4.1 Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) provides:

(1) Where damage is suffered by any person as a result of a tort (whether a crime or not)-

(a) judgment recovered against any tort-feasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tort-feasor in respect of the same damage;

(b) if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, or for the benefit of the estate, or of the wife, husband, brother, sister, half-brother, half-sister, parent or child, of that person, against tort-feasors liable in respect of the damage (whether as joint tort-feasors or otherwise) the sums recovered under the judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing the action;

(c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.


(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.

This is the core provision which seeks to define the circumstances in which one defendant can claim contribution from another defendant who is also liable to the plaintiff for the same damage.¹ Sections 2 and 3 of the Act remove some of the important differences between joint tortfeasors and several tortfeasors. Section 2 of the Act provides for the joinder of several concurrent tortfeasors by the plaintiff and s 3 of the Act allows that a defendant (D1) may join as third parties anyone from whom D1 is claiming contribution. The following discussion will deal with some of the relevant issues which have arisen as courts have sought to apply s 5(1)(c) in cases where one tortfeasor is seeking contribution from another concurrent tortfeasor.

TORTS TO WHICH CONTRIBUTION APPLIES

4.2 Section 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) has no express exceptions excluding any specific categories of tort. It, therefore, covers all types of concurrent tortfeasors. One question which arises is whether any specific categories of concurrent tortfeasors should be excluded from the application of the section.

4.3 In the following sections the arguments for applying rights of contribution to the following torts will be considered:

• torts that are crimes;
• intentional torts;
• torts of strict liability; and
• statutory torts.

Torts that are crimes

4.4 Section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) provides that there is a right to claim contribution whether or not the tort committed by D1 is also a crime.

4.5 The argument against allowing a right to contribution where a tort is also a crime is similar to the principle, enunciated in Merryweather v Nixan,² that tortfeasors should not be able to base a cause of action on their own wrongdoing, that is, on the basis of the commission of a crime.

4.6 The issue of the relationship between civil liability and criminal responsibility has been recently considered by the High Court in Gala v Preston.³ The approach of the High Court in this case was that the existence of a joint illegal enterprise was not in itself a reason for denying the existence of a duty of care. A duty of care would not arise in circumstances where the participants in the joint illegal enterprise could have no reasonable basis for expecting that the other participants would act with reasonable care, or where the recognition of the duty of care would affect the normative influence of the criminal law.⁴

4.7 The application of the principle discussed in Gala v Preston cannot be directly applied to the question of whether there should be rights of contribution between defendants who have committed torts that are also crimes. Rights of contribution are concerned with apportioning responsibility between defendants in circumstances where there is little reason for allowing a plaintiff to decide which defendant should bear the ultimate burden. The principles relevant to deciding upon the extent of rights of contribution will therefore be different from those relevant to deciding whether there should be a duty of care between participants in a joint illegal enterprise.

4.8 There are, however, two principles which underpin the decision in Gala that are directly applicable to such torts. The first is that it is not possible to have a blanket provision preventing rights of contribution where the tort is also a crime. The range of wrongs which constitute crimes, and the wide variety of contexts in which those wrongs are committed, prevent the formulation of any firm rule for determining whether a right of contribution should be denied. This was argued by the English Law Revision Committee in 1934:

At first sight public policy might appear to demand that such an exception would be made at any rate when the crime is wanton and deliberate and not merely the result of inadvertence. We have, however, come to the conclusion that it is impracticable to draw such a distinction and that any attempt to exclude from our recommendation torts which are also crimes would produce anomalies (such as would result from the fact that libel is a crime while slander is not or that negligent driving may amount to a felony) and uncertainties which it would be undesirable to introduce. Accordingly our recommendation is made without qualification.⁵

The second, related, principle is that the question of whether a defendant should have a right of contribution would depend on the nature of the crime committed and on the circumstances relevant to the case.⁶

