Birse Construction Ltd v Haiste Ltd
| Jurisdiction | England & Wales |
| Judge | SIR JOHN MAY,LORD JUSTICE ROCH,LORD JUSTICE NOURSE |
| Judgment Date | 05 December 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J1205-5 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBENF 95/0621/C |
| Date | 05 December 1995 |
[1995] EWCA Civ J1205-5
His Honour Judge Newman QC
Before Lord Justice Nourse Lord Justice Roch Sir John May
QBENF 95/0621/C
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MR R GRAY (Instructed by Fenwick Elliott, London WC2R OHS) appeared on behalf of the Appellants.
MR R AKENHEAD QC and MR A WILLIAMSON (Instructed by Alastair Thompson & Partners, London WC2B 5LX) appeared on behalf of the Defendants.
SIR JOHN MAYThe parties to this litigation comprise the Plaintiff (Birse), a building and civil engineering contractor who in February 1988 was awarded a contract after tender by Anglian Water Authority for the design and construction of a reinforced concrete storage reservoir and associated building and engineering works at Sutterton in Lincolnshire (the Sutterton Reservoir Project). The Defendant company (Haiste) are a firm of consulting engineers and were retained by Birse to act as its consulting engineers in the preparation of the tender for and the design of the Reservoir Project. The Second Third Party (Newton) was employed by Anglian and appointed by it as the "Engineer" for the purpose of the contract with Birse and as the "Construction Engineer" for the purpose of section 7 of the Reservoirs Act 1975 to issue all necessary Certificates. Birse thereafter purported to construct and complete the Reservoir but it proved to be defective. In the result Anglian made a claim against Birse in respect of the defective reservoir and its consequential losses. This claim was settled by an agreement between Anglian and Birse under which inter alia it was agreed that the original Reservoir as constructed could not be adequately repaired or replaced and that Birse should at its own expense construct a new reservoir and associated works.
In due course, by a Writ issued on the 11th October 1993, Birse sued Haiste for damages for the loss and damage which it had suffered in the circumstances I have outlined. A Statement of Claim was served by Birse on Haiste on the 28th February 1994. On the 6th June 1994 Haiste served a Third Party Notice on Newton claiming contribution from him pursuant to section 2 of the Civil Liability (Contribution) Act 1978 on the ground that he was a person liable in respect of the same damage as Haiste to Birse, by reason of Newton's alleged breach of contract and negligence.
On the 7th September 1994 Newton issued a Summons in the action under Order 14A of the Rules of the Supreme Court, which provides machinery for the determination summarily of a question of law or construction arising in the course of litigation which would or might finally determine the liability of Newton to Haiste in the Third Party proceedings to which I have referred. To this end the Summons asked inter alia for the determination of this question:-
Can any liability of Newton to Anglian be a liability in respect of the same damage of Haiste to Birse within the meaning of that term in the 1978 Act?
The Summons originally asked two further questions but before it came to be heard it was conceded that in the light of the affidavit evidence filed these were not suitable for determination under Order 14A as issues of fact to be tried were raised. It was agreed, however, that the first question was suitable for determination as this could, in one event, finally dispose of the litigation.
The Summons came before His Honour Judge Cyril Newman QC as Official Referee's business on the 25th November 1994. After taking time to consider his judgment, the latter handed this down on the 30th March 1995. The learned Judge answered the one question in the affirmative. After argument he then gave Newton leave to appeal, after ordering him to pay Haiste's costs of the Order 14A application in any event. Notice of Appeal was given on the 19th April 1995 and we heard submissions therein on the 1st and 2nd November 1995.
The appeal raises a novel point under section 1(1) of the 1978 Act upon which neither party has so far been able to find any authority. The material provisions of the Act are as follows:-
"1. —(1) Subject to the following 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) A person shall be entitled to recover contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, provided that he was so liable immediately before he made or was ordered or agreed to make the payment in respect of which the contribution is sought.
….
(4) A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or no he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.
….
2. —(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.
….
(3) Where the amount of the damages which have or might have been awarded in respect of the damage in question in any action brought in England and Wales by or on behalf of the person who suffered it against the person from whom the contribution is sought was or would have been subject to -
(a) any limit imposed by or under any enactment or by any agreement made before the damage occurred;
(b) any reduction by virtue of section 1 of the Law Reform (Contributory Negligence) Act 1945 or section 5 of the Fatal Accidents Act 1976; or
(c) any corresponding limit or reduction under the law of a country outside England and Wales;
the person from whom the contribution is sought shall not by virtue of any contribution awarded under section 1 above be required to pay in respect of the damage a greater amount than the amount of those damages as so limited or reduced.
….
6. —(1) A person is liable in respect of any damage for the purposes of this Act if the person who suffered it (or anyone representing his estate or dependents) is entitled to recover compensation from him in respect of that damage (whatever the legal basis of its liability whether tort, breach of contract, breach of trust or otherwise).
The argument on behalf of Haiste before the learned Judge, which he accepted, contended that the "damage" with which this litigation is concerned was in substance the defective condition of the Reservoir and the need to replace it. Although one can draw a distinction, as does the Notice of Appeal before us, between the damage suffered by Anglian, which at most could be the loss of the benefit and use of the new reservoir which they had contracted with Birse to design and construct, and/or with Newton to oversee, on the one hand and that suffered by Birse, which was the cost to it of rebuilding the reservoir, the ancillary losses which went with that necessary requirement and were not too remote and such matters as were referred to under the term of the settlement agreement between Birse and Anglian on the other hand, nevertheless each is properly to be considered as having been "in respect of" the underlying "damage" to which I have referred. The phrase "in respect of" is a broad one, the argument stresses.
The learned Judge went on to hold that as a matter of construction the 1978 Act provided a remedy regardless of the causes of action giving rise to the liability. Regardless, that is, of the nature of the respective causes of action as well as of the identity of the person liable in respect of the same damage. In other words, on a proper construction of the Act, the "same damage" referred to in section 1(1) did not necessarily mean damage suffered by the same person. In his judgment below the Judge said:-
"To hold otherwise would require the words 'to that person' to be inserted after the word 'liable' and before the words 'in respect of the same damage' in section 1(1) of the 1978 Act. Those words are not there, and if they were, they would be contrary to the patent intention of the Act, namely to make provision for contribution between persons liable for the same damage."
With respect to the learned Judge it might be said that the last sentence in that passage from his judgment tended to beg the question in issue. Nevertheless it is apparent from the respective arguments and from his judgment that in his view for the purposes of section 1(1) of the Act the relevant "damage" could be the same even though not suffered by the same person.
Bearing in mind Haiste's contention that the nature of the two potential causes of action which might give rise to an entitlement to contribution can be disregarded, and to overcome a serious obstacle to Haiste's general argument, namely the difficulty of showing that...
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