indemnity to the liquidators. He said that the obvious company to give the indemnity would have been the main UK trading company, company 303, and that he did not understand why Watson Burton had chosen the defendant.
  20. For reasons that will become clear later in this judgment, I regard this as irrelevant. But, to the extent that it matters, I do not accept Mr Davidson's evidence on this point. In a letter dated 4 May 2008 from Watson Burton to Mr Davidson, Mr Langley, the Senior Partner, wrote:
  21. "I refer to our meeting on Friday, 2 May at your offices when we considered whether PB Ltd or indeed any other member of the PB Group of companies should support the defence of these claims by the Eagle group of companies against Rust Consulting Ltd, given that Rust Consulting Ltd ("Rust") has no assets and is now in creditors' voluntary liquidation."
  22. It seems to me reasonably clear that either Mr Davidson was content to accept that the defendant, PB Ltd, should be the company that would agree to indemnify the liquidators or that he was indifferent as to which company gave the indemnity. However, in the event an indemnity agreement was drafted that was made between the defendant and the liquidators and which, in June 2008, was signed by the liquidators and returned to Watson Burton. Under cover of a letter dated 30 June 2008 Watson Burton forwarded the Deed of Indemnity to Mr Richard Proctor, of the defendant, for counter signature by an appropriate officer of the company.
  23. In fact, the Deed was never signed although Mr Davidson indicated in his witness statement that he would have been willing to sign it if asked to do so.
  24. Ultimately the potential issue about the choice of the PB Group company to be party to the indemnity agreement became academic because Mr Davidson accepted in cross examination that at some stage he became content that the defendant should be the company to give the indemnity. I find as a fact that it was the defendant that undertook to indemnify the liquidators against any personal liability for costs and that it was the defendant, and only the defendant, to whom the liquidators gave authority to conduct the defence of RCL. That is made quite clear by clause 1 of the operative provisions of the Deed of Indemnity.
  25. In the meantime, at some stage during early or mid May 2008, Mr Davidson located the APA and forwarded it to Mr Langley at Watson Burton for his opinion as to its effect. In an e-mail to the Zurich dated 16 May 2008 Mr Langley advised that the APA did not impose on the defendant any liability in respect of contracts which had been fully performed as at 31 December 1996. He said that he was "not currently aware of any circumstances which in my opinion can give rise to liability on the part of any other PB companies, whether parent company or otherwise, for Rust Consulting Ltd's tortious or contractual obligations".
  26. It was decided to seek a second opinion from counsel on the meaning and effect of the APA. Accordingly, Watson Burton instructed counsel to give an opinion. On 6 June 2008 Roger ter Haar QC and Jason Evans-Tovey, produced a Joint Opinion in which they advised that "Parsons Brinckerhoff and the PB Group have no liability to indemnify Rust Consulting Ltd".
  27. Counsel advised also, albeit under the assumption that New York law and English law were the same so far as the construction of the policy was concerned, that the insurers had a duty under the PB Group world wide professional liability policy to defend claims against companies in the PB Group, which included RCL, insofar as claims against those companies exceeded the deductible. They noted also that at the current rates of exchange the deductible was equivalent to about £7.7 million.
  28. The following month the PB Group instructed New York lawyers, Proskauer Rose LLP, to advise in relation to the Zurich policy. In a memorandum of advice dated 18 July 2008 Proskauer Rose advised as follows:
  29. "It follows that if the claim against RCL is not defended, leading to entry of a default judgment, and RCL fails to pay the deductible, Zurich would have no obligation to pay anything to anyone - including amounts exceeding the deductible. If Zurich has no obligation to pay anything on the claim, no deductible amounts would be due to it under the policy, so there would be no basis for Zurich to seek recovery of the deductible from PB."
  30. Thus the position as at mid July 2008 was that the PB Group had been advised that there was no obligation to indemnify RCL under the terms of the APA against the claims being made by Eagle One and that the Zurich policy did not oblige RCL (or any of the PB companies on its behalf) to defend the claim brought by Eagle One.
  31. So far as the Eagle One proceedings were concerned, I should note at this point that the action had been stayed by consent until 31 July 2008. This was to enable the pre-action protocol process to take place, the claim form having been issued and served in order to stop time running for the purposes of limitation. So it is, strictly speaking, incorrect to speak of the possibility of the claim against RCL being defended in mid 2008 whilst the stay was in place. There was to be a case management conference on the first open day after 31 July 2008.
  32. By a further order dated 20 May 2008 the stay was extended to 3 October 2008, and the case management conference was re-fixed for that date. In September 2008 it was agreed that the case management conference should be put back to 28 November 2008 and the stay was further extended to that date. However, the fact remained that during the whole of this period the liquidators of RCL took no steps in relation to the claim pursuant to the terms of the Deed of Indemnity and all communications and negotiations on behalf of RCL were conducted by the PB Group acting nominally through the defendant (because it was the only PB Group company, apart from RCL, that was a party to the Deed of Indemnity).
  33. By the end of July 2008 the policy that was favoured by the PB Group in relation to the claim was to seek to persuade Eagle One's solicitors, Clarke Willmott, that there was no prospect of any recovery from RCL or any other member of the PB Group and therefore to abandon the claim. However, the difficulty with this course was that if it was unsuccessful and the PB Group decided not to take any steps to defend the claim, Eagle One might enter judgment in default. With the US dollar being so weak against the £ there was a real likelihood that any such judgment, when interest and costs were taken into account, would exceed the deductible with the consequent possibility of involving the Zurich.
  34. In early September 2008 the risk of involving the Zurich appeared to become even greater because Proskauer Rose modified their previous advice. By an e-mail dated 4 September 2008, Proskauer Rose advised as follows:
