Hurstwood Developments Ltd v Motor and General & Andersley & Company Insurance Services Ltd
| Jurisdiction | England & Wales |
| Judge | LADY JUSTICE HALE,THE PRESIDENT |
| Judgment Date | 21 November 2001 |
| Neutral Citation | [2001] EWCA Civ 1785 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2001/0129 |
| Date | 21 November 2001 |
[2001] EWCA Civ 1785
The President
Lady Justice Hale and
Lord Justice Keene
Case No: A1/2001/0129
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
(ORDER MADE BY HH JUDGE GILLILAND Q.C.
(SITTING AS A JUDGE OF THE HIGH COURT)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr S. Berry Q.C. and Mr E. Johnson (instructed by Williams Davies Meltzer for the Claimant Mr S. Furst Q.C. and Mr M. Rowlands (instructed by Berwin Leighton Paisner for the Respondent)
As Approved by the Court LORD JUSTICE KEENE.:
This is an appeal from an order of His Honour Judge Gilliland, Q.C. sitting as a Deputy Judge of the High Court, whereby he struck our a Part 20 claim brought by the defendant in the action. The issue in this appeal concerns the circumstances in which a defendant is entitled to seek a contribution from another person under Section 1(1) of the Civil Liability (Contribution) Act 1978 ("the 1978 Act"). That sub-section provides as follows:
"Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover a contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise)".
The issue arises in the following way. The claimant in the action is a builder and developer known as Hurstwood Developments Limited ("Hurstwood"). It contracted with Camfil Limited to design and build a factory and offices on a site in Lancashire. Hurstwood engaged a company called H.B. Boring and Company Limited ("HHB") to provide site investigation services and to report on the site. According to the pleadings in the case, which for present purposes are to be assumed to be well founded, HBB concluded that the most economic method of providing the foundations for the development was a vibro flotation process. It is alleged that Hurstwood duly employed that process but that, in the course of development, subsidence occurred, with the result that the factory premises was seriously weakened. Prima facie Hurstwood premises built in a good and workmanlike manner and fit for use.
Hurstwood consequently had to carry our remedial works on the site at a cost of approximately £500,000 and, it is alleged. It incurred a number of other expenses in connection with the failure of the foundations. It brought proceedings against the defendant, Motor and General and Aldersley and Company Insurance Services Limited ("MGM"). As the name may suggest, MGA are insurance brokers, Hurstwood's case against MGA is very broadly that it gave instructions to them to procure appropriate insurance cover in respect of any liabilities for design work which it might undertake, and that MGA failed to do so, with the result that Hurstwood has had to meet the costs of the remedial work and the other expenditure from its own resources. Therefore Hurstwood claimed against MGA in the main action in negligence and for breach of contract for failing to obtain the appropriate insurance cover.
MGA then issued Part 20 proceedings against HBB. In the Part 20 Particulars of Claim it is alleged that HBB owed a duty of care in both contract and tort to Hurstwood, that HBB was negligent and in breach of the implied terms of its retainer in relation to Hurstwood by proposing the vibro flotation process for the foundations, and that Hurstwood has suffered loss and damage as a result. It is then pleaded that any loss and damage suffered by Hurstwood and claimed against MGA has been caused by the negligence and/or breach of contract on the part of HBB. On that basis it is alleged by MGA that HBB is liable to make contribution or to give an indemnity in respect of any sums which MGA may be liable to pay Hurstwood.
In response to a request for further information about the nature of the damage suffered by the claimant Hurstwood, MGA referred to the heads of loss and damage set out in para.10(7) of the particulars of claim in the action. It then pleaded as follows:
"If, contrary to its case, MGA is found liable or accepts liability for all or any of the alleged loss and damage, MGA claims an indemnity or contribution from the Part 20 Defendant on the basis that the Part 20 Defendant is liable to the Claimant for the same loss and damage; namely the loss and damage alleged in para 10.7. The nature of the alleged damage which gives rise to the contribution claim and leads MGA to seek an indemnity or contribution from the Part 20 Defendant is therefore the loss and damage pleaded in para.10.7"
Paragraph 10.7 of the particulars of claim in the main action was the paragraph where Hurstwood claimed against MGA the costs of the remedial work and its other associated expenditure. Judge Gilliland rightly observed that "on the face of the pleadings the defendant is seeking to recover from the Part 20 defendant pound for pound the damages which are sought as against the defendant by the claimant".
