When does limitation start to run for bringing a contribution claim?

Mills & Reeve has recently acted for the successful party, R.G. Carter Building Limited (“R.G. Carter”), in the Technology and Construction Court, on the issue of when the period for bringing a contribution claim under the Civil Liability (Contribution) Act 1978 (“the Act”) begins. The issue was whether time runs from the date when the settlement is agreed in principle or when the terms of settlement are finally agreed.

Under the Limitation Act 1980, proceedings for a contribution under the Act must be issued within 2 years from the date on which the right to bring proceedings accrues.  The right accrues, where there is a settlement rather than a judgment, upon the agreement to pay compensation.  

In this case the settlement did not involve the payment of any money.  Instead R. G. Carter agreed to undertake certain remedial work.  It is already established that a party can, under the Act, seek a contribution towards the cost of a payment in kind^[1] .

The agreement to undertake remedial works was reached, in principle, between R. G. Carter and Lincolnshire County Council (“LCC”) in April 2015.  From then until the 29 June 2015, when the parties signed a settlement agreement, LCC and R.G. Carter negotiated the terms of the settlement including exactly what work would be done and when it would be done.  All correspondence during this period between the parties was headed without prejudice and subject to contract.

After settling with LCC, and after the remedial works were completed, R. G. Carter brought contribution proceedings against the designer, Kier Business Services Limited (“Kier”), having first agreed a standstill agreement, to stop limitation running, on 28 April 2017.  Kier tried to argue that that the period for bringing a claim for a contribution had expired before the proceedings were issued (i.e. before 28 April 2015).

The court decided that the 2 year limitation date only starts to run from the date of a binding agreement as to the amount of the compensation payment and that binding terms were only agreed upon the execution of the settlement agreement on 29 June 2015.  

The full judgment can be read here: http://www.bailii.org/ew/cases/EWHC/TCC/2018/729.html RG Carter Building Ltd v Kier Business Services Ltd [2018] EWHC 729 (TCC)

^[1] Bake & Davies plc v Leslie Wilks Associates