England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE TECHNOLOGY & CONSTRUCTION COURT
(His Honour Judge Anthony Thornton QC)

		Royal Courts of Justice Strand, London, WC2A 2LL Tuesday 30th October 2001

LORD JUSTICE HENRY:

1. This is the judgment of the Court, prepared by Sir Anthony Evans. BICC for many years manufactured electronic batteries and cables at its Helsby Works on the Wirrall in Cheshire. The waste and by-products of these processes were tipped onto a site measuring about 8 acres alongside the Works. The by-products included highly toxic polychlorinated biphenols ("PCBs").
2. From about 1982, BICC became interested in reclaiming the tip and some adjacent land for redevelopment for light industrial purposes. The total site area was 11.8 acres. There was a number of disused buildings on the site. Investigations which were begun for this purpose revealed that water carrying the toxic PCBs was leaching out of the tip into adjoining watercourses and onto neighbouring fields.
3. The respondents to this appeal are Parkman Consulting Engineers, an unlimited company which is the successor of a firm called Ward Ashcroft Parkman. We will call them collectively "Parkman". Parkman were first instructed by BICC in 1985. Together with SGS Environment Ltd. ("SGS"), whom they instructed as sub-contractors, Parkman advised BICC in September 1987 that the tip should be rendered watertight, so that no water could enter the contaminated soil and no contaminated water could leave it, except through drains which were provided for the purpose. The drains led to a processing plant where the contaminants were segregated and disposed of away from the area.
4. Parkman (with SGS) advised that the tip could be contained in this way if:

a) a wall or "bund" of clay was built around its perimeter. This was done by excavating a trench to the required depth and then filling it with puddle clay imported onto the site. In order to ensure a watertight seal at the foot of the bund, the trench had to be excavated at least one metre into the boulder clay which formed the natural underlay to the whole area. The bund is also called the "curtain wall"; and

b) a sheet of 2 mm thick high density polythene was placed as a membrane over the whole area of the tip, except where the concrete foundations of existing buildings already, it was thought, provided a watertight covering to the soil beneath them. To ensure a watertight join between the membrane and foundations, the polythene sheet was attached to horizontal bars or lintels which ran close to the edges of the concrete. The membrane and the foundations together formed a "cap" over the contained area.

5. A third possible method of water ingress into the tip was the entry of groundwater from below through the underlying stratum of boulder clay. Likewise, if the boulder clay was permeable, water could escape from the tip into the adjoining watercourses and fields in this way. Parkman (and SGS) advised BICC that the boulder clay was impermeable and that neither water ingress nor water egress would occur in this way.
6. The civil engineering contractors employed by BICC to construct the bund and install the membrane were the Appellants, Cumbrian Industrials Ltd. ("Cumbrian"). They began work in February 1989 and finished in November the same year.
7. Parkman had advised and had designed the process plant on the basis that significant quantities of 'leachate', that is to say, of contaminated water leaching out from the tip, would require treatment and disposal during the first two years after the containment was completed. The total volume predicted for the first year was 3500 cubic metres, with an estimated operating cost of £100,000, reducing to about one half of that figure during the second year and then falling away as the tip dried out.
8. The results in practice were quite different. The process plant began operation in February 1990. By July 1991 it was apparent that, far from drying out, the tip was producing increasing quantities of leachate: 2663m³ in 1990 and 3380.79m³ in 1991. Investigations took place over a number of years, but it was not until March 1997 that experts were directed, by a case management order made in these proceedings, to agree the appropriate tests to determine the causes of water ingress.
9. Proceedings were brought by BICC against Parkman and Cumbrian in May 1995. The basis of BICC's claim as pleaded in 1997 was that, by 31 December 1996, 26259 tonnes of leachate had had to be disposed of, at a greater cost per tonne than had been estimated, and the need to process and dispose of leachate was continuing (Amended Statement of Claim, para. 16).
10. Parkman served a Contribution Notice on Cumbrian, and also brought third party proceedings against SGS and against Nukem Nuclear Ltd. (formerly Wastechem Ltd.) ("Nukem"). (Nukem was originally a defendant in the action brought by BICC, but the claim was discontinued by BICC.) Nukem was engaged by BICC to review the original plan in December 1988, shortly before construction work began.
11. BICC and Parkman entered into a Settlement Agreement dated 3 December 1998. Parkman agreed to pay BICC £1,950,000 in full and final settlement

"...of all claims which BICC has against Parkman arising out of the design and construction of the containment at Helsby and of all issues arising between BICC and Parkman in the Action" (clause 2.1).

12. BICC's claim against Cumbrian continued, and BICC's solicitors produced a draft Re-re-amended Statement of Claim which they proposed to seek leave to serve in May 1999. However, this claim also was settled, on terms that (1) the claim was withdrawn, and (2) BICC contributed £60,000 towards Cumbrian's costs of defending the action. (Given the fact that Parkman maintained BICC's allegations against Cumbrian in the contribution proceedings, and the Judge's findings against Cumbrian, it seems likely that they were commercial reasons for the BICC/Cumbrian settlement on these terms.)
13. Parkman, having paid £1,950,000 in settlement of BICC's claims against them, maintained their contribution proceedings against Cumbrian and Nukem. However, they agreed settlement terms with SGS under which SGS contributed £137,500 (13.5% of the £1,950,000 paid to BICC). The net claim against Cumbrian and Nukem, therefore, was for their contributions towards the balance of £1,812,500.
14. The contribution proceedings were heard by His Honour Judge Anthony Thornton QC in the Technology and Construction Court in October/November 1999. In a long, careful and detailed judgment he made findings as to the sources of the water ingress into the tip:

"There were 3 significant water pathways which, on my findings, contributed to the ingress in these proportions: (1) basal boulder clay : 20%; (2) curtain wall : 15-20%; [(3)] cap : 60-65%. A very substantial part of the water entering through the cap entered through deficiencies in the membrane, the evidence suggested that only minimal entry occurred through the concrete slabs and unsealed joints. These figures are approximate but sufficiently accurate to enable a fair apportionment to be made on the basis of them." (para. 241)

15. The judge apportioned responsibility "in terms of causative potency" in paragraph 303 of his judgment. Parkman, SGS and Nukem were collectively responsible for design faults, and Parkman for failing to supervise Cumbrian. Cumbrian was responsible for construction errors. He reached the following conclusions:

Ingress through cap (60% of total: see para 301)	Cumbrian Parkman SGS Nukem (design)		50% } } 50% }
Ingress through the bund (20% of total)	Cumbrian Parkman (design & supervision) and SGS/Nukem (design)		80% 20%
Ingress through the base (20% of total)	Parkman SGS and (SC.) Nukem		} } 100% }
Overall (100%)	Cumbrian Parkman (design) SGS (design) Nukem (design)	20% 20% 10%	50% } } 50% }

16. He then made findings as to apportionment for the purposes of the Civil Liability (Contribution) Act 1978 -

"304. I do not believe that a fair and equitable apportionment requires precise mathematical calculation. Taking into account the proportions set out in paragraphs 301 and 303 above and also taking into account all the factors that I have now considered, I believe that the four parties should contribute to the overall sum of £1,950,000 as follows:

1. Parkman : 20%

2. Cumbrian : 50%

3. SGS : 20%

4. Nukem : 10%

305. In the result, Cumbrian should pay Parkman £975,000 and Nukem should pay £195,000."

17. Cumbrian appeals against the apportionment, with permission given by the single Lord Justice. Including Supplemental Grounds, there are 25 grounds of appeal. These can be grouped as follows, and conveniently the appeal was argued in three stages:

A. Water ingress (from above) through the cap (paragraph 18 below).

B. Water ingress through the bund (paragraph 44 below).

C. Legal consequences viz. the application of the 1978 Act ( paragraph 60 below).

Also conveniently, the submissions were made by reference to the numbered grounds of appeal.