  35. "That being said, the likelihood that a court applying New York law would obligate Zurich, if appropriate, to pay for amounts in excess of the deductible does require modification of our July 18 advice, to the following effect: faced with a potential liability in excess of the deductible, although not obligated to do so, Zurich would be within its rights to undertake the defense of the claim to avoid a default judgment and charge the defense costs to Parsons Brinckerhoff as the first named insured under the policy. In addition, Zurich could seek to settle the claim within the deductible and demand reimbursement from Parsons Brinckerhoff pursuant to Section VI.A.4 of the Policy, which provides that: "The first Named Insured on behalf of all of you will be ... obligated for the payment of all ... deductible obligations due us." Under the Zurich policy (Coverage Agreements I.C.3), the insured must consent to a settlement, which consent "shall not be unreasonably withheld". Here, the relevant insured would be RCL; however, since RCL is insolvent and Zurich would be looking for payment within the deductible from Parsons Brinckerhoff, Zurich would likely be obligated to notify and seek Parsons Brinckerhoff's consent as well before settling the case."
  36. Mr Davidson said in his witness statement that, following this revised advice from Proskauer Rose, the PB Group decided to adopt a revised strategy of actively defending the claim if the attempt to persuade Eagle One to abandon it was unsuccessful.
  37. On 22 September 2008 Mr Davidson and Mr Langley attended a meeting with Clarke Willmott with a view to putting an end to the claim. They made an offer of £50,000, which was described as a contribution to Eagle One's costs, but the representatives of Clarke Willmott were not persuaded. The meeting came to nothing. Attempts to follow the matter up in correspondence were no more successful. It was at around this point that the case management conference, then fixed for 3 October 2008, was put back to 28 November 2008.
  38. On 22 October 2008 Clarke Willmott formally rejected the offer of £50,000. By this time the exchange rate had begun to fall and the US dollar was becoming stronger as against the £. It was estimated that the US$ 15 million deductible was then worth approximately £9.25 million.
  39. By the end of October 2008 the PB Group had decided that steps would have to be taken to prepare a defence to the claim prior to the case management conference on 28 November 2008. In early November 2008 Mr Davidson remained concerned that, although the US$ /£ exchange rate was improving (from the PB Group's point of view), there remained the risk that the trend might reverse and that any default judgment might exceed the deductible. He expressed these views in an e-mail dated 11 November 2008 to his colleague Mr Grant Smallhorn, the Legal Counsel for the PB International Group. However, Mr Smallhorn's view was that the exchange rate risk was not sufficient to justify the continued funding of the preparation of a defence.
  40. By mid November 2008 the PB Group was beginning to take the view that the best approach might be to allow a default judgment to be entered against RCL whilst the exchange rate was favourable because this would ensure that the judgment would be below the deductible. This approach was supported by Mr Langley of Watson Burton, and in a telephone conversation on 17 November 2008 between Mr Langley, Mr Davidson and Mr Smallhorn, it was agreed that the claim should not be defended. The course of action then proposed was for Watson Burton to attend the case management conference on 28 November 2008 with a view to informing the court that the liquidators were accepting the claim on the basis that Eagle One was an unsecured creditor.
  41. Mr Davidson accepted in cross examination that the consequence of this decision was that it would involve RCL accepting a liability that was greater than the PB Group's assessment of the likely value of Eagle One's claim, and probably by a very substantial amount. The decision was subsequently approved in principle by Ms Lisa Palumbo, the PB Group's General Counsel in New York.
  42. In an e-mail sent to Mr Davidson on the same day, 17 November 2008, Mr Langley said that he would brief the liquidator on how they proposed to proceed. Watson Burton would attempt to negotiate amounts in respect of costs and interest and the terms of any judgment.
  43. On 21 November 2008 Watson Burton wrote to Clarke Willmott saying that whilst they regarded the claim against RCL as weak in terms of scope of duty, causation and a measure of loss, RCL had no funds whatever to distribute to any unsecured creditors and the claim fell below the sterling value of the deductible. It was therefore proposed that the liquidators would accept the claim as pleaded and it was made clear that the liquidators were ready and willing to negotiate appropriate figures for costs and interest.
  44. On 24 November 2008 the Zurich wrote to Parsons Brinckerhoff Inc notifying it that they had decided that the professional liability policy did not cover the liability for the claim by Eagle One.
  45. In spite of some second thoughts prompted by a need to clear the proposed course of action with the PB Group Audit Committee in New York, the proposal was in fact implemented and a consent order was made at the hearing on 28 November 2008. However, there is some doubt as to the extent to which the terms of the proposed order, or indeed the fact that a consent order was to be made, was discussed with the liquidators prior to the hearing. It is clear from the documents to which I have already referred that Watson Burton intended to brief the liquidators about the proposed course of action.
  46. During the cross-examination of Mrs Farish, one of the joint liquidators, it was demonstrated by reference to the time sheets of both Watson Burton and RMT that there had been telephone conversations between Watson Burton and Mr Pott, of RMT, on 21 November 2008, although there were no attendance notes recording the contents of the conversations. Mrs Farish said that if she was not at her desk when a call for her came in, it might well be taken by Mr Pott on her behalf. The time sheets also showed that there were further telephone calls between Watson Burton and RMT on 26 and 27 November 2008 (on the latter date, with Ms Josephine Humphries, an assistant at RMT who dealt with corporate insolvency).
  47. However, it remained Mrs Farish's evidence that she was only aware of the terms of the consent judgment after it had been entered. Mr Pott was not called as a witness.
  48. The terms of the judgment that was entered against RCL by consent on 28 November 2008 included interest in the agreed sum of £100,000 and costs in the agreed sum of £10,000. Since the principal claim made by Eagle One was the diminution in the value of the site, which was put at about £7.2 million, being the difference between what the site would have sold for in September 2006 and the price in fact obtained from a purchaser who had knowledge of the defects in June 2007, it is apparent that the amount agreed by way of interest was very modest. If there had been a default judgment I would have expected interest to be assessed at an amount well in excess of £500,000.
  49. However, apart from the sum in respect of interest, the remaining sums included in the consent order effectively represented the value of the claim at its highest. A judgment obtained in default would probably have included very similar figures.
  50. It is reasonably clear that the judgment sum obtained by Eagle One in the consent order was higher than any amount that it would have recovered if the claim had been fought to judgment. Mr David Thomas QC, who with Mr Justin Mort appeared for RCL, candidly conceded this, but even if he had not done so it is a matter of common experience in this type of litigation that in claims of this sort the claimant very seldom recovers the sum claimed or, usually, anything reasonably close to it.
  51. My findings on the facts

