WH Newson Holding Ltd & Ors v IMI Plc & Anor

Factual and Procedural Background

This appeal concerns a preliminary issue regarding the interpretation of section 1(4) of the Civil Liability (Contribution) Act 1978 ("the 1978 Act"). The issue arose from a Part 20 claim for contribution brought by Defendant IMI against Defendants Delta, following a settlement of a main claim by Claimants Travis Perkins against IMI and others for damages resulting from an unlawful cartel in the copper fittings market. The European Commission found that IMI and Delta participated in the cartel during overlapping periods ending in 2001. Travis Perkins brought follow-on damages claims alleging overcharges due to the cartel, which IMI defended, including on limitation grounds. IMI then issued Part 20 claims against Delta and others for contribution or indemnity under the 1978 Act. Delta defended the Part 20 claim, including a limitation defence denying that IMI was liable to Travis Perkins due to time bar. After settlement of the main claim by IMI and Travis Perkins, the question arose whether Delta could rely on a limitation defence in the Part 20 claim. Rose J directed a preliminary issue on whether section 1(4) of the 1978 Act barred Delta from relying on limitation as a defence to IMI's contribution claim. Rose J answered that section 1(4) did bar Delta from advancing the limitation defence. Delta appeals that decision.

Legal Issues Presented

1. Whether section 1(4) of the Civil Liability (Contribution) Act 1978 precludes a Part 20 defendant from relying on a limitation defence in contribution proceedings following a bona fide settlement of the main claim by the claimant and another defendant.
2. The proper interpretation of the proviso in section 1(4) concerning the assumption of the "factual basis of the claim" against the settling defendant, specifically whether it includes or excludes collateral defences such as limitation.
3. Whether the burden of proof regarding collateral defences lies with the settling defendant or the claimant in contribution proceedings.
4. The extent to which pleadings, including replies, define the factual basis of the claim for the purposes of section 1(4).

Arguments of the Parties

Appellant's Arguments (Delta)

• The judge erred in focusing on the totality of the pleadings as at the date of settlement, which leads to arbitrary and unworkable results inconsistent with the more flexible approach indicated in prior authorities.
• A collateral defence is any defence not inconsistent with the factual basis of the claim and should not be confined to those where the burden of proof lies on the settling defendant.
• Section 1(4) does not require the court to assume the facts relating to a procedural limitation defence pleaded by the claimant in reply; the assumption should only extend to facts necessary to establish primary liability.
• Alternatively, the assumption under section 1(4) should be limited to the facts comprising the claimant's cause of action in the main claim, excluding replies to collateral defences.

Respondent's Arguments (IMI)

• The limitation defence pleaded by Delta is a collateral defence, but the claimant's positive case on deliberate concealment pleaded in reply forms part of the factual basis of the claim and must be assumed established under section 1(4).
• For the claimant to succeed in the main claim, it was necessary to prove both the substantive cartel damage and the deliberate concealment overcoming limitation.
• The proviso in section 1(4) requires the court to assume the entire factual basis of the claim, including replies to collateral defences, not just the particulars of claim.
• Section 1(4) relieves the settling defendant from proving liability but does not exclude the claimant's factual basis including replies; thus, Delta cannot rely on limitation in contribution proceedings.
• Alternatively, the proviso should be interpreted as requiring the court to assume the factual basis pleaded in the particulars of claim only, which supports upholding Rose J's decision.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully analysed the statutory scheme of the 1978 Act, particularly section 1(4) and its proviso, alongside the Limitation Act 1980 and relevant case law. The court noted that section 1(4) was enacted to relieve a settling defendant (D1) from the burden of proving their own liability to the claimant (C) in contribution proceedings against another defendant (D2), provided the settlement was bona fide.

The proviso requires assuming the factual basis of the claim against D1 could be established, but the court rejected the prior interpretation from Hashim that allowed D2 to raise collateral defences (such as limitation) that would negate D1's liability despite the assumed factual basis. The court held that such an interpretation undermines the clear purpose of section 1(4) by permitting inquiries into actual liability and collateral defences, which section 1(4) expressly seeks to avoid.

The court distinguished between the substantive claim facts and collateral defences, concluding that the proviso's assumption extends only to the factual basis of the substantive claim as pleaded in the particulars of claim and replies that form part of the claimant's case, including positive replies to limitation defences. The court found that the deliberate concealment case pleaded by Travis Perkins in reply was part of the factual basis of the claim, and thus had to be assumed established.

Accordingly, Delta's limitation defence, which did not contradict the substantive facts but challenged procedural limitation, could not be relied upon to defeat IMI's contribution claim under section 1(4). The court also rejected hypothetical arguments about different pleadings scenarios, emphasizing the need to consider the actual state of pleadings at settlement.

The court ultimately agreed with Rose J's decision but on a different interpretative basis, overruling the broader collateral defence approach taken in Hashim and affirming a purposive construction consistent with the statutory scheme and Law Commission recommendations.

Holding and Implications

The court DISMISSED the appeal by Delta, upholding Rose J's order that section 1(4) of the Civil Liability (Contribution) Act 1978 precludes Delta from relying on the limitation defence in the Part 20 contribution claim brought by IMI.

The direct effect is that Delta cannot resist IMI's contribution claim on the basis that the main claim by Travis Perkins against IMI was time barred. No new precedent was set beyond clarifying the correct interpretation of section 1(4), particularly limiting the scope of collateral defences that can be raised in contribution proceedings after a bona fide settlement. This reinforces the policy intent to facilitate settlements without burdening settling defendants with proving their own liability in contribution claims.