Sharing the blame: a summary of contribution claims and the Civil Liability (Contribution) Act 1978

Where multiple parties are responsible for the same loss, a claimant can choose to pursue just one of them for the full amount – leaving that party to resolve any contributions with others who may also be liable. In such cases, the defendant may seek to join a third party to ongoing proceedings under Part 20 of the Civil Procedure Rules, allowing the court to apportion liability during the main litigation. But often there are sound practical and tactical reasons to avoid doing this. A defendant who opts not to bring a Part 20 claim, nevertheless retains the ability to seek a recovery against a third party following settlement under the Civil Liability (Contribution) Act 1978 ("the Act").

Understanding the Act

The Act gives a defendant who settles or is found liable for a claim, a cause of action against another liable party.

Section 1(1) provides that:

"any person liable in respect of any damage suffered by another person (the "contribution claimant") may recover contribution from any other person liable (the "contribution defendant) in respect of the same damage (whether jointly with him or otherwise)"

It can be seen that the contribution claimant must establish that:

• The contribution defendant is liable to the original claimant in the underlying action in respect of the damage because (i) the contribution defendant was in breach of duty and (ii) that such breach was causative of the loss suffered by the original claimant; and
• The damage for which the contribution defendant is liable is the “same damage” for which the contribution claimant is also liable .

Parties looking to bring separate contribution proceedings must ensure that, before settling the underlying claim, they have available all evidence reasonably necessary to satisfy the evidential burden on them in the later contribution claim ⁽¹⁾.

Liability to the original claimant

The right to claim a contribution arises when (i) damage has been suffered by a claimant for which both the contribution claimant and contribution defendant are liable; and (ii) the contribution claimant has paid, been ordered to pay, or agreed to pay compensation in respect of that damage. In URS Corporation Ltd v BDW Trading Ltd, the Supreme Court recently clarified that this right does not depend on a formal judgment, admission or settlement agreement. Moreover, "damage" can include payments in kind, such as undertaking remedial works.

Section 1(4) of the Act introduces the concept of a contribution being sought only in respect of "bona fide" settlements. Evidence of collusion, dishonesty or the absence of bona fides settlement in the compromise of an underlying claim may defeat a contribution claim. Where an underlying settlement was simply dishonest, the court cannot determine a 'just and equitable' contribution against a contribution defendant, notwithstanding that the contribution claimant may have sought to compromise the primary claim in good faith ⁽²⁾.

A contribution claim cannot exceed the sum that the contribution defendant has paid or been ordered to pay to the original claimant, net of any reduction for contributory negligence, plus costs. Where a number of defendants have contributed to the settlement, each is limited to recovering the amount of their own contribution, plus costs.

One benefit to pursuing a contribution claim after the conclusion of the underlying claim is that the strength of the evidence has already been tested in the underlying litigation. This can reduce the costs risk compared to joining a Part 20 defendant to the main action at an earlier stage when the evidence may be less certain and liability may be contested.

It also allows additional time to assess the merits of a case against a potential contribution defendant and may help circumvent limitation issues - particularly in multi-party litigation where several limitation periods may be running concurrently.

However, this must be weighed against the disadvantages of bringing a separate contribution claim against a third party. Evidence does not improve for the keeping - memories fade, documents may be lost and crucially, the underlying claimant may be less inclined to assist once their own claim has been resolved.

Perhaps the most significant risk in pursuing a contribution claim is the potential costs exposure. Although this is the case for all commercial litigation, there is a particular issue within the sphere of personal injury and clinical negligence cases, where the usual protection of Qualified One-Way Costs Shifting (QOCS) is disapplied for defendants who are claimants in Part 20 or contribution proceedings. Care should be taken to ensure that there are sufficient prospects of recovery to justify the costs risks, which could be considerable ⁽³⁾.

Same damage

Contribution claims can only be brought to recover loss arising from the same damage for which both the contribution claimant and the contribution defendant are liable to the claimant.

In practice, determining what constitutes "same damage" is not always easy . It does not mean "substantially or materially similar damage" ⁽⁴⁾. For example, where an architect was held to be liable for a negligent inspection causing a contract administrator to allow an extension of time on the project which caused consequential delay and loss, this was not the "same damage" as that caused by a contractor working on the same project who had undertaken defective works, also causing consequential loss and damage ⁽⁵⁾. Although both losses ultimately reflected the original claimant's loss from delay, the damage underlying each claim was fundamentally different – one arising from negligent advice and certification, the other from contractor delay. 

