Aer Lingus v Gildacroft Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Moore-Bick |
| Judgment Date | 17 January 2006 |
| Neutral Citation | [2006] EWCA Civ 4 |
| Docket Number | Case No: B3/2005/1427 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 January 2006 |
[2006] EWCA Civ 4
The Right Honourable Sir Anthony Clarke Mr
The Right Honourable Lord Justice Rix and
The Right Honourable Lord Justice Moore-Bick
Case No: B3/2005/1427
Mr Michael Pooles QC and Mr Martin Porter (instructed by Messrs Beachcroft Wansbroughs) for the Appellant
Mr Jonathan Harvey (instructed by Messrs Kennedys) for the 1 st Respondent
Mr Nick Heathcote Williams ( instructed by Mr John A Neil) for the 2 nd Respondent
Lord Justice Rix:
Section 10 of the Limitation Act 1980 provides that a claim for contribution under the Civil Liability (Contribution) Act 1978 shall have a limitation period of two years from the date on which a person seeking contribution is "held liable…by a judgment".
The issue on this appeal is whether for these purposes the judgment spoken of by the statute includes a judgment on liability only, for damages to be assessed, or whether a judgment on quantum as well as liability is required to start time running.
The distinction is critical on the facts of this case. On 27 January 1998 William Smyth was badly injured while working for the claimants, Aer Lingus plc, at Heathrow Airport. His hand was trapped in a document lift which had been supplied to Aer Lingus and installed by Gildacroft Limited as primary contractors and Sentinal Lifts Limited as subcontractors. The accident arose out of a malfunction of the lift. Mr Smyth commenced proceedings against Aer Lingus, Gildacroft and Sentinal in November 2000. On 9 May 2001 he obtained judgment by consent against Aer Lingus for damages to be assessed. On 7 June 2001 his proceedings against Gildacroft and Sentinal were discontinued with Aer Lingus agreeing to pay their defence costs. By an agreement embodied in a further consent order dated 3 October 2003 there was judgment for Mr Smyth in the sum of £490,000 and costs. Mr Smyth's proceedings thereby came to an end.
Aer Lingus had not so far claimed any contribution against Gildacroft and Sentinal. On 4 February 2004, however, Aer Lingus commenced its own action for contributions or indemnities under the 1978 Act from both those companies. That was well within two years of the final judgment obtained by Mr Smyth against Aer Lingus on 3 October 2003, but well outside two years after the judgment on liability alone entered on 9 May 2001. The issue is which judgment marked the start of the statutory two year limitation period for Aer Lingus's claim against the contractors.
The Civil Liability (Contribution) Act 1978 (the "1978 Act")
The 1978 Act provides for the essence of contribution in the following terms:
"1. Entitlement to contribution
(1) Subject to the provisions of this section, 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 (whether jointly with him or otherwise) …
2. Assessment of contribution
(1) Subject to subsection (3) below, in any proceedings for contribution under section 1 above the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage in question."
Thus the liability to contribute proceeds by reference to the fact that two persons are each liable in respect of "the same damage", which does not mean "the same damages". As Lord Bingham of Cornhill said in Royal Brompton NHS Trust v. Hammond & Others [2002] UKHL 14, [2002] 1 WLR 1397 (at para 6) :
"When any claim for contribution falls to be decided the following questions in my opinion arise. (1) What damage has A suffered? Is B liable to A in respect of that damage? (3) Is C also liable to A in respect of that damage or some of it?…I do not think it matters greatly whether, in phrasing these questions, one speaks (as the 1978 Act does) of "damage" or of "loss" or "harm", provided it is borne in mind that "damage" does not mean "damages" (as pointed out by Roch LJ in Birse Construction Ltd v. Haiste Ltd [1996] 1 WLR 675, 682…)"
It may be observed that, provided the liability is in respect of the same damage, the liability to contribute appears to arise at the same time as the primary liability to the person who has suffered the damage. As often happens, the same action incorporates both a primary claim by A against defendants B and C, and a contribution claim between B and C. For these purposes, it is not necessary for the quantum of A's claim to be established before the court can assess the quantum of contribution between B and C: for that quantum can be assessed as a matter of the respective percentages of their liabilities.