4.9 If these two principles are applied to the question of whether there should be rights of contribution between defendants who have committed torts that are also crimes, it appears that there are good reasons for maintaining the current legal position. The right to contribution should be qualified in two ways. First, as was acknowledged in Gala, the Court should retain a general discretion to determine in particular cases that a wrongdoer should not have a right of contribution. The basis for such a decision would depend upon the facts of the particular case. Secondly, the right of contribution must be seen in the context of the discretion of the court to order one defendant to meet the full extent of the plaintiff’s liability.⁷

Intentional torts

4.10 There appear to be no decisions in New South Wales directly on the availability of a right to claim contribution where D1 has committed an intentional tort. It has been suggested by Glanville Williams that courts may still, as a matter of public policy, apply the rule in Merryweather v Nixan⁸ to cases where D1 has committed an intentional tort.⁹ However, given a recent decision in England¹⁰ which found that an intentional wrongdoer could claim from other wrongdoers,¹¹ and similar conclusions based on legislation in Ontario and British Columbia,¹² it seems that s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) probably does apply to intentional wrongdoers.¹³

4.11 As already noted, one of the arguments against allowing a right of contribution for intentional torts involves an extension of the reasoning in Merryweather v Nixan for not allowing any rights of contribution between tortfeasors. The damage committed by the intentional tortfeasor, and hence the basis for the award of damages, is so different from that of other torts that there is no just or equitable way to apportion responsibility.¹⁴ A second, and related argument, is that intentional torts involve a high degree of wrongdoing and hence tortfeasors should be wholly liable for committing them.¹⁵

4.12 The responses to these arguments are essentially the same as the responses to the arguments that there should not be a right of contribution for tortfeasors who have committed torts that are also crimes. It is not possible to formulate a general rule excluding rights to contribution for intentional tortfeasors. It is both possible and just for courts to apportion responsibility between defendants once one defendant’s liability to the plaintiff is established. Thus, rather than attempting to exclude particular kinds of wrongs as ones not subject to contribution, the courts should be left with a wide discretion as to how to apportion responsibility, including the right to award full contribution against particular defendants.¹⁶

4.13 Further arguments in favour of retaining rights of contribution for intentional tortfeasors consider the position of the other concurrent tortfeasors whose wrongdoing may or may not be categorised as intentional. It can be argued that a negligent concurrent tortfeasor should not be allowed to escape liability for some share of the harm to a plaintiff simply because an intentional tortfeasor was also responsible.¹⁷ There is also the possibility that an intentional tortfeasor could escape liability simply because of the presence of another intentional tortfeasor against whom the plaintiff seeks recovery.¹⁸

Torts of strict liability

4.14 Liability which is imposed on a defendant may be strict. Such liability may arise at common law¹⁹ or, more commonly, by statute. Some statutes such as the Workers Compensation Act 1987 (NSW) involve statutory rights of contribution.²⁰ There is hence no need to consider here the operation of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).²¹ In relation to other strict liability offences such as that created by s 2(2) of the Damage by Aircraft Act 1952 (NSW), the position is not so clear. This provision states that “Where material loss or damage is caused to any person ... on land ... by ... an aircraft while in flight ... damages in respect of the loss or damage shall be recoverable without proof of negligence, or intention or other cause of action”. Breach of s 2(2) may be a tort for the purposes of s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).²²

4.15 It appears that, where liability to a plaintiff arises from breach of statutory duty, a tortfeasor will have the right to claim contribution from another tortfeasor.²³ The right to claim contribution may be recognised even though the tortfeasors cannot avail themselves of the defence of contributory negligence in the primary action against the plaintiff.²⁴

4.16 The arguments against allowing rights of contribution for strict liability torts are based on the proposition that by creating a strict liability offence, legislators or courts have clearly specified where the liability for the damage caused is ultimately to fall. There is, therefore, a good basis for excluding rights of contribution for strict liability torts.²⁵ However, it can also be argued that strict liability torts may rather be concerned with ensuring that in certain defined circumstances an injured plaintiff will recover compensation. Fleming states that the rationale for the Damage by Aircraft Act 1952 (NSW) is:

based on fairness, considering the inequality between the parties where one is wholly at the mercy of the other, has not voluntarily exposed himself to risk, and does not benefit, unlike the other, from the activity.²⁶

This explanation for the creation of a cause of action based on strict liability seems to be primarily concerned with ensuring that any plaintiff injured by aircraft has a cause of action against the aircraft owner. When characterised in these terms there seems to be no good reason for denying rights of contribution to tortfeasors who have committed strict liability torts. Once the plaintiff has recovered compensation from a tortfeasor there seems to be no reason for denying that tortfeasor a right of contribution from another tortfeasor.