A. Ingress (from above) through the cap

Ground of Appeal 5 (the "sealant gap")

18. A defect was discovered when the site was investigated in 1997. The polythene liner was sealed onto a concrete lintel, or beam, where it abutted the edges of the concrete foundations of old or existing buildings. The discovery was:

"Between that beam and the substation, for a distance of about 8.5 metres, there was no sealant in the joint between the edges of the slab and the lintel and, when the lintel was exposed in 1997, the two edges had parted leaving a gap of between 10 mm and 40 mm." (judgment para. 163)

19. It also emerged that the gap had first been noticed in November 1993. BICC was advised then that the sealant was missing, but the advice was not heeded (para. 164). Parkman contended that this was a construction defect for which Cumbrian was responsible. There was evidence, however, that the work was properly carried out (para. 165) and that a defect of this magnitude would not have passed unnoticed by the Resident Engineer and his staff (para. 166). The judge found "... on the balance of probabilities, that the sealant had originally been installed ..." (para. 166). This finding is not challenged. It leads, however, to an issue as to the amount of water ingress into the tip which occurred through this pathway. The judge found that no significant quantity did (para. 184). The appellants say that that finding was against the weight of the evidence, and was wrong.
20. This ground of appeal exposes a situation of some irony. Parkman's case, supported by their expert witness Dr. Cairney, was that "a high proportion of that part of the external water ingress, due to rainfall entry, leaks into the containment because inadequate care was taken to install the necessary mastic sealant, which Cumbrian itself had proposed". At the trial, Cumbrian took the decision not to dispute this (see the "Further Information" supplied to the single Lord Justice at his request when considering the application for permission to appeal, para. 10). They recognised that "To have established such a point [that this was not a significant water pathway] would have helped if Cumbrian were held responsible for the sealant gap but would have worked against Cumbrian if they were not responsible". They understood that their own expert witness, Mr. Doherty, did not disagree with Dr. Cairney. His report "was not inconsistent" with it (para. 9). This was simply not a live issue, Mr. Marrin QC submits, at the trial.
21. However, when Mr. Doherty was being cross-examined by Mr. White QC for Parkman he said this, in a passage quoted by the Judge

"Q. The sealant … you would accept that this would provide a lead in for water ingress path into the containment? Let water in?

A. It is a possibility, yes.

Q. A possibility?

A. Yes, I do not think it is certain.

Q. You do not think water is going down through that location?

A. I think it is a possibility.

Q. Is there a strong possibility, or a small possibility?

A. A small possibility, in my opinion.

Q. Why do you say that?

A. I have looked at the contours in this part of the site on the membrane … [followed by his explanation, which included his disagreement with Dr. Cairney as to the size of the "... area which draws into this crack"]."

22. The appellants say disarmingly that this evidence came as a surprise to all. However, there was no re-examination and no application by Cumbrian for an opportunity to reconsider their position on the issue. The matter rested on the evidence as it was given.
23. The Judge dealt with the issue as follows:

"184. I have already summarised Dr. Cairney's view that the propensity for water ingress through the sealant gap was considerable …. However, the opinion of the experts was that the gap was not a significant water pathway. This view is best summed up in the evidence of Mr. Doherty, Cumbrian's principal expert, in this passage: …."

and he quoted verbatim the passage set out above, followed by his finding

"I accept that evidence which is corroborated by the relevant photographs, site reports and contemporary notes of site inspectors.

185. It follows that little of the surface water ingress occurred through the sealant gap and that the greater part of the approximately 60% of the water entering the containment, which entered through the cap, entered through tears and pinholes within the surface of the HDPE liner."

24. This conclusion is said to be against the weight of the evidence. Hence the irony. The appellants submit that the Judge was wrong to reject the evidence of Parkman's expert and to prefer the evidence given by their own. They say that this was not an issue at any stage of the trial.
25. We can agree that the Judge was wrong to give the impression that "... the opinion of the experts ..." was against Dr. Cairney's view, when he was preferring the evidence that Mr. Doherty had given. However, as he did make clear, he took full account of Dr. Cairney's evidence, and he based his conclusion, not just on Mr. Doherty's evidence, but on his appreciation of other relevant evidence as to the contours of the membrane and the size of the area which drained into the particular pathway, itself being no more than 40 mm. wide over on 8.5 metre length. Mr. Alexander, another expert witness called by Parkman, said merely that he had not estimated the amount of water that went through the gap, when he was being cross-examined by counsel for Nukem.
26. We are not referred to authority in connection with the criticisms that were made of the judge's preference for the evidence of Mr Doherty on this issue. It is now well established that the trial judge is required to give reasons for rejecting the evidence of one expert witness in favour of another's: Dyson -v- Leeds CC [2000] CP Rep 42, and Flannery -v- Halifax Estate Agencies Limited [2000] 1 WLR 377. Although the judge did not do this in paragraph 184 of his judgment, nevertheless we are satisfied, as we have stated above, that on a consideration of the whole of his judgment his reasons are sufficiently clear.
27. In our judgment, it is impossible for us to hold either that there was no evidence to support the Judge's finding or that there was any such irregularity in the trial or in the way that the evidence developed on this issue as would have entitled us to set it aside.
28. We also have grave reservations about Mr. Marrin's submission that if the finding was wrong, and the sealant gap did account for "significant" water ingress, Cumbrian has a defence to the whole of Parkman's case on the cap. The Judge found that there were defects in the membrane for which Cumbrian was responsible (paragraphs 135, 147 and 149) and that even if these were no more than "tears and pinpricks" (para. 149) caused e.g. by construction machinery running over the membrane, and even though only a small area was seen when investigations were carried out, nevertheless these extended over a wider area and they were sufficient to account for 60 per cent of the total water ingress. If the finding was that a significant contribution was made by the sealant gap, it would be necessary to assess how much that contribution was to the 60 per cent figure on the evidence that was given. If the Judge's finding stands, however, that question does not arise.

Ground of Appeal 12 – the absence of doming

29. This arises out of the Judge's finding:

"The absence of doming gradients is not, therefore, a defect or deficiency on this particular site" (para. 155)

The finding is criticised because, it is submitted, Parkman's failure to provide for "doming gradients" in the surface on which the membrane was laid was contrary to general good practice (the Judge accepted this) and therefore it was a design fault for which Parkman bore the responsibility vis-à-vis Cumbrian. The consequence of a flat or un-domed surface is that "ponding" occurs, thus increasing the rate of water ingress into the contained area below any tears or other defects in the membrane.