  52. Having summarised the events leading up to the entry of the consent judgment on 28 November 2008, I should now set out my findings of fact insofar as they are relevant to the issues in the claim.
  53. In relation to RCL, I find the following facts:
  54. (1) RCL had not traded since at least 1997 and in 2007 and 2008 there was no intention on the part of its directors that it should ever trade again.

    (2) The original intention of the directors and the shareholder of RCL in 2007 was that it should be placed in a members' voluntary liquidation, but this was changed by the notification and service of the claim by Eagle One. Instead it was decided to put RCL into creditors' voluntary liquidation.

    (3) To this end, Anthony Josephs and Linda Farish, of RMT, were appointed liquidators on 24 April 2008.

    (4) Linda Farish said in evidence that normally in a liquidation where the company had no assets it would make no difference to the outcome of the liquidation if there was a contingent claim against the company. She said: "It would just be accepted in the liquidation, because there wouldn't be a dividend. It wouldn't matter whether the claim was £7 or £7,000 or £7 million". This evidence was not challenged and, insofar as it relates to RMT's practice, I accept it.

    (5) Although RCL, by its directors at the time, must have known of the APA (because it was a party to it), there is no evidence that prior to the consent order Mrs Farish (or anyone else at RMT) was informed either of the existence of the APA or of the legal advice that was given in relation to it.

    (6) It follows from this that, at all material times during 2008, RCL did not believe that the defendant was taking over the conduct of the defence of the claim by Eagle One pursuant to any obligation to indemnify RCL, and therefore it did not rely on it to do so. Mrs Farish, and her co-liquidator, assumed that this was being done in the interests of the PB Group as a whole.

    (7) The liquidators of RCL did not know the precise terms of the consent order until after the event. However, I consider that it is likely that during one or more of the telephone calls that took place on 26 and 27 November between Watson Burton and RMT that the liquidators were told of the intended course of action and, in particular, that the court would be told on the hearing on 28 November 2008 that the liquidators would be accepting the claim. It is clear from the documents that Mr Langley intended to brief the liquidators and in these circumstances I consider it highly unlikely that Watson Burton did not do so.

    (8) If a default judgment had been entered against RCL it would probably have been for the same amounts as those in the consent judgment, so far as the various heads of loss are concerned, but the amount in respect of interest would have been greatly in excess of £100,000. I cannot speculate in what amount the claimant's costs might have been assessed, but I doubt whether it would have been significantly less than £10,000.

  55. In relation to the defendant, I find the following facts.
  56. (1) It was decided within the PB Group that one of the PB Group companies should take over the conduct of RCL's defence of the claim brought by Eagle One. I find that it was agreed that that company was to be the defendant, company 401. To the extent that it matters, I do not accept that this was the result of any error by Watson Burton. It seems to have been a deliberate choice.

    (2) All those concerned within the PB Group acted on the basis that there was no obligation on the defendant to indemnify RCL under the terms of the APA against the claim made by Eagle One. When agreeing to the consent order and its terms those acting for the defendant and the PB Group did not consider that they were doing so pursuant to any obligation on the defendant imposed by the APA.

    (3) The principal motive for agreeing to the consent order was to prevent the entry of a judgment in default at a time when the exchange rate might have been less advantageous, with the result that the judgment sum might exceed the deductible of US$ 15 million under the Zurich professional liability cover. This was seen to be in the interests of the PB Group (but immaterial to RCL).

    (4) Since RCL's liabilities exceeded its assets no one in the PB Group or the liquidators envisaged that there would be any prejudice to RCL if they agreed to a consent judgment or did nothing and allowed judgment against RCL to be entered in default.

  57. I have to confess that I find it very difficult to form any view as to what course of action, if any, could be said to be in RCL's best interests. It is well understood that when a company is trading as a going concern the conduct of its directors can, in some circumstances, be shown to be against the best interests of the company. However, at all material times RCL was effectively comatose. It did not trade and had no reason to exist. It had no assets, in the sense that its one asset was exceeded by its one liability.
  58. For these reasons, I do not consider that the issues in this case can be approached by seeking to establish whether what was done was or was not in RCL's best interests. In the context of this case, that concept seems to me to be meaningless.
  59. The judgment on the Preliminary Issues

  60. On 21 December 2010 Akenhead J handed down his judgment on the preliminary issues. As I have already indicated, he disagreed with the advice that was given to the PB Group in 2008 and held that, under clause 3.1 of the APA, the defendant agreed to indemnify RCL against "all proceedings, claims and demands" in respect of actual liabilities.
  61. The relevant paragraphs of Akenhead J's judgment are as follows:
  62. The Scope of the Clause 3.1 Indemnity

    39. It is now necessary to turn to perhaps what was the most contentious part of these proceedings, namely the extent to which the Clause 3.1 indemnity covers the consent judgment entered into by Rust against itself and whether Rust must prove in effect that it was liable to the Eagle One Companies.

