THE RATIONALE FOR NO RIGHTS TO CONTRIBUTION
The traditional argument against a right to claim contribution
3.1 The traditional reason for not allowing contribution between joint tortfeasors at common law was that the basis of a tortfeasor’s cause of action for contribution would be that tortfeasor’s own wrongdoing. A court hearing such an action would, therefore, be required to apportion liability between two wrongdoers in circumstances where both are fully liable to the plaintiff for the whole of the damages.1
The effect of the principle of solidary liability
3.2 As noted in Chapter 2, the existence of rights to contribution between joint wrongdoers is made necessary because the doctrine of solidary liability essentially allows a plaintiff to choose which wrongdoer to proceed against and leaves open the possibility that one wrongdoer, once chosen, must pay the full amount of the plaintiff’s loss. However, as Fleming notes, one reason for not having any right of contribution between joint wrongdoers is that the doctrine of solidary liability, without any right of contribution, leads to a more effective scheme of loss distribution:
This [the doctrine of solidary liability] had the result in most cases of allocating the loss to him who, in the plaintiffs estimate, had the deeper pocket. For this reason, the rule against contribution has been defended as a welcome device for promoting loss distribution, inasmuch as a defendant who is best able to absorb the loss is prevented from obtaining partial or complete reimbursement from a co-defendant who may be uninsured or financially weak.2
3.3 The passage above draws on the arguments of Professor Fleming James of the Yale Law School which were published in 1941 as a defence of the rule in Merryweather v Nixan:
As among defendants, contribution tends to favour the large and wealthy at the expense of the relatively poor and weak, and for this reason would bring about a less effective social distribution of accident losses than exist at present.3
3.4 The appropriate distribution of loss is the general rationale for the introduction of the Employee’s Liability (Indemnification of Employer) Act 1982 (NSW), which denies an employer a right of contribution from an employee who has committed a tort and thereby caused the employer to sustain a loss. This Act was a response to the decision of the House of Lords in Lister v Romford Ice and Cold Storage Co Ltd4 which held that an employee, who was probably not insured, could be required to indemnify an employer for the loss sustained by the employer. The then Attorney-General stated in his second reading speech on the bill:
The employer is best fitted to absorb or pass on the cost of tort damages on behalf of his servants by pricing and insurance, and it is socially undesirable to frustrate this function. Similarly, it is no longer acceptable for insurance companies to exercise their right of subrogation and recover from the employee in the name of the employer, thereby evading their proper function of risk spreading.5
While the Act does deny, in certain circumstances, the availability of the right to contribution, it clearly accepts that the unfettered operation of the rule of solidary liability is undesirable and that there is a need, in certain circumstances, to prevent recovery being sought against the party which is least able to bear the burden.
Law and economics perspective
3.5 Economic theorists have attempted to justify the rule against contribution at common law on the grounds that it provides incentives for efficient behaviour. In comparison with contribution, solidary liability is cheapest to administer. While actions between defendants will have a distributive effect, the availability of contribution would have no impact on incentives for efficient accident avoidance. So, while rules of contribution may deter negligent activity as effectively as solidary liability by itself, contribution, because of the potential for complexity and multiple parties and actions, is, in fact, more expensive to administer and, therefore, less desirable.6
THE RATIONALE FOR RIGHTS TO CONTRIBUTION
Solidary liability and arbitrariness as to which defendant is liable
3.6 The principal reason for introducing a scheme for contribution between joint wrongdoers is that the doctrine of solidary liability allows a plaintiff a wide discretion in determining the defendant against which the plaintiff can proceed. As Fleming notes:
The most controversial aspect of the rule was, no doubt, the power it conferred on the plaintiff to determine the incidence of loss distribution between co-tortfeasors at his own whim, allowing him to throw the whole loss, if so minded, on one of them and completely exempt the other.7
The basic rationale for equity maintaining rights of contribution was substantially similar:
And the doctrine has an equal foundation in morals; since no one ought to profit by another man’s loss where he himself has incurred a like responsibility. Any other rule would put it in the power of the creditor to select his own victim; and, upon motives of mere caprice or favouritism, to make a common burden a most gross personal oppression.8
3.7 A recurring theme supporting rights of contribution is the injustice of the plaintiff having a right to decide conclusively which wrongdoer shall bear the full amount of the plaintiff’s loss. An answer to this point, although ultimately an unsatisfactory one, is provided by Professor James:
Proponents of contribution never tire of stressing the arbitrary power a plaintiff has in deciding how he will collect a judgment against two or more tortfeasors. He may be guided by whim, caprice, or spite. He may be, of course, but in fact he usually is guided by an intelligent self-interest.9
However, it is such unfortunate occurrences that the law must protect against. The other passages quoted above are evidence of the underlying concept of fairness which supports rights of contribution between tortfeasors. Where the plaintiff’s damage results from the wrongful conduct of more than one person it is unfair that the one to whom the plaintiff looks for payment (by suing only one wrongdoer or pursuing only one following a judgment against all wrongdoers) should bear the whole of the loss.