30. The Judge was prepared to accept the causation argument viz the increased rate of water ingress through individual defects if the surface was not domed, but he held that there was no design defect in this particular case. That was because the site was intended for light industrial development, and such a requirement was inconsistent with doming (that was Mr. Fermor's evidence, which he accepted).
31. The appellants submit that "Intended future use provides no justification for an inherently bad design" (skeleton argument para. 27). However, the Judge's logic is impeccable unless there was evidence that doming was an invariable requirement of good design, notwithstanding some other (inconsistent) requirement. If that was the case, a choice had to be made between the two. Mr Fermor pointed out the inconsistency, but his evidence did not go so far as to support a conclusion that this was, in the circumstances, a defect in design. The judge's finding, therefore, was one that he was entitled to make.

Grounds of Appeal 1 - 4 : "impermeable membrane"

32. Ground 1 is that the Judge erred in law by holding that Cumbrian's obligation was to provide an impermeable membrane, when their contractual undertaking was to carry out the work in a good and workmanlike manner. This is linked with Ground 2, that there was no or insufficient evidence of a breach of contract by Cumbrian, given the Judge's findings as to the care and precautions taken by Cumbrian, as to the susceptibility of the membrane to damage, and the relatively small area of the membrane in which actual defects were observed from which he inferred that other unobserved imperfections existed over a wider area.
33. Grounds 3 and 4 were not pursued before us.
34. Grounds 1 and 2 raise a number of interlocking issues which it is helpful to identify and separate. First, what was the nature of Cumbrian's contractual undertaking with regard to the membrane? Secondly, what defects were observed when part of the area was inspected, and how were they caused? Thirdly, what inferences if any could be drawn from those defects, which were observed, as to the existence of defects and as to their causes, in the remaining area of the membrane?
35. First, the nature of the undertaking, is a question of law. In paragraph 251, the Judge said:

"… Cumbrian's contractual obligation was to provide an impermeable membrane."

Not so, Mr Marrin submits, because the obligation was to carry out the work in a good and workmanlike manner. That is true, but the Judge immediately placed his remark in the context of an earlier part of the judgment

"I have already determined that that obligation was not to be regarded as contractually impossible …." (para. 251)

36. The earlier passage was at paras. 225-229. It started with findings as to what the defects were

"225. The defects in the membrane that existed occurred because the membrane was wrinkled in certain locations; because the forks of the digger [pierced] and punctured the membrane, particularly where it was wrinkled; because the sand was not laid uniformly to a depth of at least 100mm. but was omitted in certain locations; and because the plant was moved across the site in a way that ensured that pinholes and depressions would occur …."

37. The Judge then considered Cumbrian's reliance upon clause 13 of the ICE Conditions of Contract

"… as giving it a contractual justification for the membrane containing the imperfections that I have found it to contain. In essence, Cumbrian argued that it was impossible to attain a result whereby the membrane and its associated capping [sc. sand] layers, when laid, retained the complete integrity required and remained free of tears and pinholes despite this standard of finish being required by terms of the contract."

38. He stated his conclusions in paragraph 229, including

"… Cumbrian called no expert or factual evidence which sought to explain why impermeability was commercially physically impossible … [the evidence] did not suggest that the relevant standards of workmanship were impossible to attain …."

and finally:

"Cumbrian, as a further difficulty in its impossibility case, inconsistently asserted as its first and principal line of defence that the membrane was defect-free. Its contention was to this effect: "The specified standard of workmanship was achievable and I was able to achieve it. However, if the facts turn out differently and I am proved not to have achieved it, actually that standard was impossible to achieve". I am satisfied that the requisite standard was commercially achievable and that Cumbrian failed to achieve it. That failure amounted to a breach of the main contract."

39. This part of the judgment is not criticised. The plethora of references to the standard of workmanship required by the contract makes it clear that the Judge had the nature of the undertaking well in mind. He found that an impermeable membrane could be achieved by the specified standard of workmanship. As a corollary, the existence of defects which could be caused by a failure to achieve that standard was evidence (though not conclusive) that the contract was broken. Against this background, the terse single sentence statement of the obligation in paragraph 251, which is made the basis of this ground of appeal, is entirely understandable. The contention that he misdirected himself is not made out.
40. Secondly, what defects were observed, and how were they caused? Paragraph 158 of the judgment, referred to in Ground 2, was a finding that pinpricks were caused by an inadequate sand layer beneath the membrane, which meant that it impacted directly onto sharp stones, despite "precautions and care" taken in the choice and use of special plant to work on the surface of the membrane. The finding in paragraph 189 that the membrane was "highly susceptible to being damaged whilst being laid" has to be read in conjunction with the Judge's findings on "impossibility", already quoted above. Neither of these paragraphs, therefore, supports an attack on the Judge's findings that defects in the membrane were caused by Cumbrian's breaches of contract.
41. There was much detailed evidence about defects that were discovered in the area that was opened up. There were issues as to what the defects were and how, including by whom, they were caused. Cumbrian's case included allegations that they were caused by others, even by the opening-up process itself. We were not referred to this evidence in detail, and the Judge's findings are not challenged on this appeal. The appellants submit that the Judge was wrong to draw the inferences that he did, as to the existence of defects over a wider area, as to whether such defects were caused by breaches of contract by Cumbrian, and as to the amount of water ingress caused thereby. This is the third aspect of the submissions which we have identified above.
42. The short answer to this submission, in our judgment, is that the Judge was entitled to reach the conclusions that he did; they were supported by evidence which he was entitled to accept. He rejected Cumbrian's contention that the polythene liner was not impermeable (paras. 152-3). He accepted Dr. Cairney's opinion

"… that if such random excavations threw up such tears, the likelihood was that similar tears and pinpricks would be found in other locations, some of them in significant locations so far as water ingress is concerned "(para. 144).

He found that

"… unless most of that ingress [the total ingress through the cap] can be attributed to the other defects associated with the cap, and that was not a credible finding on the available evidence, [underlining added] substantial water ingress must have occurred through imperfections in the liner."

and he recorded Mr. Fermor's evidence

"... that if there were many similar holes to those that were discovered, those alone would be sufficient to explain a substantial amount of ingress through the cap." (para. 147)

43. His conclusion is stated in para. 149, including:

"… the inescapable conclusion is that most of that water ingress must have been through tears and pinpricks through the HDPE liner and that the imperfections actually observed must have been representative of many further such imperfections" (para. 149).

44. The Judge's findings that Cumbrian failed to achieve the appropriate standard of workmanship as regards the cap and as to the amount of water ingress caused thereby depended, therefore, on his analysis of a complex of factual issues. The analysis is clearly set out in his judgment. These grounds of appeal are either an attack on the whole of his findings on breach and causation, or they are nothing. In our judgment, they do not come within sighting distance of the former result.

