Claimant proceeding against third party — Third party claiming contribution from defendant — Claimant and third party reaching a settlement — Claimant proceeding against defendant on Part 20 basis — Defendant applying to have Part 20 claim struck out on basis that terms of settlement unjust and inequitable — Claim dismissed
The claimant was approached by a third party for a mortgage. A solicitor involved in that transaction failed to inform the claimant of certain information that subsequently had an adverse effect upon the property valuation. The claimant commenced proceedings.
In turn, the solicitors brought a Part 20 claim against the defendant firm of surveyors on the ground that it had negligently valued the property. The solicitor claimed a contribution under the Civil Liability (Contribution) Act 1978. The claimant and the solicitor settled their action, and the Part 20 claim was assigned to the claimant.
The Part 20 defendant sought summary judgment or a striking-out order against the claimant. It maintained that:
1. The solicitor was not “liable in respect of any damage suffered by” the claimant within section 1(1) of the Civil Liability (Contribution) Act 1978. The wording of the agreement stated that the claimant would not “execute [its] judgment against [the solicitor] beyond any sum that [it] might recover in damages and costs from [the defendant]”. The defendant argued that the wording rendered the judgment wholly unenforceable until a contribution order had been made against it, so that, until that time, the solicitor would not be liable for anything.
2. The settlement arrangement contained certain provisions protected by a confidentiality clause, so that it was not a “bona fide settlement or compromise” within section 1(4).
3. No liability pertained in respect of the “same damage” since the damage suffered by the claimant as a result of the solicitor’s wrongdoing was not the same damage as that suffered by the claimant as the result of any contractual or tortious breach of duty by the defendant.
4. The terms of the agreement meant that it was not possible to arrive at a contribution that was “just and equitable” so no order for contribution should therefore be made.
Held: The Part 20 claim was dismissed.
1. The solicitor was “liable” for the purposes of section 1(1) of the 1978 Act. The relevant liability did not have to be a “continuing or present” liability: see RA Lister v Thomson (Shipping) [1987] 3 All ER 1032. It included a liability that arose under order of the court, notwithstanding that the amount of the liability and the time for enforcing it had not been specifically determined.
2. The wording of the settlement was for the purposes of avoiding limitation difficulties and that did not imply that the settlement was not undertaken in good faith. However, the confidentiality clause in the agreement, which was intended to keep certain facts from the defendant, and the fact that certain circumstances surrounding the way in which the agreement was reached were withheld from the defendant did suggest that there was a need for investigation. On these grounds, the defendant would have failed in its application to have the Part 20 claim struck out.
3. An element of the quantum of the sum ordered to be paid by the solicitor did arise from the claim pleaded by the claimant, in contract and tort, and was therefore the “same damage”, notwithstanding that the precise apportionment was yet to be identified.
4. The settlement arrangements did not deal appropriately with the defendant’s liability. Although the intended sequence of events envisaged in the settlement was that the amount of the contribution should be quantified prior to visiting liability on the defendant, this would have been neither just nor equitable and was contrary to the scheme of section 2(1) of the 1978 Act. On those grounds, no order in respect of the contribution should be made. The Part 20 claim was dismissed.
Andrew Goodman (instructed by Curtis & Parkinson, of Nottingham) appeared for the claimant; Derek Holwill (instructed by Park Nelson) appeared for the defendant.
Vivienne Lane, barrister
