Mouchel Ltd v Van Oord (UK) Ltd (No 2)

Under the Civil Liability (Contribution) Act 1978, a contribution may include a share of costs paid to the injured third party as part of a settlement concerning the relevant damage. In a global settlement, precise allocation between damages and costs is generally undesirable unless supported by strong evidence. A party’s own costs of defending the underlying claim are not recoverable under the 1978 Act because they are not liability to a third party. Such costs may be awarded only under section 51 of the Senior Courts Act 1981.

Mouchel sought further contribution from Van Oord following an earlier judgment concerning Mouchel’s settlement of Kier’s claims arising from offshore works at South Humber power station. Van Oord had been held liable to contribute in respect of scour protection, but not in respect of unsuitable sand, and its share of the relevant liability had been assessed at 35 per cent.

The further issues were Van Oord’s contribution towards interest paid under the settlement, Kier’s costs included in the settlement, and Mouchel’s own costs of defending Kier’s proceedings.

1. The parties agreed that Van Oord’s contribution towards the £18,000 interest element should use the same 8.546 per cent proportion as its contribution towards the settled liability. The resulting sum was £1,534.68.
2. Following BICC Limited v Parkman Consulting Engineers [2002] BLR 64, costs paid to the injured party may found a contribution claim under the 1978 Act. The relevant question was the extent to which the negotiated costs element was attributable to damage for which Van Oord and Mouchel shared responsibility.
3. The evidence offered only an imperfect allocation between GMS, scour protection and general matters. It provided guidance but did not justify a mechanically precise apportionment. In a global settlement, it was generally undesirable to differentiate between damages and costs without strong evidence.
4. The court therefore adopted the same 8.546 per cent proportion used for damages and interest. Van Oord was ordered to pay £33,781.72 towards Kier’s costs.
5. Mouchel’s own costs of defending Kier’s claim were not recoverable under the 1978 Act, which concerns liability to a third party. Any claim had to rest on sections 51(1) and 51(3) of the 1981 Act. The court declined to exercise that discretion because Van Oord was involved only at a late stage, its contribution was small, and there was no conduct justifying an order.

No contribution was awarded for Mouchel’s own costs of defending the main action.

First-instance decision dealing with further contribution and costs issues following the court’s earlier judgment in the same proceedings, [2011] EWHC 72 (TCC).