The Supreme Court has ordered a fresh High Court hearing on whether ECI European Chemical Industries Limited may pursue a separate contribution claim against MC Bauchemie Müller GmbH and Company after its third-party notice was set aside for delay.
The dispute arose from ECI’s claim for indemnity or contribution in connection with a separate action brought by Vincent Donnelly. ECI had obtained leave to serve MC Bauchemie with a third-party notice. The notice was later set aside because it had not been served “as soon as is reasonably possible” under section 27(1)(b) of the Civil Liability Act 1961. No appeal was taken from that order.
The High Court considered two preliminary issues. It answered both against MC Bauchemie, which had argued that ECI could not maintain the separate proceedings. The Supreme Court upheld the answer to the first issue: serving a defective third-party notice that is later set aside does not, by itself, bar a claimant from bringing a separate contribution action. The claimant is not automatically in a worse position than one who served no notice.
The second issue concerned whether the court should use its discretion to refuse ECI’s separate claim. In a judgment delivered by Geoghegan J, the Supreme Court allowed MC Bauchemie’s appeal on that issue and ordered a new hearing in the High Court. It did not decide whether ECI’s contribution claim should ultimately proceed.
At the new hearing, the High Court must determine whether there was a good reason why a third-party notice complying with the Act was not served. The Supreme Court said ECI, as the party seeking contribution, bears the burden of establishing that reason. Any relevant timing issue already decided by Kearns J in setting aside the notice must be treated as res judicata and cannot be reopened.
If the High Court finds a good reason, the separate action should be permitted to proceed. If it finds none, the proceedings should be rejected unless an exceptional circumstance would make that refusal unjust. The Supreme Court also said there was no evidence of prejudice in this case. Geoghegan J’s further view that only procedural prejudice would be relevant was expressly obiter, and he noted that whether prejudice is relevant at all remains debatable.