Unjust enrichment
3.8 Another more recent rationale supporting rights of contribution between wrongdoers is one based on the restitutionary principle of unjust enrichment. A consideration of the principle of unjust enrichment may help to give further meaning to the concept of fairness which underlies the law of contribution.
3.9 The most comprehensive consideration of the rationale for the existence and further extension of rights to contribution is contained in the Report of the Ontario Law Reform Commission.10 This Report identifies the principle of unjust enrichment as forming the basis of “nearly all contribution and related claims at common law and in equity” and also as providing “the underlying rationale of the right to contribution among concurrent tortfeasors” found in the Ontario Negligence Act.11
3.10 The Report states that, in the case of contribution:
D2 has received a benefit by D1’s payment, since D2’s liability to P has been discharged. Put another way, it may be said that D2 has been unjustly enriched by D1’s payment discharging D2’s liability.
3.11 It is relevant to note that the Ontario Commission uses the same rationale to support the extension of rights of contribution to wrongdoers whatever the source of their liability. The Commission argues that:
From the foregoing description of the scope of the right to contribution among tortfeasors and other wrongdoers, two general criticisms of existing law emerge. First, the very reasons that made the rule in Merryweather v Nixan unfair apply with equal force to situations where D1 and D2 are concurrent contract breakers, or where one is a contract breaker and the other a tortfeasor. The absence of a right to contribution allows the injured person to choose the defendant who is to bear the entire loss for which two or more defendants are legally responsible. If the person sued by the plaintiff has no claim to contribution, the other will have obtained a benefit that it is unjust to retain. It has been precisely to avoid this kind of injustice that, in other contexts, equity, the common law, and statutes have provided rights of contribution and indemnity. The particular legal categories into which the primary liabilities of D1 and D2 to P fall ought to be of no relevance to the secondary legal rights and duties arising between D1 and D2.12
This passage underlines the Ontario Commission’s reliance on the principle of unjust enrichment as the primary rationale for both the retention and the extension of rights of contribution. Indeed, it has been noted that if this broader view of unjust enrichment were accepted by the courts, there would be no need to consider the reform of contribution legislation.13 However, the principle of unjust enrichment is ultimately an inadequate rationale for contribution in all cases. There are, indeed, several instances where the Ontario Law Reform Commission decides that the strict application of restitutionary principles would not be appropriate and would lead to an unfair result.14
Proportionality
3.12 In LRC 65 the Commission argued for retaining the doctrine of solidary liability because a system of proportionate liability would be unfair to plaintiffs who would often recover less than full damages. After balancing the rights of plaintiffs and tortfeasors, the Commission concluded that the doctrine of solidary liability should be retained. In reaching this conclusion we did not reject a system of apportioning liability where such apportionment merely determined the levels of contribution between wrongdoers. A scheme providing for rights of contribution between wrongdoers provides a way of ensuring that, as far as possible, there is a rational connection between the extent of a defendant’s responsibility for the loss sustained by a plaintiff and the degree of liability which that defendant is required to bear.