The contribution which was sought by MGA was and is sought under section 1(1) of the 1978 Act, the terms of which have been set out at the beginning of this judgment. Under that provision contribution may only be recovered from a person who is
"liable in respect of the same damage (whether jointly with him or otherwise)".
HBB applied to strike out the Part 20 claim against them on the basis that they were not liable for the same damage as MGA. It was said that the damage suffered by Hurstwood in respect of the alleged negligence by HBB was not the same damage as that suffered by Hurstwood as a result of the alleged negligence of MGA. That, in essence, is the short point which arises on this appeal.
Judge Gilliland analysed with considerable care a number of the leading authorities on this topic, although he did not have available to him a more recent decision of the Court of Appeal in Eastgate Group Ltd v Lindsay Morden Group Inc. [2001] EWCA Civ 1446. He noted that the cases drew a distinction between "damage" as used in section 1(1) and "damages", and that section 6(1) of the 1978 Act clearly distinguished between the compensation, which flowed from the damage, and the damage itself. He then identified the damage for which Hurstwood was seeking to make MGA liable in the main action as being the absence of insurance cover. His judgment then continues: -
"That is quantified by reference to the remedial works, but the remedial works themselves are in no way the damage caused by the defendants. The defendant simply has nothing to do with the carrying out of the construction works on site. It does seem to me that there has to be some causal relation in relation to the damage in that both the person seeking to recover contribution must have caused the damage and the person against whom contribution is sought must also have caused that damage."
Judge Gilliland observed that there was no causal relationship between any acts of omissions of MGA and the situation in which Hurstwood found itself "vis-à-vis the state and condition of the premises and [its] legal liability in respect of it." The claim against MGA was based on the absence of insurance cover, to which Hurstwood could have had recourse, irrespective of any negligence on the part of HBB. He then concluded that HBB had not contributed to that loss, that the claim against MGA was for a very different kind of damage from that forming the basis of the claim against HBB, and that therefore MGA's Part 20 claim should be struck out.
MGA now challenge that decision. On their behalf, Mr Berry, QC, emphasises that section 6(1) of the 1978 Act makes it clear that contribution may be sought even though the liability of the two parties does not arise from the same cause of action. It is submitted that the judge was wrong to approach the issue on the basis that there had to be some causal relation between the acts and omissions of both parties and the damage suffered. The issue is simply: are they liable in respect of the same damage? The judge was influenced by the reference to !responsibility for the damage" in section 2(1) of the 1978 Act, which deals with the apportionment of contribution on a just and equitable basis, but the Court of Appeal has said in Friends' Provident Life Office v Hillier Parker [1997] Q.B. 85 that the operation of section 1(1) is not to be confined to liability arising from breach of duty or default. As that case emphasised, the 1978 Act was intended to be given a wide interpretation.
Mr Berry contends that the damage or harm in the present case suffered by Hurstwood was the same. Hurstwood had to pay from its own resources, "put its hand in its own pocket", to compensate Camfil Limited. That was the result of HBB's negligence over its site investigation and the result of MGA's failure to put in place the requisite insurance. Reliance is placed on the "simple test" propounded by Sir Richard Scott, V.C., in the Court of Appeal case of Howkins and Harrison v Tyler [2001] Lloyds LR: Prof. Neg. 1, at para. 17, namely would payment by either of the parties relieve the other pro tanto of its obligations to the claimant? In the present case it would, and this mutual discharge of liabilities is not merely a necessary condition for contribution under section 1(1) but is also normally sufficient to establish such contribution. The...
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