HURSTWOOD DEVELOPMENTS LTD v MOTOR & GENERAL AND ANDERSLEY & CO INSURANCE SERVICES LIMITED AND ANOTHER

For contribution under section 1(1) of the Civil Liability (Contribution) Act 1978, parties may be liable for the same damage even though their liabilities arise from different causes of action. “Damage” means the harm or loss suffered, not the damages awarded or the measure used to quantify it.

The mutual discharge test is a valuable method of determining whether liabilities concern the same damage. Ordinarily, if payment by either party would reduce or extinguish the other’s liability to the claimant, the statutory requirement is satisfied. The test is not a substitute for the statutory wording, but will normally be sufficient.

Hurstwood Developments brought negligence and contract claims against insurance brokers for failing to procure appropriate insurance cover. The alleged loss comprised the cost of remedial works and associated expenditure following subsidence caused by defective foundation advice from H. B. Boring & Co Ltd.

The brokers brought Part 20 proceedings seeking contribution or an indemnity from H. B. Boring under section 1(1) of the Civil Liability (Contribution) Act 1978. The deputy High Court judge struck out the claim, holding that the parties were not liable for the same damage. The appeal concerned the proper construction of “the same damage” and whether the pleaded liabilities satisfied that requirement.

1. Appeal allowed. The Part 20 claim was restored, with costs here and below. The respondent was ordered to repay £19,000 with interest.
2. Section 1(1) of the Civil Liability (Contribution) Act 1978 does not require the parties’ liabilities to arise from the same cause of action. Section 6(1) confirms that liability may arise in tort, contract, breach of trust or otherwise. The expressions “damage” and “damages” are distinct; damage refers to the harm or loss, whereas damages are the compensation quantified for it.
3. The statutory phrase “the same damage” should receive a broad and practical interpretation. Different descriptions of the loss, reflecting different causes of action, are not conclusive. Section 2(1), concerning responsibility and apportionment, cannot rewrite section 1(1) as requiring each party to have caused the same damage in a narrow causal sense.
4. The mutual discharge test stated in Howkins and Harrison v Tyler and applied in Eastgate Group Ltd v Lindsay Morden Group Inc asks whether payment by either party would reduce or extinguish the other party’s liability to the claimant. It is a valuable method of identifying the same damage and will normally be sufficient, although it does not replace the statutory words.
5. On the pleaded facts, payment by H. B. Boring would reduce the brokers’ liability, and the respondent conceded that payment by the brokers would likewise reduce H. B. Boring’s liability. Both liabilities therefore related to Hurstwood having to meet from its own resources the cost of compensating Camfil for the subsidence. The section 1(1) requirement was satisfied.

• High Court: HH Judge Gilliland QC, sitting as a deputy High Court judge, struck out the brokers’ Part 20 claim.
• Court of Appeal (Civil Division): the appeal was allowed. The striking-out order was set aside and the Part 20 claim restored.