    40. The first question to consider is the simple construction of Clause 3.1. The indemnity is "against all proceedings, claims and demands in respect thereof". The words "in respect thereof" must relate to the assumption of "responsibility for the satisfaction, fulfilment and discharge of all the Liabilities and the Contracts". One can to a large extent discount the responsibility for the "Contracts" in the context of the current case because the only outstanding obligation at the Effective Date resting on Rust was the maintenance of professional indemnity insurance until 2008; there would be a legitimate case to be made against PB to the extent that Rust suffered loss because (should such be proved) PB had failed to maintain professional indemnity insurance until February 2008 (12 years from the warranty). However, obviously the Eagle One Companies' case was not for breach of any duty on the part of Rust to insure but it was a case of professional negligence.

    41. The indemnity therefore relates to proceedings, claims and demands in respect of the responsibility assumed by PB for the satisfaction, fulfilment and discharge of all of the "Liabilities", which includes the satisfaction, fulfilment and discharge of the contingent liability (if any) of Rust to the Eagle One Companies arising under the November 1995 and November 1996 Agreements and the Warranty. Simply looked at as a matter of construction of Clause 3.1, in my judgment, the indemnity is against "all proceedings, claims and demands" in respect of actual liabilities, which had been contingent in that no claim had been made against Rust until about 2007 when the Eagle One Companies instituted proceedings. I reach that view because "Liabilities" as defined talks about "other liabilities…in so far as they are reflected in the accounts of the Vendor…as at the Effective Date". In my view, "liabilities" with a small "l" within the definition of "Liabilities" must mean just that, namely actual liabilities. There would be no point in commercial terms reflecting a liability in the company accounts, even if it was done in purely verbal terms without any actual figure being allowed for it, if there was no liability.

    42. The one remaining question therefore is whether legal precedent as such either prevents or at least influences any such contractual interpretation. In my view, it does not. Parties can use the words "indemnity", "guarantee" or "warranty" but whatever such words they use, one needs by way of contractual interpretation to determine what is being indemnified, guaranteed or warranted. In my judgment, what Rust was being indemnified against was "proceedings, claims and demands in respect" of the satisfaction, fulfilment and discharge of any actual liability which Rust had, in the context of this case, to the Eagle One Companies. The fact that proceedings were issued against Rust by the Eagle One Companies in relation to the relevant Festival site does not of itself mean that PB was liable to indemnify Rust against them; similarly, simply because a judgment had been entered against Rust, and even if after contested proceedings Rust was found to be liable, PB would not, without more, be bound by that judgment, unless for instance it was a Part 20 Defendant or third party in such proceedings.

  63. Akenhead J then reviewed the various authorities that had been cited to him and continued as follows:
  64. 45. A review of these cases leads me to the following conclusions:

    (a) The first step which any court or other tribunal must take is to determine as a matter of contractual interpretation what the extent and scope of the indemnity, guarantee or other form of surety actually is. It is of course open to contractual parties to agree whatever they want and it is the Court's job to interpret their agreement.
    (b) Thus, if contractually, the indemnifier or guarantor undertakes in effect to pay any relevant judgment sum however the judgment is procured, the beneficiary can recover the judgment sum. If however the indemnity or guarantee covers only for actual liabilities of the person whose conduct is being indemnified for or guaranteed, then the liabilities in question have to be established against the indemnifier or guarantor.
    (c) Clear wording is required to make a guarantor or indemnifier liable for judgments obtained against the beneficiary of the guarantee or the indemnity.
    (d) Estoppel of the various different types can of course, on the facts of any given case, come into play in the field of guarantees or indemnities.
    (e) Where what is being guaranteed or indemnified against includes claims, proceedings or judgments against the beneficiary, the giving of notice to the guarantor or indemnifier may form at least one basis for or strand of a case in estoppel. The active participation of the guarantor or indemnifier in the proceedings, may, depending on the circumstances, level and scope of the participation, go much further to establish an estoppel against it. The positive concurrence by the guarantor or indemnifier with a consent judgment against the beneficiary will go further still.
    (f) Given the wide range of factual permutations which may arise in any particular case, it is inappropriate for this Court to lay down any specific requirements needed to establish an estoppel in these types of circumstances. Whilst the giving of notice to, the active participation by and the giving of approval to a consent judgment by the guarantor or indemnifier may in many cases give rise to an estoppel against it so as to prevent it from denying an obligation to indemnify against or pay out for the amount of the consent judgment, it would be wrong to be absolutely prescriptive. It is necessary to look at all the relevant evidence and circumstances before deciding whether there is or is not an estoppel.

    46. It follows from the above that, as I have formed the view that the Clause 3.1 indemnity is such that it does not of itself operate without Rust establishing against PB that it was liable to the Eagle One Companies for the damages either as claimed by the Eagle One Companies or in the amount of the consent judgment against Rust, I must conclude that Rust can not recover on that indemnity simply because there is a consent judgment against it in relation to one or more of the contracts which it had with the Eagle One Companies. The answer to the question of whether or not PB is estopped from challenging the consent judgment will depend on all the circumstances.