B. Grounds of Appeal 6-11 – the Bund (Note: Ground 9 was not pursued, though not abandoned.)

45. The underlying stratum of boulder clay falls away to lower levels along the western perimeter of the site. In consequence of this, the trench which was filled with puddle clay in order to create the bund had to be excavated deeper in absolute terms if the required depth of one metre below the surface level of the boulder clay was to be achieved. If the trench was footed less than one metre into the boulder clay, the watertight integrity of the bund was compromised.
46. There was an additional problem, though this may not have been appreciated when the work was done. In the same area, a layer of alluvium (soil which is not impermeable as puddle clay is, and as boulder clay was supposed to be) was superimposed on the boulder clay, at some depth below the surface of the tip. The trench had to be taken through this alluvium as well as one metre of boulder clay before reaching the required depth.
47. For this reason, the issue raised by these Grounds of Appeal is also described as the "window (or lens) of alluvium" point. Strictly, though, the existence of the alluvium is not the point in issue. The allegation is that the trench was not excavated deeply enough into the underlying boulder clay. Cumbrian denies the allegation: the relevance of the alluvium layer or 'window' is that its presence may account for its failure to do so, if that occurred.
48. The issue is dealt with in section 5.2.2 of the judgment, paragraphs 102-130. Paragraph 116 describes how the initial allegations made by BICC were limited to water ingress through defects in the membrane and through the basal (underlying boulder) clay. There had been little contact between the parties' experts, and the available data had not been coordinated or analysed as a body. At an early case management conference, therefore, on 26 July 1995, the court ordered the experts to meet. Their meeting threw up concerns about the integrity of the bund as a water barrier. In April 1996 a protocol was drawn up "for the Proposed Investigation of the Clay Curtain Wall" (see para. 117). Contractors were employed to drill "probeholes" to an agreed specification, and an agreed specialist was employed as contractor to do this work.
49. The experts were Dr. Cairney appointed by Parkman, Mr. Fermor (Cumbrian) and Dr. Jefferis (BICC). Mr Fermor in fact only made two brief visits to the site when the drilling was being carried out. Some reference was made to this fact and the reasons for it both in the evidence and during the hearing of the appeal; but we can assume that the only relevant consequence is that Mr Fermor's evidence on these matters was perforce more limited than it might otherwise have been.
50. In summary, the evidence from the probe drilling was that in certain places the trench was founded in alluvium rather than boulder clay. Cumbrian disputed this, and relied upon contemporary site records and on witnesses' evidence that the trench was fully excavated to a one metre depth in boulder clay for the whole of its distance. The Judge found

"130. My overall conclusion is that, where it differs, the probehole evidence is to be preferred to the contemporaneous site recordings. My finding is that the trench, for a significant part of the 190 metres between probehole 2 and probehole 5, was founded in alluvium and that the alluvium lens situated between the bottom of the trench and the top of the underlying boulder clay varied in depth from negligible to nearly 1 metre in depth." (para. 130).

51. The appellants say that this finding was against the weight of the evidence (Ground 6) and that the Judge was wrong to accept the probe drilling results relied upon by Parkman (Ground 6(i) and (iii)); that he ought not to have found that Cumbrian's site personnel were unaware of the presence of alluvium (Ground 7) nor that they might have mistaken the layer alluvium for boulder clay (Ground 8); that the Judge's reasons for rejecting contemporary site records were wrong, in two respects (Grounds 9 and 10); and that he was wrong to find, and place reliance on the fact, that Cumbrian had instructed Mr. Fermor to restrict his presence on the site when the drilling tests were carried out (Ground 11).
52. Viewed in isolation from the other evidence, Mr Marrin mounted a convincing challenge against the probehole records which purported to show that the bund was founded in alluvium or in less than one metre of boulder clay. He relied in particular on the fact that in four cases the test results were close to the contemporary site records, whereas in a second group of four "mismatches" they were strikingly different. This suggests, he submitted, that either one or the other of the two sets of results was open to serious error, and that these were the probehole results. The explanation might be human error, or that mistakes occurred, or that unwittingly the probeholes were allowed to emerge from the sides of the bund before reaching its foundation in the boulder clay. This could happen if the drill was not centred at the top of the bund, or if it deviated from the vertical. If this occurred, the probe would encounter alluvium at levels which were in fact above the foundation of the Bund. Mr Marrin pointed to records showing that two of the probeholes were re-drilled, apparently because the first attempt was not on the centreline of the Bund. It was not a coincidence, he submitted, that the four major mismatches are the ones on which Parkman relies. Those results were most likely to be wrong, and therefore the allegation was unsupported.
53. Cumbrian's criticisms of the probe borehole results were considered in detail by the Judge in paragraphs 116-126. Para. 127 follows

"127. The conclusion that I draw from the probehole evidence and the attacks made upon is that the afterthoughts of Mr Fermor, who was not present during the probehole drilling because of an unexplained instruction from Cumbrian to him that he should not attend, are unconvincing. The test was agreed upon and the experts accepted that it would be reliable when agree[ing] on the procedure to be followed. Moreover, the uncontroverted evidence of Dr. Cairney and Mr. Hurry suggests that the test was accurately carried out. Furthermore, Cumbrian's attack on this evidence is largely based on an unfavourable comparison between it and Mr. Appleton's site measurements, whose likely inaccuracies I have already dealt with at length. The objective and technically acceptable means of measuring the depth of the bund wall provided by the probehole results is inherently reliable unless, which was not shown to be the case, this system and its execution were flawed."

54. His reference to "the afterthoughts of Mr. Fermor" is explained by the fact that Cumbrian's attack on the probehole results was not launched until September 1999, shortly before the trial. The following answers by Mr. Fermor during his cross-examination by Mr. White QC should also be noted:

"JUDGE: Are you able to say whether that appears to be an appropriate protocol for the carrying out of this probe test?

A. I think on the face of it it seems entirely reasonable. I would like to think with hindsight I guess I might feel we should obviously be cautious about whether the probeholes are going to prove what was intended but I am afraid I cannot say I would have done any differently … obviously subsequently we are slightly disconcerted to find the results do not seem to prove what we intended [them] to." (Day 6 p. 128)"

and:

"MR WHITE: … do you have any reason to believe that the probes were not carried out competently?

A. No, I think we can be sure that the protocol was reasonably followed in a competent manner." (Day 6 p. 129"

55. Dr. Cairney gave evidence that the probehole results were reliable, and he was critical of the contemporary site records (Day 7 pp. 61 and 65).
56. The Judge also considered the contemporary site records, how they were obtained, and the oral evidence from Cumbrian personnel, including the excavator driver, in paragraphs 107-115. He said that conditions on the site were not easy for making accurate measurements, and he pointed out some deficiencies in the methods used (para. 109). He said this:

"110. In truth, the principal means of determining the required depth at any particular location was by eye, namely seeing from the top of the excavation when the colour and consistency of the material being excavated changed and then, by eye and by use of the staff, seeking to excavate a further 1 metre into what appeared to be the clay."

57. This led him to note that:

"None of Cumbrian's witnesses appeared to appreciate that there was a lens or window of alluvium …." (para. 111).

Mr Marrin says that there was no evidence to support this (Grounds 7 and 8), referring also to the Judge's further statement that:

"The visual and textual [sic] differences between soil and clay were clearly marked" (para. 112).

He submits that the evidence did not establish this: the matter was not gone into with any of them.