Cases can be fact specific. For example, physical defects in a reservoir gave rise to two (different) types of damage: one being the financial loss from having to construct a second reservoir and the other being the loss in not having a properly working reservoir in the first place. Even though both may have been brought about because the reservoir was badly constructed by the contractor, the damage was not the same for the purpose of the Act ⁽⁶⁾. 

In that case, Roch LJ summarised: “The word ‘damage’ in the phrase ‘the same damage’ in section 1(1) does not mean ‘damages’.” This is an important distinction as the two can easily become confused.

An example of this is a case where a building contractor whose construction was found to be defective, was held not to be liable for the same damage as an insurer whose liability arose from its liability to indemnify the insured for financial loss as set out within the wording of the policy ⁽⁷⁾.

Parties considering a contribution claim must, therefore, carefully assess the nature of the proposed contribution defendant's liability to the original claimant.

Apportionment of damage

Just as the court will assess the apportionment of liability between the parties in the underlying litigation, the contribution claimant must establish the extent of liability that the contribution defendant should bear. The court exercises a broad discretion under s2 of the Act, with the applicable principle being that the contribution must be "just and equitable" taking account of each party's fault and their causative relevance. This is a highly fact-sensitive exercise.

The court can consider factors such as moral blameworthiness and causative potency. So, if one party is thought to be more morally blameworthy - such as where they have acted fraudulently, while the other party was merely negligent - the court may apportion contribution taking these factors into account.

Similarly, where a party is morally culpable - for example, where a breach has resulted in criminal liability such as an HSE prosecution - their conduct may be found to have greater causative potency and moral blameworthiness. In such cases, the court may apportion a much greater proportion of the liability to that party.

Time limits

The time limit for bringing a contribution claim is governed by s10 Limitation Act 1980. This provides that a party seeking a contribution under the Act must issue proceedings within two years of the date on which the right accrued. This two-year period runs from either:

• The date of a judgment or arbitration award against the contribution claimant.
• If the claim was settled by agreement, the earliest date on which the contribution claimant and the original claimant agreed the amount to be paid to the original claimant. Time starts to run as soon as there is an identifiable amount of money to which a contribution defendant can be made to contribute and there is no requirement that the amount of compensation must be established by a judgment, an admission or a settlement agreement between the original claimant and the contribution claimant for the purpose of limitation. 

Summary

The decision whether to favour contribution proceedings over Part 20 claims is largely a tactical one. Generally, there are pros and cons to each, which need to be carefully considered in light of the specific facts and context of the claim. At Womble Bond Dickinson, we provide strategic, tailored advice to help you navigate these options. Our approach takes into account your individual business needs and commercial sensitivities – ensuring you achieve the outcomes that matter most. 

Key contacts

Sally Brock and David Brown are key contacts in the Casualty Litigation team at Womble Bond Dickinson. They each have extensive experience in handling catastrophic and fatal injury claims for a range of self-insuring, commercial and insurer clients, often with a regulatory cross over. They are widely respected for their broad practice in defendant personal injury litigation and specialise in advising and representing clients in the retail, transport, aviation and industrial disease sectors within both the public and private sectors.

References:

^{(1) Percy v Merriman White & Mayall [2022] EWCA Civ 493}

^{(2) Abbey National Bank Plc v David Gouldman & Co (a firm) (Matthews & Son (a firm), part 20 defendants): [2003] 1WLR 2042}

^{(3) Wagenaar -v- Weekend Travel Ltd [2014] EWCA Civ 1105} 

^{(4) Royal Brompton Hospital National Health Service Trust v. Hammond and Others and Taylor Woodrow Construction (Holdings) Limited [2002] UKHL 14} 

^{(5) Royal Brompton Hospital National Health Service Trust v. Hammond and Others and Taylor Woodrow Construction (Holdings) Limited [2002] UKHL 14} 

^{(6) Birse Construction Ltd v Haiste Ltd 1 WLR 675; [1996] 2 All ER 1}

^{(7) Bovis Construction Ltd v Commercial Union Assurance Co plc [2001] 1 Lloyd's Rep 416}