Aer Lingus v. Gildacroft (CofA)
If a case goes to a split trial, so that a judgment on liability is given before the actual damages are assessed when does the two-year limitation period start to run for the purposes of any contribution claim against a third party? The High Court held it runs from the judgment on liability, but the Court of Appeal disagreed. Time does not begin to run until the quantum of the tortfeasor's liability has been ascertained by judgment or award or agreement.
DMC Category Rating: Developed
This case note is based on an Article in the February 2006 Edition of the ‘(Re)insurance Bulletin’, published by the Insurance/Reinsurance teams at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website
In February 2004, Aer Lingus began proceedings against the first and second defendants under the 1978 Act. The defendants, however, pleaded that the claim was time-barred because the two-year time limit ran from the date of the judgment on liability. Aer Lingus maintained that the trigger date was the date on which the actual amount of damages was assessed, as this determined how much it could claim in the contribution proceedings.
Under section 10(1) of the Limitation Act 1980, contribution claims cannot be brought "after the expiration of two years from the date on which the right accrued". If a person is "held liable" in respect of that damage by a court judgment or an arbitration award "the relevant date shall be the date on which the judgment is given or the date of the award as the case may be" (section 10(3). The sub-section goes on to state that, for the purposes of time running, no account is taken of any judgment or award given or made on appeal, insofar as it varies the amount of damages awarded.
Under section 10(4), where a person pays or agrees to pay compensation for the damage (whether he admits liability or not) "the relevant date shall be the earliest date on which the amount to be paid by him is agreed…"
At first instance, the judge held that time ran from the date of the judgment on liability. Since these contribution proceedings were issued over two years after that judgment on liability, Aer Lingus' claim was time-barred.
Section 10 provides a special time limit for claiming contribution and introduces as the trigger, not the occurrence of the underlying damage, but the date of judgment, award or payment (made or agreed).
The statement in section 10(3) that, for the purposes of limitation, no account would be taken of a subsequent appeal insofar as it varied the amount of damages, suggested that the trigger date for a judgment or award is the decision on quantum. Otherwise, there would be no need to stress that a later change in quantum would have no effect on the running of time. This was consistent with the provision for settlement in 10(4), where the trigger is the earliest date the amount to be paid was agreed.
Aer Lingus' claim was, therefore within the limitation period, the contribution proceedings having been issued within two years of the date damages were ascertained.
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