58. The Judge's description of the site measurement process as "... relatively rough and ready ..." (para. 114.5) was not challenged, but Mr. Marrin submitted that the reliability of the measurements was established by other evidence. He relied particularly on the witnesses who said that they excavated the trench one metre into boulder clay, and upon the fact that the site measurements were made jointly by Mr. Love (Cumbrian's site engineer) and Mr. Appleton (Parkman's Resident Engineer), without any complaint or reservation by the latter.
59. The Judge had to take account of the whole of this evidence – the probehole results and the criticisms made of them; the contemporary site records, whose reliability and accuracy also had to be assessed; and the evidence of witnesses who did the work and saw it being done – in order to make his finding as to whether or not the allegation, that for a length of 190 metres the bund was founded in alluvium rather than clay (strictly, that the trench was excavated less than one metre into the underlying boulder clay) was proved to be correct. Although the attack on the probehole results may be convincing, seen in isolation, the same is true of the criticisms made of the site records. The Judge found that the former were reliable and should be preferred. We cannot say that he was not entitled to reach that conclusion.
60. As we read his judgment, he based his decision on his acceptance of the borehole results (para. 130, quoted above). His references to the site personnel failing to notice that the excavation was encountering alluvium, not clay, were not an independent reason for finding that this had occurred. Rather, it could explain why the trench was not taken one metre into the clay. There was evidence that the presence of alluvium was noted in the site record. But the absence of evidence that the persons responsible for excavating the trench were concerned about the difference, however prominent it may be, tends to suggest that this is probably what occurred if, as the Judge found, the probehole results are accepted as correct.

C Legal Consequences

61. Parkman claim under section 1(1) of the Civil Liability (Contribution) Act 1978 as:

"... a person liable in respect of any damage suffered by another person" (ie BICC),

to recover contribution

"... from any other person [ie Cumbrian] liable in respect of the same damage (whether jointly with him or otherwise)."

Parkman allege, therefore, that Cumbrian is a person liable to BICC in respect of the "same damage" as that for which they (Parkman) were liable to BICC, and in respect of which liability the BICC/Parkman Settlement Agreement was made in December 1998.

62. The fact that BICC's claim was compromised by Parkman does not prevent the claim for contribution from being made under the Act: it is expressly permitted in these circumstances by section 1(4).
63. Section 2(1) provides that:

"... the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage in question."

64. The judge held that Parkman should recover from Cumbrian one half of the total sum of £1,950,000 which Parkman had agreed to pay and has paid to BICC under the Settlement Agreement, and he ordered Cumbrian to pay £975,000 accordingly (see paragraph 16 above: judgment paragraphs 304 - 305).
65. The appeal raises a number of issues as to the interpretation and application of the 1978 Act. These can be summarised as follows:

a) Were Parkman and Cumbrian both liable to BICC in respect of "the same damage"?

b) Was the judge's apportionment (paragraph 15 - 16 above) unduly favourable to Parkman?

c) Was the judge correct to include in the amount of Parkman's liability to BICC the whole sum of £1,950,000, when £600,000 was said to have been paid not in respect of Parkman's liability to BICC but of BICC's costs of the proceedings against Parkman and the other defendants?

66. The starting point must be the nature of the claim made by BICC against Parkman, and the terms of the Settlement Agreement. The claim is set out in a Re-amended Statement of Claim for which leave was given on 1st May 1998. It seems that that pleading was extant in December 1998 when the Settlement Agreement was made.
67. By the pleading, BICC alleged that Parkman (First Defendant) were liable for negligent design of the containment works and breach of an implied contract term (paragraph 6.2) that the works as designed would be reasonably fit for their intended purpose (paragraph 12, Particulars 1). In addition, there were numerous allegations of negligence by Parkman in relation to the construction of the works by Cumbrian (Second Defendant). Against Cumbrian, BICC alleged that they were in breach of the works contract (paragraph 15).
68. Paragraph 16 of the Re-amended Statement of Claim reads:

"16 As a result of the negligence breach of duty and breach of contract by the First Defendant and the breach of contract by the Second Defendant the plaintiffs have suffered loss and damages."

69. Particulars were given which in the original (unamended) Statement of Claim were these:

"(1) Leachate volumes generated from the containment area have increased year on year since completion of the specified works in 1990. It is likely that that trend will continue in the future.

(2) Currently the Plaintiff dispose of the leachate by agreement with the ... authorities."

70. The Re-amended Statement of Claim further alleged:

"(3) the Plaintiffs have suffered and will suffer as follows:

A Existing Losses

[total £2,452, 827]

B Further Consultancy Costs

Consultation fees for further investigative works.

£109,200 (estimated)

...

To provide an effective long-term solution for the containment site will require additional investigations and a new design. It is projected that this work will be completed by the middle of 1997. Implementation of the design is likely to take a further year.

C Projected Future Costs (pro rata current costs)

From January 1997 to December 1997

...

Sub-Total £205,836

Total Estimated Extrapolated Costs £2,767,863

The Plaintiffs also claim as damages the costs of implementing the new design. Particulars of such costs will be provided as soon as the Plaintiffs are able to do so."

71. It should be noted here that the first item "A. Existing Losses" included the costs to BICC of the construction works carried out by Cumbrian and the fees paid to Parkman, totalling £1,045,200. The judge commented, rightly, that this sum could not be recovered at the same time as claiming the alleged additional costs of treating leachate over the long term (judgment paragraph 237). That part of the claim, therefore, could be discounted, and the total under A was reduced to £1,047,627.
72. By the Settlement Agreement dated 3rd December 1998, Parkman undertook to pay to BICC the sum of £1,950,000

"... in full and final settlement of all claims which BICC has against Parkman arising out of the design and construction of the containment at Helsby and of all issues arising between BICC and Parkman in the action" (clause 2.1).

73. By an Amended Contribution Notice dated 7th June 1999 served by Parkman on Cumbrian, Parkman claimed a contribution in respect of the sum of £1,950,000, but this was re-amended in October 1999 to read:

"£1,350,000 paid ... in settlement of the Plaintiff's claims ... exclusive of costs."

The Re-amended Contribution Notice also gave credit for £137,500 received by Parkman from SGS.

74. In order fully to understand Mr Marrin's submission that Parkman and Cumbrian were not both liable to BICC for "the same damage", as required by section 1(1) of the Act, it is necessary to take account of two further developments before the trial took place in October 1999.
75. First, the Court appointed Dr S A Jefferis as an expert to report on

"Quantum relating to the failure of the containment at the BICC, Helsby Work."

He reported in April 1999. He considered three options and he concluded as follows:

"Option 1: Repairs to the existing containment

[purpose: to minimise the quantity of leachate produced from the containment]

Cost estimate: £2.7 million to £2.9 million plus annual running and maintenance costs.

Option 2: Creation of a new landfill

Cost estimate: £6,093,256

Option 3: Construction of a leachate treatment plant with discharge to a foul sewer

... if the necessary permits for discharge to foul sewer can be obtain then this could be a practical solution for the management of the site.

Cost estimate: £354,800 plus other costs."

76. Secondly, BICC compromised their claims against Cumbrian (paragraph 12 above). During the settlement negotiations, BICC's solicitors produced, but did not serve, a further pleading which appears to have been intended as a Re-re-amended Statement of Claim, though it is not correctly drafted as such. A further claim was added under the heading "D. Cost of Improved Leachate Treatment Plant". This claim totalled £502,909.76, including Dr Jefferis's estimated capital cost figure of £354,811. The paragraph referring to a "new design" (quoted above) was deleted.

