Co-operative Retail Services Limited v. Taylor Young Partnership and Others

Contribution under sections 1(1) and 6(1) of the Civil Liability (Contribution) Act 1978 requires the injured person to be entitled to recover compensation from the proposed contributor for the same damage. Contracting parties may displace ordinary liability through a joint-names insurance and risk-allocation scheme. Where the contract imposes a duty to reinstate insured works, but excludes a right to compensation for the fire damage and associated delay, the contractor is not liable for that damage within the Act.

A claim arising from a later failure to insure or reinstate concerns distinct damage and cannot support contribution for the original fire damage.

Co-operative Retail Services Limited v Taylor Young Partnership and Others concerned fire damage to an office building before practical completion. The employer claimed against its architects and consulting engineers. They sought contribution from the main contractor and electrical sub-contractor under the Civil Liability (Contribution) Act 1978.

The employer, contractor and sub-contractor were co-insured under a contractors' all-risks policy. The contract required the contractor to reinstate fire damage using the insurance proceeds and allocated delay losses between the contracting parties.

Judge Wilcox determined a preliminary issue against the contribution claim. The Court of Appeal affirmed that decision in [2000] 2 All ER (Comm) 865. The central question was whether the contractual scheme left the contractor or sub-contractor liable to compensate the employer for the fire damage, so that contribution could be recovered from them.

1. Disposition. The House of Lords unanimously dismissed the appeal. Lord Hope delivered the principal speech. Lord Bingham and Lord Rodger gave concurring reasons, while Lord Mackay and Lord Steyn agreed that the appeal should be dismissed.

2. Statutory gateway. Per Lord Hope and Lord Rodger, sections 1(1) and 6(1) of the Civil Liability (Contribution) Act 1978 permit contribution only from a person from whom the injured party is entitled to recover compensation for the same damage. A contractual obligation to restore damaged work is not an obligation to pay compensation for the damage which caused the need for restoration.

3. Contractual allocation of fire risk. Per Lord Hope, the effect of the main contract and sub-contract depended on their proper construction. The clauses expressly excluded liability for fire damage to the works before practical completion. They substituted a joint-names insurance and reinstatement regime for the ordinary rules governing compensation for negligence or breach of contract. The contractor had to restore the works with due diligence. The employer had to apply the insurance proceeds towards that work, and the contractor could claim no other payment for it.

4. Delay and contribution. Per Lord Hope and Lord Bingham, fire entitled the contractor to an extension of time, while the contract gave no entitlement to additional loss and expense. Each contracting party therefore bore its own delay losses. Since neither the contractor nor the sub-contractor was liable to compensate the employer for the fire damage or delay, they were not persons liable for the same damage as the architects or engineers. No contribution could be recovered from them.

5. Distinct later breaches. Lord Bingham, Lord Hope and Lord Rodger reasoned that a failure to maintain insurance or perform the reinstatement obligation could generate a separate damages claim. Such damages would arise from the later failure and would not concern the same harm or wrong as liability for causing the fire.

6. Timing, obiter. Lord Hope would have held that liability for contribution is ordinarily assessed when contribution is sought. Section 1(3) creates a limited exception where liability has subsequently ceased. Lord Bingham and Lord Mackay agreed with that conclusion, although it was unnecessary to dispose of the appeal.

7. Co-insurance, obiter. Lord Hope regarded the contractual intentions of co-insured parties, including an implied term where necessary, as the satisfactory basis for preventing claims between them concerning the insured risk. He preferred that explanation to circuity of action. The point did not require determination because the contractual construction issue disposed of the appeal.

1. House of Lords: On 25 April 2002, the House unanimously dismissed the appeal in [2002] UKHL 17 and upheld the determination that no contribution was recoverable from the contractor or sub-contractor.

2. Court of Appeal: On 4 July 2000, Peter Gibson, Brooke and Robert Walker LJJ dismissed the architects' and engineers' appeal and affirmed the preliminary determination. The decision is reported at [2000] 2 All ER (Comm) 865.

3. Technology and Construction Court: On 21 December 1999, Judge Wilcox decided the preliminary issue by holding that the architects and engineers could not maintain their contribution claims against the contractor or sub-contractor.