IMI Plc and anor v Delta Ltd and anor

The High Court determined on the hearing of a preliminary issue that section 1(4) of the Civil Liability (Contribution) Act 1978 precluded the Part 20 Defendants from relying on a limitation defence they had pleaded against the claimants in resisting contribution proceedings by the Part 20 Claimants. The underlying action concerned a follow-on competition damages claim against IMI, who had joined Delta as Part 20 Defendants. IMI then settled the main claim but pursued the contribution claim against Delta. Delta had pleaded that it was not liable for contribution on the basis that the main claim was time-barred and the preliminary issue concerned whether or not section 1(4) allowed Delta to advance that defence against IMI. Mrs Justice Rose held that the expression “assuming… that he would have been liable assuming that the factual basis of the claim against him could be established” in section 1(4) required the court to look at the totality of the claimant’s pleaded case (including its reply) and assume that to be established. Since the claimants had pleaded a response to limitation under section 32 of the Limitation Act 1980 and the burden of establishing those facts was on the claimants, those allegations were therefore assumed to be established. As such, IMI’s liability was assumed for the purposes of contribution proceedings and Delta could not rely on limitation as a collateral defence.

The judgment is significant in substantially limiting the availability of collateral defences advanced by Part 20 Claimants in main claims to Part 20 Defendants in contribution proceedings. This is likely to be of particular importance in follow-on damages cases, in which contribution and limitation are often in issue. The judge recognized that the construction of section 1(4) was “very difficult” and had been the subject of only two first instance judgments which were not themselves clear. Permission was granted to appeal to the Court of Appeal.

The full judgment can be read here: http://www.bailii.org/ew/cases/EWHC/Ch/2015/1676.html

Brian Kennelly and Tom Coates instructed by Addleshaw Goddard LLP acted on behalf of the Part 20 Defendants, Delta.