The judge's findings

77. The judge addressed three questions:

"(1) What damage was complained of [by BICC]? (2) To what extent was that damage caused by the ascertained breaches of contract? (3) What damages flowed from or were caused by the damage caused by that defendant?" (paragraph 230)

78. He answered question 1 as follows:

"231 The damage suffered by BICC was physical in nature, being the water that ingressed into the containment after the containment works had been completed. The damage was not the cost of treatment of the leachate nor the cost of the additional protective measures or treatment plant, nor the costs of bringing proceedings in an attempt to recoup these costs. These costs represent the damages flowing from, are claimed as the result of, and are potentially recoverable for that water ingress damage."

79. In considering the extent of the damage the judge said this:

"The extra costs claimed [by BICC] were those incurred in treating and disposing of the leachate. The additional work and the enhanced treatment plant costs claimed were again allegedly necessitated because of the continuous ingress of water into the containment." (Paragraph 233)

80. Under the heading "The Damages Claimed", the judge referred to the figures in the "Proposed Further Amended Statement of Claim", which BICC's solicitors produced in their settlement negotiations with Cumbrian in April 1999 (see paragraph 75 above). The judge said:

"... there was no suggestion during the trial that the figures ... were inflated or unreasonable."

He noted Dr Jefferis's estimate of the costs of providing a replacement treatment plant which he took at £572,465 (paragraph 239.4), and for reasons set out in paragraphs 236 - 238 he concluded:

"Thus, the totality of the claim was both directly related to volume and capable of apportionment between each of the relevant pathways." (Paragraph 238)

On this basis, the "... viable overall claim by BICC against Parkman ..." was about £2,150,000.

81. Next he considered the "overlap" in the liability of the three parties to BICC resulting from the apportionment of responsibility for water ingress between Parkman and Cumbrian and Nukem, as described in paragraph 15 above. In summary, there were three sources of ingress: through the cap (60% - 65%); through the bund (15% -20%); and through the base (20%). Parkman shared the responsibility for each of these three (in other words, it was potentially liable for 100% of the claim), and Cumbrian shared responsibility for the cap (60%) and the bund (20%): 80% of the total.
82. Turning to the 1978 Act (paragraph 270) the judge directed himself as follows:

"272 Damage, for which a contribution claim may be made, is distinguished by the Act from the damages or compensation which the relevant party is entitled to recover for that damage. The damage that is referred to is the harm suffered by that other person or the wrong that caused the injury or deaths. Only if the harm suffered or the wrong that has been caused is purely economic will the damages be commensurate with the damage suffered" (referring to Birse Construction Limited -v- Haiste Limited, Watson & others (Third Parties) [1996] 1 WLR 675 and Jameson -v- CEGB [1998] QB 323

83. We observe that the distinction between "damage" and "compensation" including damages is clearly drawn by the Act: cf section 6(1). "Damage" refers, as the judge said, to the harm suffered or the wrong done. Whether this leads to the conclusion stated by the judge is perhaps open to debate. He said:

"Thus the 'damage' for which Parkman was sued and for which it agreed to pay compensation was the water ingress into the containment." (paragraph 274).

Although this conclusion derives from the authorities to which the judge referred, it seems artificial to categorise the "damage" suffered by BICC as the physical ingress of water into the containment, rather than the costs incurred by BICC in treating the water that leaked from the containment and removing the impurities borne by it. This could be regarded as a case of economic not physical "damage". However, because the two are, as the judge noted, "commensurate", it is unnecessary to make the distinction in the present case.

84. After close consideration of "... the contribution that can be ordered ...." (paragraph 284) the judge held:

"297 Thus, in assessing a just and equitable sum, my starting point is that Parkman has incurred a liability to pay BICC £1,950,000 for damages commonly caused by all three parties to the contribution proceedings."

85. This apportionment in terms of "causative potency" is set out in paragraph 303, quoted in paragraph 15 above, and the judge's overall assessment is in paragraph 304, which begins:

"304 I do not believe that a fair and equitable apportionment requires precise mathematical calculation."

He held that Cumbrian should contribute 50% of the overall sum of £1,950,000 paid by Parkman to BICC.

86. The judge recorded (twice) that both Cumbrian and Nukem conceded that Parkman's settlement was reasonable (paragraphs 246 and 289.2).

Cumbrian's appeal

87. Grounds 13 and 13A - C, which were added by amendment, can be taken together. Essentially, they are concerned with identifying the "damage" for which both Parkman and Cumbrian are liable to BICC for the purposes of the 1978 Act, and with quantifying the amount of any contribution that can be recovered.
88. Cumbrian contends that the judge was wrong to hold that both Parkman and Cumbrian were liable to BICC for "the same damage" under section 1(1) of the Act:

"The judge ought to have found that:

(i) The damage or the wrong caused in respect of which Parkman were liable to BICC was the provision by them of a containment which was unfit for its intended purpose by reason of the fundamentally flawed design;

(ii) The damage or the wrong caused for which Cumbrian might be liable to BICC was the consequences of additional leachate generation;

(iii) The nature of the two categories of damage are of a wholly different kind and are not the "same damage" (Ground 13B)

89. This contention is supported by reference to BICC's Re-amended Statement of Claim where the allegation is made that Parkman were negligent and in breach of contract by failing to design and supervise the construction of containment works which were fit for their intended purpose, and where the Particulars of Loss first referred to the need for a new design, later replaced by claims for the cost of an improved water treatment plant said to be £502,909 (see paragraph 75 above).
90. Mr Marrin QC also refers to Dr Jefferis's Report (paragraph 74 above) where the cost of "Repairs to the existing containment" was estimated at £2.7 - £2.9 million. Dr Jefferis advised that even these repairs would fail to achieve Parkman's original target, which was that all outflow of contaminated water (leachate) would cease after a period of two years: some form of continuing treatment and disposal costs would continue indefinitely.
91. Whilst a summary may not do full justice to Mr Marrin's submissions, they were to this effect. Parkman were liable to BICC for a wrong which consisted of the provision of a "fundamentally flawed" design. Quoting from the Supplemental Skeleton Argument for the appellants:

"Irrespective of the quality of Cumbrian's construction work the site would not have dried out nor achieved its intended purpose by reason of water ingress through the basal clay for which Cumbrian was not liable." (paragraph 2)

