Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MASTER DAVISON
Between :
T WALLIS SMITH COGGINS LIMITED | Claimant |
- and - | |
PORT OF LONDON AUTHORITY | Defendant |
Mr A John Williams (instructed by Keoghs LLP) for the Claimant
Mr Jamie Clarke (instructed by Weightmans LLP) for the Defendant
Hearing dates: 14 & 15 October 2025
Approved Judgment
This judgment was handed down remotely at 10.30am on 31 October 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
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MASTER DAVISON
Introduction and narrative
This is my judgment on the trial of a preliminary issue in a contribution claim brought by T Wallis Smith Coggins Limited, a stevedoring firm, (“Smith Coggins”) against the Port of London Authority (“the PLA”).
Mr Roy Whitmarsh was employed by Smith Coggins as a stevedore at the West India Dock in 1971 and 1972. He would then have been a man in his late twenties. He was exposed to asbestos. The account he was later to give to Dr Twort was as follows:
“He was always loading ships; other dockers would be removing cargo from one end of the hold while he was putting in cargo in space that was already empty. Asbestos cargo was brought into the docks on a regular basis. Unloading of asbestos cargo always caused clouds of dust to be created. When he was working alongside dockers in the same hold as they were unloading asbestos cargo, he was putting in other cargo. Dust was always visible on the floor of the ships hold and floating about inside. It would take a day, and often a few days, to load their cargo.”
The dockers that Mr Whitmarsh worked alongside and who were unloading asbestos whilst he was loading other cargo were employed by the PLA and it is alleged in these proceedings that the PLA were the occupiers of the relevant vessels, wharves and warehouses under the Occupiers Liability Act 1957.
Some 7 years after Mr Whitmarsh had left the employment of the claimant, the claimant transferred its business to the defendant. The Agreement effecting the transfer was dated 9 February 1979. The preamble to the Agreement stated the intention of Smith Coggins to cease carrying on its business as stevedoring contractors in the port of London. It went on:
“The Company and the PLA consider it desirable that the cesser of stevedoring activities by the Company should take place with as little disturbance as possible to the trade of the port of London and in particular to the customers of the Company and to the employment of the registered dock workers employed by the Company and that the business of the Company as stevedoring contractors in the Port of London (“the Business”) should therefore be transferred by the Company to the PLA on the terms stated below.”
There then followed 9 clauses. It is sufficient to refer to the first five. By clause 1, the goodwill of the Business was transferred with effect from the date of the Agreement. By clause 2, the Company transferred its plant and equipment. By clause 3, the Company surrendered the tenancies of the premises it held from the PLA making no claim for compensation for the early surrender and the PLA correspondingly releasing any claim it might have for dilapidations etc. By clause 4 the registered dock workers and 15 other personnel employed by the Company were transferred to the PLA. The transfers, (which were, of course, pre-TUPE) were to be effected by termination and re-employment. There was specific provision for the PLA to reimburse the Company for wages referable to services performed by transferring employees between the date of the transfer of the Business and their formal re-employment by the PLA. There was also specific provision for termination payments in favour of employees to be the responsibility of the Company.
Clause 5 was in these terms:
“For the avoidance of doubt it is expressly agreed that the Company will bear pay and discharge all liabilities in respect of the Business relating to any period prior to the time of transfer of the Business other than those liabilities and obligations from which the PLA have agreed hereunder to release the Company.”
In February 2022, some 50 years after his exposure to asbestos, Mr Whitmarsh developed the first symptoms of mesothelioma. Solicitors acting on his behalf issued proceedings against Smith Coggins on 14 February 2023. On 15 May 2023, judgment on liability was entered in the claimant’s favour on a “Show Cause” hearing. The standard interim payment of £50,000 was made. The case settled within his lifetime for £170,000. Smith Coggins (or, to be more precise, their insurers) also paid £8,280.80 to the DWP in respect of non-deductible CRU benefits and £100,000 in costs. The consent order was dated 20 June 2023.
By a Claim Form issued on 22 September 2025, Smith Coggins have brought a claim under the 1978 Act for contribution in respect of the settlement.
The Defence to the claim raised multiple issues (including the accuracy of Mr Whitmarsh’s account of his working conditions as briefly set out above). The relevant part of the Defence for present purposes is paragraph 20, which cited Clause 5 of the Agreement above and went on:
“This agreement was made after the Civil Liability (Contribution) Act 1978 coming into force (on 1 January 1979) and by section 7 (3) (b) of that Act that nothing in the Act shall affect – (b) any express contractual provision regulating or excluding contribution; which would be enforceable apart from this Act (or render enforceable any agreement for indemnity or contribution which would not be enforceable apart from this Act). Accordingly, the Defendant is not liable to contribute as the Claimant alleges or at all. By this agreement, this claim is barred as a matter of principle, such that it [the claimant] has no right to bring this claim for an indemnity or contribution for matters arising prior to 9 February, there being no express reservation in relation to the subject matter of this claim.”
At the first case management conference Master Eastman directed a preliminary issue to be tried, namely:
“whether as a matter of construction of the Agreement made between the Claimant and the Defendant dated 9 February 1979, Clause 5 is a complete defence to and bars the Claim herein as a matter of principle (as alleged in paragraph 20 of the Defendant’s Defence).”
This is the issue I tried in four hours over the course of 14 and 15 October 2025.
No evidence was called. I simply read the Agreement and the statements of case and heard counsel speak to their skeleton arguments. I express my gratitude for the skill and economy with which those submissions were put forward. Because I think the answer to the preliminary issue is (a) clear and (b) short, I can state my conclusion and my reasoning with similar economy.
