04 December 2014

A defendant may often find that another person caused or contributed to the loss which the claimant is trying to recover from it. If so, the defendant will want to seek a contribution from that third party for the payment of any damages the claimant is awarded or towards any settlement.

In principle, the defendant has two main options. It can either join the third party into the main proceedings or it can wait to see if the claimant is successful and then, if it is, commence a further contribution claim against the third party.

Joining the third party to the main claim removes the need for issuing separate proceedings and ensures that the third party is part of the debate. This is the “Part 20 Procedure” and results in the question of contribution being heard as part of the same set of proceedings as the main claim. This can mean that a contribution to settlement funds will be available, bring forward the time at which any contribution from the third party is actually paid (meaning that the defendant does not need to carry the whole liability pending further proceedings) and bring another party to court whose main interest is to defeat the claimant’s claims.

However, it may also increase the costs in the short term (as there are three or more parties participating in the dispute), introduce another ‘front’ on which to fight and potentially lead to ‘cut-throat’ defences where each defendant tries to blame the other. Also, if the judge decides that the claimant’s claim fails then the defendant may (despite having won) become liable for the costs of the third party whom it dragged into the proceedings (a recent case on this is Wagenaar v Weekend Travel Ltd t/a Ski Weekend).

The alternative is to wait for judgment and then, if held liable for the claimant’s loss, issue fresh proceedings for contribution against the third party under the Civil Liability (Contribution) Act 1978. This delays the time at which a contribution can be expected and requires a whole new set of proceedings. The third party may also raise arguments that the initial defendant should have run the main claim differently or should/ should not have settled it.

However, as a recent Court of Appeal case demonstrates (Chief Constable of Hampshire v Southampton CC)http:, claims under the Civil Liability (Contribution) Act are subject to special limitation periods and the defendant will have to issue proceedings against the third party within two years from either the date of judgment in the original claim; or from the date on which the main proceedings settled.

In each case, the defendant will need to undertake a thorough case assessment in order to establish whether the appropriate course of action is to issue a Part 20 claim in the original proceedings, or bring a separate action after the main claim concludes.

The author Rupert Hyde is a member of Burges Salmon’s Disputes team led by David Hall.

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David Hall Partner

  • Dispute Resolution
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