92. Moreover, BICC was claiming the (unquantified) cost of a "new design" in December 1998 when its Settlement Agreement with Parkman was concluded; only later was this claim deleted in the course of settlement negotiations with Cumbrian, against whom it could not be maintained. The damage for which Parkman were liable to BICC was the need for a new design, if the original objects were to be achieved. Mr Marrin called this in argument the defective design concept. Cumbrian, on the other hand, was liable only for defects in the construction of the "flawed" design, and for that part of the water ingress which was attributable to them.
93. In our judgment, the position is much simpler than Mr Marrin's analysis suggests. The fact is that the containment as designed and constructed was not effective in halting water ingress into the tip, with the result that there was a continuing need to treat and dispose of contaminated water flowing from it. The continuing water ingress was caused by defects in both the construction and design of the containment. Parkman and Cumbrian (and others) respectively were liable to BICC for these defects, and they were each partly responsible for the water ingress which resulted from them. The claim by BICC against both parties was for the cost of treating and disposing of the additional quantities of leachate caused by this water ingress. The additional quantities were such that an enhanced treatment plant was necessary; the cost of providing this was the appropriate measure of damages for the wrong that BICC suffered. That wrong can be defined either as the water ingress itself or as the cost of treatment and disposal of leachate which resulted from it. Both parties were liable to BICC for the water ingress and for the costs of dealing with it. That was "... the same damage ..." for the purposes of the Act.
94. Cumbrian's contention, it seems to us, depends upon the hypotheses that if BICC had chosen to do so, it could have claimed from Parkman the cost of creating a new landfill (Dr Jefferis's Option 2 - estimate £6,093,000) or of repairing the works in fact carried out (Option 1 - estimate £2.7 - £2.9 million), and that Parkman would have been liable to BICC for one or other of these claims. The fact is that neither claim was made, against Parkman or Cumbrian. If either had been put forward there would have been good grounds for arguing, in the light of Dr Jefferis's report, that BICC was required to mitigate its damage by adopting the cheaper alternative of continuing to treat and dispose of leachate, albeit at the cost of enhancing the treatment plant. But none of these contingencies arose. The claim in fact made, and the liability established against both parties, was for the costs of dealing with the consequences of additional water ingress or of treating additional leachate, whichever formulation is preferred, and that was "the same damage" within section 1(1) of the 1978 Act.
95. Mr Marrin did not emphasise before us the further allegation made by BICC that the site was also intended to be fit for light industrial development. Parkman's design incorporating a membrane meant that this could not be achieved, because piles supporting the buildings would pierce the membrane and compromise its watertight integrity. This might have caused BICC to claim that Parkman was liable for the costs of remedying this design defect also; but BICC never did this, and Cumbrian cannot rely upon the hypothesis that they might have done so.
96. Ground 13C restates the "same damage" argument by contending that Cumbrian was only liable to BICC for that part of the damage for which Parkman were liable to BICC -

"... represented by some £1,032,210 out of the total claim faced by Parkman of some £4,440,250."

This links with Ground 13, that the judge was wrong to find that the total claim against Parkman was £2,150,000 (paragraph 239). The £4,440,250 figure includes the £2.7 - £2.9 million estimated cost of Dr Jefferis's Option 2.

97. The short answer to both contentions is that the only "viable" claims, as the judge described them, totalled £2,150,000. These were all in respect of additional treatment costs. No further claim in fact was made, and if it had been, it would have been met by the "mitigation of damage" objection referred to above.
98. The further contention, that Cumbrian's contribution should have been assessed rateably (Notice of Appeal paragraph 32) therefore does not arise.
99. For these reasons, in our judgment the appellant's contentions under Grounds 13 and 13A - C of the Amended Notice of Appeal fail.

Apportionment

100. Three grounds of appeal challenge the judge's apportionment of responsibility between Parkman and Cumbrian in assessing the amount of the contribution which Parkman is entitled to recover. Ground 14 contends that more than 50% in relation to water ingress through the cap should be attributed to Parkman and those involved in the design of the membrane, and that Cumbrian's share should be reduced.
101. Mr Marrin accepts that the Court of Appeal should only interfere with the trial judge's assessment in "exceptional" cases, as stated by the House of Lords in an Admiralty case The McGregor [1945] AC 197. He submits that the circumstances were exceptional here. In relation to water ingress through the cap, there were specific findings of defective design (detailing errors, paragraph 196; insufficient gradient, paragraph 196; supervision errors, paragraph 199; specific warning by Nukem, paragraph 301; a single skin membrane was undesirable, paragraph 193) and of factors which militate in Cumbrian's favour (there was no water ingress through the sealant gap; installing the membrane was a difficult exercise, carrying with it a considerable risk of damage to the membrane (paragraph 301); and there was no contemporaneous criticism of Cumbrian's workmanship. These matters, Mr Marrin submitted tip the scales in favour of Cumbrian, and the 50:50 apportionment is manifestly wrong. The correct figure, he submits, should be two-thirds:one third in Cumbrian's favour.
102. Ground 15 arises out of the judge's finding that Cumbrian bears 80% of the responsibility for water ingress resulting from defective construction of the bund, imposing only 20% on Parkman for their negligent supervision of the work. The "... traditional range of contribution by a supervisor ...", as the judge noted (paragraph 301), is from 20% to 33¹/₃%: he was wrong, it is submitted, to take the lower figure in the present case. Mr Marrin points to the judge's findings that Parkman failed to alert Cumbrian to the presence of alluvium and acquiesced in a rough and ready method of site measurement (paragraph 199).
103. It must be observed that the matters relied upon by Mr Marrin are all referred to by the judge; it cannot be suggested that they were not present to his mind, nor is it said that his findings were self-contradictory, except that the overall assessment of 50% was not a proper reflection of the whole. We cannot agree that this is an exceptional case, nor that the judge's overall assessment was manifestly wrong. He made findings of serious defects in the construction work carried out by Cumbrian as regards both the cap and the bund, and he was concerned with the allocation of responsibility for water ingress which result from those defects as well as errors in supervision and design. There is no reason for doubting that his overall assessment was fair and correct.
104. Ground 16 relies on a specific matter arising from the findings in paragraph 303 ("causative potency") and the judge's "... fair and equitable apportionment ..." in paragraph 304. In the former, Cumbrian is held responsible for 50% of water ingress through the cap, which formed 60% of the total, and for 80% through the bund, 20% of the total. The cumulative effect, therefore, is responsibility for 46% (30% plus 16%) of the total. Yet in paragraph 304, Cumbrian's contribution is assessed at 50% of £1,950,000, the total sum paid.
105. The small percentage difference of 4% is not insignificant in financial terms: nearly £80,000, with consequences as regards interest and costs.
106. The judge explained earlier in his judgment why he gave a wider meaning to "responsibility" for the purposes of assessing the amount of contribution under section 2(1) of the Act than what he called "causative potency" alone. This was in paragraph 208:

"In its context, the 'responsibility' referred to relates to factual responsibility in a causal sense, moral responsibility in the sense of culpability and organisational responsibility in the sense of where in the hierarchy of decision-making and in the organisational structure leading to the damage the contributing party was located."

107. It was not submitted to us that the judge was wrong to take account of the additional factors to which he referred, or that "responsibility" in section 2(1) of the Act means causative potency alone. Rather, the submission was that all relevant factors were taken into account in the assessment, impliedly 46%, in paragraph 303. The judge gave no reason for increasing this figure to 50% in paragraph 304.
108. In our opinion, the premise of this argument is incorrect. The judge expressly limited himself to "causative potency", and he reached his preliminary conclusions on that basis. He then took account of other, wider factors as he was entitled to do. There is no inconsistency between the two paragraphs and the overall assessment stands.

Costs

109. Finally, Grounds 17-20 are concerned with the judge's assessment of a contribution figure by reference to the sum of £1,950,000 paid to BICC in respect of "all claims" (Settlement Agreement Clause 2.1) but which Parkman attributed as to £600,000 to BICC's costs (Contribution Notice, as re-amended in October 1999).
110. The Contribution Notice, as re-amended, limits the claim for contribution under the 1978 Act to the payment of £1,350,000 "exclusive of costs". The judge records that Parkman deleted £600,000 (from £1,950,000) on account of costs because they-

"... assumed that [Parkman] could claim contribution towards that notional costs figure pursuant to section 51 of the Supreme Court Act, 1981." (judgment paragraph 290)

He continued:

"If it has no such entitlement under section 51, Parkman seeks to claim contribution towards the entire settlement sum under the Civil Liability (Contribution) Act."

