A guide to getting a grip on those contribution claim confusions
Defendants to litigation can choose to pay up, or not, as we saw recently (AJ 1/8.8.02). If they decide to remain in the frame, they need not necessarily face the music alone. They can scout around to see if there is anyone else potentially liable in respect of the claimant's claim.
At the beginning of the last century this was not an option open to them. Design and build contractors (if they had such things in the early 1900s) might have found themselves bearing the full brunt of the building owner's claim for defective foundations, even though their consulting engineers had clearly mis-calculated.
In 1935, a piece of legislation that rejoiced in the title of the Law Reform (Married Women and Tortfeasors) Act introduced for the first time the statutory right for defendants to claim a contribution towards their liability from others. The right was only available in actions in tort and then only to defendants who could establish that they were actually tortfeasors, that is, that they had some liability to the claimant.
Ironically, if the defendants were blameless, there would have been no liability to pass on and so they found themselves, unusually for defendants, trying to establish that they were in fact liable to the claimant.
The Law Commission recognised that the conventions of civil litigation ought not to be turned on their head in this way and recommended further legislation. It ultimately appeared as the more appropriately entitled Civil Liability (Contribution) Act 1978. The Contribution Act had the basic intention of enabling a defendant to claim a contribution from another party liable to a claimant in respect of the same damage. But never has such a purportedly straightforward piece of legislation caused more furrowing of confused brows and tearing out of hair.
The apparently simple notion of being 'liable for the same damage' has given rise to a raft of litigation including Birse Construction v Haiste Ltd (1995) in which the design and build contractor accepted that it had constructed a reservoir that leaked, and agreed to remedy it at no cost to the water company employer. Birse claimed the remedial costs from its engineer, Haiste, which sought a contribution from the water company's own project manager. The Court of Appeal distinguished between the 'damage' for which Birse was liable and the 'damages' for which Haiste was liable. They were not the 'same damage' as required by the Act, and so the contribution claim failed.
A similar point was argued successfully in the recent House of Lords case of Royal Brompton Hospital v Hammond (2002). Although the contractor had responsibility for drying out the floor slabs, when it became apparent that they would not dry out for some considerable time, the architects issued an instruction to lay a damp proof membrane and gave the contractor its costs of doing the work together with an extension of time. Both had considerable financial consequences. The hospital claimed against the architects, alleging that the instruction and the extension were given negligently. The architect claimed a contribution from the contractor on the basis that it was equally liable to the hospital.
The court disagreed and held that the hospital's claim against the contractor was for delay and disruption whereas its claim against the architect was for negligent certification: they were not the same.
So how can defendants establish whether there is someone also liable for the claim made against them? In Howkins & Harrison v Tyler (2001), the court proposed the 'mutual discharge test'which involved assessing whether any contribution made by one potential defendant reduced the liability of the other, and vice versa.
This test was considered in Brompton but not wholly endorsed. Instead, the law lords said, just ask these simple questions:
What damage has A suffered?
Is B liable to A in respect of that damage?
ls C also liable to A in respect of that damage or some of it?
And, of course, when it is put like that, it is difficult to see why there has ever been any trouble with contribution claims at all.