The Limitation Act 1980 (the "1980 Act")
Section 10 of the 1980 Act, beneath the heading "Special time limit for claiming contribution", provides as follows:
"10.- (1) Where under section 1 of the Civil Liability (Contribution) Act 1978 any person becomes entitled to a right to recover contribution in respect of any damage from any other person, no action to recover contribution by virtue of that right shall be brought after the expiration of two years from the date on which the right accrued.
(2) For the purposes of this section the date on which a right to recover contribution in respect of any damage accrues to any person (referred to below in this section as "the relevant date") shall be ascertained as provided in subsections (3) and (4) below.
(3) If the person in question is held liable in respect of that damage –
(a) by a judgment given in any civil proceedings; or
(b) by an award made on any arbitration;
the relevant date shall be the date on which the judgment is given, or the date of the award (as the case may be) .
For the purposes of this subsection no account shall be taken of any judgment or award given or made on appeal in so far as it varies the amount of damages awarded against the person in question.
(4) If, in any case not within subsection (3) above, the person in question makes or agrees to make any payment to one or more persons in compensation for that damage (whether he admits any liability in respect of the damage or not) , the relevant date shall be the earliest date on which the amount to be paid by him is agreed between him (or his representative) and the person (or each of the persons, as the case may be) to whom the payment is to be made."
As stated above, the issue on this appeal is whether, for the purposes of section 10(3) (a) , Aer Lingus was "held liable…by [the] judgment" given on 9 May 2001for damages to be assessed, or only by the judgment for £490,000 given on 3 October 2003.
The following matters may be noted about section 10. First, the references to "any damage" in subsections (1) and (2) and to "that damage" in subsections (3) and (4) must be a reference to the same concept of "damage" found in section 1 of the 1978 Act. Secondly, although the two year period is said to run from the date on which a right to recover contribution "accrues", it is difficult to think, in the absence of contrary authority, that that expression is intended to convey that the cause of action for a contribution under the 1978 Act only arises at the time of any judgment (whatever that means) , award, or payment or agreement to pay compensation, for otherwise a defendant could not claim contribution from another defendant (or at best could do so only contingently) until his own liability (and perhaps the quantum of it too) had been established, or the payment or agreement to pay had been made. Moreover, the 1978 Act, which creates the right to contribution, is written in terms of the mere occurrence (or concurrence) of liability in respect of the same damage. There is no apparent need for that liability to have been established. On the contrary, section 1 of the 1978 Act makes clear that a person may be entitled to contribution even when he has ceased to be liable (subsection (3)) or, following a bona fide settlement, whether or not he is or ever was liable (subsection (4)) . The difference between the 1978 Act's "person liable" and the 1980 Act's "held liable" (under section 10(3)) or "makes or agrees to make any payment" (under section 10(4)) would seem to be clear and deliberate. If the cause of action for a contribution only arose after judgment, award, or payment (made or agreed) , then a defendant could never claim contribution from a co-defendant (or another party joined by him to the claimant's action for the purposes of a claim in contribution) at any earlier stage: but that is something which happens all the time. Rather, section 10 is stating a "special time limit for claiming contribution", as the heading to the section indicates, and the concept of the right accruing is fashioned merely for the purposes of dating the beginning of the two year limitation period.
Thirdly, in the absence of section 10 of the 1980 Act, there may have been a considerable dispute whether the limitation period would have been regulated by analogy by reference to the underlying liability in respect of the same damage, counting from the occurrence of that damage (as section 1 of the 1978 Act would suggest) , or whether on the other hand the limitation period counted only from the ascertainment of the quantum of liability in question by judgment,...
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