111. Although the claims were not made formally in the Contribution Notice, the judge regarded Parkman as seeking an order in relation to £600,000 under section 51(3) of the 1981 Act or, alternatively, a contribution order extending to the full £1,950,000 under the 1978 Act.
112. He held that he had no jurisdiction to make an order under section 51(3), but that (distinguishing the judgment of His Honour Judge Lloyd in J Sainsbury plc -v- Broadway Malyan [1998] 61 Con LR 31) he was entitled to order a contribution under the 1978 Act in respect of the full sum paid to BICC, inclusive of any part referable to BICC's costs.
113. Before us, Mr Marrin for the appellant submitted that the judge was wrong to order any contribution under the 1978 Act in respect of what Parkman themselves attributed to BICC's costs of the proceedings against them; but he agreed with the contention raised by the Respondent's Notice that the judge did have power to make a costs order under section 51(3) which could be to the like effect.

Section 51(3), Supreme Court Act, 1981

114. Section 51(1) provides that:

"... the costs of and incidental to all proceedings in ... the High Court ... shall be in the discretion of the court."

Section 51(3) reads:

"(3) The court shall have full power to determine by whom and to what extent the costs are to be paid."

115. The judge's reason for holding that he had no power to make an order under this section was that BICC were no longer active parties to the proceedings "... whose costs can be assessed by the court". As stated above, neither counsel supports this conclusion, and we can record briefly that in our judgment the discretion given by the section is not limited so as to exclude an order in these contribution proceedings in respect of a sum paid to the original claimant (plaintiffs) in respect of their costs.
116. Mr Marrin submitted that the judge's order in respect of the £600,000 paid to BICC in respect of their costs, even if he had the power to make it under section 51(3), should not be upheld in the present case, for the same reasons as he gave for objecting to the order in fact made under the 1978 Act. These will be considered below.

Civil Liability (Contribution) Act 1978

117. Judge Lloyd held in the case cited that:

"(e) Even on a wide interpretation of [the 1978 Act] costs could not form part of the loss or damage in respect of which a party was entitled to contribution." (Headnote)

118. His reasons were helpfully summarised by Mr Marrin as follows:

a) Section 6(1) of the 1978 Act states that:

"... a person is liable in respect of any damage for the purposes of this Act if the person who suffered it ... is entitled to recover compensation from him in respect of that damage ...".

b) Section 2 provides that the amount of any contribution must be assessed by reference to liability for that "damage" (cf the reference to "damages" in section 2(3)).

c) Neither "compensation" nor "damage" includes a right to recover costs, or a liability to pay costs.

d) The amount of costs depends on "... factors unrelated to the cause of the original damage ..." (per Judge Lloyd J Sainsbury plc -v- Broadway Dalyan at 76).

e) Costs require a detailed investigation and assessment which is "... not consistent with the simplicity envisaged by the 1978 Act" (Judge Lloyd at 77).

119. In the present case, the judge referred to the "very different" circumstances of the Sainsbury case and to the context of Judge Lloyd's remarks, which were obiter (paragraph 295). The question which arises in the present appeal is whether the judge was correct to hold that the court has power to order contribution under the 1978 Act towards a payment reasonably made under a settlement agreement in respect of liability for "... the same damage ..." when the payment is in respect of "all claims" including a potential liability for costs. Mr Marrin submits that the judge was wrong both for the reasons given above and because in the present case the respondents clearly and deliberately limited the payment in respect of liability to £1,350,000 and attributed the balance, £600,000, to BICC's costs.
120. In our judgment, the judge was entitled to adopt the approach he did. On the evidence before him, the payment made was £1,950,000 in respect of "all claims" by BICC against Parkman.

"The settlement was, in its entirety, settling Parkman's liability for the damage to BICC's containment and, in consequence, may in its entirety found a contribution claim under sections 1(1) and 1(4) of the Act." (paragraph 296)

121. Moreover, even if part of the payment was expressed to be made in respect of BICC's costs, we are not persuaded that the words of sections 2 or 6(1) of the Act preclude the making of a contribution order in respect of that part. Section 1(1) defines the person who is entitled "... to recover contribution ..." and the person from whom it may be recovered. Section 2(1) does not expressly limit the amount of contribution to the amount payable in respect of liability "... for the damage in question ..." - section 2(3) might, but would not necessarily have this effect; and section 6(1) again defines the person who can claim contribution, without expressly limiting his recovery to the "compensation" he is liable to pay to the injured person.
122. The common law background is provided by the Court of Appeal's decision in Biggin & Co Limited -v- Permanite Limited [1951] 2 KB 314. The amount paid under a reasonable compromise with a third party may be taken as the measure of damages in a breach of contract claim. There the settlement figure included the third party's costs, and one of the reasons for the Court of Appeal's decision was that costs were saved by the settlement of the third party proceedings (see page 326). Judge Lloyd acknowledged that

"... reasonable settlements are to be encouraged (which invariably means that costs are taken into account in arriving at the figure)." (page 77)

123. Our present view is that the 1978 Act enables the party claiming contribution to recover a contribution towards a payment made in respect of the injured party's costs: but it is sufficient for the purposes of the present case that the judge was entitled to have regard to the whole of the settlement figure paid in respect of "all claims". We would so hold.
124. By Grounds 19 and 20 Cumbrian contends that the judge was wrong to apply the overall 50% contribution assessment to the £600,000 which Parkman accepted that they had paid in respect of BICC's costs. There was no evidence as to what costs BICC had in fact incurred, nor whether they were concerned with BICC's claims against Parkman for design faults "... with which Cumbrian were not concerned". Nor was there any form of assessment which would have indicated the extent to which the costs were recoverable from Parkman in the action.
125. These contentions raise a number of issues. Was the settlement reasonable? The judge thought that this was conceded by Cumbrian (see paragraph 85 above), although Mr Marrin submitted to us that the burden of proving that it was reasonable rested upon Parkman, and that the burden was not discharged. Secondly, the absence of detailed assessment is a factor relevant to the question whether there is power to order contribution in respect of a payment on account of costs, which we have considered above (paragraph 117(e)). Thirdly, does Cumbrian have a valid complaint that the payment was in respect of costs incurred by BICC in relation to their design claims against Parkman? It seems to us inevitable that any of BICC's costs for which Parkman were potentially liable must relate to BICC's claim against them, not against Cumbrian.
126. However, none of these considerations, in our judgment, impinge upon the fact that the judge was entitled to make an overall assessment of the amount of contribution which Parkman should recover from Cumbrian in respect of the total payment of £1,950,000, and in our judgment he was.
127. For these reasons we would dismiss this appeal.
Order: Appeal dismissed with costs on an indemnity basis after 10^th July; detailed assessment; Cumbrian Industrials ltd to pay £75,000 on account within 14 days; application for permission to appeal to House of Lords refused. (Order does not form part of the approved judgment)