Contributors
Claimants in professional negligence claims often have more than one potential target in their sights. However, properly advised, a claimant will only pursue the most vulnerable or the one with the deepest pockets. If so, a defendant will want to consider seeking contribution from others involved. But over recent years there has been some uncertainty surrounding limitation on contribution claims, including the issue of when time starts to run. The recent decision in Spire Healthcare Ltd v Nicholas Brooke [2016] EWHC 2828 (QB) ends some of that uncertainty.
The facts
In 2005 Mr Jellett sued his hospital and his neuro-surgeon following a procedure which resulted in haemorrhage and Mr Jellett subsequently being rendered tetraplegic.
After several years, the hospital offered in November 2011 to settle the claim for 75% of damages to be assessed on the understanding that the hospital would seek a contribution from the surgeon. The settlement was also on the basis that the hospital would make an interim payment of £300,000.
Proceedings against the hospital were stayed and against the surgeon discontinued by way of consent order. In 2013 a final quantum figure of £4.65m was agreed.
In 2015, the hospital issued contribution proceedings against the surgeon who argued by way of preliminary issue that limitation had expired.
Rules on limitation
Under the Limitation Act 1980, a party who is entitled to recover contribution must commence proceedings within two years of the date on which his right of recovery accrued. Broadly speaking, such a right accrues on the date of judgment/arbitration award in the underlying action.
However, Section 10(4) of the Act deals with limitation where payment in the underlying claim is made other than by way of judgment i.e. settlement. The Section provides that, where in the underlying claim a party "makes or agrees to make any payment", the relevant date for the purpose of calculating limitation is the date when "the amount to be paid …is agreed".
So, in principle, time on a contribution claim arising from a settlement starts to run when quantum is agreed. But, what happens if an interim payment is made pending agreement on the quantum figure – does that payment constitute making or agreeing to make " any payment" under Section 10(4) of the 1980 Act so as to start the clock running?
The decision
In Spire Healthcare the hospital argued that the limitation clock was not activated until the date of the final agreement on quantum in June 2013. In endorsing the argument, the Judge applied the rationale of the Court of Appeal in Aer Lingus v Gildacroft Limited and Sentinel Lifts Limited [2006] in which it was held that the 2 year time limit runs from the date of assessment of damages, not the date of a finding of liability.
Accordingly the Judge in Spire Healthcare held that Section 10(4) of the Act did not apply to voluntary interim payments. The relevant date for a limitation calculation was the date on which the final settlement sum was agreed. The Judge also commented obiter that even an order for an interim payment would fail to trigger the time limit.
Comment
The vast majority of professional negligence claims are settled prior to trial. Where contributions are subsequently sought, there will be a number of those cases involving agreement as to liability in the underlying claim and a voluntary payment by the defendant pending finalisation of quantum figures. For example, in the construction professionals' context, it is common for parties to agree a split of liability and interim payment to fund remedial works, with the final quantum figure to be agreed on completion of remedial/project works. In the context of a solicitor's claim, a split of liability and quantum with a voluntary payment in the interim can often occur, for example where the underlying claim relates to tax issues subject to on-going HMRC investigations.
In such cases, the Spire Healthcare decision provides professionals and their insurers with a little breathing space on time limits for pursuing a recovery.