  65. Finally, Akenhead J summarised his conclusions in the following terms:
  66. 47. I have found the issues as formulated somewhat convoluted. As to Issue 1, Rust may be entitled to rely on the consent judgment to establish not only its liability under the November 1995 or November 1996 Agreements or the Warranty or for the consent judgment sum on the various assumptions put forward in this issue as formulated but it will be necessary to establish all the facts and circumstances to determine if there is any material estoppel.

    48. With regard to Issue 2, the proceedings by the Eagle One Companies against Rust were in relation only to possible "Liabilities" as defined in the APA and referred to in Clause 3.1 or to the satisfaction, fulfilment or discharge of such "Liabilities". They were not in relation to any of the "Contracts" as defined in the APA and referred to in Clause 3.1. Clause 8 of the APA is inapplicable and provides no indemnity which is material to any failure on the part of Rust to exercise reasonable care and skill in the discharge of any of its duties or services under the November 1995 or November 1996 Agreements or the Warranty.

    49. As to Issue 3, Rust is not yet or possibly at all entitled to judgment in relation to the consent judgment. Subject to estoppel, Rust will have to prove that it was not only liable to the Eagle One Companies but also liable for any particular sum. In relation to Issue 4, it is not possible at this stage to determine whether PB is entitled to judgment against Rust as estoppel issues remain to be resolved on the facts.

  67. Since these findings and conclusions are findings and conclusions in this action I am bound by them and, indeed, I must treat them as if they are my own. I have no difficulty with this since I am in entire agreement with Akenhead J's conclusions insofar as they concern the issue that I have to determine.
  68. One important conclusion reached by Akenhead J is that RCL cannot recover on the indemnity given by clause 3.1 of the APA "simply because there is a consent judgment against it in relation to one or more of the contracts which it had with the Eagle One Companies". The question for me, being one that Akenhead J said had to be answered in the light of all the relevant evidence and circumstances, is whether or not the defendant is estopped from denying that RCL is liable to Eagle One for the sums set out in the consent judgment.
  69. The submissions of the parties in outline

  70. Mr Thomas submitted that the defendant should be estopped from challenging the consent judgment for the following reasons (which I take from paragraph 76 of his opening submissions):
  71. (1) It was on notice of the Eagle One claim made against Rust. Its knowledge of the claim was intimate. In the case of an express indemnity, absent significant considerations to the contrary this is enough to bind an indemnifier. There are no relevant significant considerations to the contrary. In fact there are powerful further considerations that PB Limited should be estopped.

    (2) It conducted the proceedings through its lawyers and it did so in the interests of itself and the group of companies of which it formed a part.

    (3) It not only decided that Rust would consent to judgment but did so for the commercial benefit of itself and the group. It did so having informed itself as to the likely merits of the claim against Rust and the merits of its defence to a claim for an indemnity.

    (4) In all these circumstances it is fair to the parties and avoids bringing the administration of justice into disrepute.

    Mr Thomas submits, in effect, that if (a) the indemnifier has notice of the claim made against the party claiming the indemnity, (b) the indemnifier has the conduct of the defence of the claim against the party claiming the indemnity and (c) the indemnifier actively concurs in the making of the settlement, the indemnifier is bound by the settlement. He submitted that an absence of belief that the indemnifier was liable to indemnify the party claiming the indemnity is irrelevant.

  72. The opposing submissions by Mr Streatfeild-James, who together with Mr Christopher Lewis appeared on behalf of the defendant, were to the following effect:
  73. (1) The foundation of any estoppel in this type of situation is that the indemnifier has been put on notice that a claim is to be made under the indemnity.

    (2) No notice was given by RCL (as the person to be indemnified) to the defendant (as the indemnifier) that a claim would be made under the APA for an indemnity in respect of the Eagle One proceedings, for the very simple reason that both parties proceeded on the basis that the defendant was not under any liability to indemnify under the terms of the APA.

    (3) The consent judgment is of itself, as he submits the court has found, not sufficient to prove that RCL had an actual liability to Eagle One.

    (4) No part of the conduct of the response to the claim by Eagle One was in fact affected by any issue as to the proper construction of the APA, or on the basis of any indemnity in it.

    (5) There was no promise by the defendant to RCL that it would be bound by the outcome of the Eagle One claim, nor was there any common understanding that the outcome of the Eagle One claim would be determinative as between RCL and the defendant for the purposes of liability under the APA.

    (6) There is no question in this case of the defendant trying to re-litigate a question which has already been determined on the merits.

  74. In addition, Mr Streatfeild-James asked rhetorically: what is the equity that is being protected that would justify an estoppel in this case?
  75. The authorities

