The Part 20 claimants ("D1") in this case settled with the claimant ("C") in the main proceedings and then sought a contribution from the Part 20 defendants ("D2"). D2 argued that the claim against the D1 had been time-barred (a defence which D1 had raised in the main proceedings, before settling). The case turned on the interpretation of section 1(4) of the Civil Liability (Contribution) Act 1978, which provides that "A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage … shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.' (emphasis added). D1 argued that this section precluded D2 from advancing the time bar argument. At first instance, the judge agreed and D2 appealed.
The Court of Appeal considered the earlier decision of Arab Monetary Fund v. Hashim , in which it was held that the proviso in section 1(4) permitted an investigation as to whether any "collateral defence" which D1 had against C might have succeeded. A collateral defence was defined by the Court of Appeal as "a defence raised by D1 that does not involve a denial of the factual basis of C's cause of action against him, but is in the nature of a defence of confession and avoidance and may be one of limitation".
It held that Hashim had been wrongly decided and that the proviso in section 1(4) does not permit an investigation as to whether the collateral defence would have succeeded. The section "has provided expressly that there is to be no inquiry as to whether D1 was or was not actually liable to C". All that is required is proof by D1 that the factual basis of the claim against him disclosed a reasonable cause of action. Accordingly, D1 satisfied the requirements of the proviso, and could therefore seek a contribution from D2.