Aer Lingus v. Gildacroft (CofA)

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Aer Lingus v (1) Gildacroft Ltd (2) Sentinel Lifts Ltd
English Court of Appeal: Sir Anthony Clarke MR, Rix and Moore-Bick LJJ: [2006] EWCA Civ 4: 17 January 2006
Michael Pooles QC and Martin Porter, instructed by Beachcroft Wansbrughs, for Are Lingus
Jonathan Harvey, instructed by Kennedys, for Gildacroft
Nick Heathcote Williams, instructed by John A Neil, for Sentinel Lifts
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

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 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.

The Acts
Section 1 of the Civil Liability (Contribution) Act 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" (which is not the same as the same damages) (Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397).

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.

The Court of Appeal disagreed. It acknowledged that the words "held liable…by a judgment" strongly suggested the crucial date is the judgment on liability but, nevertheless, the wording of section 10 of the Limitation Act pointed towards the trigger being the judgment on quantum.

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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