  76. I will take the authorities relied on by each party in chronological order, although this is not necessarily the order in which they were cited. I start with the authorities relied on or cited by Mr Thomas.
  77. The first case was Duffield v Scott (1789) 100 ER 628, a decision of the Court of King's Bench of some antiquity. The facts are a little difficult to extract from either the judgments or the report. A Mr Balcher (later deceased) had given a bond of some sort to the plaintiff to the effect that he would indemnify the plaintiff against his wife's debts and "against all demands by reason of any cause, matter or things whatsoever concerning" (quoting from Lord Kenyon's judgment). A Mr Cuthbert sued the plaintiff for a debt directly or indirectly incurred by the wife; he obtained judgment in damages as well as a sum for costs. It appears that the deceased or his executors had notice of the Cuthbert action. Buller J said this:
  78. "This case has been argued on two grounds . . . With respect to the second point; it is said that the plaintiff has demanded three things by his replication. Now if he is entitled to one of these, he must have judgment. He is undoubtedly entitled to recover the amount of Cuthbert's debt; and the question is, whether he is not also entitled to the costs and expenses. As to that, I believe there are cases which say that, to entitle a person to recover on a bond of indemnity, he must show that he was compelled by law to pay the debt. They go a great way to prove that the plaintiff in this case is entitled to recover the costs and expenses. The purpose of giving notice is not in order to give a ground of action; but if a demand be made which the person indemnifying is bound to pay, and notice be given to him, and he refuse to defend the action, in consequence of which the person to be indemnified is obliged to pay the demand, that is equivalent to a judgment, and estops the other party from saying that the defendant in the first action was not bound to pay the money."

    The problem with this passage is that it is a little difficult to know precisely what is meant by the words "obliged to pay the demand". However, it is clear that the case involved a debt and that the party claiming the indemnity, the plaintiff, had been sued to judgment and that the order of the court included the debt and the plaintiff's costs. In these circumstances I do not consider that Buller J can be taken to have laid down any general rule applicable to cases where the party claiming the indemnity has settled a claim against him, rather than being sued to judgment.

  79. The next case was another decision of the King's Bench, Smith v Compton and others (1832) 110 ER 146. As Akenhead J observed, this was not a case involving a contract of indemnity but a covenant of good title which was breached by the defendant. The plaintiff was held entitled to recover what he paid in compromise of an action brought against him by a party who had a better title as well as his own costs of those proceedings. As Akenhead J observed, this case is more readily comprehended as one which simply addresses the recoverability of damages including costs of and occasioned by compromising proceedings which flow from a breach of contract or covenant. However, Lord Tenterden did say in the context of this case:
  80. "The only effect of want of notice in such a case as this, is to let in the party who is called upon for an indemnity to show that the plaintiff has no claim in respect of the alleged loss, or not to the amount alleged; that he made an improvident bargain; and that the defendant might have obtained better terms if the opportunity had been given him. That was not proved here, and we cannot assume it."

    But the real point of the case was that it was argued by the defendant that the lack of notice to the defendant of the claim brought against the plaintiff was fatal to the plaintiff's claim to recover under the covenant. No positive case was advanced that the compromise was unreasonable: all that was submitted was that the compromise might have been unreasonable and that the lack of notice precluded recovery. My understanding of the passage quoted above from Lord Tenterden is simply that he was saying that the lack of notice allowed the defendant to challenge the compromise on its merits. I do not consider that the case can be relied on as authority for the proposition that if notice had been given the defendant would have been bound by the terms of the compromise. This conclusion seems to me to be supported by the short judgment of Parke J in which he cited the passage from the judgment of Buller J in Duffield v Scott and, in particular, Buller J's statement that "The purpose of giving notice is not in order to give a ground of action".

  81. The next case, Mary Ann Jones v John Williams (1841) 151 ER 860, was a decision of the Court of Exchequer which did address a contractual indemnity. An indemnity was given to RJ by the defendant by which he undertook to save harmless and indemnify him from any loss or damage by reason of RJ executing a bond to WJ in the sum of £600. The undertaking was not expressly in the terms of an indemnity but was apparently given by way of what the Court called an "actual binding guarantee" which was contained in two letters. RJ's administratrix became liable to pay the bond and the defendant had notice of this. The defendant did not indemnify her with the result that she was called upon and obliged to pay £310 secured by the bond and a further sum for the costs of an action against her in relation to the bond. She was held entitled to recover the principal and the costs. Lord Abinger CB dealt with several pleading points and went on:
  82. "I think, however, that it was not necessary for the plaintiff to prove more than was proved in this case. The defendant had notice of the action, and might have come in and defended it, if there was a good defence by reason of the want of notice…"

    Parke B said:

    "It was proved that the defendant had notice of the action upon the bond, and he ought to have undertaken the defence. The case is within the authority of Duffield… On that ground, I am of opinion that sufficient evidence was given that the defendant was bound to pay, having had notice of the action, and having made no defence to it"

    The other judges agreed. Akenhead J noted that the case was distinguishable from the current case because the guarantee was in very broad terms "I should consider it a matter of favour to myself if your brothers will join, and I will see that they come to no harm". As he observed, that is, and was treated as being, a very broad undertaking. The task of understanding the judgments is complicated by the fact that the bond appeared to be subject to a condition for repayment of the sum secured, with interest, "at or before the expiration of six months' notice to be given to pay the same".

