Interim payments are not covered by section 10(4) of the Limitation Act 1980; they do not trigger the start of the two year limitation period for commencing contribution proceedings.

The Facts

Mr Jellet was left tetraplegic as a result of medical negligence during an operation.

The hospital settled the negligence claim together with costs on the understanding that it would seek 50% contribution from the surgeon, Mr Brooke. In addition it offered, pending assessment of damages, to make an interim payment.

A consent order was signed by the parties on 25 November 2011, with quantum subsequently being agreed on 24 June 2013.

The hospital issued contribution proceedings on 5 March 2015, which led to a dispute regarding the relevant date for the purposes of section 10(4) of the Limitation Act 1980. Under section 10(4) the relevant date shall be the earliest date on which the amount to be paid is agreed between the parties.

Mr Brooke argued the offer of an interim payment triggered the two year limitation period. Therefore the contribution proceedings were issued out of time as limitation expired on 25 November 2013.

It was the hospital's case that the date damages were agreed is the relevant date for the purposes of section 10(4). Accordingly limitation would expire in June 2015.

The court was required to determine three issues:

  1. Whether a voluntary interim payment can be used for the purposes of section 10(4) Limitation Act 1980 to trigger the two year limitation period;
  2. Whether the effect of the consent order was to compromise the deemed contribution proceedings therefore the hospital was barred from bringing contribution proceedings by estoppel by representation or by cause of action estoppel; and
  3. Whether the hospital's contribution claim should be stayed or struck out as an abuse of process on the ground that they sought to re-litigate issues which existed prior to settlement.

The Decision

The issues were determined in favour of the Claimant.

  1. An interim payment is not covered by section 10(4) therefore it did not trigger the two year limitation period. The provision is concerned with the date of agreement of "the" settlement sum; therefore the relevant date was the date the full quantum of damages was agreed. The relevant date for the purposes of section 10(4) was therefore 24 June 2013 and the hospital had issued proceedings within the two year limitation period.
  2. The consent order did not give rise to cause of action of estoppel: it contained no express reference to the issue of contribution between the hospital and Mr Brooke, nor at any stage during the negotiations in November 2011 did Mr Brooke suggest that the proposed compromise was on the basis that contribution proceedings would not be instigated. Furthermore there was no estoppel by representation as they had been no clear and unequivocal representation that the hospital would not bring contribution proceedings.
  3. For reasons stated above, the consent order does not prevent the hospital from issuing contribution proceedings therefore there are no reasons why the claim is an abuse of process.

Comment

  • An interim payment will not trigger the two year limitation period for contribution proceedings as it has been made whilst pending assessment of the final figure of damages.
  • The two year limitation period for contribution claims is not widely known and defendants must consider the possibility of issuing such a claim at an early stage in order to ensure they are protected.
  • The date the final damages figure is determined is the relevant date for the purposes of section 10(4) as it is on this date that the parties are informed of the final sum of the claim and are able to calculate the appropriate contribution figure.
  • Whilst the contribution claim had been brought within the relevant limitation period, the case suggests there are circumstances when the claim can be stayed or struck out as an abuse of process. Estoppel by representation and cause of action estoppel can be used in appropriate circumstances as the basis for striking out the contribution claim if can be shown by the party, who is subject to the claim, that they understood the consent order was the end of the proceedings and subsequent contribution proceedings would not be issued. Defendants must be careful not to settle on these terms.