Mobil North Sea Ltd & Anor v P J Pipe & Valve Company (t/a P J Valves or P J Valve Ltd) [2001] EWCA Civ 741 (3 May, 2001)

Mobil North Sea Ltd & Anor v P J Pipe & Valve Company (t/a P J Valves or P J Valve Ltd) [2001] EWCA Civ 741 (3 May, 2001)

The settlement agreement between Mobil and Fluor did not eliminate Fluor's loss or its right to claim against PJ Pipe for the cost of replacing defective valves under the sub-contract. The agreement was a collateral transaction modifying the internal accounting between Mobil and Fluor, not a discharge of the substantive loss caused by PJ Pipe's breach. Fluor's claim is a direct claim for its own loss, not merely an indemnity, and the settlement agreement does not provide a defence to PJ Pipe.

Citation
[2001] EWCA Civ 741
Parties
Claimant/respondent: Mobil North Sea Limited; Claimant/respondent: Fluor Enterprises Limited; Defendant/applicant: PJ Pipe & Valve Company
Jurisdiction
England and Wales
Procedural Posture
Civil Appeal / Permission to Appeal and Substantive Appeal From High Court Judgment
Outcome
Permission to appeal allowed; appeal dismissed
Legal Topics
Mitigation of Loss, Damages, Settlement Agreements, Sub Contracts, Head Contracts
Contract Law Civil Procedure Mitigation of Loss Damages Settlement Agreements Sub Contracts Head Contracts

Case Brief

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Parties

Mobil North Sea Limited

Claimant/respondent

Fluor Enterprises Limited

Claimant/respondent

PJ Pipe & Valve Company

Defendant/applicant

Procedural Posture

Civil Appeal / Permission to Appeal and Substantive Appeal From High Court Judgment

Legal Issues

  1. 1 Whether a settlement agreement between claimants eliminates the loss recoverable from the defendant under a sub-contract for defective goods
  2. 2 Whether the settlement agreement is a collateral transaction or affects the substantive claim for damages
  3. 3 Whether the claim is for an indemnity or for direct loss under the sub-contract

Ratio Decidendi

The settlement agreement between Mobil and Fluor did not eliminate Fluor's loss or its right to claim against PJ Pipe for the cost of replacing defective valves under the sub-contract. The agreement was a collateral transaction modifying the internal accounting between Mobil and Fluor, not a discharge of the substantive loss caused by PJ Pipe's breach. Fluor's claim is a direct claim for its own loss, not merely an indemnity, and the settlement agreement does not provide a defence to PJ Pipe.

Court Disposition

Permission to appeal allowed; appeal dismissed

Orders

  • Appeal dismissed with costs assessed summarily in the sum of £20,000, to be paid within 14 days
  • Any application for a stay to be made to the trial judge