3.13 The Scottish Law Commission chose to rely chiefly on a similar principle in support of the existence of a right to claim contribution:
The principle underlying one person’s right to claim relief from another is that he has discharged the proper debt or liability of that other person.15
CONCLUSIONS OF OTHER LAW REFORM AGENCIES
3.14 A number of law reform agencies have considered whether the law relating to contribution between concurrent wrongdoers should be reformed. None of these agencies has recommended that rights of contribution apply to a more limited range of causes of action. In fact most have extended rights of contribution to heads of liability other than tort.16
CONCLUSION
3.15 There are strong reasons for retaining rights of contribution between wrongdoers. A plaintiff’s right to obtain full compensation for an injury is protected without allowing the plaintiff the ultimate discretion of determining which defendants are liable to pay that compensation. At the same time, each defendant is expected to pay an amount of damages equivalent to the extent of that defendant’s responsibility for the harm sustained by the plaintiff. Where rights of contribution create an imbalance in the rights of plaintiffs and tortfeasors, it may be necessary to limit, in particular circumstances, the rights available to defendants. The enactment of the Employees Liability (Indemnification of Employer) Act 1982 (NSW) is an example of a response to circumstances in which a right of contribution created an injustice by placing liability on the defendant usually least able to bear that liability. In general, therefore, a scheme of rights of contribution between tortfeasors appears to be justified.
QUESTION ARISING IN CHAPTER 3
3.1 Should rights of contribution be retained where solidary liability prevails
FOOTNOTES
1. Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337
2. J G Fleming, The Law of Torts (8th ed, Law Book Company, Sydney, 1992) at 260.
3. F James, “Contribution Among Joint Tortfeasors: A Pragmatic Criticism” (1941) 54 Harvard Law Review 1156 at 1167. See also Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 55-56.
4. [1957] AC 555. See also McGrath v Council of the Municipality of Fairfield (1985) 156 CLR 672. In this case the Court decided that the Employee’s Liability (Indemnification of Employer) Act 1982 (NSW) prevented an employer from claiming contribution from an employee who was a tortfeasor and who had caused the employer loss.
5. New South Wales, Parliamentary Debates (Hansard) Legislative Assembly, 10 February 1982 at 1705.
6. W M Landes and R A Posner, “Joint and Multiple Tortfeasors: An Economic Analysis” (1980) 9 Journal of Legal Studies 517 at 529-530.
7. Fleming (1992) at 260.
8. J Story, Commentaries on Equity Jurisprudence (3d ed (Eng), Sweet & Maxwell, London, 1920) at para 493.
9. F James, “Contribution Among Joint Tortfeasors: A Pragmatic Criticism” (1941) 54 Harvard Law Review 1156 at 1167.
10. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 50. See also University of Alberta, Institute of Law Research and Reform, Contributory Negligence and Concurrent Wrongdoers (Report 31, 1979) at 34-36.
11. RSO 1980, c 315.
12. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 70.
13. J R Morris, Apportionment of Civil Liability (Legal Research Foundation Inc, Publication No 28, 1987) at 6.
14. For example, the Commission considered that to “apply a strict restitutionary approach” in the context of D1 seeking contribution after the settlement, release or waiver by a plaintiff (P) of D2’s liability “would give P too much power to decide who should ultimately bear the loss”: Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 170. See also the Ontario Report at 153.
15. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) relying on dicta of Lord Murray in Glasgow Corporation v John Turnbull & Co [1932] SLT 457 at 459 which stated that in the law of Scotland this principle appeared to be the basis upon which the equitable right to relief in all cases ultimately rests.
16. Law Reform Commission of Hong Kong, Report on the Law Relating to Contribution Between Wrongdoers (Topic 5, 1984) at para 5.3; Law Reform Committee of South Australia, 42nd Report of the Law Reform Committee of South Australia to the Attorney-General Relating to Proceedings Against and Contributions between Tortfeasors and Other Defendants (1977) at 10-11; University of Alberta, Institute of Law Research and Reform, Contribution, Negligence and Concurrent Wrongdoers (Report 31, 1979) at 40-52; Law Reform Commission of Saskatchewan, Proposals Relating to Joint Obligations (Report to the Minister of Justice, 1985) at 8-10; Victoria, Chief Justice’s Law Reform Committee, Contribution (1979) at para 5; England and Wales, Law Commission, Law of Contract: Report on Contribution (Law Com 79, 1977) at para 33.
