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Liability----------------'

Inquiry Into The Law Of Joint and Several LiabilityReport of Stage Two

Joint and several tortious liability has for some time been an issue of concern tothe construction industry; particularly, to consultants and their professionalorganisations. They should welcome the recommendations for proportionateliability made in this Report. Further action on these recommendations is nowa matter for the Standing Committee of Attorneys-General.

The kind permission of the Attorney-General's Department to reproduce theReport of Stage Two of the Inquiry Into The Law Of Joint and Several Liability isgratefully acknowledged.

PREFACEInFebruary 1994the federal Attorney-General, Michael

Lavarch, and NSW Attorney-General, John Hannaford,established an inquiry into the law of joint and severalliability.

The inquiry was conducted by Professor Jim Davis, aleading academic on the law of torts and contract at theAustralian National University. It was carried out in closeconsultation with a steering committee comprising MrAndrew Rogers QC, a former judge of the NSW SupremeCourt, Mr Laurie Glanfield, Director General, NSWAttorney-General's Department and Mr Ian Govey,Principal Adviser, Business Law, CommonwealthAttorney-General's Department.

The report was prepared in two stages. The report onthe first stage ofthe inquiry, whichexamined the desirabilityand feasibility of altering the present rules on joint andseveral liability, was released in July 1994 [see ACLNIssue #37, p36].

Following consideration of the report, the federal andNSW Attorneys-General, with the support of theircolleagues from all States and Territories, agreed that theinquiry should proceed to Stage Two.

This report was prepared in light of public commentswhich were invited on the release of the report of StageOne. It includes the background material provided in thefirst report and recommends specific changes to the presentlaw on joint and several liability.

Action to be taken in light of the report will now be amatter for the Standing Committee of Attorneys-General.

Any queries concerning the report could be directed inthe first instance to:

Attorney-General's DepartmentRobert Garran OfficesNational CircuitBARTON ACT 2600

Attention: Ian Govey

EXECUTIVE SUMMARY

Key RecommendationsThat the presentjoint and several liability ofdefendants

in actions for negligence causing property damage orpurely economic loss be replaced by liability which isproportionate to each defendant's degree of fault.

That the liability for loss arising from misleadingconduct in contravention of the Trade Practices Act, theFairTrading Acts or the Corporations Law be proportionateto each defendant's degree of responsibility for that loss.

Introduction• Joint and several liability means that while several

persons have, by their negligence, combined to causeloss to a plaintiff, anyone ofthem may be fully liable.

• Proportionate liability divides the loss among thedefendants according to their share of responsibility.

• The difference between joint and several liability andproportionate liability has a major impact if one of thedefendants does not have significant assets, is insolventor untraceable; joint and several liability puts that risk,in the first instance, on the other defendants,proportionate liability includes the plaintiff as bearingsome or all of that risk.

• In the first stage of this inquiry, the terms of referencerequired a consideration ofjoint and several liability asagainst proportionate liability.

• Stage Two of the inquiry is for the purpose of makingspecific recommendations about changes to the presentlaw.

• This report is intended to form the single point ofreference and consequently reiterates much of thematerial already included in Stage One of the inquiry.

• The terms of reference exclude:- personal injury claims;- possible capping of liability;- extent of a professional's duty of care.

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Present state of the law and reform proposalsThe law of negligence is effective largely because ofliability insurance and a 'deep pocket' defendant.But liability insurance is becoming prohibitivelyexpensive for professionals, local authorities etc.In any case, negligence principles were developed forpersonal injury claims not economic losses.Contribution betweenjoint and several tortfeasors (andcontributory negligence) are recent statutorydevelopments aimed at spreading losses fairly amongall those responsible, but they have shortcomings.Contribution rights do not apply if the liability is incontract and not in tort.It is not clear whether contribution rights apply if theliability is based on s 52 of the Trade Practices Act1974 or on s 995 of the Corporations Law.Under recent legislation in Victoria, South Australiaand the NorthemTerritory, claims for defective buildingwork apply proportionate liability.The New South Wales Law Reform Commission, andlaw reform agencies in Canada and New Zealand, havegenerally proposed retaining joint and several liability.Legislation in British Columbia and the Republic ofIreland allows for proportionate liability when theplaintiff has been contributorily negligent.In the United States, more than two-thirds of the Stateshave some form of proportionate liability, but thedetails differ widely.

Conclusions and recommendationsThe main argument in favour of retaining joint andseveral liability is that it is the best way ofensuring fullcompensation to a plaintiff.But that is not applicable when the loss is financial andwhen the effects on liability insurance are taken intoaccount.The building legislation of Victoria, South Australiaand the Northern Territory favours a fair division ofresponsibility between defendants over fullcompensation to the plaintiff.A second argument for retaining joint and severalliability is that proportionate liability raises practicaldifficulties.But there is no indication that this has been theexperience ofBritish Columbia, the Republic ofIrelandor those States in the United States which have adoptedproportionate liability.It is recommended that in negligence actions forproperty damage or purely economic loss, joint andseveral liability be replaced by proportionate liability.Of the various forms of proportionate liability, it isrecommended that liability in all cases be proportionateto each defendant's degree of fault.This follows the lead of the legislation concerningdefective building work.It puts the risk of an insolvent defendant on to theplaintiff alone.But the plaintiff bears that risk under the current lawwhen there is only one defendant.

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It is fair that a defendant's liability should be limited tothe degree of fault, unaffected by matters beyond thedefendant's control.Other forms of proportionate liability have beenconsidered but rejected:

(a) Proportionate liability only when the plaintiff ispartly at fault.

If the loss is shared with the plaintiff, whynot among each of the defendants?But it depends on determining causes, notdegrees of blame.It may be arbitrary, as it does not apply if theplaintiff is not a contributory factor in theloss.

(b) Proportionate division of an insolventdefendant's share of liability, when the plaintiffis contributorily negligent.

This method has been used in Ireland for thelast 30 years.It may need two approaches to a court, andthus increases the costs.The results may be arbitrary, depending onthe causes of the loss.

(c) Proportionate liability if the defendant'spercentage of blame is below a threshold.

This is arguably a fair result for the defendantonly marginally at fault.But the percentage is an arbitrary line.More fundamentally, it is not clear as amatter of principle why proportionateliability should be applicable only below acertain threshold.

The liability under s 52 of the Trade Practices Act (andits equivalent in the fair trading legislation ofthe Statesand Territories) for misleading conduct in trade orcommerce, and the liability under s 995 of theCorporations Law for misleading conduct in relation tosecurities is apparently joint and several, but for that tocontinue would create anomalies with liability innegligence.The 'Trade Practices Act expressly imposes joint andseveral liability, but only in respect of claims arisingout of consumer transactions and claims for personalinjury or damage to consumer property.It is recommended that the statutory liability for lossarising from misleading conduct be proportionate toeach defendant's degree of responsibility for that loss.If appropriate, an exception could be provided forclaims arising out of consumer transactions.Various other statutes currently imposejointand severalliability by express provision, in the light of specificcircumstances covered by each statute. The policyunderlying these provisions has not been examined bythis inquiry, which makes no recommendation thatthey be changed.

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The joint and several liability of members of apartnership, as between themselves, is ofthe essence ofthe partners' relationship; consequently, no change issuggested to that liability.Vicarious liability involves joint and several liability,but any change in this area would destroy the conceptofvicarious liability; it is therefore recommended thatvicarious liability remain joint and several.

REVIEW OF JOINT AND SEVERAL LIABILITY

1. IntroductionOn 17 February 1994, the Attorneys-General for the

Commonwealth and New South Wales jointly announcedan inquiry into the law relating to joint and several liability.The terms of reference were:

To consider whether it is desirable and feasible to alterthe present rules on joint and several liability, havingregard to:

legislation on proportional liability in Australianand comparable overseas jurisdictions;reports recommending for or against an alterationof the rules on liability; andany other relevant matters.

The inquiry is to consider in particular the issue ofprofessional liability and is not to examine the operationof the rules on joint and several liability in relation topersonal injury claims.

At the time of announcing the inquiry, the Attorneysindicated that it was proposed to be undertaken in twostages. Subject to consideration of the matters covered bythe above terms of reference, a further report might becommissioned to consider the nature and scope of anypossible changes to the present law.

On 21 July 1994, the Report on Stage One of theinquiry was released. It raised various options for reform,principal among them being a suggestion that the argumentsadvanced for the retention of joint and several liabilitywere not necessarily relevant to the issue of liability forpurely economic loss or property damage. That report alsoobserved that there was reason to consider whether aregime of proportionate liability would be appropriate insome or all circumstances.

When that report was released, the Attorneys soughtcomment on those options for reform, and announced thatthe inquiry was to proceed to a second stage, the purposeof which is to make specific recommendations aboutchanges to the present law.

Therehas been aconsiderableresponse to the Attorneys'request for comment on Stage One of the inquiry. Theresponses have come from a wide range of professionalbodies and, with one exception, have expressed a strongpreference for replacing joint and several liability withproportionate liability in all circumstances.

Inpreparing this Report on StageTwo, it was consideredappropriate for it to form a single point of reference, andnot to depend upon references to the Report of Stage One.

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2. The nature of the liability under consideration

(a) Liability of concurrent, but independent,wrongdoers the principal focus

It is necessary for this Report to examine thecircumstances in which concurrent wrongdoers may beregarded either as jointly and severally liable, or asproportionately liable, and the similarities and differencesbetween these two types of liability.

The similarities are that both arise when two or morepeople, each acting independently of the other, have bytheir separate wrongful acts brought about a single andspecific injury to another person. Suppose, for example,that abuildernegligently constructs ahouse with inadequatefoundations, that the architect negligently fails to supervisethat part of the construction, and that the local authoritynegligently fails to notice the inadequacy ofthe foundations.Each of these three has acted independently of the others,but the end result (it may be assumed) is that the houseproves to be defective. The owner's complaint is solelythat the house needs to be underpinned.

