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Niru 2 was decided in the CA yesterday (see [2004] EWCA Civ 487).

To recap (v briefly). Niru pay out by mistake on a letter of credit relating to unavailable goods to CAI, a bank. They sue the bank for repayment, and also sue SGS, who certified that the goods were available, for negligence. In Niru 1, held that both CAI and SGS are liable, and that CAI doesn't have a defence of change of position. Hence judgment given against CAI and SGS jointly and severally.

SGS pay the judgment and in Niru 2 seek from CAI (a) subrogation to Niru's rights against SGS, (b) recoupment from CAI, (c) contribution from CAI. The judge says they succeed on (a) but not (b) or (c). Both sides appeal.

Held:

(1) SGS can have subrogation, as decided below.

(2) SGS could also have had recoupment, reversing the judge.

(3) Probably SGS could have had contribution on the basis of Friends Provident v Hillier Parker. Although Royal Brompton cast doubt on Friends Provident, these doubts were obiter, and the CA pro tem remains bound by Friends Provident. Sedley went further and said he actually liked the result in FP.

Happy days

Andrew

Andrew Tettenborn MA LLB
Bracton Professor of Law

Tel: 01392-263189 / +44-392-263189 (international)
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[My homepage:
http://www.ex.ac.uk/law/staff/tettenborn/index.html].