W.H. Newson Holding Ltd & Ors v IMI Plc & Anor

For the purposes of section 1(4) of the Civil Liability (Contribution) Act 1978, a collateral defence is one on which the defendant in the main action would bear the burden of proving the determining facts. The court must examine the totality of the pleadings as they stood when the settlement was made. Facts which form part of the claimant’s case, and which the claimant would have had to establish to succeed, fall within the statutory assumption that the factual basis of the claim could be established. A settling defendant therefore need not prove its own liability by investigating facts that the claimant would have had to prove, including facts relied on to postpone limitation under section 32 of the Limitation Act 1980.

The proceedings concerned claims for damages arising from a copper-fittings cartel. IMI settled the main claim brought by companies in the Travis Perkins group and pursued a contribution claim against Delta under section 1(1) of the Civil Liability (Contribution) Act 1978.

Delta sought to argue that the underlying claim against IMI was time barred because the claimants could not satisfy section 32(1)(b) of the Limitation Act 1980. The preliminary issue was whether that limitation defence was excluded by section 1(4) of the 1978 Act, particularly its assumption that the factual basis of the settled claim could be established.

1. Construction of section 1(4). The statutory assumption is intended to avoid or limit an investigation in contribution proceedings into whether the settling defendant was in truth liable. It does not prevent the Part 20 defendant from showing that the settling defendant would not have been liable as a matter of law or from relying on a collateral defence supported by facts which the settling defendant would have had to prove.
2. Meaning of collateral defence. A defence is collateral where the burden of establishing the facts determining the issue would have rested on the defendant in the main action. The court must consider the totality of the pleaded case as it stood at settlement. The availability of the statutory assumption cannot depend arbitrarily on whether the claimant pleaded material answering an anticipated defence in the particulars of claim or in a subsequent pleading.
3. Application to limitation. The accrual of the cause of action and expiry of the ordinary limitation period were not in dispute. The relevant issue was whether the claimants could establish that the cartel had been deliberately concealed and that they could not reasonably have discovered it earlier. Those matters supported the claimants’ reliance on section 32 and would have been facts for them to establish. They were therefore part of the factual basis of the claim against IMI within section 1(4).
4. Disposition. Section 1(4) precluded Delta from arguing that the claimants’ claim was time barred for the reasons pleaded in paragraph 18 of its amended defence. The preliminary issue was answered accordingly.