Tuesday, 8 February 2011

Third Party/Section 20 Actions

Often, in connection with building defects, reliance on information conveyed by manufacturers is cited as a cause. For example, a material or product may be specified because of the representations made by the manufacturer or supplier about its qualities. The product once bought may be found to be unsuitable and the sales literature to misstate the product’s qualities.

Building owners making the claim may have no contract with the product manufacturer. They may nevertheless, either directly or through their design team, have placed reliance on the representations made by the manufacturer.

In multi-party litigation, claims against manufacturers and suppliers may be brought in through what were called ‘third-party’ actions and are now, by reference to the Civil Procedure Rules 1999, more commonly called ‘section or part 20’ actions. For example, employers may sue through the building contracts, so claiming against main contractors for the provision of defective products. Contractors may in turn claim it is the fault of subcontractors, who may, in their turn, accuse their suppliers of delivering defective goods – which supplier may, in their turn, blame the manufacturer. Equally, employers may claim that they and their consultants, acting as their agents, listened to the representations made by manufacturers about the qualities of their products and, in reliance thereon, specified what proved to be defective building products or systems. Thus, either through the contractual chain or by separate related claims, all may be joined together in a single legal action.

Such multi-party proceedings are usually protracted and expensive.

However, to the extent that the defendants blame each other rather than deny fault, multi-party proceedings may be to the claimants’ advantage. As the defendants seek to pass blame one to another, they implicitly acknowledge that someone is at fault. It is risky to seek to avoid liability by accusing others: the response from those accused is often counter-accusation. This aggressive mode of defence is sometimes referred to as ‘cut-throat’.

Experience teaches that the cut-throat defence is a high-risk approach and best regarded as a last resort. The cut and thrust of accusation and counter-accusation between defendants can make the case for the claimant. Arguments between defendants over who is to blame tend to expose all potentially culpable actions to scrutiny. The more effectively each defendant argues that fault lies with others, the less the claimant has to do to prove its case and the more likely it is that all defendants will be found to share liability. Provided some or all of the defendants are found to be liable, the claimant does not have to show the extent of individual fault, as apportionment of blame is reserved to the court.

1 comment: