Baker & Davies Plc v Leslie Wilks Associates (a firm)

For the purposes of contribution under section 1 of the Civil Liability (Contribution) Act 1978, statutory references to a “payment” can include payment in kind, where the work supplied is capable of monetary valuation. A party may therefore obtain contribution for remedial works carried out at its own expense. The limitation provisions in section 10 of the Limitation Act 1980 regulate when the contribution right accrues; they do not narrow the substantive right created by section 1. A settlement must be a bona fide settlement or compromise of the underlying claim. An agreement merely permitting remedial works, while leaving the claimant’s liability and the risk of failure unresolved, is not such a settlement.

The claimant building contractor sought contribution or an indemnity from its consulting structural engineers under section 1 of the Civil Liability (Contribution) Act 1978. The claimant had arranged and funded remedial underpinning works at a housing development and had made payments connected with losses suffered by the employer.

The court was asked to determine three preliminary issues: when the settlement agreement with the employer was reached; whether that agreement gave rise to a contribution claim; and when time began to run under section 10 of the Limitation Act 1980. The defendant argued that the earlier agreement to carry out remedial works was the relevant settlement and that “payment” meant only monetary payment.

1. Contribution and payment in kind. The primary right under section 1(1) of the Civil Liability (Contribution) Act 1978 is expressed broadly: a person liable for damage may recover contribution from another person liable for the same damage. Subsections (2) to (4) remove possible restrictions or defences; they do not narrow that primary right.
2. The word “payment” in sections 1(2) and 1(4) of the 1978 Act and section 10(4) of the Limitation Act 1980 is capable of including payment in kind. Where remedial work is capable of monetary valuation, the “amount to be paid” refers to the value of the work rather than merely its physical performance. The contrary reasoning in George Stow & Co. Ltd. v Walter Lawrence Construction Ltd. (1992) 40 Con. L.R. 127 was not accepted.
3. Meaning of settlement. For section 10(4), the relevant agreement must be a bona fide settlement or compromise of the employer’s claim. The correspondence up to February 2001 showed approval of the proposed remedial works and, at most, an implied agreement to refrain from suing while the works proceeded. It did not show that the employer had agreed to give up its claim or to bear the risk that the works would fail.
4. The legally binding settlement was made when the settlement deed was signed on 11 March 2005. That agreement gave rise to a contribution claim under the 1978 Act. Under section 10(4) of the Limitation Act 1980, the relevant date was therefore 11 March 2005. The preliminary issues were answered accordingly.

First-instance determination of three preliminary issues in a contribution claim. No prior appellate decision is stated in the judgment.