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Aer Lingus v Gildacroft, Court of Appeal, 17 January 2006

23 January 2011
The issues

Limitation – Indemnity – Civil Liability (Contribution) Act 1978 – Whether Time for Claiming Contribution runs from Judgment on liability or Judgment on quantum

The facts

Mr Smyth, an employee of Aer Lingus, had an accident when his left arm was trapped in a lift which had malfunctioned. He sued Aer Lingus and on 9th May 2001 a consent Judgment was entered on the issue of liability against Aer Lingus.

In September 2003 the claim was settled for £490,000.00. On 4th February 2004 Aer Lingus started contribution proceedings against Gildacroft claiming an indemnity under the Civil Liability (Contribution) Act 1978.

Gildacroft pleaded that the claim was statute barred. The High Court Judge took the view that giving the words “held liable in respect of that damage by” their natural meaning, the relevant Judgment was that on liability and it was from that date therefore that the two year period ran. Consequently the proceedings for contribution were statute barred. The Defendant appealed.

The decision

Both sides had argued that policy considerations favoured their respective positions. The Court however was not much assisted by policy considerations. If the two year period was only triggered by the ascertainment of quantum then there was room for greater delay and the law did not favour delay. The establishment of liability against a tort feasor even in the absence of the ascertainment of quantum could be taken as a sufficient warning to a party of the need to take formal steps to secure any contribution that he thought he was entitled to. On the other hand in Littlewood v George Wimpey & Co Limited (based on the wording of predecessors of the 1978 Act namely the law reform (Married Women and Tort Feasors) Act 1935) the Court was prepared to assume that a 6 year limitation period following the ascertainment of quantum was the correct interpretation. In that light the statutory choice of a 2 year period introduced in 1963 might well be regarded as a suitable compromise between opposing policy positions. For these reasons it would be decided that the Judgment or award referred to in Section 10(3) of the 1980 Act as setting the relevant date for the running of time against a tort feasor who seeks contribution under the 1978 Act was a Judgment or award which ascertained the quantum and not merely the existence of the tort feasor’s liability.

Appeal allowed.

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