  83. But again, this is a case where the party claiming under the guarantee was actually sued and then paid the debt and the costs of the action. It appears that this was done pursuant to some form of court order which effectively determined the plaintiff's liability for the debt and the costs. In the course of his judgment Parke B said that "I think there was sufficient evidence to show that she was bound to pay according to the terms of the bond". From this it appears that the court took the view that the plaintiff's liability to pay had been established on the facts, and so it was not a case of the defendant being denied the right to challenge the liability by way of some form of estoppel. I have to confess that I find it difficult to extract any clear principle from the report of this case.
  84. The authority most strongly relied on by Mr Thomas, or rather a dictum in that authority, is Parker v Lewis (1872-3) LR 8 Ch App 1035. The facts of the case are very complicated and I do not find it necessary to set them out since the dictum relied on came at the end of some long judgments by Sir W M James LJ and Sir G Mellish LJ after which Mellish LJ went on to "add a few observations" on the question of whether a judgment was conclusive. He considered the dictum of Buller J in Duffield v Scott and confirmed that it and the other cases referred to above were "actions on express contracts of indemnity". At page 1059 he said:
  85. ". . . I think that the law with reference to express contracts of indemnity is, that if a person has agreed to indemnify another against a particular claim or a particular demand, and an action is brought on that demand, he may then give notice to the person who has agreed to indemnify him to come in and defend the action, and if he does not come in, and refuses to come in, he may then compromise at once on the best terms he can, and then bring an action on the contract of indemnity. On the other hand, if he does not choose to trust the other person with the defence to the action, he may, if he pleases, go on and defend it, and then, if the verdict is obtained against him, and judgment signed upon it, I agree that at law that judgment, in the case of express contract of indemnity is conclusive. But I apprehend it is conclusive on account of what the law considers the true meaning of such a contract of indemnity to be. It is obvious that when a person has entered into a bond, or bought land, or altered his position in any way on the faith of a contract of indemnity, and an action is brought against him for the matter against which he was indemnified, and a verdict of a jury obtained against him, it would be very hard, indeed, if, when he came to claim the indemnity, the person against whom he claimed it could fight the question over again, and run the chance of whether a second jury would take a different view and give an opposite verdict to the first. Therefore, by reason of that contract of indemnity, the judgment is conclusive; but in my opinion it is conclusive because that is the meaning of the contract between the parties ..."
    (My emphasis)

  86. In the course of Mr Thomas's final submissions it emerged that he and the court were not reading this passage in the same way. Mr Thomas submitted that the word "he" that I have emphasised in the passage above referred to the indemnifier, rather than to the party claiming the indemnity. I have to say that I had read the passage on the basis that "he" referred to the party claiming the indemnity. I understood that Mr Streatfeild-James and Mr Lewis had read it in the same way. It has to be said that the syntax of the passage as a whole is not happy: for example, in the first sentence of the passage that I have quoted above the pronoun "he" is used indiscriminately to refer to both parties.
  87. Having re-read the passage several times, I am satisfied that my original reading of it is correct and that Mr Thomas's reading is mistaken. In my view the explanation of the rationale for the rule that is given at the end of the passage makes this clear.
  88. I consider that the reasons given by Mellish LJ as to why the indemnifier cannot re-open the issue decided against the party indemnified are illuminating. First, it is clear that he is referring to the situation where a judgment is obtained against the party claiming the indemnity, rather than the case where that party has settled a claim against him. Second, he refers to the party claiming the indemnity having "altered his position in any way on the faith of a contract of indemnity". He also restates the general rule that a judgment inter partes, unlike a judgment in rem, is conclusive only between the parties involved and the persons claiming under them.
  89. I regard it as of importance also that in the first part of the passage Mellish LJ refers to the party claiming the indemnity having compromised the claim against him "on the best terms he can". I consider that it goes without saying that if the compromise was not made on the best terms reasonably achievable, the party claiming the indemnity would not be able to rely on it.
  90. In Ben Shipping Co (PTE) v An Bord Bainne [1986] 2 All ER 177, Bingham J (as he then was) had to address an implied obligation that was said to have been given by charterers to indemnify shipowners in respect of claims made by cargo owners. The charterers were informed by the shipowners of proceedings against them by the cargo owners but turned down an invitation to take over the defence or take part in the proceedings; this gave rise to an issue about estoppel. In fact Bingham J found that there was no implied obligation to indemnify, and so his judgment in relation to the estoppel point is obiter. However, given its source it obviously commands considerable respect. Having considered the cases relied upon by Mr Thomas in this case he went on, at page 187, as follows:
  91. "To succeed in their estoppel claim, the shipowners must establish as a matter of law that having given notice to the charterers of the claim made against…the shipowners…and the charterers having declined to conduct the defence, and the ship owners having compromised the claim, they (the charterers) are estopped from contesting the liability of the shipowners to the third party…and the reasonableness of the compromise and the incurring of costs, even though there was no express contract of indemnity and the charterers bone fide and on reasonable grounds challenged the shipowners' right to indemnity and the claim was settled without immediate reference to the charterers. I do not think any such principle can be clearly found in the authorities relied on. Nor do I think it desirable to attempt to lay down such a far reaching principle. It is of course good sense and common practice for a defendant to give notice of a claim against him and any proposed settlement to a person against whom he intends to seek indemnity or contribution, if such person is not joined as a third party. This gives that person the opportunity to raise any points or objections he wishes, and will make it somewhat harder for him to raise arguments later which he could have raised at the time. It is, however, a large stride from a commonsense tactical practice to a rule of law…The rule contended for would present the charterers with a choice between taking over the defence of the claim which they believe to be nothing to do with them and thereafter (if that belief was falsified) finding themselves bound to indemnify the shipowners against settlement of a claim even though the claim could be shown to be ill-founded or the settlement unreasonable. The authorities may well support, and I can see virtue in, a much more limited principle, but that would not avail the shipowners here."
  92. Turning to the submissions of Mr Streatfeild-James, although he relied on a number of authorities in the course of the argument before Akenhead J he did not rely specifically on those authorities before me but instead confined himself to commenting on the authorities relied on by Mr Thomas.
  93. There was one other authority that was cited to Akenhead J and which was briefly mentioned during the argument before me. It is the decision of Toulson J (as he then was) in Lincoln National Life v Sun Life of Canada [2004] 1 Lloyd's Rep 737 which concerned reinsurance contracts. At paragraph 92 Toulson J made the following observations:
  94. "It is probably only at the level of the House of Lords that the rules about the extent to which a judgment or award between A and B may be relied upon by or against B in proceedings between B and C, where those proceedings involve an issue about the rights between A and B, could be comprehensively reconsidered. The modern tendency when tackling the diverse problems of serial litigation involving a common issue has been to move away from technical rules towards a broader consideration of what is fair. Thus the rules of res judicata and issue estoppel have been supplemented by the court's jurisdiction to strike out claims or defences where the issue has been previously determined, not necessarily between the same parties and it would be unfair in all the circumstances for the previous decision to be challenged in the later proceedings. In considering whether and to what extent the findings of a competent tribunal in proceedings between A and B should be able to be relied upon by or against B in proceedings between B and C, there is a strong argument for saying that the real considerations should be what is most fair to the parties and will avoid bringing the administration of justice into disrepute. The fact that C was not a party to the earlier proceedings (and normally, although not invariably, will therefore have had no opportunity to influence them) would in many cases make it unfair that the earlier judgment should be relied upon by B, but not necessarily against B, although the cases to which I have referred show that circumstances can vary greatly. Among other things, one could imagine circumstances in which it might make a difference in terms of justice whether the earlier decision was the product of an informal arbitration, in which the arbitrator had not properly addressed the arguments, compared with proceedings in which the issues had been fully and properly investigated and addressed in a reasoned decision. Where the previous decision was an arbitration award, the confidentiality of the arbitration proceedings could also be a relevant factor."