Discussion
The parties’ cases
I set out, in very brief summary only, the parties’ respective cases.
The construction of Clause 5 contended for by the defendant was set out in paragraph 23 of Mr Jamie Clarke’s skeleton argument. He said that the clause dealt with allocation of risk and, so far as the contribution claim was concerned, did so in this way:
“It is contended that a reasonable person would say that the underlying claim arises from the Claimant’s employment and deployment of Mr Whitmarsh as a stevedore at the Defendant’s port before February 1979. So where there is a compensation claim brought by Mr Whitmarsh arising out of that employment and deployment, the language of the Contract means that payment of all of that compensation must be borne by the Claimant, without recourse to the Defendant.”
By contrast, the claimant, through Mr A John Williams, said that Clause 5 was far less ambitious in scope. Its immediate context was the transfer of a business. As part of the transfer, the transferor, Smith Coggins, was released from certain liabilities for which it would otherwise have been responsible – notably (a) liabilities in respect of the premises it was surrendering and (b) liabilities in respect of the employees who were transferring. With those exceptions, and because this was a business transfer not a share acquisition, the transferor’s other, ordinary liabilities remained in place. All that Clause 5 did was to make this abundantly clear – hence the opening words “for the avoidance of doubt”. It related, and only related, to the liabilities of Smith Coggins. It had nothing to do with any liabilities of the PLA, including any contingent liability that the PLA might have incurred in respect of Mr Whitmarsh. To put that slightly differently, by Clause 5 the PLA was making clear that it was taking the goodwill and the assets of the business. It was not (save with very limited exceptions) taking on the liabilities of the business.
Conclusion and reasons
I prefer Mr Williams’ construction, which is, in my view, obviously the right one. My reasons follow.
I was taken to some familiar authorities including Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 and, more recently, Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd [2018] EWHC 163 (Comm). I forebear from burdening this judgment with the relevant passages. Lord Hoffman’s analysis from the Investors Compensation Scheme case is particularly well-known and I have paid close attention to it. My task (to quote only from the first principle of that analysis) is to ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”.
In my view, the background and context (including the immediate context) are very relevant. At the risk of repetition, Clause 5 must be interpreted in the context of an agreement which (a) transferred the assets and goodwill of a business to the buyer and by which (b) the buyer released or assumed certain liabilities of the seller. It was in the interests of the buyer to make it clear that, so far as the assumption of liabilities was concerned, the agreement went no further than its precise terms. So even though the position was perhaps already clear, the parties inserted Clause 5 to put the matter beyond doubt.
The ordinary and natural meaning of the words “the Company will bear pay and discharge all liabilities in respect of the Business relating to any period prior to the time of transfer of the Business” is that the words refer to the Company’s liabilities, (which by the consent order in favour of Mr Whitmarsh, Smith Coggins has “borne, paid and discharged”). It is a stretch, to say the least, to argue that those words mean that the Company was releasing the PLA from the PLA’s liability to contribute. A liability on the PLA to contribute on the ground of its own tortious conduct cannot in this context fairly be called a liability “in respect of the Business” of Smith Coggins and I do not think that the parties had any such intention.
There are two additional points:
The first is that “clear words are necessary before the court will hold that a contract has taken away valuable rights or remedies which one of the parties to it would have had at common law (or pursuant to statute)”; see the judgment of Lord Leggatt in Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29 at paragraph 106. The “valuable right or remedy” in play here was and is, of course, the right to claim contribution under the 1978 Act. Clear words taking away that right are not found in Clause 5.
The second is related to the first. On the PLA’s interpretation of Clause 5 it would operate as a kind of indemnity. Had Mr Whitmarsh brought his claim against the PLA (which he could have done) the PLA would, on its case, have been entitled to pass the entire liability to Smith Coggins pursuant to Clause 5 – even though Clause 5 makes no mention of the PLA’s liabilities. In that situation this would also have had the effect of defeating or nullifying Smith Coggins’ right to limit the extent of their contribution to what was “just and equitable”; see section 2(1) of the 1978 Act. The position would be even more extreme (as Mr Williams pointed out) if the industrial disease were a cumulative and divisible one such as asbestosis rather than mesothelioma. In such a case, the PLA would, on their construction, be entitled to pass on to Smith Coggins all liability for damage for which they were exclusively responsible. Again, clear words would be necessary to justify such an extreme construction.
I acknowledge that the PLA’s construction of Clause 5 is linguistically available (albeit requiring a considerable and considerably strained emphasis on the words “all” and “in respect of”). But here the words of Lord Hoffman’s fourth principle have resonance. In relevant part that principle was expressed thus:
“The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.”
The PLA’s proposed construction is a classic example of the utility of that principle.
I also acknowledge that the court’s approach to exclusion clauses (if such this be) is no longer as hostile as once it might have been characterised. I accept that parties to commercial contracts have freedom to allocate risk and make provision for risk (including through insurance) in the way that they choose. But Mr Clarke’s well-expressed submissions on this aspect assumed a favourable answer to a prior question. That prior question was whether Clause 5 was indeed allocating risk or excluding or regulating the PLA’s liability in respect of such risks. I have found that it was not.
I record that the submissions of the parties ranged more widely than set out above. But having resolved the Preliminary Issue on basic principles of the interpretation of contracts, nothing is to be gained from discussion or further discussion of those points.
I invite counsel to draw up an order reflecting the above.