Summary
A defendant may claim contribution from a co-defendant after the claimant has settled with that co-defendant, but only if the defendant advances and proves an independent factual case establishing the co-defendant’s liability for the same damage. A defendant cannot conditionally adopt allegations which the claimant is no longer pursuing.
Once a contribution notice has been validly filed and served, the Part 20 claimant has an accrued cause of action sufficient in principle to support a freezing injunction. The claimant need not already have been held liable or have paid compensation. The usual requirements remain a good arguable case, prospective substantive proceedings and a sufficient risk that enforcement will be frustrated.
Factual background
The claimants brought fraud and breach of duty claims against three former officers and sought substantial damages under Kazakhstan law. The first defendant settled with the claimants. The second and third defendants then sought permission under CPR Part 20 to bring contribution claims against him, relying largely on the allegations previously pleaded by the claimants.
The second defendant also sought a worldwide freezing injunction against the first defendant in support of the proposed contribution claim. The central issues were whether the proposed contribution claims were properly constituted after settlement and whether a contingent contribution claim could support freezing relief.
Held
- Contribution application. Permission for the second and third defendants to serve contribution notices was refused. The allegations against the first defendant were no longer facts in issue because the claimants had settled and the proceedings against him had been stayed. The proposed contribution claim was therefore bound to fail.
- A defendant may advance an alternative case based on allegations made by the claimant against another defendant while those allegations remain actively pursued. After settlement, however, the defendant must positively assert and assume the burden of proving the allegations needed to establish the other defendant’s liability. Conditional reliance on allegations which the claimant no longer advances is insufficient.
- The draft notice did not allege that the first defendant acted dishonestly or otherwise wrongfully, caused loss, or received illicit payments. It therefore did not establish liability for the same damage under section 1 of the Civil Liability (Contribution) Act 1978. The deficiency was substantive, not a case-management matter under CPR 20.9.
- The first defendant’s existing contribution claim was different. Under section 1(4) of the Act, a settling party may claim contribution without proving that he was liable, provided that he would have been liable if the factual basis of the claim could be established.
- Freezing injunction. The clean-hands argument failed. Alleged fraud forming part of the underlying dispute was not misconduct connected with the conduct of the proceedings or with the relief sought. A wrongdoer may in principle obtain ancillary relief needed to make contribution effective.
- The authorities requiring a pre-existing cause of action were reconsidered. The relevant requirement is satisfied where the Part 20 claimant is entitled to commence proceedings claiming contribution. The cause of action accrues when a contribution notice is filed and served as of right, or when permission to file and serve it is granted. Section 10 of the Limitation Act 1980 concerns limitation only and does not determine when the cause of action accrues for freezing relief.
- A validly constituted Part 20 contribution claim may therefore support a freezing injunction where there is a good arguable case and a sufficient risk of dissipation. The injunction application was nevertheless refused because permission to bring the contribution claim had been refused and there was no prospective judgment capable of being frustrated.
The court’s approach to earlier authorities
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Appeal route
- This judgment [2016] EWHC 1048 (Comm) High Court (Commercial Court)
- Appealed to[2016] EWCA Civ 1036Outcomeappeal allowed (unanimous; contribution notice permitted and freezing undertakings continued)
Key cases cited
25 authorities cited.
- Zurich Insurance PLC UK Branch v International Energy Group Limited [2015] UKSC 33
- Fourie (Appellant) v. Le Roux and others (Respondents) [2007] UKHL 1
- Dubai Aluminium Company Limited v. Salaam (Original Respondent and 2nd Cross-appellant) and others (Original Appellants and Cross-respondents) and Others and another (Original Respondent and 1st Cross-appellant) [2002] UKHL 48
- Co-operative Retail Services Limited v. Taylor Young Partnership and Others [2002] UKHL 17
- Grovit v Doctor [1997] 1 WLR 640
- Aer Lingus v Gildacroft Ltd & Anor [2006] EWCA Civ 4
- Binks v Securicor Omega Express Ltd. [2003] EWCA Civ 993
- YUKONG LINE LTD. v. RENDSBURG INVESTMENTS CORPORATION AND OTHERS [2001] 2 Lloyd's Rep 113
- Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd (Chishty Coveney & Co v Raja) [1998] 1 WLR 1426
- Solland International Ltd & Ors v Clifford Harris & Co [2015] EWHC 3295 (Ch)
- The Royal Bank of Scotland Plc v Highland Financial Partners LP & Ors [2012] EWHC 1278 (Comm)
- Bleasdale & Anor v Forster [2011] EWHC 596 (Ch)
- STARLIGHT SHIPPING CO v ALLIANZ MARINE & AVIATION VERSICHERUNGS AG AND OTHERS (THE “ALEXANDROS T”) [2012] 1 Lloyd's Rep 162
- PAPAMICHAEL v. NATIONAL WESTMINSTER BANK PLC AND ANOTHER [2002] 1 Lloyd's Rep 332
- Mercantile Group (Europe) AG v Aiyela [1994] QB 366
- Zucker v Tyndall Holdings Plc [1992] 1 WLR 1127
- TSB Private Bank International SA v Chabra [1992] 1 WLR 231
- VERACRUZ TRANSPORTATION INC v. V. C. SHIPPING CO. INC. AND DEN NORSKE BANK A/S (THE “VERACRUZ I”) [1992] 1 Lloyd's Rep 353
- VIRGO STEAMSHIP CO. S.A. v. SKAARUP SHIPPING CORPORATION (THE “KAPETAN GEORGIS”) [1988] 1 Lloyd's Rep 352
- R A Lister & Co Ltd v E G Thomson (Shipping) Ltd (No 2) [1987] 1 WLR 1614
- SIPOREX TRADE S.A. v. COMDEL COMMODITIES LTD. [1986] 2 Lloyd's Rep 428
- STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD. v. THAKUR SHIPPING CO. LTD. [1986] 2 Lloyd's Rep 439
- Siskina (Owners of cargo lately laden on board) v Distos Cia Naviera SA (Ibrahim Shanker Co v Distos Cia Naviera SA) [1979] AC 210
- In re Richardson, Ex parte Governors of St Thomas’s Hospital [1911] 2 KB 705
- Rowland v Gulfpac Ltd
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Cases citing this case
2 later cases · 1 positive · 1 caution
Most senior citing decisions:
- URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 applied
- URS Corporation Limited v BDW Trading Limited [2023] EWCA Civ 772 distinguished
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