The majordifferences betweenjointand several liabilityand proportionate liability emerge when consideration isgiven to the rights of the injured party. To continue withthe above example, if the builder, architect and localauthority were to be regarded as jointly and severallyliable to the homeowner, each would be treated as aneffective cause of the whole of the loss. As a result, thehomeowner would be entitled to sue anyone (or more) ofthose three. If the owner sues (say) the local authority, itis entitled to bring in the others, either as parties to theoriginal action by the owner, or in separate proceedings, inorder to recover from the builder and the architect a justand equitable proportion of the damages payable to theowner.

The right to recover contribution from others who, bythe commission ofa tort, are responsible for the same harmis provided by the LawReform (Miscellaneous Provisions)Act 1946 (NSW), Part III, and the equivalent of thoseprovisions in each of the other States and the Territories.There is also a right of contribution, which arises atcommon law when one of several persons has paid morethan his or her proper share towards discharging a commonobligation, and which arises in equity when a liability ofone of several persons to pay more than his or her share hasbeen ascertained (see, eg, Spika Trading PtyLtdvHarrison(1990) 19 NSWLR 211 at 214 per Giles J).

Joint and several liability, and a concomitant right ofcontribution, allow for a sharing of liability among anumber of persons in the proportion for which each wasresponsible for the loss. It throws the risk of insolvency oruntraceability of anyone of the defendants on to the otherdefendants, and permits a plaintiff to recover the whole ofhis or her loss from those who are solvent.

If parties are regarded as proportionately liable, theliability ofeach is in all circumstances limited to the extentto which that party is considered to be responsible for theloss. There is no right of contribution between variousdefendants, since none ofthem would, as a general rule, be

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liable to pay to the plaintiff any more than the proper shareowing by each defendant.

Proportionate liability also allows for the sharing ofliability among a number ofpersons. The major differencefrom joint and several liability is thatproportionate liabilityputs the risk of the insolvency or untraceability of adefendant on to the plaintiff. For the latter to recover thewhole of his or her loss, each person responsible for thatloss must be sued to judgment, and execution thereonsatisfied. A further difference from joint and severalliability is that whereas that form of liability assumes thateach ofthose found liable is an effective cause ofthe wholeof the loss suffered by the injured party, proportionateliability apportions causal effectiveness according to thedegree of fault of each wrongdoer.

A variation on the notion of proportionate liability hasbeen adopted in some jurisdictions. Under this variant,which may be termed modified proportionate liability,the extent ofthe liability ofeach defendant is limited, in thefirst instance, in proportion to the degree of fault of thatdefendant. But if it turns out that one of the defendants isinsolvent or untraceable, the share of that defendant'sliability is divided rateably among the remaining, solvent,parties, which may include the plaintiff, if he or she hasbeen found to some extent responsible for the ultimateloss.

(b) Consideration extends beyond professionalliability

The terms of reference require consideration to begiven 'in particular [to] the issue ofprofessional liability' .It is, however, clear that this inquiry should not be limitedto the issue of professional liability.

On the one hand, there is little unanimity as to the fieldsofendeavour which may be regarded as coming within thenotion ofa profession. There is consequently no advantagein attempting to address that issue of definition in aninquiry of this nature.

On the otherhand, any attempt to confine considerationto those activities which are universally accepted as withinthe professions would lead at once to unnecessaryanomalies. The example of concurrent liability which hasalready been used - that of a builder, architect and localauthority - provides an apt example. Of those three, onlyan architect would normally be regarded as engaging inprofessional activities. But the loss caused by thewrongdoing ofeach is precisely the same, and none shouldbe excluded from consideration simply on the basis of anill-defined division between professional activities andothers.

3. Exclusions from the terms of referenceThe terms of reference place various limits on the

scope of this inquiry. In the first place, there is an expressexclusion of any examination of the rule of joint andseveral liability in relation to personal injury claims.Hence, this inquiry has not considered the possible liabilityamongst themselves ofmembers ofthe medical and nursingprofessions for medical misadventures. Norhas the inquiry

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concerned itselfwith the liability of two or more motoristsfor the injuries received by passengers or onlookers as aresult of a road accident, nor with the liability of anemployer and an occupier ofpremises for injuries sufferedby an employee while on those premises. Those questionscannot be separated from the much broader issue of theproper basis of the liability for any form of physical ormental injury or hurt, and the sources of compensation forthem.

Secondly, the terms of reference do not mention thepossibility of considering a monetary limit on liability forpurely economic loss. The omission of any reference tothis issue in the setting up of the present inquiry makes itclear that it is excluded from consideration.

A third exclusion from the terms of reference is adiscussion of the range of persons to whom a professionalmight be liable. In the law of negligence, the ambit ofliability is determined by the concept of a duty of care.However careless a person might have been, he or she willnot be liable in the tort of negligence to anyone to whomno duty of care is owed. The issue of the extent of the dutyofcare, and the factors which go to determine whether sucha duty is owed in any particular circumstances, is onewhich has given rise to differing views in the highest courtsnot only in Australia but also in comparable overseasjurisdictions. A resolution ofthat issue is beyond the scopeof this inquiry.

4.Backgroundtothe~quiry

In considering the liability of professionals and othersfor the property damage and purely economic loss that theymight cause, it is relevant to take account of the effect ofinsurance. Professionalpeople, scarcely withoutexception,are insured against their possible liability to their clientsand to members of the public. As a result, a professionalperson is often the sole target for legal action when lossesare suffered in commercial operations, even though he orshe is only one of the parties involved. Concern has beenexpressedfor some years at the increasing level ofpaymentswhich those insurance funds are required to meet, and theconsequently increasing cost ofthat insurance. Among thesubmissions received in response to the release of StageOne of this inquiry, there was consistent comment that thecost of insurance had reached unacceptable levels. Amember of one of the international accountancy firmsobserved that few, if any, commercial insurers are able toprovide cover for those firms, and expressed the view thateven the major firms' self-insurance arrangements mightnot be able to continue to sustain the demands made uponthem. Not only is the cost of insurance reflected in the costofthe professional services, but there is a fear that insuranceitself is becoming unobtainable.

In 1989, the then Attorney-General for New SouthWales, the Hon John Dowd, announced a widespreadreview of the law of torts in that State, aimed in part atconsidering the feasibility of limiting the liability ofprofessionals. Following from that initiative, the WesternAustralian Legislative Council, in November 1991, set upa Select Committee on Professional and Occupational

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Liability, the terms of reference of which were, amongother matters, to inquire into and report on limitation ofprofessional and other occupational liability.

While those reviews were aimed at considering theliabilityofall professions, otherbodies havebeenconcernedat the increasing level of liability in particular fields.Those withknowledge and expertise ofthe building industryhave argued that joint and several liability is 'patentlyunfair [and] illogical' , in that the practical result ofimposingthat liability not only on the professional people who maybe involved but also on the local authority may often leadto the local authority settling a claim for defective buildingwork for an amount in excess of the authority's perceivedshare ofresponsibility (see Dix and Lovegrove, The ModeIBuildingActfor Consideration by the States andTerritories,amonographpublishedby the Australian Uniform BuildingRegulations Co-ordinating Council).

The liability ofaccountants, and especially auditors, inrelation to the work that they are obliged to undertakeunder the Corporations Law has also been the subject of aspecialist review. A Working Party of the MinisterialCouncil for Corporations issued a Report in June 1993detailing various options for consideration as a means ofpreventing or curbing any perceived inequities in theliability ofaccountants and auditors. One option proposedby that Working Party was to address 'the arbitrary andunfair consequences of the present rules regarding jointand several liability of auditors'. However, the WorkingParty recognised that a review ofjoint and several liabilitycould not be confined to its impact on auditors undertakingtheir statutory obligations under the Corporations Law, butwould need to consider its effect for members of otherprofessions and (as noted above) for bodies such as localauthorities. The present inquiry stems from a meeting ofthe Standing Committee of Attorneys-General of 4November 1993 which noted the proposal of that WorkingParty, and accepted the need to consider the matter in acontext wider than that of the Corporations Law.

The rules relating to joint and several liability have alsobeen the subject ofjudicial comment. Rogers CJ, in AWALtd v Daniels, tla Deloitte, Haskins and Sells ( 1992) 10ACLC 933 at 1022, observed that joint and several liabilitygives considerable scope for injustice. His Honourpointedout that, since that principle permits a plaintiff to sue oneonly of those who are jointly and severally liable, a well­advised plaintiff will take proceedings against the personwho has liability insurance adequate to meet the claimmade by the plaintiff. But the judge was sceptical of thefairness of this course of action. He said:

"[A] well insured defendant, who may perhaps beresponsible for only a minor fault, in comparison withthe fault of other persons, may nonetheless be madeliable, at least in the first instance, for the entirety ofthedamage suffered by the plaintiff. The defendant mayindeed seekcontributionfrom otherpersons responsiblefor the major damage. Why should the whole of theburden of possibly insolvent wrongdoers fall entirelyon a well insured, or deep pocket, defendant?"

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5. The course of development of the lawAs the law stands at present in Australia, two or more

people who are liable in tort for the same damage are, as ageneral rule, jointly and severally liable, and each has aright of contribution against the other(s). This state of thelaw is, however, of relatively recent origin.

The current rules relating to joint and several liability,and especially those concerned with contribution betweenthose liable, are one means of spreading the cost ofcompensating an injured plaintiff. While the plaintiffmaychoose to sue one only of several who are concurrentlyliable, the one who is so chosen is entitled to bring in theothers in order to recoup from them a fair share of thedamages payable to the plaintiff. But the most pervasivemeans of spreading the cost of compensating a plaintiff isthrough liability insurance. Although the award ofdamagesis made against the defendant(s), the payment is made bytheir liability insurers, and the cost of any particular awardis spreadamong all thepolicyholders, by way ofadjustmentsto future premiums.

A review of the development of the rules relating tojoint and several liability requires some mention ofthe wayin which liability generally for negligence has developedduring the course of this century, and the relationshipbetween that development and the availability of liabilityinsurance.

