Where several parties each contribute to the same damage, English law generally makes each of them liable for the whole of the claimant's loss. This is joint and several liability. A claimant can recover the entire loss from any one defendant and leave that defendant to recover contributions from the others. For a construction professional, it means the firm can be pursued for the full loss even where its share of the fault is modest, provided its breach was a cause of the damage.
The Act gives a defendant who has paid more than its fair share a statutory right to recover contribution from others liable for the same damage. Section 1 establishes the entitlement to contribution. Section 2 provides that the amount recovered is such as the court finds just and equitable having regard to the extent of that person's responsibility for the damage. Section 6 defines the damage for which contribution can be claimed.
The practical difficulty is solvency. If a co-defendant has become insolvent, has dissolved, or was never insured, the contribution right is worth little, and the professional who remains standing may bear the loss the court would otherwise have shared out. This is why the identity and solvency of other consultants on a project matter to a firm's own exposure.
Because the 1978 Act cannot cure an insolvent co-defendant, professionals often negotiate a net contribution clause into their appointments. Such a clause limits the firm's liability to the amount that would be just and equitable for it to pay assuming the other parties had paid their fair share, whether or not they actually can. The clause was upheld in West v Ian Finlay & Associates [2014] EWCA Civ 316, though its effectiveness turns on clear drafting and, for consumers, the transparency and fairness requirements now in the Consumer Rights Act 2015.
A defendant that settles a claim can still seek contribution from others, but timing matters. Section 10 of the Limitation Act 1980 gives a two-year period for a contribution claim, running from the date on which the right to contribution accrues, usually the date of judgment or settlement. A professional that pays out and then delays before pursuing co-defendants can lose the contribution claim altogether. Insurers handling the claim will normally protect the position, which is another reason to notify and involve them promptly rather than attempting to resolve a multi-party dispute alone.
Apex considers joint and several exposure when discussing the appropriate limit of indemnity for architects, quantity surveyors and engineers, and looks at whether appointments carry net contribution protection. The pillar guides for architects, quantity surveyors and engineers give the sector background.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.