Contribution claims are often an option for defendants but how do you assess whether or not they are likely to be successful?
The recent case of Jubilee Motor Policies Syndicate 1231 v Volvo Truck & Bus (Southern) Ltd has again flagged up that "same damage" in the Civil Liability (Contribution) Act 1978 section1(1) (“the Act”) will be restricted to just that ie, an identical match.
What are the guiding principles when assessing whether it is possible to pursue a third party (or whether a party may be pursued themselves) for a contribution or an indemnity under the Act?
What does the Act say about contribution?
“ Any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (jointly with him or otherwise."
Very basically, if you and someone else are liable to a third person for the “same damage” then you can recover a contribution from that other person (or they from you).
Therefore there are two immediate elements to consider:
- What is “damage" for the purposes of the Act?
- What is “same damage"?
Section 6 (1) of the Act provides that:
- “A person is liable in respect of any damage if the person who suffered the damage is entitled to recover compensation from him in respect of that damage".
- “Damage” is not defined by reference to the legal basis of the liability eg, tort, contract, misrepresentation.
- “Damage” must be a detriment liability or loss and be capable of assessment in money terms. In other words – there must be a liability to pay compensation (whatever the basis of that liability).
If there is “damage”, is the potential contributor liable in respect of the “same damage”?
The Act does not define “same damage”. You therefore need to look to case law for relevant tests.
One of the leading cases on the meaning of “same damage” is the House of Lords decision in Royal Brompton Hospital NHS Trust v Hammond. The Royal Brompton Hospital had engaged a contractor and an architect in relation to major building works. The contract overran by approximately 10 months.
During an arbitration against the hospital, the contractor claimed payment under the contract between them for loss and expense. The hospital made a counterclaim on the basis that the contractor had not actually been entitled to any of the extensions of time which had been given to the contractor and certified by the architect. The hospital argued that the upshot of that should be that the contractor was liable to pay liquidated damages under the contract. The arbitration settled with the hospital paying the contractor £6.2 million.
The hospital then issued legal proceedings against the architect claiming damages for negligently granting extensions of time to the contractor.
The architect subsequently claimed a contribution from the contractor under the Act on the basis that both the architect and the contractor were liable to the hospital for the “same damage”.
Both the Court of Appeal and the House of Lords held that the architect and the contractor were not liable for the “same damage”. This was because the contractor’s damage was the late delivery of the building (and consequent disruption suffered by the hospital) ie, the hospital could not get patients in beds!
The damage arising from the architect’s negligence was not in the delay in completion of the building. Rather, the damage caused by the negligent certification by the architect was the impairment of the hospital’s ability to obtain compensation for the delay from the contractor.
Put simply, “same damage” means same harm.
In Royal Brompton the House of Lords found that “same damage” should not be confused with same damages:
The fact that two or more wrongs lead to a common result does not of itself mean that the wrongdoers are liable in respect of the same damage. The facts must be examined more closely in order to determine whether the damage is the same."
In the more recent cast of Jubilee Motor Policies Syndicate 1231 v Volvo Truck & Bus (Southern) Ltd it was again held that the terms “in respect of” and “same damage” should be construed narrowly.
The insured party V had been involved in a car accident. V’s insurer paid monies to the injured party H. The insurer J brought a subrogation claim against the insured party V on the basis that V in breach of contract had failed to adequately maintain his vehicle.
The issue of whether or not insurer J was entitled to a contribution depended on the court's interpretation of the terms "same damage" and "in respect of" in the Act.
It was held that damages paid by insurer J to the individual H for personal injuries suffered at the hands of the insured party V did not have the same origin: one was causatively liable because the insured party V actually caused the injury, the insurer however had simply paid because he was liable to do so under an insurance policy.
When looking at a claim for contribution ask yourself the following questions:
- What harm has A suffered?
- Is B liable in respect of that harm?
- Was C also liable to A in respect of that harm or some of it?
If you have not got an identical match then the contribution claim will fail.