(a) The lawof negligenceand liability insuranceAlthough scholars differ as to the details, it is generally

accepted that negligence as a separate and identifiable tortdid not develop until the latter years of last century. It isoften said that the concept ofa duty ofcare - the foundationofthe separate tortofnegligence -was notclearly articulateduntil the judgment ofBrett MR in Heaven vPender (1883)11 QBD 503. It is not so well known that liabilityinsurance became available only at about the same time.Prior to the 1880s, the notion that a person might take outinsurance against his or her liability to a third party wasregarded as contrary to public policy. The incentive toexercise reasonable care, or pay for the consequences, wasconsidered likely to be lost ifone could pass one's liabilityon to an insurer.

It has been argued that it was no mere coincidence thatan identifiable tort of negligence was developed at muchthe same time as liability insurance started to becomeavailable (see Davies, 'The End ofthe Affair: Duty ofCareand Liability Insurance' (1989) 9 Legal Studies 67). Oncea market for liability insurance was created (by theenactment of the Employers' Liability Act 1880 (UK)), thecourts took advantage of this new found source of realcompensation, and new found means of loss spreading, toexpand the range of liability for negligence. Whether ornot that argument is valid - and it must depend largely oninference and supposition, and not on direct judicialobservation - there is no doubt that in the latter years of thiscentury, the availability of liability insurance has had aprofound effect upon the law of negligence. As ProfessorFleming puts it (The Law of Torts (8th ed, 1992), p 10),'knowledge that the judgment will not be borne

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singlehandedly by the one defendant ... has resulted in ...a vast expansion of the scope of liability and substantiallystricter liability, especially in areas where insurance ismandatory'. Illustrations of this phenomenon are to befound in Western Suburbs Hospital v Currie ( 1987) 9NSWLR 511 at 518 per Kirby P and in Lynch v Lynch (1991) 25 NSWLR 411 at 415-6 per Clarke JA.

This development is obviously beneficial to those whosuffer personal injury as the result ofanother's lack ofcare.Few people carry their own (first party) insurance againstsuch an eventuality, so that a defendant's (third party)insurance is generally the only source ofcompensation foraccidental injury. But the tort ofnegligence has expandedfar beyond providing compensation for personal injury.Within the last 30 years, as a result of the decision inHedley Byrne & CoLtdvHeller & Partners Ltd [1964] AC465, the tort ofnegligence also includes compensation forthe purely financial harm consequent upon a carelessmisstatement. Although the policies behind imposingliability for anegligentmisrepresentation are notnecessarilycongruent with the policies at the basis ofthe imposition ofliability for personal injury, the same legal principles areapplied in both circumstances. The provision ofcompensation for negligently causing such injury isnaturally of the highest priority to the law. And if theinjured plaintiff is unlikely to be able to provide thatcompensation from his or her own resources, the law willgo to considerable lengths to insure that compensation isprovided by those who are at fault in causing the injury.

But the interest in a person's financial security, and inthe preservation of his or her property, is of a lower scaleofvalues. Furthermore, protection ofthese interests is, notuncommonly, provided by first party insurance, which islikely to be more economically efficient than third partyinsurance. It is therefore not surprising that on someoccasions, members of the judiciary have remarked thatcompensation of a plaintiff, whose loss flows only fromthe negligent invasion ofan interest in financial security orpreservation of property, need not be of such importanceas would be the case were the plaintiff to suffer bodilyharm (see Spartan Steel &AlloysLtdvMartin (Contractors)Ltd [1973] QB 27 at 38 per Lord Denning MR; Lamb vCamden London Borough Council [1981] QB 625 at 637­8 per Lord Denning MR).

(b) Liability of concurrent tortfeasorsThe course ofdevelopment ofthe liability ofconcurrent

tortfeasors has been as haphazard as that of liability innegligence generally. In the early years ofthis century, theliability ofmultiple defendants was determinedby commonlawprinciples alone, unaffectedby any statutoryprovisions.At that time, there was a substantial difference betweenjoint tortfeasors and several concurrent tortfeasors. Jointtortfeasors - that is, two or more who have to some extentacted in concert - might be sued either separately ortogether, but if one were sued separately, a settlement ofthe action with that one, or judgment against him or her,barred further proceedings against the others, even thoughthejudgmentwere not satisfied, or the settlementagreement

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not carried out. If, on the other hand, a number of peoplehad brought about the plaintiff's loss by their separate actsof negligence, the common law generally considered onlythe last of those wrongdoers to be liable, and denied thatone the right to claim contribution from others who mighthave been involved. As Professor Fleming observes (TheLaw ofTorts (8th ed, 1992), p 220), this view was largelyattributable to 'the traditionalpreoccupation [ofthe commonlaw] with finding a sole responsible cause'. Thatpreoccupation finds further expression in the common lawrule that, if the plaintiff's loss had been brought about,even inpart, byhis orherown failure to exercise reasonablecare, that contributory negligence was a complete bar torecovery.

The first legislative move away from this position,adopted throughout Australia during the 1940s and 1950s,related to the rights inter se of multiple defendants. TheLawReform (Miscellaneous Provisions) Act1946 (NSW),Part III, and equivalent legislation in the other States andthe Territories, permitted rights of contribution betweenseveral concurrent tortfeasors, and abolished the rule thatjudgment against one tortfeasor barred a subsequent actionagainst another jointly liable.

Once legislation allowed a liability to be shared amongseveral defendants in proportion to their respective degreesof fault, it was not long before plaintiffs also were obligedto bear no more than their share of fault. By virtue of theLawReform (Miscellaneous Provisions) Act1965 (NSW),s 10, and the equivalent in the otherStates and the Territories,the contributory negligence of the plaintiff was no longera complete bar to his or her action, but led only to anapportionment of the damages payable, on a just andreasonable basis.

6. Current law, and reform proposals, inAustralia

(a) OverviewReference has already been made to the fact that two or

more people who are liable in tort for the same damage are,as a general rule, jointly and severally liable, and legislationprovides that each has a right of contribution against theother(s). That is, however, no more than a general rule. Ifthe liability of the defendants arises otherwise than by thecommission of a tort, their rights of contribution may beseverely limited. If the defendants' joint and severalliability is imposed by statute, their rights of contributionare based upon principles of common law or equity, andnot on legislation. The general rule of joint and severalliability is also subject to a clearexception, in the legislationin some jurisdictions relating to the building industry,which provides for proportionate liability. There is apossible anomaly in relation to the statutory liability formisleading or deceptive conduct, in that, while liability isjoint and several, there may be no rights of contribution.The New South Wales Law Reform Commission, alone ofthe law reform agencies around the country, has addressedthe issue of whether proportionate liability should replacejoint and several liability, but has recommended againstany change.

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(b) Common law liability not based in tortTwo or more people may, by their concurrent but

independent acts or omission, bring about a single loss orinjury to another in a wide variety of circumstances, inwhich each may contravene different rules of law. Thus,a single loss may be caused by two persons independentlybut concurrently acting negligently and in breach of theirrespective duties ofcare. A single loss may also be causedby the combination of one person acting in breach ofcontract and another in breach of a tortious duty, as with aretailer and manufacturer, or by the combination of oneperson acting in breach of trust and another in breach of atortious duty of care. In each case, the two would beregarded by the common law as jointly and severally liableand, if the person suffering the loss were to sue both ofthem in the one action, their respective shares ofresponsibility for the damage would be assessed. But iftheperson suffering the loss were to sue only one of thoseresponsible, as the law currently stands in all jurisdictionsother than Victoria, that one would not be able to claimcontribution from the other unless both ofthem were liableto the plaintiff in tort.

The reason for this unfortunate conclusion lies in thewording of the legislation providing for rights ofcontribution. TheLawReform (Miscellaneous Provisions)Act 1946 (NSW), Part III, (and the equivalent elsewhereapart from Victoria) was enacted to meet the perceiveddifficulty of those concurrently liable in tort being unableto claim contribution one from another. Its terms are inconsequence limited to those so liable. The difficultieswhich the legislationmight otherwise cause have, however,been lessened in recent years by the judicial expedient offinding that contractingparties may, in some circumstances,owe to each other concurrent and co-extensive duties intort and contract.

(c) Jointand several liability imposed by statuteLegislation on occasion makes explicit reference to

joint and several liability. The Partnership Act 1892(NSW), sections 10 and 12, (and the equivalent legislationin each of the other States and Territories) provides thateach member ofa partnership is jointly and severally liablefor any torts committed by anyone of the partners whilethat partner is acting in the ordinary course of business ofthe firm.

By virtue ofsection 556(1) ofthe Companies Codes, alldirectors of a company, together with those who took partin its management, were jointly and severally liable fordebts incurred by the company when it was insolvent. Thesame liability was also imposed by section 592 of theCorporations Law. (From 23 June 1993 that section wasreplaced by section 588G of the Corporations Law, whichconfines liability to directors and does not refer in terms tojoint and several liability.)

There is a heterogeneous collection ofother legislationofthe CommonwealthandNew SouthWales which imposesjointand several liability in a wide variety ofcircumstances.A selection ofthat legislation is listed in Appendix A to thisReport. In those instances, the liability in question is

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generally to pay a levy or charge for a service provided bya public authority, or a liability to compensate for expensesincurred by a public authority. Those instances of thestatutory imposition of joint and several liability aretherefore not relevant to the present inquiry. In other cases,such as section 30 of the Marine Pollution Act 1987(NSW), the liability is a clear expression of the policy ofthe statute, and is equally not relevant to this inquiry. TheTrade Practices Act 1974 (Cth) expressly imposes jointand several liability in two situations (see sections 73(1)and 75AM). They are discussed below, in relation tomisleading conduct in trade or commerce.

