Where two (or more) advisors or suppliers are involved in providing a service (or goods) and both are (separately) negligent how do they share the claim?
The initial answer is that the Civil Liability (Contribution) Act essentially requires parties to divide the responsibility according to the judge’s view on their respective share of blame. The wronged claimant can recover its entire loss from either defendant and the defendants are then left to fight it out between them as to the apportionment of that loss.
However, there is a gloss on this where the negligent acts occur in a series. If a later negligent act causes the loss on its own, then the earlier negligence is arguably irrelevant and the first actor does not have to contribute to the loss at all.
A break in the chain of causation
The long history of caselaw on when a later act ‘extinguishes’ the liability of the first act was reviewed and recorded in 2010 in Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm).
Crucially, judges have consistently stated that liability will depends upon the facts of each case and no general rule can be given. The guidance is:
- “in order to comprise a novus actus interveniens, so breaking the chain of causation, the conduct… “must constitute an event of such impact that it ‘obliterates’ the [original] wrongdoing…””.
- Concurrent breaches are unlikely to be extinguished.
- If the second actor is aware of the breach/negligence of the first before its own negligence, the first’s liability is more likely to be extinguished.
- If the second actor is unaware of the breach/negligence of the first, the first’s liability is likely to remain unless the second actor is reckless or grossly negligent in proceeding (these terms are seemingly intended to have the same meaning in this context).
Court of Appeal Decision
This test was approved and used by the Court of Appeal in Flanagan v Greenbanks (t/a Lazenby) – Pt 20 claim by Lazenby v Cross in December 2013.
An installer of cavity wall installation (Lazenby) negligently did not check that the house was suitable before installing. It was not suitable because it had a timber frame. The householder successfully claimed compensation from Lazenby.
Lazenby then sought to claim a contribution (under a civil procedure rule – Pt20) from the initial assessor/introducer (Cross) who had also negligently not identified that the house had a timber frame before passing the job on to Lazenby. Cross argued that Lazenby’s subsequent negligence in not checking extinguished his own initial negligence in failing to do the same thing – ie Cross’s negligence was no longer causative.
The Court of Appeal was torn and considered these facts were a 'close run thing'. However, by a majority of 2:1 it decided that Cross remained liable. Despite professional obligations on the installer to check for suitability itself, its failure to do so did not absolve Cross for getting it wrong in the first place.
Parties in a supply chain or working in teams by reference or introduction need to be careful about the negligence of their peers. If such negligence appears possible, it will often not be good enough to rely upon their initial work, which should properly be checked.
The Lazenby case provides a ringing endorsement of the guidance laid down in Borealis. However, the dissenting judgment is a reminder that the question to be resolved – whether an act has broken the chain of causation – is case specific and can only be determined by reference to each individual factual scenario. This is likely to remain an area troubled by disagreement and one in which litigation will have a further role to play.
The author Mairi Pollock is a disputes lawyer in Burges Salmon's disputes and litigation team team led by David Hall.