It is often the case that more than one party has contributed to the loss sought by a claimant in proceedings. But a claimant may choose to sue only one of several potential defendants. Read more below.
The Civil Liability (Contribution) Act 1978 (CA 1978) provides the mechanism by which a contribution can be sought by a defendant towards any judgment (or settlement) obtained by a claimant, whether from a co-defendant or another party. However, the perils and pitfalls of contribution claims are many and varied. Recent case law shows the need to navigate such matters carefully and with expert advice.
Regular readers may recall our Autumn 2016 Resolve Quick summary concerning a defendant to a contribution claim who could not defend the claim by the first defendant on the basis of a collateral limitation defence that could have been taken by the first defendant (click here for summary or for full decision: WH Newson v IMI).
Hot on the heels of that judgment and over-ruling the High Court, the Court of Appeal has made clear that a defendant may serve a contribution notice on co-defendant even after that party has reached a full and final settlement with the claimant in the main action. This is because section 1(3) of the CA 1978 has an express provision that proceedings for contribution can be instigated or continued against notwithstanding that the party claiming is no longer liable to a claimant for the claimed damages. (Section 10(4), Limitation Act 1980) (Kazakhstan Kagazy plc and others v Zhunus and others).
Another recent case (Spire Healthcare Ltd v Brooke) has clarified the trigger event for limitation for the purposes of a contribution claim. Section 10 of the Limitation Act 1980 provides that a defendant claiming a contribution under CA 1978 must issue proceedings within two years of the date upon which the co-defendant is "held liable...". Those two years run from either 1) the date of a judgment or arbitration award against the defendant or 2) if the defendant settled the claim, the earliest date upon which the amount to be paid by him was agreed with a claimant.
In Spire Healthcare the claimant, a patient, brought negligence proceedings against Spire Hospital and his surgeon. The claim was settled by all, with Spire agreeing to make an interim payment on account of damages (in 2011), which were to be later globally assessed or agreed. Damages were ultimately agreed in 2013 following which Spire brought a contribution claim against the surgeon. He argued that the claim was time barred as it was over two years since the agreed interim payment. However, the Court found that the relevant date from which the two years ran was the date of the agreement of the ultimate quantum in damages, not the date of payment of the interim sum (2013). As such, the contribution claim could continue.
Contribution claims are a crucial avenue of recovery for defendants where multiple parties may be liable. However, such claims have peculiarities, both in terms of procedure and their statutory underpinning in the CA 1978.