Co-Operative Retail Services Ltd v Taylor Young Partnership & Ors

For contribution under section 1 of the Civil Liability (Contribution) Act 1978, the relevant question is whether the proposed contributor is liable in respect of the same damage when contribution is sought, subject to section 1(3). A party is not liable for this purpose where the contractual scheme governing the risk means that liability to the claimant could not be established. Joint all-risks insurance may form part of that scheme, particularly where the parties are co-assured and the contract allocates fire losses to insurance rather than inter-party claims. The effect depends on construction of the actual contracts. The court should not use the language of circuity of action as a substitute for analysing those contractual arrangements.

Co-Operative Retail Services Ltd claimed against its architects and mechanical and electrical engineers following a fire during construction of its headquarters. The defendants sought contribution from the main contractor, Wimpey, and the electrical subcontractor, Hall, alleging that the fire resulted from breaches by all concerned.

The Technology and Construction Court decided that neither Wimpey nor Hall was liable in respect of the same damage for the purposes of section 1(1) of the Civil Liability (Contribution) Act 1978. It also refused permission to amend the defence to allege contributory negligence. The defendants appealed. The central issues were the relevant time for assessing liability, the effect of the joint names insurance and contractual allocation of fire losses, and whether the proposed contributory-negligence amendment had any realistic prospect of success.

Appeal dismissed. The application for permission to appeal against refusal to amend the defence was also dismissed. Permission to appeal to the House of Lords was refused.

1. Under section 1(1) of the Civil Liability (Contribution) Act 1978, a person may recover contribution only from another person whose liability in respect of the same damage has been or could be established in an action by the person suffering the damage. The relevant assessment is made when contribution is sought, although section 1(3) preserves liability which has ceased since the damage occurred, subject to its express exception (paras [20], [42]-[47]).
2. The court accepted The Benarty (No 2) [1987] 3 All ER 1032 as correctly decided insofar as section 1(6) concerns the substantive character of liability rather than procedural means of enforcement. It declined, however, to adopt the alternative reasoning that liability existing when the damage occurred necessarily remained sufficient despite later contractual or legal barriers (paras [29]-[45], [84]).
3. The joint names insurance and the JCT contractual provisions allocated the cost of reinstatement and associated professional fees to the insurance fund. They also regulated delay and completion through extensions of time and liquidated damages. On that construction, Wimpey could not be liable to CRS for the Schedule 1, Schedule 2 or Schedule 3 losses, even assuming negligence (paras [48]-[76]).
4. The same contractual framework protected Hall. Its status as a named co-assured, or the contractual requirement that insurers waive subrogation rights, meant that CRS had no recoverable loss for the insured physical damage. The direct warranty did not alter that conclusion. The consequential-loss claim could not independently support a negligence action for pure economic loss (paras [77]-[81]).
5. The court preferred analysis of the contracts to reliance on circuity of action. In the absence of the special contractual scheme, insurance would ordinarily not bar liability or contribution (paras [69]-[73], [82]-[85]). The proposed amendment based on treating a co-insured's fault as the claimant's fault under the Law Reform (Contributory Negligence) Act 1945 had no realistic prospect of success (paras [87]-[90]).

• Court of Appeal (Civil Division): dismissed the appeal from the Technology and Construction Court and dismissed the application for permission to appeal against refusal to amend the defence. Permission to appeal to the House of Lords was refused.
• Technology and Construction Court: HH Judge Wilcox answered all three contribution questions in the negative and refused permission to amend the defence.