The joint and several liability imposed by section556(1) of the Companies Codes gave rise to a commonobligationoraco-ordinate liability which attractedcommonlaw or equitable rights of contribution (see Spika TradingPty Ltd v Harrison (1990) 19 NSWLR 211). It wouldappear that the joint and several liability imposed by theother legislation referred to above is of the same nature.Members of a partnership also have rights of contributionamong themselves.

(d) The building industryLegislation in Victoria, South Australia and the

Northern Territory abolishes joint and several liability forthose who may be found responsible for defective buildingwork and creates proportionate liability instead. Thelegislation was enacted in 1993, the various jurisdictionsbringing the statutes into force at differing dates: 1September 1993 for the Northern Territory, 15 January1994 for South Australia and (with minor exceptions notpresently relevant) I July 1994 in Victoria.

The Building Act 1993 (Vic), section 131 provides:"(1) After determining an award ofdamages in a

building action, the courtmustgivejudgmentagainst each defendant to that action who isfound to be jointly or severally liable fordamages for such proportion of the totalamount ofdamages as the court considers tobe just and equitable having regard to theextent of that defendant's responsibility forthe loss or damage.

(2) Despite any Act orrule oflaw to the contrary,the liability for damages ofa person found tobe jointly or severally liable for damages ina building action is limited to the amount forwhich judgment is given against that personby the court."

The phrase 'building action' is defined in section 129as including an action for damages for loss or damagearising out of or concerning defective building work, thesame section also providing that building work includesthe design, inspection and issuing of a permit in respect ofa building project. It is the clear intention ofthe legislationthat those who may be found proportionately liable includethe builder, the architect, the engineer, the project managerand the local authority. In view of the fact that each ofthose is to be proportionately liable, section 132 prohibits

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any defendant from seeking contribution from any otherdefendant.

The equivalent provisions in South Australia and theNorthern Territory are section 72 of the Development Act1993 (SA) and section 155 of the Building Act 1993 (NT).It is understood that the Ministers responsible for buildingcontrol in the other jurisdictions around the country haveagreed in principle to seek the enactment of relativelyuniform legislation.

(e) Misleading conduct in trade or commerceSection 52 of the Trade Practices Act prohibits a

'corporation' (as broadly defined by thatAct) from engagingin misleading conduct in trade or commerce, while section42 ofthe Fair Trading Act 1987 (NSW) (and the equivalentprovision in the fair trading legislation of the other Statesand the Territories) prohibits a person from engaging inthat conduct. The New South Wales statute, together withthe equivalent ones in Queensland, Western Australia andthe two Territories, define trade or commerce as includingany 'professional activity'. French J of the Federal Courthas held that a professional person who provides servicesfor reward acts in trade or commerce for the purposes oftherelevant legislation in the Commonwealth and the otherStates (Bond Corp Pty Ltd v Thiess Contractors Pty Ltd(1987) 14 FCR 215 at 218-9).

For a professional person to provide incorrectinformation or advice may well be regarded as misleadingconduct. The legislation is therefore of considerablerelevance to the general issue of professional liability, themore so because section 52 and its equivalents may beinfringed despite the fact that all reasonable care was takenin the circumstances (see Parkdale Custom BuiltFurniturePty Ltd v Puku Pty Ltd (1982) 149 CLR 191). Theremedies available for a breach of section 52 or itsequivalents, so far as is presently relevant, are twofold;first, damages under section 82 of the federal Act, section68 of the New South Wales Act and the equivalent in otherjurisdictions, and, secondly, a range of compensatoryorders under section 87 ofthe federal Act, section 72 oftheNew South Wales Act and the equivalent elsewhere.

There is nothing to prevent a claimant from suing twoor more persons who, either jointly or severally, havecaused him or her damage by a breach of section 52 or itsequivalents. However, concepts relevant to either jointand several liability or proportionate liability do not figurein the scheme of the legislation so far as it seeks to providecompensation for purely economic loss caused by acontravention of section 52. The Act expressly imposesjoint and several liability on a corporation which suppliesgoods to a consumer and a linked credit provider of thatcorporation, if the consumer should suffer loss or damageas a result of a breach of contract by the supplier (seesection 73(1)). The Act also expressly imposes joint andseveral liability where two or more corporations are liablefor personal injury or damage to consumer goods by reasonofa breach ofone or more ofthe provisions ofPart VA (seesection 75AM). The Act, it appears, draws a parallelbetween personal injury and loss or damage resulting from

25

a misperformed consumer transaction, and distinguishesboth of those from the liability flowing from a breach ofsection 52.

It has already been pointed out that a concomitant ofthe notion of joint and several liability is the right of oneperson found so liable to claim contribution from anotherwho is also liable. But neither the Trade Practices Act northe fair trading legislation make express provision for theexercise of rights of contribution between persons foundconcurrently liable for a breach of those statutes. It hasbeen held that section 5 ofthe Law Reform (MiscellaneousProvisions) Act 1946 (NSW) and its equivalent in the otherStates and Territories, which provide for rights ofcontribution among concurrent tortfeasors, do not apply tothose found to have concurrently breached the fair tradinglegislation (ANZBanking Group LtdvTurnbull & PartnersLtd (1991) 33 FCR 265 at 276-7 per Sheppard J). On theotherhand, itmay be argued that iftwo persons concurrentlybreach section 52 ofthe federal Act, or its State equivalent,that will give rise to a common obligation, sufficient toattract the common law or equitable doctrines ofcontribution (cf. Spika Trading Pty Ltd vHarrison ( 1990)NSWLR 211 at 241-5 per Giles J).

The Australian Law Reform Commission, in its ReportCompliance with the Trade Practices Act 1974 (ALRC 68,1994), noted this gap in the legislation and hasrecommended, in para 7.23, that the Trade Practices Act beamended 'to provide expressly that courts may makeorders for contribution and indemnity'. It is to be assumedthat, if the federal Act were to be amended along thoselines, the same amendments would be made to the fairtrading legislation of the States and Territories.

(f) Misleading conduct in relation to securitiesSection 995 ofthe Corporations Law prohibits a person

from engaging in misleading conduct in, or in connectionwith, any dealing with securities. The terms of the sectionare thus very similar to section 52 of the Trade PracticesAct, except that section 995 is limited to conduct (oftenconstituted by the making of a statement) that relates tocompany shares, stock, debentures and other securities. Acontraventionofthe section does not entail criminal liability(see subsection 995(3)), but anyone who suffers loss ordamage as a result of that contravention may recover it ina civil action from the wrongdoer (see section 1005).

There is no express provision in the Corporations Lawfor a right of contribution or indemnity if two or morepeople are found to have been in contravention of section995. As with section 52 of the Trade Practices Act, itwould appear doubtful whether there is a right outside theCorporations Law to obtain contribution or indemnity.

(g) New South Wales Law Reform CommissionIn 1990, the Commission prepared a report,

Contribution Among Wrongdoers: Interim Report onSolidary Liability (LRC 65). The Commission pointed outthat, as part ofits Community Law Reform Program, it hadundertaken work on the general topic of the law governingrights of contribution between two or more persons

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responsible for the same damage, but that it had beenrequested to prepare an interim report dealing solely withthe question of solidary liability (in this review referred toas joint and several liability). The Commission canvassedthe possibility of retaining joint and several liability or ofreplacing it with proportionate liability. It concluded (para46) that 'the existing general rule of [joint and several]liability should be maintained' .

In coming to that conclusion, the Commission foresawa number of objections to proportionate liability from apractical point of view (paras 37-43). For instance, theCommission considered that proportionate liability couldrequire a plaintiff to join all the possible defendants to theaction, thus increasing the time and cost of a trial. TheCommission also noted that proportionate liability wouldgive the plaintiff an interest in the determination of therelative proportions of liability of each defendant. If theplaintiff suspected that one defendant was insolvent, theplaintiff would seek to argue that the other (solvent)defendants were responsible for the whole, or by far thegreater part, of the loss, thus minimising the effect of afinding of liability against the insolvent defendant. TheCommission further expressed concern that proportionateliability would hinder the resolution of disputes byagreement. All the defendants would have to agree notonly on their ownliability, and the quantum ofthe plaintiff'sloss, but also their own share of that liability, before theplaintiff could receive any compensation. A final pointwhich the Commissionmade was that to apply proportionateliability in a case where one defendant's obligations arosesimply from the fact of its vicarious liability for anotherwould completely undermine the principles of vicariousliability and the policy behind them.

The Commission suggested (para 19) that there mightbe grounds for abolishing joint and several liability in acase where the plaintiffhad been partly to blame for his orher own loss. It pointed out that an argument can bemounted to the effect that 'a contributorily negligentplaintiff deserves no greater favour than a defendant alsopartly to blame for the plaintiff's loss'. However, itrejected that argument, partly on the grounds ofthe practicaldifficulties referred to above, and partly on the basis that'in many cases a plaintiff's fault is different in kind fromthat of a defendant' (para 25).

The New South Wales Law Reform Commission was,of course, concerned with liability for personal injury aswell as for property damage and purely economic loss.The objections itput forward to proportionate liability maynot apply with such force in the case of the latter two typesof loss.

7. Current law, and reform proposals, incomparable overseas countries

(a) New ZealandThe law in New Zealand is substantially the same as

that in New South Wales. That is, two or more personsliable for the same damage are regarded as jointly and

26

severally liable, and each has a right of contribution fromthe other or others. Further, a plaintiff who has failed totake reasonable care for his or her own well being willsuffer a reduction of the damages otherwise payable, onaccount of that contributory negligence. One substantialdifference between the two jurisdictions is that in NewZealand it is not possible to sue for damages for personalinjury (see Accident Rehabilitation and CompensationInsurance Act 1992 (NZ), s 14).

In 1983, the New Zealand Contracts and CommercialLaw Reform Committee, in a Working paper onContribution in Civil Cases, advocated retention of therules relating to joint and several liability. The issue hasrecently come before the successor to that Committee, theNew Zealand Law Commission. In a Discussion Paperpublished in March 1992, on Apportionment of CivilLiability (NZLC PP19), the Commission considered atsome length the arguments for and against replacing jointand several liability.

