Home Information Cases David Edgar Heaton & Ors v AXA Equity & Law Life Assurance Society Plc & Ors (2000)

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David Edgar Heaton & Ors v AXA Equity & Law Life Assurance Society Plc & Ors (2000)

Summary

Claimants' appeal from the decision of Laddie J on the trial of a preliminary issue as to the effect upon these proceedings of a settlement agreement ('the agreement') made between the claimants and the third parties.

Facts

The defendants submitted, and Laddie J held, that the effect of the agreement was to extinguish the claimants' case against them. The claimants were directors of and shareholders in Glyne Investments Ltd ('the company'). The company was appointed as a representative of: (i) Target Life Assurance Ltd ('Target'), to service its existing clients; and (ii) the defendants, in relation to new business from July 1991. On 29 January 1993 Target summarily terminated its agreement with the company, alleging that the company had been engaged in "churning" business (ie buying and selling investments to increase commission). The defendants then summarily terminated their agreement with the company on 8 February 1993. On 1 March 1993 the company sued Target ('the Target action') claiming damages for breach of contract. The company alleged that it was Target's wrongful act that had caused the defendants to terminate their agreement with the company, and the damages sought included damages for loss of commissions withheld by the defendants following termination. In 1996 the company went into liquidation and all its rights of action against Target and the defendants were assigned to the claimants. At the trial of certain preliminary issues in June 1997 Target effectively conceded liability. The Target action was settled by the agreement, which was scheduled to a Tomlin order dated 23 April 1998. The parties to the agreement were the claimants and the third parties, who had by then assumed the relevant assets of Target and its associated company. The agreement was expressed to be "in full and final settlement of all claims and potential claims...which the (parties hereto) have or may have against each other under or in respect of or arising out of" the termination of the defendants' agreement with the company. The claimants issued these proceedings in November 1998, advancing contractual claims which were substantially the same, mutatis mutandis, as those advanced in the Target action, in relation to which the losses claimed were entirely encompassed within the losses claimed in the Target action. The claimants also advanced individual claims against the defendants for damages for negligence in the publication of reports and references to LAUTRO and other third parties, and claimed damages for loss of income, pension rights and other benefits which had not been included in the Target action. The defendants relied on the decision of the House of Lords in Jameson v Central Electricity Generating Board & Ors (1999) 2 WLR 141 ('the Jameson case').

Held

(1) The significance of the decision in the Jameson case was that the House of Lords had held that if one concurrent tortfeasor, B, agreed to pay damages to A in full satisfaction of A's claim, then such an agreement was capable of being interpreted as extinguishing A's claim against another concurrent tortfeasor, C. (2) However, that case was of no real assistance in the instant case, since on the facts, the third parties, as B, and the defendants, as C, were not concurrent tortfeasors, but successive contract-breakers. Since loss was not an essential ingredient of an action in contract, the agreement could not extinguish the claimants' cause of action in respect of the defendants' breach of contract. The most that could be said was that the claimants would be precluded from making double recovery. Consequently, the only basis for staying the claimants' contractual claims against the defendants would be if the damages recoverable would, inevitably, be nominal. The court was satisfied that this was not the case. (3) The court was satisfied that, on a true construction of the agreement, the claimants and the third parties had reached a sensible commercial bargain, which left the claimants free to pursue their claims, both contractual and individual, against the defendants.

Appeal allowed.

* The House of Lords granted an application by Axa Equity & Law Life Assurance Society plc and Axa Equity & Law Unit Trust Managers Ltd seeking leave to appeal in this case on 14 December 2000. The Appeal Committee had made a provisional unanimous decision to grant leave following a consideration of the applicant's petition and had invited objections from the respondent on 20 November 2000. The appeal was set down for hearing and referred to an Appellate Committee on 26 February 2001.

Court of Appeal
Beldam LJ, Chadwick LJ, Robert Walker LJ
Judgment date
19 May 2000
References

​LTL 19/5/2000 : (2000) 3 WLR 1341 : (2000) 4 All ER 673 : Independent, July 3, 2000 : Times, June 7, 2000 

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