Last edited 25 Jan 2016

Contribution and apportionment


[edit] Introduction

Where, by reason of a breach of contract or tort, one or more parties are liable to the claimant for the same damage, the claimant is entitled to recover the whole of their loss against each defendant (See Cassell & Co v Broome). Whilst the courts will make apportionments of loss as between the

defendants they courts will not apportion as between the defendants and the claimant. This rule is important in respect of collateral warranties; for example, if a building defect is caused by the negligent design of two consultants and only one of those consultants has given a collateral warranty, then that consultant may be liable for the whole of the plaintiff’s loss.

If, however the parties' breaches have caused different damage then the defendant's liability will be restricted to the damage for which they were responsible (See Baker v Willoughby).

The Law Reform (Contributory Negligence) Act 1945 empowers a court to apportion damages as between the defendant and the claimant where the claimant's fault has contributed to the damage, for example where defective building works have been negligently overlooked by the architect and negligently overlooked by the employer's Clerk of Works. It would appear that save for one exception, contributory negligence is confined to damages for tortious liability and not damages for breach of contract (See Basildon District Council v J.E. Lesser (Properties) Ltd and Others, and Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Limited). The exception is confined to cases where the breach of contract is co-extensive with a tortious liability for negligence, the latter liability existing independently from the contract (See Forsikringsaktieselskapet Vesta v Butcher and Others, and Bank of Nova Scotia).

[edit] Contribution

As between the defendants, the court is empowered to apportion blame by virtue of contribution awards under the Civil Liability (Contribution) Act 1978.

Section 1(1) of the Act provides that '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)'.

It follows that the courts can apportion blame between several defendants regardless of whether or not the defendants' liability arises from different contracts or from a tortious liability (See Birse Construction Ltd v Hastie). In deciding the issue of liability, section 1(4) provides that a bona fide compromise entered into by the party from whom contribution is sought, shall be conclusive evidence of liability provided that the factual basis for the claim can be established. Section 1(5) of the Act provides that any judgment of a court shall be conclusive evidence of liability.

[edit] Jameson and Another v Central Electricity Generating Board (Babcock Energy Ltd)

In Jameson and Another v Central Electricity Generating Board (Babcock Energy Ltd) the Court of Appeal also distinguished the meaning of the word 'damage' as used in the Act and 'damages' in its normal sense of compensation.

Auld LJ stated:

‘In the Act of 1978 the word 'damage' is not defined, but, in my view, its meaning is plain in the various contexts in which it appears. It is the wrong causing injury ... the scheme of the Act is to provide contribution in respect of "compensation" for "damage".'

The words "the same damage" in section 1(1) refer to "any damage suffered" in that sub-section (See Birse Construction Ltd v Hastie Ltd).

Any liability can be a liability in respect of the same damage: Birse Construction Ltd v. Hastie. Judge Cyril Newman QC held that the 1978 Act provides a remedy regardless of the causes of action giving rise to liability, which allows apportionment between those found to be liable in respect of the same damage. The time at which the party from whom contribution is sought needs to be liable for the purposes of section 1(1) or 1(6) of the Act is the time at which contribution is being sought to be recovered and section 1(3) is not relevant to this test (See Co-operative Retail Services Ltd v Taylor Young and Others).

[edit] J. Sainsbury plc v Broadway Malyan and Ernest Green Partnership Ltd

In J. Sainsbury plc v Broadway Malyan (a firm) and Ernest Green Partnership Ltd, Sainsbury brought proceedings against its architect, Broadway Malyan, for breach of contract and negligence in design of a compartment wall with less than two hours fire resistance. A fire broke out and Sainsbury alleged that had the compartment wall been properly designed, the fire brigade could have prevented the fire spreading to the main sales area in the store. Sainsbury claimed damages for the costs of reinstatement of the whole building. Broadway settled its claim and then brought third party proceedings against Ernest Green Partnership, the engineers, claiming 50% of contribution under the 1978 Act. Ernest Green contested the reasonableness of the settlement on the grounds that Sainsbury's claim was for the loss of a chance to contain the fire and should be discounted by the percentage prospect of success of the chance.

