Demco Investment & Commercial SA v Interamerican Life Assurance (International) Ltd & Ors

Contribution between jointly liable parties is determined by what is just and equitable, having regard to responsibility for the same damage. Where contractual liabilities arise from warranties and indemnities given on a share sale, contribution will ordinarily follow the parties’ shareholdings, subject to agreed liability caps. A reasonable settlement may support a contribution claim, but a party that unreasonably refuses an available collective settlement may be denied contribution towards the additional liability caused by that refusal. Contractual caps are calculated by reference to the agreed purchase price, including amounts payable or set off, rather than only sums actually paid.

Generali Deutschland Holding AG sought contribution from the other sellers of Interlife after paying £26,632,560 under a bilateral settlement with SEB. The payment resolved claims arising from pensions mis-selling and included gross-negligence liabilities, capped non-gross-negligence liabilities, interest and costs.

The other sellers had declined earlier opportunities to join a collective settlement and continued the arbitration. The court considered the proper allocation of contribution, whether Generali remained liable to contribute to later and greater liabilities, the construction of the contractual caps, the effect of limited means, and whether Mr Sackville had authority to sign for Mr Cohen.

1. Contribution. Under the Civil Liability (Contribution) Act 1978, the relevant question was the parties’ responsibility for the same damage. The settlement was reasonable. The sellers’ contractual responsibility arose from the warranties and indemnities, not from management responsibility. Contribution for gross-negligence liabilities was therefore to follow shareholdings.
2. For non-gross-negligence liabilities, contribution was prima facie according to shareholdings, subject to each seller’s contractual cap. Any excess attributable to a seller’s cap, or any shortfall caused by inability to pay, could be reallocated among the remaining contributors.
3. Generali was not required to contribute towards the excess liabilities, interest and costs generated after the other sellers unreasonably declined to join the earlier settlement. Although those liabilities remained damage for which the sellers were responsible, it was not just and equitable to make Generali share that excess.
4. The caps for Mr Sackville and Mr Paine were calculated by reference to the entire Purchase Price, including Additional Prices I and II where paid, payable or deposited. The caps were not confined to the £700,000 actually paid at completion.
5. Limited means did not reduce the initial contribution assessed by responsibility. Any inability to pay was to be addressed when the actual shortfall and recoverability were known.
6. Mr Sackville had actual authority to sign for Mr Cohen. Alternatively, Mr Cohen had ratified the agreements and was estopped from denying authority. The court also concluded, obiter, that an honestly mistaken agent would not commit forgery absent an intention that the other party suffer prejudice, and that an unauthorised agency act could in principle be ratified.
7. The court proposed declarations and contribution orders, including judgment against Mr Sackville, Mr Paine and Mr Cohen, while reserving unresolved questions concerning later arbitration recoveries and liabilities.

First-instance decision in the Commercial Court. No appellate history was stated in the judgment.