WH Newson Holding Ltd & Ors v IMI Plc & Ors

A case management hearing in this complex litigation was held on 29 November 2013. This is a claim by 21 members of the Travis Perkins group of companies for damages arising out of the Copper Plumbing Tubes cartel. That cartel was the subject of an infringement decision by the European Commission on 3 December 2004 in Case COMP/38.069. The Defendants in this claim, IMI and Boliden, were addressees of the Decision and participated in the cartel. The Third Parties (together ‘AGA’) were not addressees of the Decision but, it is alleged by the Defendants, they did participate in the cartel through their then subsidiary company Wednesbury Tube & Fittings Company Ltd (‘Wednesbury’). In February 1997, AGA sold Wednesbury to Mueller Industries Inc. Mueller was an addressee of the Decision having been found to be a member of the cartel through the participation of Wednesbury in the cartel after February 1997 and through the participation of other subsidiary companies.

IMI and Boliden have each brought separate contribution claims against the other addressees of the Decision including Mueller.

One of the issues that was dealt with at the hearing on 29 November was a request for disclosure by AGA, the Third Parties, seeking any documents held by IMI and Boliden that are relevant to Wednesbury’s participation in the cartel before February 1997. IMI and Boliden did not oppose that application and the Claimants adopted a neutral stance. It is accepted that some of the material which may be in IMI and Boliden’s possession and which may therefore need to be disclosed is information that comes from Mueller. IMI and Boliden have been given copies of these documents when they inspected the European Commission’s case file during the investigation leading up to the Decision. Mueller objected to that disclosure being ordered. One basis for their objection was because Mueller consider that the attempt to involve AGA in this claim by means of an additional claim pursuant to the Civil Liability (Contributions) Act 1978 is illegitimate.

AGA is not pursuing the point that the proceedings against it are not properly brought. However, the point raised by Mueller is an important one since it affects them both as Defendants in the separate contribution claims brought by IMI and Boliden and because they are the source of some of the confidential documents that IMI is intending to disclose to AGA.

This claim started as an action brought in the Competition Appeal Tribunal pursuant to section 47A of the Competition Act 1998. Section 47A of the Competition Act 1998 was inserted by section 18 of the Enterprise Act 2002 and provides so far as relevant:

“ 47A Monetary claims before Tribunal

(1)

This section applies to—

(a)

any claim for damages, or

(b)

any other claim for a sum of money,

which a person who has suffered loss or damage as a result of the infringement of a relevant prohibition may make in civil proceedings brought in any part of the United Kingdom.

…

(3)

For the purpose of identifying claims which may be made in civil proceedings, any limitation rules that would apply in such proceedings are to be disregarded.

(4)

A claim to which this section applies may (subject to the provisions of this Act and Tribunal rules) be made in proceedings brought before the Tribunal.

…

(6)

The decisions which may be relied on for the purposes of proceedings under this section are —

…

(d)

a decision of the European Commission that the prohibition in Article [101(1)] or Article [102] of the Treaty has been infringed; or

….

(9)

In determining a claim to which this section applies the Tribunal is bound by any decision mentioned in subsection (6) which establishes that the prohibition in question has been infringed.

(10)

The right to make a claim to which this section applies in proceedings before the Tribunal does not affect the right to bring any other proceedings in respect of the claim.”

It has been established by the Court of Appeal that proceedings in the Tribunal under section 47A can only be brought against companies that were addressees of the infringement decision relied on. The Court of Appeal so held in Emerson Electric Co & Ors v Mersen UK Portslade Ltd (sued as and formerly Le Carbone (Great Britain) Ltd [2012] EWCA Civ 1559. That case concerned an appeal from a decision of the Tribunal striking out a claim brought under section 47A against Le Carbone GB, the UK subsidiary of Carbone SA. Carbone SA was an addressee of the Commission’s decision finding a cartel infringement relating to electrical and mechanical carbon and graphite products. Le Carbone GB was part of the same undertaking as Carbone SA for the purposes of Article 101 TFEU but was not itself an addressee. The Court of Appeal upheld the decision of the Tribunal that the Tribunal had no jurisdiction to hear a follow-on damages claim against Le Carbone GB. Mummery LJ with whom Moore-Bick and Black LJJ agreed emphasised that nothing said in the judgment was intended to decide or even to indicate whether or not civil proceedings were available in that case (see paragraph 38). Having held that there was no jurisdiction under section 47A Mummery LJ said:

“83.