In J. Sainsbury plc, the court held that the word "damage" in sub-sections (1) and (4) of section 1 of the Act was not only concerned with liability for loss and did not preclude a person from whom contribution was being sought of asserting that:

  1. the person claiming contribution paid too much, or
  2. that in assessing contribution the party liable to contribute should not be required to pay compensation for elements of the payment for which that person could never have been held liable had they been sued directly.

The court also stated the elements in a claim for contribution as:

  1. the facts relied upon against the party seeking contribution, would, if established, have rendered that party liable in law for some loss,
  2. the party has made a payment in respect of that loss,
  3. the party from whom contribution is sought, is liable in respect of the same loss.

The essential elements are liability and common damage. For example, A is the consulting engineer for a project and B the specialist services consultant. A enters into a collateral warranty with C but B does not. As a consequence of negligence on the part of both A and B in the design of the mechanical services, the heating installation is incapable of achieving the required outputs. The benefit of the collateral warranty has been assigned to D, the tenant in occupation. D brings proceedings against A under the collateral warranty but has no right to bring proceedings against B, either in contract or in tort as D's loss is purely economic. In these circumstances, whilst B is clearly blameworthy, A will have to pay the whole of the damages to D and will have no right of contribution from B. If however A and B's design faults had caused a heating boiler to explode destroying the building, whereby B had a tortious liability to D, then A would have rights of contribution against B.

[edit] Royal Brompton Hospital National Health Trust v Hammond and Others (No3)

In Royal Brompton Hospital National Health Trust v Hammond and Others (No3), the Court of Appeal rejected a claim by architects for contribution against the main contractor on the grounds that the employer's claim against the architect was that the architect's behaviour had weakened or impaired the employer's prospect of success or increased the prospect of defeat in an arbitration brought by the contractor, whereas the employer's claim against the contractor was for damages for delayed completion. Accordingly the damage was not the "same damage" as required by the Act. The court held that it was necessary to distinguish between cases of negligent failure by an architect to condemn and require rectification of defective work where the damage might on both cases be regarded as defective building for which it could be said that the contractor and architect were liable in respect of the same damage. In the present case the damage caused by [the contractor's] breach of contract (if any) was the failure to provide the building on time. The damage caused by [the architect] was impairment of the ability to obtain financial recompense in full from [the contractor] for damage of a different kind, and contribution was therefore not available.

Section 1(3) of the Act provides that contribution may be recovered from someone who has 'ceased to be liable' thus preserving the rights of contribution where the party from whom contribution is sought could prior to the Act have pleaded a limitation defence or a settlement. The Act therefore reverses the decisions of Wimpey & Co Ltd v BOAC, and in Harper v Gray and Walker. (See also Jameson and Another v Central Electricity Generating Board (Babcock Energy Ltd).

Section 2(1) provides that the courts are to assess contribution on the basis of what is just and equitable having regard to the extent of the person's responsibility for the damage in question. Further, by section 2(3) the court must give effect to any limitation of liability clause contained in any relevant agreement.

In Equitable Debenture Assets Corporation v William Moss Group Ltd and Others, the Official Referee gave separate apportionments of liability in respect of design and workmanship problems arising from defects in curtain walling. In respect of the design he apportioned 25% to the architect and 75% to the specialist sub-contractor. In respect of workmanship, he put 5% against the architect, 15% against the main contractor and 80% against the sub-contractor. Another example of an apportionment is the case of Lames London Estates Ltd and Others v North Herts District Council and Others, where the apportionment in respect of defective foundations was 32.5% to the architect and 22.5% each to the local authority, the original developers and the specialist sub-contractor. See also Saipem SpA & Conoco (UK) Ltd v Dredging VO2BV and Geosite Surveys Ltd (the ‘Volvox Holandia) (No 2) for an illustration of an assessment of contribution and the available parties.

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