Hampshire Constabulary v Southampton City Council

In a contribution claim following settlement of an underlying action, limitation under section 10(4) of the Limitation Act 1980 begins when the amount payable for the actual damage is agreed. A later consent order recording the settlement, or a later order quantifying costs, does not make the case one falling under section 10(3). Costs are ancillary to the damage, although they may themselves be recoverable in contribution proceedings under section 2(1) of the Civil Liability (Contribution) Act 1978. Acceptance of a Part 36 offer therefore starts time running on the agreed damages figure, even where costs remain to be agreed or assessed.

The Chief Constable of Hampshire Constabulary settled Mr Chegwidden’s personal injury claim by accepting a Part 36 offer of damages, with costs to be agreed or assessed. A consent order later recorded the settlement, and a further order quantified costs. The Chief Constable subsequently brought contribution proceedings against Southampton City Council under the Civil Liability (Contribution) Act 1978.

District Judge Powell held that the claim was barred by section 10 of the Limitation Act 1980. The appeal concerned whether the settlement fell within section 10(3) or section 10(4), and whether the amount of costs postponed the commencement of time.

Lord Justice Jackson delivered the substantive judgment, with Lord Justice Patten and Lord Justice Lewison agreeing. The appeal was dismissed.

1. Section 10(3). Section 10(3) applies where the person seeking contribution has been held liable by a civil judgment or arbitration. Acceptance of the Part 36 offer automatically stayed the underlying proceedings under CPR 36.11(1). The later consent order was made under CPR 36.11(5) to record the settlement and deal with costs. It did not constitute a judgment holding the Chief Constable liable. The later costs order was not such a judgment either.
2. Earlier authority. The actual decision in Knight v Rochdale Healthcare NHS Trust [2003] EWHC 1831 (QB); [2004] 1 WLR 371 was correct. The court noted that Aer Lingus plc v Gildacroft Ltd [2006] EWCA Civ 4; [2006] 1 WLR 1173 had cited Knight with apparent approval, while expressing reservations about part of the reasoning in Knight which it did not need to decide.
3. Costs and contribution. Under section 2(1) of the Civil Liability (Contribution) Act 1978, a contribution may include an amount referable to both damages and costs. Parkman Consulting Engineers (an unlimited company) v Cumbrian Industrials Ltd [2001] EWCA Civ 1621; 79 Con LR 112 and Mouchel Ltd v Van Oord (UK) (No 2) [2011] EWHC 1516 (TCC); 137 Con LR 105 supported that conclusion.
4. Section 10(4). The phrase “amount to be paid” concerns the sum agreed as compensation for the actual damage caused. It excludes the settling party’s ancillary liability for costs. Limitation therefore began on 4 November 2010, when the damages were agreed, although costs were quantified later. The contribution proceedings issued on 3 December 2012 were consequently statute barred.

1. Court of Appeal (Civil Division) dismissed the appeal and upheld the decision that the contribution claim was statute barred: [2014] EWCA Civ 1541.
2. Southampton County Court, District Judge Powell, held that limitation began when the Part 36 offer was accepted and dismissed the contribution claim.