Contribution claims – a tip for the future
Accept certain inalienable truths: prices will rise, politicians will philander and contribution claims will continue to crop up in construction litigation.
As such, I thought it would be worth recapping a key principle of contribution claims: same damage.
Section 1(1) of the Civil Liability (Contribution) Act 1978 provides that, in to recover a contribution from another party, that party must be liable for the same damage:
“…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).”
You might think that the term “same damage” is obvious and not worthy of its own blog, let alone judicial ink. But you would be wrong.
Considering situations where the claim is not for the same damage may help illustrate the differences in damage that can arise, and what to look out for:
- Different kinds of harm: delay caused by a contractor and an extension of time wrongly given by a contract administrator are not the same damage: Royal Brompton Hospital NHS Trust v Hammond1.
- Physical defects as opposed to financial loss: Birse Construction Ltd v Haiste2. In this case, the two (different) types of damage suffered were physical defects in a reservoir and the financial loss of having to construct a second reservoir. Roch LJ summarised his reasoning and conclusion:“The word ‘damage’ in the phrase ‘the same damage’ in section 1(1) does not mean ‘damages’.”
- A building contractor who builds a defective building is not liable for the same damage as an insurer. The former was liable for the damage suffered as a result of the defects, whereasthe insurer could only be liable for financial loss under the policy: Bovis Construction Ltd v Commercial Union3.
It is worth noting that one party may be liable for only some of the damage suffered, whilst the other may be responsible for the whole. This part can still be the same damage. And there are many situations where the parties are responsible for the same damage. That said, if your client is facing a contribution claim, my advice would be to check whether it really is for the same damage.
1. Royal Brompton Hospital NHS Trust v Hammond [2002] UKHL 14.
2. Birse Construction Ltd v Haiste [1996] 1 WLR 675.
3. Bovis Construction Ltd v Commercial Union Assurance Co Plc [2001] 1 Lloyd’s Rep 416, David Steel J.