An argument in favour of displacing joint and severalliability, which the Commission found most attractive,was that 'joint and several liability may place a wrongdoerwhose proportionate share of the blame for the loss causedto the plaintiff is relatively minor at risk of having to beara very much greater share, even perhaps the whole, of thatliability' (para 162). The Commissionalso saw as beneficialthe fact that, under proportionate liability 'there would beno needfor complicatedrules concerning the apportionmentof liability between defendants' (para 163), because theonus would be on the plaintiff to seek out, and bring actionagainst, those defendants who might have contributed tothe loss. The Commission also remarked (para 166) on theunfairness of joint and several liability in cases where theplaintiff was contributorily negligent. It noted thatcircumstances could arise in which the plaintiff'sproportionate contribution to the loss was greater than thatof the only solvent defendant, but that the latter would becalled upon to compensate the plaintiff in respect of theliability of the other (insolvent) defendants.

On the other hand, the Commission was greatlyconcerned with the effect on plaintiffs which abrogation ofthe rule ofjoint and several liability would have. It stressedthat the common law is committed to fully compensatingaplaintifffor all loss whichhas been suffered, and observedthat joint and several liability 'is one means of achievingthis: any risk of an absent or insolvent defendant must beborne by a co-defendant (if there is one)' (para 168). TheCommission further raised what it saw as the practicaldifficulty that under a regime of proportionate liability,'the plaintiffwill usually have to sue all possible defendantseven if the claim will be difficult to prove against some'(para 170). It noted that this might tend to be the currentpractice, but thought that such an approach should not berequired in all cases.

In the end the Commission expressed the provisionalview that the law of joint and several liability shouldremain (para 192).

Notwithstanding this general conclusion, theCommission suggested that ifone defendant is insolvent or

ACLN - Issue #41

untraceable, and if the plaintiff is partly responsible for hisor her own loss, the plaintiff and the other (solvent)defendants should each bear an appropriate share of thatpart of the loss attributable to the insolvent defendant. TheCommission acknowledged that this suggestion was notconsistent with its stand on joint and several liability.

'It is, in fact, a half-way house between joint andseveral liability and [proportionate] liability: acompromise. We think it appropriate in the context'(para 186).

(b) CanadaThe law in the Canadian Provinces which have a

common law system, other than British Columbia, is, to allintents and purposes, the same as that in New South Wales.Two or more persons responsible for the same damage arejointly and severally liable, and each has a right ofcontribution against other defendants. The question ofjoint and several liability has been considered by lawreform bodies in Alberta and Ontario.

(i) AlbertaThe Institute of Law Research and Reform of the

University ofAlberta (which performs a role similar to thatof a law reform commission) published Report No 31,Contributory Negligence and Concurrent Wrongdoers inApril 19,....9. The Report considered whether liabilityamong a number ofwrongdoers should continue to be jointand several, or should be proportionate. It observed thatthe law may appear to be unfair if it requires a tortfeasor tosatisfy a judgment in an amount greater than his or herrelative degree of fault. The Report also acknowledgedthat proportionate liability would do away with the need toresolve several difficult issues relating to rights ofcontribution, such as the effect of a settlement by onedefendant, and the expiry of a limitation period as againstone, but not all, of those responsible. While recognisingthe force of these arguments, the Report concluded that'paramount importance should be accorded to the principlethat the non-negligent plaintiffshould obtain full recovery,if at all possible' (p31).

The Report considered that the arguments in favour ofproportionate liability are stronger in cases in which theplaintiffhas been partly to blame for the loss. However, italso noted: that there was no evidence of demand for achange in the law; that the plaintiff's fault in failing to lookafter his or her own interests is different in degree from thatof a defendant; and that to have one set of rules applicableto a non-negligent plaintiff and a different set of rulesapplicable where the plaintiff was partly at fault wouldresult in considerable confusion.

Taking these various factors into consideration, theInstitute concluded 'that the liability of concurrenttortfeasors either to a plaintiffwho is free from negligenceor to a contributorily negligent plaintiff should continue tobe joint and several' (Recommendation 7, p 33).

(ii) OntarioThe Ontario Law Reform Commission published a

27

Report on Contribution Among Wrongdoers andContributory Negligence in 1988. In a wide-rangingreview of the areas of law encompassed within that title,the Commission considered whether the rules relating tojoint and several liability should be changed. It observedthat joint and several liability 'helps to assure the goal offull compensationto an injuredpersonfor losses attributableto the fault of others, a goal that the Commission regardsas fundamentally just' (p 46). It was not persuaded thatthere were sufficiently strong economic reasons to justifya modification of the rules of joint and several liability. Italso considered that any unfairness to a defendant flowingfrom joint and several liability was outweighed by theunfairness to an innocent plaintiff who, under a regime ofproportionate liability, would be undercompensated ifanydefendant were insolvent or untraceable.

The Commission acknowledged that there was someforce in the argument that, in the case of a contributorilynegligent plaintiff, the defendants' liability should beproportionate rather than joint and several. However, itrejected adoption of that view for two reasons. The firstwas that 'in many, although not all, instances, the fault ofthe injured person and that of the wrongdoer differ inquality and not just in degree' (p 47). The second reasonwas that the effects in practice of such a change in the lawcouldbe to 'create new uncertainty andpotentialunfairness'(p 47). Instances of such uncertainty and unfairnessreferred to were the need on the plaintiff's part to proceedagainst all possible defendants, the need to obtain agreementfrom all of them in order effectively to settle a matter, andthe estimation of the degree of fault of an insolvent oruntraceable defendant.

The Commission therefore recommended that 'thereshould be no change in the law respecting the in solidumliability of concurrent wrongdoers to a plaintiff, evenwhere the plaintiff is contributorily negligent' (p 48).

(iii) British ColumbiaThe Court of Appeal of British Columbia, in Reekie v

Messervey (1989) 59 DLR (4th) 481 at491, summedup thelaw in that Province by saying:

"Under the Negligence Act, RSBC 1979, c298, theliability ofa defendant is [proportionate] if the plaintiffis contributorily negligent and joint and several if theplaintiff is not contributorily negligent."

The proportionate liability ofa defendant derives fromss 1 and 2(c) of that statute, which are in the followingterms.'1. Where by the fault of 2 or more persons damage or

loss is caused to one or more of them, the liabilityto make good the damage or loss shall be inproportion to the degree in which each person wasat fault, except that:(a) if, having regard to all the circumstances of

the case, it is notpossible to establishdifferentdegrees of fault, the liability shall beapportioned equally; and

(b) nothing in this section shall operate so as to

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(c) Republic of IrelandAnother jurisdiction in the common law tradition, in

addition to British Columbia, to make statutory provisionfor proportionate liability in the case of a contributorilynegligent plaintiff is the Republic of Ireland. But inIreland, unlike in British Columbia, the portion of the totalloss attributable to an insolvent or untraceable defendant isto be shared rateably among both the other (solvent)defendants and the plaintiff. The Civil Liability Act 1961provides, in section 38( 1 ), as follows:

"38.(1)Where an action is brought against one or moreof concurrent wrongdoers by an injured person who isfound in such action to have been guilty ofcontributorynegligence and it is held to be just and equitable that the

Those provisions were interpreted as providing forproportionate liability when the plaintiff is contributorilynegligent by the Court of Appeal in the Province inComenco Ltd v Canadian General Electric Co Ltd (1983)4 DLR (4th) 186, a decision which was confirmed by aBench of five Justices in Leischner v West KootenayPower and Light Co Ltd (1986) 24 DLR (4th) 641. Thatinterpretation has been applied to cases of physical injuryand, in Hongkong Bank of Canada v Touche Ross & Co(1989) 36 BCLR (2d) 381, has been applied to a claim forpurely economic loss.

It has also been decided by the Court of Appeal, inWells v McBrine (1989) 54 DLR (4th) 708, that it is aconcomitant of those decisions that when a plaintiff iscontributorily negligent, the court should decide on theapportionment of liability among all those who are foundto have been at fault, whether they are parties to the actionor not. While judgment can only be entered against a partyto the proceedings, it is considered necessary for those whoare before the court to show who all the possible wrongdoersmay be, and the degree of fault attributable to each.

The British Columbia Law Reform Commission wascharged with the task of reviewing the law relating toshared liability, including the interpretation placed uponthat Province's Negligence Actby its Court ofAppeal. TheCommission recommended abrogation of the judicialinterpretation, in its Report on Shared Liability (LRC 88,1986, P 22). That recommendation has not beenimplemented.

2.

render a person liable for damage or loss towhich his fault has not contributed.

The awarding of damage or loss in every action towhich section 1 applies shall be governed by thefollowing provisions: ...(c) as between each person who has sustained

damage or loss and each other person who isliable to make good the damage or loss, theperson sustaining the damage or loss shallbe entitled to recover from that other personthe percentage of the damage or losssustained as corresponds to the degree offault of that other person; ,

plaintiff's damages should be reduced under subsection(1) of section 34 having regard to his contributorynegligence, the judgment against one wrongdoer shallnot be for the whole of the plaintiff's recoverabledamages but the court shall determine the respectivedegrees offault ofthe plaintiffand ofall the defendantsto the plaintiff's claim at the time ofjudgment, leavingout of account the degrees of fault of persons who arenot such defendants, and shall give the plaintiff aseveral judgment against each defendant for suchapportioned part of his total damages as the courtthinks just and equitable having regard to thatdefendant's degree of fault determined as aforesaid."

Ifone defendant is insolvent or untraceable, the sectionalso allows a plaintiff to apply for a secondary judgmentdistributing the deficiency among the other defendants injust and equitable proportions (sub-section (2)). Theproportionate liability established by sub-section (1) isexpressed not to apply to wrongdoers, one of whom isvicariously liable for the wrongs of another (sub-section(3)). A plaintiffis generally barred from bringing a secondor subsequent action against a wrongdoer not sued in theinitial proceedings, unless the plaintiff satisfies the courtthat it was not reasonably possible to join that wrongdoerin the first action (sub-section (4)). A defendant againstwhom damages have been awarded may seek contributionfrom any wrongdoer not sued in the initial action (sub­section 8)).