The outcome is compatible with the principle of legal certainty, which would be undermined if an entity which was not an addressee of a decision of the Commission could be made liable to proceedings in national courts based on it. The result does not offend the requirements of the principle of effectiveness, since remedies are available: it is only a matter of determining against which entities and in which jurisdictions the remedies are available.”

The scope of the Tribunal’s jurisdiction under section 47A was also considered by the Court of Appeal in three judgments, the most recent of which considered an appeal from an interlocutory ruling by the Tribunal in this case: see WH Newson Holding v IMI [2013] EWCA Civ 1377 and earlier Enron Coal Services Ltd v English, Welsh and Scottish Railway Ltd [2009] EWCA Civ 647 and Enron Coal services Ltd v English Welsh and Scottish Railway Ltd [2011] EWCA Civ 2. In each case, the Court of Appeal has stressed that the jurisdiction of the Tribunal under section 47A is limited to the findings in the infringement decision relied on. At paragraph 21 of her judgment in the Newson appeal, Arden LJ cited from the judgment of Patten LJ in the first Enron judgment:

“No right of action exists unless the regulator has actually decided that such conduct constitutes an infringement of the relevant prohibition as defined … The purpose of section 47A is to obviate the necessity for a trial of the question of infringement only where the regulator has in fact ruled on that very issue ….”

This claim was transferred to the High Court by order of the Tribunal on 24 July 2012 pursuant to Rule 48(a) of the Competition Appeal Tribunal Rules (S.I. 2003/1372). That Rule provides that the Tribunal may direct that a claim for damages be transferred to the High Court. Such transfers are contemplated by section 16(5) of the Enterprise Act 2002 which provides that rules of court may make provision in connection with the transfer from the Tribunal to the High Court of a claim made in proceedings under section 47A. CPR 30.1(2) refers to Practice Direction 30 as making provision for transfer of proceedings between the court and a tribunal. PD30 paragraph 8.7 provides that where proceedings are transferred from the Tribunal to the High Court they are transferred to the Chancery Division.

The limited jurisdiction of the Tribunal under section 47A does not of course apply to actions started in the High Court. The direct effect of Article 101 TFEU means that a person suffering loss as a result of an infringement of the EU competition rules may bring an action to recover damages for that loss even if there is no pre-existing decision condemning the alleged infringing conduct: Case C-453/99 Courage v Crehan [2001] ECR I-6297. The Claimants could therefore have brought an action in the High Court against AGA alleging that AGA had been a party to the copper plumbing tubes cartel and, if they had succeeded in proving that participation, could have recovered damages for losses suffered.

Section 1 of the Civil Liability (Contribution) Act 1978 provides so far as relevant:

“1.(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).

….

(3)

A person shall be liable to make contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, unless he ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against him in respect of the damage was based.

….

(6)

References in this section to a person’s liability in respect of any damage are references to any such liability which has been or could be established in an action brought against him in England and Wales by or on behalf of the person who suffered the damage; …”

Mueller argues that because AGA could not be sued by the Claimants under section 47A – or as Mueller put it, because AGA has no section 47A liability to the Claimants – then AGA cannot be liable in a claim for contribution in respect of any section 47A liability of Boliden or IMI to the Claimants.

Mueller relies on the speech of Lord Bingham in Royal Brompton NHS Trust v Hammond [2002] UKHL 14. Lord Bingham referred to ‘the obvious justice of requiring that a common liability should be shared between those liable”. He went on to say:

“ 5. It is plain beyond argument that one important object of the 1978 Act was to widen the classes of person between whom claims for contribution would lie and to enlarge the hitherto restricted category of causes of action capable of giving rise to such a claim. It is, however, as I understand, a constant theme of the law of contribution from the beginning that B's claim to share with others his liability to A rests upon the fact that they (whether equally with B or not) are subject to a common liability to A. ….

6.

When any claim for contribution falls to be decided the following questions in my opinion arise:

(1)

What damage has A suffered?

(2)

Is B liable to A in respect of that damage?

(3)

Is C also liable to A in respect of that damage or some of it?

…. I do not think it matters greatly whether, in phrasing these questions, one speaks (as the 1978 Act does) of "damage" or of "loss" or "harm", provided it is borne in mind that "damage" does not mean "damages" (as pointed out by Roch LJ in Birse Construction Ltd v Haiste Ltd [1996] 1WLR 675, at p 682) and that B's right to contribution by C depends on the damage, loss or harm for which B is liable to A corresponding (even if in part only) with the damage, loss or harm for which C is liable to A. This seems to me to accord with the underlying equity of the situation: it is obviously fair that C contributes to B a fair share of what both B and C owe in law to A, but obviously unfair that C should contribute to B any share of what B may owe in law to A but C does not.”

Lord Steyn in that case referred to the earlier judgment of Sir Richard Scott V-C in Howkins & Harrison v Tyler (a firm) [2001] Lloyd's Rep PN 1, at p 4, para 17. With the agreement of Aldous and Sedley LJJ, the Vice Chancellor in Howkins had observed (emphasis added):

"Suppose that A and B are the two parties who are said each to be liable to C in respect of 'the same damage' that has been suffered by C. So C must have a right of action of some sort against A and a right of action of some sort against B. There are two questions that should then be asked. If A pays C a sum of money in satisfaction, or on account, of A's liability to C, will that sum operate to reduce or extinguish, depending upon the amount, B's liability to C? Secondly, if B pays C a sum of money in satisfaction or on account of B's liability to C, would that operate to reduce or extinguish A's liability to C? It seems to me that unless both of those questions can be given an affirmative answer, the case is not one to which the 1978 Act can be applied. If the payment by A or B to C does not pro tanto relieve the other of his obligations to C, there cannot, it seems to me, possibly be a case for contending that the non-paying party, whose liability to C remains un-reduced, will also have an obligation under section 1(1) to contribute to the payment made by the paying party."

Lord Steyn in Royal Brompton NHS Trust said that this formulation was best regarded as a practical test to be used in considering the very statutory question whether two claims under consideration are for "the same damage". He noted though that its usefulness may vary depending on the circumstances of individual cases and that ultimately, the safest course was to apply the statutory test.

Applying that ‘practical test’ here, if AGA were indeed a party to the cartel by reason of Wednesbury’s participation in the cartel before February 1997 then the Claimants clearly have a right of action ‘of some sort’, to adopt Sir Richard Scott’s phrase, against AGA as well as their right of action against IMI and Boliden. If AGA paid the Claimants some compensation for the losses they suffered as a result of the cartel, that would reduce the amount of compensation that IMI and Boliden could be liable to pay, and conversely any damages that IMI and Boliden pay to the Claimants will reduce the amount that AGA might be held liable to pay.

Where Mueller’s submission is mistaken in my judgment is in referring to ‘section 47A liability’. There is no such liability because section 47A does not create any new cause of action. It simply provides that the cause of action arising from the infringement at the suit of a person who has suffered loss may be brought in the Tribunal if the conditions set out in section 47A are met. That is not to say that if it were a different cause of action it would necessarily fall at the hurdle set by section 1 of the 1978. But here the case is entirely clear because if the Claimants had brought an action in the High Court against IMI, Boliden and AGA rather than using the section 47A route, they would have been relying on precisely the same cause of action against all of them and seeking compensation for the same damage.

I therefore reject AGA’s submission. At the hearing on 29 November I ordered that disclosure should take place, subject to this point being resolved. In the light of my conclusions, there is no reason to disturb the directions I gave in the course of that hearing.