Aer Lingus v Gildacroft Ltd & Anor

For the purposes of section 10(3) of the Limitation Act 1980, a person is held liable by a judgment or arbitral award only when the quantum, as well as the existence, of the liability has been ascertained. A judgment on liability with damages to be assessed does not start the special two-year limitation period for a contribution claim under the Civil Liability (Contribution) Act 1978.

This construction reflects the distinction between damage and damages and maintains consistency with section 10(4). Where liability is admitted without judgment or award, time begins when the amount payable is agreed, rather than when liability is admitted.

An employee was injured by a malfunctioning document lift and obtained a consent judgment against Aer Lingus on liability, with damages to be assessed. More than two years later, a further consent order fixed the damages at £490,000. Aer Lingus then sought contribution or indemnity from the contractors which had supplied and installed the lift.

Simon J, in [2005] EWHC 1556 (QB), held that the contribution claim was out of time because the judgment on liability had started the two-year period under section 10(3) of the Limitation Act 1980. The central issue on appeal was whether time began with that judgment or only when the quantum of Aer Lingus's liability was ascertained.

1. Appeal allowed unanimously. Section 10(3) of the Limitation Act 1980 refers to a judgment or arbitral award which ascertains the quantum, and not merely the existence, of the contribution claimant's liability. The consent judgment for damages to be assessed therefore did not start the two-year limitation period. The judge's contrary conclusion was set aside.

2. The right to contribution under section 1 of the Civil Liability (Contribution) Act 1978 depends upon concurrent liability for the same damage. “Damage” does not mean damages. The existence of that right does not require the claimant's liability or its amount first to have been established. Section 10 instead creates a special limitation rule and uses accrual as a mechanism for fixing the commencement of its two-year period.

3. The wording and structure of section 10 supported the requirement that quantum be ascertained. The reference in section 10(3) to an appellate variation of damages suggested that the earlier judgment or award contemplated by that subsection had already assessed damages. More significantly, section 10(4) starts time, in cases without a qualifying judgment or award, when the amount payable is agreed. It does so even where liability was admitted earlier. Consistent treatment under the two subsections therefore pointed to ascertainment of quantum as the critical event.

4. The historical background supported the same conclusion. The reasoning associated with George Wimpey & Co Ltd v British Overseas Airways Corporation and its treatment in Ronex Properties v John Laing Construction Ltd proceeded on the understanding that both the existence and amount of liability had to be ascertained. Although those observations were not binding determinations of the present issue, the language derived from that background was substantially reproduced in the later limitation legislation.

5. Rix LJ delivered the judgment. Moore-Bick LJ and Sir Anthony Clarke MR agreed. Because quantum was not ascertained until the later order, Aer Lingus's contribution proceedings were brought within two years and were not time-barred.

1. Court of Appeal (Civil Division): By [2006] EWCA Civ 4, unanimously allowed Aer Lingus's appeal and held that the contribution claim was not time-barred.
2. High Court, Queen's Bench Division: Simon J, in [2005] EWHC 1556 (QB), held that the judgment on liability had started the limitation period and that the contribution claim was out of time.