The English Electric Company v Alstom [2017] EWHC 1748 (QB)

This post was written by Max Archer. This case is not to be confused with the earlier decision in The English Electric Company Limited v Alstom UK [2016] EWCA Civ 1314, featured on the blog earlier in the year (accessible here).


The Background

Mr Edmund Critchley was diagnosed with malignant mesothelioma in early 2013. He brought proceedings against his employer, Associated Electrical Industries Ltd (“AEI”) that had exposed him to asbestos whilst he worked in the turbine industry between 1965 and 1967.

AEI subsequently admitted that it was his employer and effectively admitted liability by failing to show cause as to why judgment in default should not be entered against it. AEI paid compensation to Mr Critchley, the total amount expended including costs was £850,672.45.

The dispute before the court arose out of the corporate histories of the English Electric Company (“EE”) and Alstom:

• EE and AEI had been members of the same corporate group.
• Pursuant to an agreement of sale of AEI’s turbine business to EE in 1970, EE agreed to indemnify AEI against any claims arising on completed and uncompleted contracts as at 1st April 1970.
• EE then sold the business on to Alstom UK Limited in 1989.
• The 1989 sale also contained an indemnity clause to the effect that Alstom were liable to indemnify EE under the agreement.

The basis of EE’s claim against Alstom was as follows:

• AEI was liable to Mr Critchley as alleged
• EE and that it was bound to indemnity AEI pursuant to the 1970 agreement.
• Pursuant to the 1989 agreement Alstom was now liable to indemnify EE.

The Parties’ Arguments

Alstom argued that in spite of AEI’s admission of liability and pay-out to Mr Critchley, AEI was not liable to Mr Critchley as it was not his employer. It was argued that Mr Critchley was instead employed by AEIM, a subsidiary.

Against this, EE argued that AEI was Mr Critchley’s employer and that even if he had been employed to some extent by AEIM, the latter had been acting at all times as an agent for AEI which was the party ultimately liable anyway.

It was agreed that if EE was liable to indemnify AEI under the 1970 agreement then it must be liable to indemnify it on the 1989 agreement.

The Decision

HHJ Waksman QC gave judgment for EE.

It was held that AEI was Mr Critchley’s employer. There was no contract of employment before the court, further, there were many documents that were inconsistent, some pointing to AEI as the employer, some pointing to AEIM. However, the fact that Mr Critchley considered himself to be employed by AEI was of considerable importance in coming to the conclusion that it was the employer. Further, AEI’s admission that it was the employer was a further matter of importance, this was a decision that would not have been made lightly. The judge considered that on the balance of probabilities EE had established that the employer was AEI. The various uncertainties in the documents were not enough to displace this finding.

He went on to find that AEIM might have held itself out (to HMRC for example) as the employer and be acting for AEI as an agent in that regard. That being the case, AEI would be the principal, there could therefore be no reason why AEI could not be liable to Mr Critchley as had been admitted in the previous proceedings. If there was any extent to which AEIM could have been his employer it could only have been as an agent for AEI.

EE was therefore successful in its claim.

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