Aer Lingus v. Gildacroft

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Note: the judgment in this case has been overruled by the Court of Appeal. To access the note on the Court of Appeal decision, click here. Editor, 4 May 2006

DMC/INS/05/15
Aer Lingus v Gildacroft Ltd and Sentinel Lifts Ltd
English High Court: Simon J.: [2005] EWHC 1556 (QB): 24 June 2005
M Porter, instructed by Beachcroft Wansborough, for Aer Lingus
J Harvey, instructed by Kennedys, for the first defendant, Gildacroft
A Heathcote-Williams appeared for the second defendant, Sentinel Lifts
LIMITATION: LIMITATION ACT 1980: CONTRIBUTION: CIVIL LIABILITY (CONTRIBUTION) ACT 1978: WHETHER LIMITATION PERIOD RUNS FROM DATE OF JUDGMENT DETERMINING LIABILITY: WHETHER LIMITATION PERIOD RUNS FROM DATE ON WHICH AMOUNT OF DAMAGES FINALLY DETERMINED
Summary
The issue in this case was the date from which the two year limitation period under the 1980 Limitation Act runs in a case where a party is seeking contribution from a third party under the Civil Liability (Contribution) Act, 1978. The judge held that, where the original dispute goes to a split trial and judgment is given on liability with damages to be assessed at a later hearing, time runs from the date of the first judgment (on liability) and not from the date on which the amount of damages is finally determined

DMC Category Rating; Confirmed

This case note is based on an Article in the August 2005 Edition of the ‘(Re)insurance Bulletin’, published by the Reinsurance and Insurance teams at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website.

Background
Under section 10 of the Limitation Act 1980, a person who has the right to claim a contribution from another under the Civil Liability (Contribution) Act 1978, must do so within two years of that right accruing. The right arises when the person is held liable by "a judgment in any civil proceedings" or by an arbitration award. In cases where the original dispute is settled (with or without admission of liability), the relevant date is the earliest date on which the amount of compensation to be paid is agreed.

On 27 January 1998, while working for Aer Lingus, William Smythe was injured when a document lift supplied and installed by the first and second defendants malfunctioned and trapped his left wrist. He sued and, on 9 May 2001, obtained judgment against Aer Lingus for damages to be assessed. By consent order dated 3 October 2003, the amount was agreed at £490,000 plus costs.

In February 2004, Aer Lingus began proceedings against the first and second defendants under the Civil Liability (Contribution) Act 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.

Judgment
The judge disagreed. Section 1 of the 1978 Act provides that (subject to the provisions of the section) "any person liable in respect of any damage suffered by another person may recover contribution from any person liable in respect of the same damage (whether jointly with him or otherwise)…". Recovery can be claimed under the Act whatever the legal basis of the other person's liability, provided it is in respect of "the same damage"(Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397).

But "damage" is not the same as "damages". There is nothing in the Act to suggest that liability for damage requires the amount of damages to be determined first. The relevant date is the date of the judgment on liability. If the contribution proceedings come on for hearing before the issue of damages is decided, the court can either grant an indemnity or make an order that the defendant bear a proportion of the damages yet to be assessed. In this case, the contribution proceedings were issued over two years after the judgment on liability and so Aer Lingus' claim was time-barred.

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