Information is not available on the way in which thismeasure operates in practice. The fact that it has been inforce for more than 30 years, however, suggests that itposes no difficulties in implementation, either by thecourts in cases that go to litigation or by the parties to adispute who agree to a settlement.

(d) EnglandThe law in England, in all relevant respects, is the same

as that in New South Wales. Concurrent wrongdoers arejointly and severally liable to the plaintiff, and have rightsof contribution among themselves.

A suggestion that these rules should be changed wasmade in a Report published in April 1989 of Study Teamsset up by the Department of Trade and Industry, under thechairmanship ofProfessorAndrew Likierman. The Reportnoted that many professionals 'argue that in commercialmatters they should be liable only for the share of thedamages which would be apportioned to them as just andequitable' (para 4.7); in other words, that they should beunder proportionate liability. The authors of the Reporthad sympathy with that view, but considered that thematter should be referred to the Law Commission - thebody charged with reviewing and proposing reform of thelaw in England. However, the issue does not fall within theLaw Commission's present program, and even if thereference is made it is likely to be some time before it isformally considered by that body.

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(e) United StatesThe rules on the liability of concurrent wrongdoers in

the United States vary considerably, ranging from thoseStates which apply joint and several liability in allcircumstances to those which apply proportionate liabilityin all circumstances. The rules as to the liability ofdefendants tend to be linked to some extent to the approachin each State towards the contributory negligence of theplaintiff.

The law in most States adopts some form or other ofapportionment ofdamages to take account ofthe plaintiff'scontributory negligence. Until the 1970s, the law in theUnited States was the same as the common law in Australia,in decreeing that contributory negligence was a completebar to a plaintiff's action. While the Australian States andTerritories replaced that rule in the 1950s and 1960s withone for the sharing of the loss between the plaintiff anddefendant, it was not until the 1970s and 1980s that asimilar move was made in the United States. It is now therule in all but four of the 50 States.

With acceptance of the view that damages could thusbe allocated on the basis of the relative degrees of fault ofthe plaintiffand defendant came the attitude in some Statesthat damages could also be allocated as between severaldefendants, and that there was no objection in principle toproportionate liability. Whereas joint and several liabilitywas the norm throughout the country some 40 years ago,that rule has now been modified or abrogated in two-thirdsof the States.

There are still 13 States, and the District of Columbia,in which those concurrently liable for the same damage arejointly and severally liable, whatever the nature of thedamage suffered. In a further three States (California,Nebraska and Ohio), joint and several liability is generallyimposed, although liability for general damages (non­economic loss) in a personal injury action is proportionate.

On the other hand, eight States have abolished jointand several liability altogether. In four of those States(Alaska, Utah, Vermont and Wyoming), the abolition wasby statute, while in the other four (Kansas, Kentucky,Oklahoma and Tennessee) it was brought about by judicialdecision. A further eight States have establishedproportionate liability as the norm, but have retained jointand several liability in cases of intentional wrongdoing, orthose involving widespread personal injury, such asproducts liability, defective medicinal products, or aircraftaccidents.

In the remaining 18 States, the nature of a defendant'sliability - ie, whether it is joint and several or proportionate- depends upon the degree of fault attributable to thatdefendant or any fault on the part of the plaintiff, or acombination of both. In four States (Georgia, Michigan,Missouri and Texas), the defendants will be proportionatelyliable if the plaintiff is also contributorily negligent. Inother States, a defendant will be proportionately liable, solong as his or her share of responsibility for the loss is lessthan a percentage specified by the relevant legislation(ranging from 20% to 50%), but otherwise jointly andseverally liable. And in other States again, a defendant's

29

liability will be proportionate, where his or her degree offault is less than a specified percentage, or less than that ofthe plaintiff.

In addition, the proportionate liability system in someStates allows anyone or more of the defendants to seek asecondary judgment whereby the share ofa defendant whoturns out to be insolvent or untraceable may be re-allocatedamong the remaining parties.

As well as changes in State law, there has been a moveto introduce proportionate liability into federal law. Thefederal Securities ExchangeAct 1934 imposes civil liabilityfor making an untrue statement of material fact in anytransaction relating to securities, or for omitting to state amaterial fact in such a transaction. As the law currentlystands, that liability is joint and several. A bill, introducedinto the 102nd Congress, and re-introduced on 5 January1993 into the 103rd Congress, sought to change thatposition. The bill proposed the insertion of a new section20B into the Securities Exchange Act 1934, whereby inany private civil action for damages under that Act, thevarious defendants' liability wouldbe proportionate, unless'the trier of fact specifically determines that [a particular]defendant engaged in' fraudulent conduct in relation to asecurities transaction. The bill was not proceeded with inthe 103rd Congress, and there has not yet been anopportunity for it to be re-introduced into the 104thCongress.

8. Views of academic writersIn view of the fact that joint and several liability is the

currently applicable rule in Australia (apart from the veryrecent legislation relating to the building industry) and inNew Zealand and England, and that joint and severalliability has only recently been departed from, and thenonly in some jurisdictions, in the United States, it is notsurprising that only three ofthe text-books in those countrieshave addressed the issue of whether there should be anychange from that rule.

Trindade and Cane, The Law ofTorts in Australia (2nded, 1993), at pp 730-1, conclude that 'provided we acceptthat the main aim of the law of tort is compensation, andthat tort liability coupled with a systemofliability insuranceis the best way to ensure that people who suffer loss arecompensated for it, then [joint and several] liability coupledwith rights ofcontribution seems better suited to achievingthis aim than proportionate liability' (p 731). The authorsacknowledge, in a footnote, however, that both of theassumptions on which that conclusion is based 'can beattacked either generally or as they apply to particularareas of tort liability' .

Fleming, The Law of Torts (8th ed, 1992), generallyaccepts the then current state of law, comprising joint andseveral liability and rights of contribution. He considers,however (at p 275), that ifthe plaintiffis partly to blame forthe loss, and if one of the defendants is insolvent, the jointand several liability of the defendants may be as unfair aswould be the proportionate liability of the defendants.This is because their joint and several liability throws theburden of that insolvency on the remaining solvent

ACLN - Issue #41

defendant(s), while their proportionate liability throws theburden of the insolvency on the plaintiff alone. ProfessorFleming goes on to suggest that the 'more equitablesolution would be to distribute [the insolvent defendant's]share [among the plaintiff and solvent defendant(s)] inproportion to their own responsibilities. This can beaccomplished by a "secondary judgment", on the basis ofwhat is "just and equitable" in case of superveninginsolvency.' He observes that, alone of the countries witha common law tradition, the Republic of Ireland hasadopted this approach, in s 38 of the Civil Liability Act1961, which has been referred to above.

Professor Glanville Williams, Joint Torts andContributory Negligence (1951), in a review of the area oflaw encompassed in that title, accepted that joint andseveral liability is correct as a matter of principle, in caseswhere the plaintiff is free of any blame for the loss.However, he also considered that 'where the plaintiff isguilty ofcontributory negligence, the defendants ought notto be liable in solidum [jointly and severally], but shouldshare the liability between them, together with the risk ofinsolvency of one of their number, the plaintiff also takinghis own due share' (§ 104, P 406). The method proposedby Professor Williams for achieving this end was a'secondary judgment', described in summary form byProfessor Fleming, as quoted above. Professor Williamsdealt with both the reasons supporting his view, and themeans for giving it effect, at some length (§§ 102-104, pp398-409). As has already been observed, only the Republicof Ireland has paid heed to them.

The editor of one of the two leading text-books on tortlaw in the United States, Professor Gray, (editor of Harperand James, The Law ofTorts (2nd ed, 1986)), is critical ofthose States which have modified or abolished joint andseveral liability. He points out that, under joint and severalliability, the risk of one defendant's insolvency was borneby the other defendant(s), and describes as spurious anyargument that would change that allocation of risk if theplaintiff is free of blame for loss. The text continues: 'Ifplaintiff was negligent, there is considerable support forthe proposition that under comparative negligence the riskof loss from a non-paying defendant should be sharedamong all the othernegligent actors, including the plaintiff,in proportion to their respective shares of fault' (§ 22.17,pp 412-3). However, Professor Gray contends that themere fact that the risk of insolvency ofone party is capableofbeing apportioned does not establish that such should bethe case. He concludes by saying that the fact that'defendants' losses are generally more likely to be insuredthan plaintiffs' is, it is submitted, a better reason for notchanging the allocation of this risk, than is the "logic" ofcomparative fault for making such a change' .

Since the above edition was prepared, law reviewarticles have been published in the United States on thetopic ofjoint and several liability, as against proportionateliability. Consistent with the wide variety of approachestaken by the courts and legislatures in that country, asdescribed above, the authors of articles espouse a broadrange of views. This is illustrated by two recent articles.

30

One of them, Mednick and Peck, 'Proportionality: AMuch-Needed Solution to the Accountants' LegalLiabilityCrisis' (1994) 28 Valparaiso Law Review 867, proposes afederal statute, along the lines of the Bill to amend theSecurities Exchange Act referred to above, embodying theprinciple of proportionate liability for accountants andothers coming within the ambit of the federal securitieslaws. The other article, Wright, 'The Logic and Fairnessof Joint and Several Liability' (1992) 23 Memphis StateUniversity LawReview 45, trenchantly criticises a decisionof the Supreme Court of Tennessee which, in 1992,abolished joint and several liability in that State andreplaced it with proportionate liability. Wright argues thatjoint and several liability should be retained, andproportionate liability abandoned.

9. Conclusions and recommendations

(a) Should joint and several liability beretained?