    Discussion and conclusions

  95. All the cases cited by Mr Thomas have one feature in common and that is that the plaintiff (or claimant) had compromised or been ordered to pay the sum or sums claimed and the issue was whether the defendant, the indemnifier, could challenge the plaintiff's liability to the original claimant for those sums - either as to liability or as to amount. None of the cases was one where the indemnifier had made or agreed to the compromise in question. However, that said, the observations of Bingham J in Ben Shipping do not, in my view, assist Mr Thomas.
  96. It seems to me that for any estoppel to arise of the type contended for by Mr Thomas there must be notice to the indemnifier that a claim is being made under the contract, or alleged contract, of indemnity. Whilst I can see that in some cases the knowledge of the indemnifier that a claim has been made against the party entitled to claim under the indemnity in circumstances where he can reasonably be expected to know that the other party is looking to be indemnified by him against the claim may be sufficient, even though there has been no express demand under the contract of indemnity, the essential feature is still present that the indemnifier is acting in the knowledge or expectation that a claim will be made against him under the indemnity.
  97. I consider that this conclusion is supported by Mellish LJ's reference in Parker v Lewis to the party claiming the indemnity having altered his position in some way on the faith of a contract of indemnity: in other words, that the party claiming to be indemnified must, at the very least, have acted in the knowledge or belief that he was entitled to be indemnified.
  98. It follows from this that, by contrast, knowledge of the indemnifier that a claim has been made against the party entitled to claim under the indemnity will not be sufficient if (a) he is unaware that he is under an obligation to indemnify or believes positively that he is not under such an obligation and (b) the party claiming the indemnity has not asserted that there is such an obligation.
  99. That is the position here. As I have already found, at no point prior to the making of the consent order did RCL or, more particularly, its liquidators, know that there was or might be a right of indemnity under the APA.
  100. At this stage it is helpful to stand back from my initial conclusion reached in the light of the authorities and to look at the broad picture. The courts have developed the concept of estoppel in order to meet the demands of fairness and justice in particular situations. I can think of no case where a party has been or could be estopped from adopting a position or denying the truth of a matter in circumstances where to allow such an estoppel would be unfair.
  101. I am in little doubt that if the defendant in this case is prevented from challenging RCL's liability as represented by the consent judgment Eagle One will receive a windfall, in the sense that it would then be permitted to recover an amount from the defendant significantly larger than the amount it would have recovered if its claim against RCL had been pursued to judgment and RCL's liquidators had then claimed under the indemnity.
  102. However, if the defendant and the PB Group had chosen to do nothing, then Eagle One would have had the choice either of entering judgment in default or of proving its claim against RCL on its merits. If it elected to do the former, little would be achieved because I have difficulty in seeing how the PB Group could be estopped from challenging a default judgment obtained in such circumstances: the second and third features relied on by Mr Thomas would not be present.
  103. In this situation, the only course realistically open to Eagle One would be to pursue the action and prove its claim against RCL. Having obtained a judgment on the merits, both as to liability and quantum, its appointed liquidators could then sue the defendant for an indemnity under the terms of the APA. Provided that the defendant and/or the PB Group had been given notice of the claim and had had the opportunity to defend it on its merits if it wished, I cannot see how the defendant could then challenge that judgment. The situation would fall clearly within the principle (as I understand it) set out in the dictum of Mellish LJ in Parker v Lewis.
  104. If the defendant is not estopped from challenging the consent judgment, then Eagle One will be in no worse position than it would have been in if the defendant and the PB Group had simply done nothing. There is nothing unfair about requiring Eagle One to prove its claim because that is what it would have had to do in any event if it wished to make a claim through RCL under the indemnity.
  105. This conclusion accords entirely, it seems to me, with the observations of Toulson J in Lincoln National Life v Sun Life of Canada quoted above. It shows also how right Akenhead J was when he said that it was necessary to look at all the relevant evidence and circumstances before deciding whether in any particular situation there is or is not an estoppel.
  106. I will hear the parties on costs, if not agreed, and on any other questions that may arise out of this judgment.

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