Summary

A CPR Part 20 claim for a contribution was allowable where the parties were each liable for the same damage even though the nature of the parties' liability differed.

Facts

Appeal by the claimant ('H') from a decision of the High Court striking out a Part 20 claim by the defendant ('M&G'). The issue concerned the circumstances in which a defendant is entitled to seek a contribution from another under s.1(1) Civil Liability (Contributions) Act 1978. H, a developer, had carried out building works which suffered subsidence as a result of poor foundations. H compensated its client for the remedial works and claimed against M&G, an insurance broker, for negligently failing to arrange the appropriate insurance policy requested by H. M&G brought a Part 20 claim against the respondent ('B'), claiming that B was liable for H's loss in failing to advise properly on the methods used in constructing the foundations, and that B was liable to make a contribution to M&G under s.1(1) of the Act on the ground that B's negligence related to the same damage. H successfully applied for the striking out of M&G's Part 20 claim and this was the subject of the present appeal by M&G. MGA contended that s.6(1) of the 1978 Act makes it clear that contribution may be sought even though the liability of the parties does not arise from the same cause of action. The simple issue should be: are they liable in respect of the same damage? B argued that a party cannot be liable under the 1978 Act unless it has in some sense caused the damage for which the other party is liable.

Held

The damage for which M&G was liable was the compensation paid by H to its client and the damage for which B was liable was that same compensation. The court applied the "mutual discharge of liability" test in Eastgate Group Ltd v Morden Group Inc (2001) EWCA Civ 1446. A contribution by B would reduce the liability of M&G and vice versa. Had there been an insurance policy in existence, covering H, B's liability would not have been reduced by any payment made by the insurer under the policy. Accordingly, s.1(1) of the Act had been satisfied and M&G was entitled to seek a contribution or indemnity from B.

Appeal allowed. Part 20 claim restored.