A principal issue is whether the reasons put forward forretaining joint and several liability continue to be valid. Amajor reason advanced by all of the law reform agenciesreferred to in this review is that the principal aim ofthe lawoftorts is to provide full compensation (whereverpossible)to one who has been injured by the fault of another. No­one can doubt that this is an accurate statement whenapplied to a plaintiffwho has suffered personal injury. Theinterest in bodily integrity is rightly accorded a highpriority. But full compensation for personal injury is, inmany cases, no more than the aim of the law. Legislationin many of the States restricts the damages that may beclaimed when the personal injury is the result of a motoraccident or arises in the course of the injured person'semployment. If, in these instances, the demands of fullcompensation should give way to contrary communityconsiderations, it is clearly doubtful whether the interest infinancial security should always be completely protectedby the law. It may certainly be questioned whether thatinterest should be put on the same plane as the protectionofbodily integrity. In reviewing the course ofdevelopmentof the law, the point was made that there is some judicialresistance to the unthinking application to cases offinancialloss and property damage of the principles developed forthe compensation of personal injury.

The legislation in Victoria, South Australia and theNorthern Territory, applying proportionate liability toclaims for defective building work, clearly takes the viewthat if the plaintiff's claim relates to property damage oreconomic loss, the argument for the provision of fullcompensation should be subordinated to the dictates offairness in the allocation ofresponsibility. In New Zealandthe law oftorts does notprotectpersonal injury by accident,and the New Zealand Law Commission has tentativelyproposed that joint and several liability should not beretained if the plaintiff is partly at fault.

The law ofnegligence, and its avowed aim ofprovidingcompensation to one who is injured, depends upon afinding of fault in at least one defendant. If the injured

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person can find no-one else to blame for the injury, he orshe cannot recover compensation. When these principlesare applied to cases of purely economic loss - the focus ofthis current inquiry - it becomes clear that under theexisting rules of joint and several liability, one who hassuffered financial harm will do everything possible to fixeven a small measure of the blame for that loss on a personwho is solvent, or insured against that liability. But thefairness or justice of a legal rule must be questioned whenits effect is to place full liability on a defendant who mayhave been only marginally at fault, and to provide fullcompensation to a plaintiff who is able to find one onwhom to fix the blame for the loss.

The other reason put forward by each ofthe law reformagencies for retaining joint and several liability was thepractical difficulties that each could foresee as arisingfrom the implementation ofproportionate liability. It may,however, be suggested that any practical problems inimplementing a regime of proportionate liability are moreapparent than real. It has already been observed that theRepublic ofIreland has had such a regime for more than 30years, and no evidence has emerged of any practicaldifficulties. The Province of British Columbia has alsohad such a regime for more than 10 years, and there is noindication ofpractical difficulties. Equally, there has beenno suggestion from those States in the United States ofAmerica which have adopted one of the various forms ofproportionate liability that the change in the law has led todifficulties of applying it in practice. Furthermore, theapplication of proportionate liability in British Columbiahas demonstrated that there is no need for all the possibleparties to litigation to be joined in the one action. As aconsequence, if the plaintiff and the solvent defendant(s)wish to settle their action, there is no need for them toinclude in the negotiations those parties who are clearlyinsolvent. All that is required is agreementon the proportionof fault of those defendants who are parties to thenegotiation.

A view expressed by two of the academic writersreferred to (Trindade and Cane in Australia and Harper andJames in the United States) is that joint and several liabilityis an adequate solution when coupled with the fact that atleast one of the defendants will have liability insurancesufficient to cover the losses suffered by the plaintiff.However, even in cases of personal injury resulting fromroad and industrial accidents, insurers are facing severedifficulties in maintaining adequate levels ofcover, leadingto statutory limitations on the compensation available.Among the comments received in response to Stage One ofthis inquiry, the view was expressed that for professionalsthe cost of liability insurance has reached unacceptablelevels and that some of the international accounting firmsmay be able to continue their current self-insurancearrangements for no more than afew years. These commentsalso made the point that claims against those firms whichare settled tend to be subject to the limits imposed by thelevel of insurance cover which a firm has. If, in thosecases, full compensation is constrained by the extent ofthe

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defendant's insurance, it may be observed that a fairer andmore just limit would be the proportion to which anyparticular defendant was to blame for the loss.

It is suggested that the arguments that have beenadvanced for the retention ofjoint and several liability arenot applicable to the current situation, focussing as it doeson the liability professionals and others for financial harmand property damage.

It is therefore recommended that joint and severalliability be abolished, and replaced by a scheme ofproportionate liability, in all actions in the tort ofnegligencein which the plaintiff's claim is for property damage orpurely economic loss.

(b) Which type of proportionate liability?Reference has already been made to the fact that at

least four different types of proportionate liability havebeen introduced in various jurisdictions in the commonlaw world over the last 30 years. It is necessary to considereach ofthem, in order to see which might be recommendedas a replacement for joint and several liability, in thecircumstances referred to above.

(i) Proportionate liability in all circumstancesThe variant used in the legislation of Victoria, South

Australia and the Northern Territory dealing with claimsfor defective building work imposes proportionate liabilityin all circumstances, without regard to whether the plaintiffhas also been in any way to blame for the loss.

The advantages of this scheme, as perceived not onlyby the proponents of the legislation but also by the lawreform agencies in New Zealand and Alberta, are twofold.First, it is regarded as inherently fair that each defendantshould bear no more than the proper proportion of the lossthat has been suffered by the plaintiff and inherently justthat liability should be equated with responsibility.Secondly, the law reform agencies saw advantage in thefact that the existing complicated rules as to contributionbetween various defendants would no longer be necessary.

But despite these advantages, the two law reformagencies recommended against the adoption of such aregime. Their reason, in essence, was that, whereas jointand several liability puts the risk of insolvency anduntraceability of a defendant on to the other (solvent)defendants, proportionate liability puts that risk on to theplaintiff. In their view the advantages of proportionateliability did not outweigh the disadvantage of that transferof risk. It may, however, be observed, in response to thatview, that if a plaintiff is not able to show that any morethan one person is responsible for the loss suffered, theplaintiff bears the risk that that lone defendant might beinsolvent or untraceable. It may therefore be questionedwhether that risk should be transferred, simply becausetwo or more people may be responsible for the loss.

This variant of proportionate liability does not dependon findings, or assumptions, as to the cause or causes oftheplaintiff's loss, but requires only the attribution of fault,and degrees of fault, to a defendant against whom action isbrought. Once a defendant is found to bear a certain

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percentage ofthe blame for a particular loss, that defendantcan be assured that the extent ofhis or her liability will notincrease solelybecause anotherdefendant is either insolventorhas only minimal assets with which to satisfy ajudgment.Joint and several liability is imposed on defendants despitethe fact that each has acted independently of the others inbringing about the plaintiff's loss. It can scarcely beregarded as just that one of the defendants should bear theburden of satisfying a claim for loss, when the principalreason for that loss lay in the activities and defaults ofothers, over whom the one solvent defendant had no realcontrol.

It is therefore recommended that joint and severalliability for negligence which causes only property damageor economic loss be replaced by liability which apportionsfault, in all circumstances, among those responsible for thedamage or loss.

(ii) Proportionate liability when plaintiff partly at faultAnother variant of proportionate liability is in the

legislation of British Columbia. Under this variant,proportionate liability is applied only when the plaintiffhas been contributorily negligent; if the plaintiff is not toblame for the loss, the defendants are jointly and severallyliable.

This variant was given serious consideration by thelaw reform agencies in New South Wales, Alberta andOntario. Those agencies saw advantages for it in principle,on the basis that, since the total loss suffered by the plaintiffwas to be apportioned between the plaintiff on the onehand and the defendants on the other, that loss ought alsoto be apportioned among each of the defendants inproportion to the degree of fault of each. The law reformagencies concluded, however, that the contributorynegligence of the plaintiff was not an adequate reason forproposing a move to proportionate liability. Their commonreason for that view was that the fault of a contributorilynegligent plaintiff is often different in kind from the faultof a defendant. Each of the agencies pointed out that aplaintiff will be contributorily negligent merely by beingpartly to blame for the loss or damage, and need not be acause, in part, of the defendant's breach ofduty. Hence, ina motor car accident, aplaintiffmay be found contributorilynegligent in failing to wear a seat belt. However, thepresent inquiry is concerned with instances of purelyeconomic loss and property damage. In thesecircumstances, it is less easy to distinguish betweencontributing to the damage suffered and contributing to thebreach of duty.

This variantplaces considerable emphasis onthe causesbehind the plaintiff's loss. If the plaintiff were not in anyway a cause of that loss, each of the defendants is regardedas being an effective cause of the whole of the loss, andtherefore potentially liable to compensate for all the loss.It may, however, be observed that concepts of cause arenotoriously difficult to apply with any precision. It couldbe regarded as arbitrary for the extent of a defendant'sliability to depend on whether the plaintiffplayed any partin bringing about the loss that he or she has suffered. It

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might also be regarded as unfair to a defendant who isfound to be, say, 10% at fault that his or her liability islimited to that proportion, so long as the plaintiff is evenmarginally also at fault, but extends to the whole ofthe lossif the plaintiff is not at fault and the other defendants areinsolvent or untraceable.

For these reasons, this variant ofproportionate liabilitydoes not appear to be as fair and just as that recommendedabove.

(iii) Proportionate division of insolvent defendant'sshareA third variant of proportionate liability is that in the

legislation of the Republic of Ireland and put forward as atentative proposal by the New Zealand Law Commission.

This variant, like the one referred to under the precedingheading, would impose proportionate liability only whenthe plaintiffwas found to have beencontributorilynegligent.This variant is different from that mentioned above in thatunder this variant, ifany defendant turns out to be insolventor untraceable, his or her share of the loss or damage isdivided rateably among all the other parties, including theplaintiff, in proportion to their respective shares ofresponsibility. Whereas the British Columbia legislationwould throw the risk of an insolvent defendant on to acontributorily negligent plaintiff alone, the legislation ofthe Republic of Ireland would spread that risk among allthe remaining parties.

