In the recent case of Riedweg v HCC International Insurance plc and others, the High Court considered the interplay between the Third Parties (Rights Against Insurers) Act and the Civil Liability (Contribution) Act. This case is important as it is the first time the interplay between claims for a contribution under section 1(1) of the Civil Liability (Contribution) Act 1978 and claims under the Third Parties (Rights Against Insurers) Act 2010 has been considered.
In this article, we look at the question the court had to decide - whether a liability to claimant Mrs Riedweg in respect of a property transaction, was to be classed as the 'same damage' in respect of that same property transaction – and the reasons why the court said ‘no’.
Mrs Riedweg’s claim was that Goldplaza, a firm of surveyors, had negligently overvalued a property which she went on to purchase for £8 million in December 2016. Mrs Riedweg said she would not have bought the property had she known its true value, stated to be £5.5 million. As Goldplaza was in liquidation, Mrs Riedweg brought her claim against HCC International Insurance under the Third Parties (Rights Against Insurers) Act 2010.
The liability was alleged incurred by Mrs Riedweg's solicitors and a business advisor. Mrs Riedweg was allegedly incurred by HCC International Insurance, the professional indemnity insurer of Goldplaza. HCC International Insurance said it was classed as 'same damage', and asked the court for permission to bring a claim for a contribution from the solicitors and the business advisor under section 1 of the Civil Liability (Contribution) Act 1978.
After proceedings were issued against it, HCC International Insurance applied for permission to claim a contribution from the claimant’s conveyancing solicitors and business advisor, alleging they acted in breach of fiduciary duty, breach of contract or negligence in relation to the property transaction. It was alleged that those breaches caused Mrs Riedweg the same damage as that for which HCC International Insurance was potentially liable under the Third Parties (Rights Against Insurers) Act 2010.
Section1(1) of the Civil Liability (Contribution) Act 1978 says: ‘Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise)’.
The meaning of same damage in section 1(1) has been considered in a number of cases. In one case, the Court of Appeal decided that same damage meant damage suffered by the same person. The House of Lords said that same damage meant that damages that could be recovered by the claimant from one person would reduce or extinguish damages that could be recovered from another.
In this case, Mrs Riedweg’s claim against HCC International Insurance was brought under the Third Parties (Rights Against Insurers) Act 2010. That provides a procedural mechanism allowing someone with a claim against an insolvent insured to pursue that claim directly against the insurer. Mrs Riedweg was in effect standing in the place of the insured, Goldplaza, making a claim for payment under the insurance policy from HCC International Insurance.
The court accepted that the right to a contribution could arise even where there were different causes of action between defendants, but there must be a connection between the damage suffered by Mrs Riedweg and liability of HCC and the liability of the solicitor and the business advisor.
Here, the alleged liability of the solicitors and the business advisor to Mrs Riedweg arose directly from the property transaction. But HCC had nothing to do the property transaction. Its only duty was to pay Goldplaza, or Mrs Riedweg standing in place of Goldplaza, in accordance with the terms of the insurance policy.
The court refused HCC’s application for permission to make a claim for a contribution against Mrs Riedweg’s solicitors or her business advisor. A claim under the the Third Parties (Rights Against Insurers) Act 2010 is a claim under the policy, and a liability of the insurer to pay under the policy is different to the underlying liability incurred to a claimant by the insured and which is covered by the policy.
Even if the alleged liability of Goldplaza, the solicitors and the business advisor were capable of giving rise to the same damage, HCC’s liability was completely separate. The procedural device that allowed the claimant to claim against HCC under the the Third Parties (Rights Against Insurers) Act 2010 did not make the recoverable sums the same damage as that which might be recovered from Goldplaza, the solicitors or the business advisor. Section 1(1) of the the Civil Liability (Contribution) Act 1978 was not on these facts engaged.
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