This approach is supported by Professor GlanvilleWilliams and by Professor Fleming, as being more fairthan either joint and several liability or the other forms ofproportionate liability referred to above. However, thisapproach would often require a plaintiff to face courtproceedings a second time, ifone ormore ofthe defendantswere found to be insolvent or untraceable. The costs of asecond adjudication on the division of the plaintiff's lossare regarded by some as outweighing the fairness of theultimate result. This variant, like the one discussed underthe preceding heading, places considerable emphasis onthe causes for the plaintiff's loss, in that it applies onlywhen the plaintiff is found to be one of those causes. Asalready mentioned, a defendant who is found to be only10% to blame may, in the end, be obliged to satisfy thewhole of a judgment if the other defendants are insolvent.Despite the advantages perceived by academic writers forthis variant of proportionate liability, it is considered thatthey are outweighed by the disadvantages just referred to.

(iv) Proportionate liability and defendant's degree offault

The other variant of proportionate liability applies insome jurisdictions in the United States. Under theseschemes, the details of which vary from State to State, adefendant will be proportionately liable so long as his orher share of the responsibility is less than a specifiedpercentage. These schemes have the advantage oflimitingthe liability of a party whose comparative degree of faultis relatively minor when compared to the degree offault ofother defendants, or of the plaintiff. As pointed out by

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academic writers in that country, such fairness is bought atthe price of some arbitrariness. There may be littledifference in substance between a defendant who is 19% toblame for a loss and one who is 21 % to blame, but theliability of the former may be proportionate and confinedto 19% of the overall loss, while that of the latter may bejoint and several and, depending on the solvency of otherparties, effectively 100% of the overall loss.

A further and more fundamental criticism of thisvariant is that it is difficult, if not impossible, to see itsrational basis. If it is regarded as fair that one defendantshould be proportionately liable when he or she was 10%to blame for a loss, it would appear to be equally fair foranother defendant also to be proportionately liable if he orshe is 30% to blame. But if the arbitrary line at whichproportionate liability ceases is 20%, the second of thesehypothetical defendants would be jointly and severallyliable.

It is suggested that the arbitrary nature of this variantof proportionate liability militates against its adoption inAustralia.

(c) Statutory liabil ityReference has been made earlier in this report to the

statutory liability for misleading conduct, which appearsto create an anomaly when compared with liability innegligence, and to the statutory imposition of joint andseveral liability. Neither has been included within any ofthe above recommendations, but both matters fall withinthe terms of reference.

(i) Liability for misleading conductIt has beennoted that two or more persons may, by their

separate breaches of section 52 of the Trade Practices Act1974 (Cth) (or its equivalent in the fair trading legislationof the States and Territories), cause loss or damage toanother person. As the law stands at present, while it isassumed that those who have brought about that loss wouldbe regarded as jointly and severally liable, it is doubtfulwhether any of them has a right of contribution againstanother or others. Equally, two or more who have causedloss or damage by a contravention of section 995 of theCorporations Law would presumably be jointly andseverally liable, but would be unlikely to have any rightsof contribution one against the other.

Although liability in negligence is different from theseforms of statutory liability, in that the statutory provisionsmay be infringed despite all reasonable care having beentaken, there are many similarities between the two formsof liability. In particular, so far as the present inquiry isconcerned, both forms of liability may arise when aprofessional person makes a misstatement on which othersrely, to their financial detriment.

Because of the similarities between professionalliability for negligence and under these statutes, it isanomalous that, in the case of multiple wrongdoers, anyone of such a group should be exposed to a considerablydifferent extent of liability depending solely on whetheraction is brought at common law or under one or other of

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the statutoryprovisions. On the otherhand, acontraventionof section 52 of the Trade Practices Act, or its State orTerritory equivalent, may arise from a multitude ofcircumstances far removed from that of a professionalperson making a statement which turns out to be incorrect.Hence, a solution which removed the anomalyjustreferredto in relation to professional liability may bring with itfurther difficulties in relation, say, to a contravention ofsection 52 constituted by misleading the public as to thetrading relationship between one business and its rival.

Subject to the comments below on claims arising out ofconsumer transactions, it is therefore recommended that,if two or more are together responsible for a contraventionof section 52 of the Trade Practices Act (or its equivalentin the fair trading legislation of the States and Territories)or of section 995 of the Corporations Law, each should beliable only in proportion to the degree. of responsibilitywhich he or she bears for the contravention, and not jointlyand severally.

Ithas beennoted above that the AustralianLaw ReformCommission recommended the amendment of the TradePractices Act to allow for the introduction of rights ofcontribution and indemnity among respondents toproceedings under that Act. Adoption of thisrecommendation as it stands would be consistent with thepresent rule of joint and several liability as applied in anaction in negligence. When defendants to an action arejointly and severally liable it is appropriate for anyone ofthem to be able to seek contribution or indemnity from anyof the others. But if the recommendations of this Reportare accepted, and proportionate liability is adopted for anaction in negligence relating to property damage or purelyeconomic loss, it would be appropriate for proportionateliability to apply, in general, to remedies for misleadingconductunder the Trade Practices Act and the CorporationsLaw.

However, iftheprinciple ofproviding full compensationfor consumer claims under the Trade Practices Act wereregarded as being of paramount importance, joint andseveral liability might be maintained for these claims, in asimilar manner to that presently applicable under the Actfor personal injury claims.

Reference has already been made to the fact that theTrade Practices Act currently draws a distinction betweenconsumer transactions and business transactions, andappears to equate the former with claims for personalinjury. Section 75AM expressly imposes joint and severalliability for a breach of other provisions of Part VA whichcauses death, personal injury or damage to consumergoods, and subsection 73(1) expressly imposes joint andseveral liability for a breach ofcertain consumer contracts.In those cases in which the claim arises by reason ofpersonal injury or from a consumer credit transaction, theAct specifies that liability shall be joint and several,whereas no such specification is made with respect toclaims arising, for instance, in a business context from acontravention ofsection 52. The clear reason for imposingjoint and several liability in cases of personal injury is toensure adequate compensation tor the injured person. A

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similar rationale is no doubt behind the express impositionof joint and several liability in some cases where loss ordamage arises from a consumer transaction.

(ii) Joint and several liability imposed by statuteIt has been noted earlier in this report that a

heterogeneous collection of Commonwealth and NewSouth Wales statutes (see Appendix i\) expressly imposesjoint and several liability in various circumstances. It hasalso been noted that sections 10 and 12 of the PartnershipAct 1892 (NSW) (and the equivalent legislation in theother States and Territories) renders each member of apartnership jointly and severally liable for any tortscommitted by anyone of the partners while that partner isacting in the ordinary course of the business.

It has already been observed that joint and severalliability is generally imposed in the statutes listed inAppendix A to ensure the recovery by a public authority ofa levy or rate for a service provided, or to ensure therecovery ofexpenses incurred by a public authority. Thosepurposes are wholly different from issues relating to thedivision of liability among multiple tortfeasors. Thepolicy underlying these provisions has not been examinedby this inquiry, which makes no recommendation that theybe changed.

The statutorily imposed liability of partners betweenthemselves must necessarily remain. It is of the essence ofthe relationship between those who have agreed to becomepartners that, for instance, they owe fiduciary duties eachto the other and that each is responsible for the tortscommitted by any fellow partner acting in the ordinarycourse of the partnership business.

(d) Vicarious liability excludedIt was pointed out by the New South Wales Law

Reform Commission that to apply proportionate liabilityin a case where one defendant's liability arose simply fromits vicarious liability for another defendant wouldcompletely undermine the principles of vicarious liabilityand the policy behind them. This proposition is unarguablycorrect. However, while the Commission used thatargument to support its view that no change should bemade to joint and several liability, it is suggested that abetter approach is that adopted in the Republic of Ireland.Subsection 38(1) of the Civil Liability Act 1961 creates aform of proportionate liability, but sub-s 38(3) excludesthose cases where one is vicariously liable for the wrongsof another. It is therefore recommended that any changeto the present rules on joint and several liability should beexpressed not to apply to instances of vicarious liability.

J.L.R. DavisLaw FacultyThe Australian National University

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APPENDIX

Selection of Legislation Imposing Joint andSeveral Liability

Part 1 - CommonwealthGreat Barrier Reef Marine Park Act 1975, s 61B(2)(Liability for expenses incurred by the Commonwealthor the Authority resulting from contravention of theAct)

• Lighthouses Act 1911, s 14 (Persons liable to lightdues)

• Migration Act 1958s 65(2), (3)(a) (Costs of deporting deportees)s 66(2), (3)(a) (Costs of keeping deportees in custody)s 88(7) (Costs of custody of prohibited entrant duringstay of vessel in port)s 89(7) (Costs of custody of prohibited entrant duringstay of aircraft in Australia)

• Navigation Act 1912, s 415 (Expenses in taking personto sea)

• Petroleum Retail Marketing Franchise Act 1980, s22(7) (Compensation for contravention of the Act)Shipping Registration Act 1981, s 72 (Expenses oftaking officers to sea)

Part 2 New South WalesCattle Compensation Act1951, s 16F(5) (Levy ofrateson owners of cattle)Charitable Fundraising Act 1991, s 41(5) (Recoveryof certain expenses from unincorporated association)Drainage Act 1939, s 50(1) (Liability of joint ownersfor rates)Marine Pollution Act 1987, s 30 (Liability of owner,lessee, licensee and otheruser ofpipeline for discharge)Maritime Services Act 1935, s 13YA(2) (Liability ofowner and master of vessel for damage to Board'sproperty)Pilotage Act 1971, s 28A(2) (Liability of owner andmaster of ship under pilotage)Rivers and Foreshores Improvement Act 1948, s 19(3)(Liability of joint owners of property for rates andcontributions)Strata Titles Act 1973, s 59(4) (Liability ofpresent andprevious proprietor for levies by body corporate)Strata Titles (Leasehold) Act1986, s 89(3) (Liability ofpresent and previous proprietor for levies by bodycorporate) 0