4.17 Any recognition of a right of contribution in these circumstances would, as in the case of crimes and of intentional torts, be qualified by a wide discretion of the court as to the way in which damages are to be apportioned.

Statutory regimes

4.18 There are a range of statutes which create specific causes of action without any reference to rights of contribution. The Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) are two statutes which create obligations which plaintiffs may pursue through independent causes of action.²⁷ In neither case is there any reference to rights of contribution. There are diverging opinions as to whether the causes of action created by these statutes are “torts” for the purposes of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and subject to the right to contribution found in s 5(1)(c).²⁸ Heydon has doubted that the statutory right to contribution can apply in the Federal jurisdiction because s 79 of the Judiciary Act 1903 (Cth) requires the Federal Court to apply only the “laws relating to procedure” of the State in which it is sitting. In any case Heydon doubts that s 5(1)(c) could apply to actions under the Trade Practices Act, even if it relates to procedure, because a breach of s 52 is not “a tort (whether a crime or not)”. However, he goes on to note that s 23A-23B of the Wrongs Act 1958 (Vic) would not suffer from the same problem because it refers to a “wrong” which is “sufficiently widely defined to include a breach of s 52”.²⁹ If New South Wales were to adopt provisions similar to those in Victoria, it would probably have no effect on the Trade Practices Act 1974 (Cth) but it would presumably apply to the Fair Trading Act 1987 (NSW).

4.19 The failure by the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) to provide for any rights of contribution between wrongdoers appears to be a major gap in the law.

Conclusion

All tortfeasors may claim contribution

4.20 The Commission has reached the conclusion that the general scheme of rights to claim contribution should be available to all tortfeasors. The reasons for having a statutory scheme defining rights of contribution apply equally to torts that are crimes, intentional torts and strict liability torts. In each case the existence of rights to contribution will reduce the discretion of the plaintiff to determine who ultimately bears the loss and will provide for a just and equitable apportionment between wrongdoers.

4.21 Similar conclusions have been reached by others. Glanville Williams has argued that rights of contribution should apply to all tortfeasors.³⁰ Although the Ontario Law Reform Commission considered this issue in less detail, it also recommended the extension of rights of contribution to all tortfeasors.³¹ In considering the extension of rights to contribution to all persons liable in damages for the same loss, whatever the basis of their liability to the plaintiff, some law reform agencies, like the Scottish Law Commission, did not give any consideration to distinguishing between different torts.³²

Proposal 1

Rights of contribution between tortfeasors should apply to all tortfeasors.

D1’S CLAIM FOR CONTRIBUTION

4.22 The question whether D1 has a right to claim contribution from D2 is considered here in three basic circumstances:

• where D1 is sued to judgment³³ by P - that is, found liable by a process of court;
• where D1 has reached a settlement with P, or made some payment which has the effect of reducing D2’s liability; and
• where D2 has successfully defeated an action brought by P.

4.23 In the context of the existing rights to contribution provided by s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), situations where D1 is sued to judgment or has settled with P are concerned with the meaning of “liable” where the term first occurs in s 5(1)(c):

Where damage is suffered by any person as a result of a tort ... any tort-feasor liable in respect of that damage may recover contribution ...

4.24 The situation where D2 has successfully defeated P is concerned with the meaning of “liable” where it occurs for the second time in s 5(1)(c):

... may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage.³⁴

Where P obtains judgment against D1

4.25 The question arises, when D1 is found liable to P, whether D2 can dispute D1’s liability to P or challenge the findings made against D1 in that litigation, as part of D2’s defence to D1’s claim for contribution, when D2 was not a party to the proceedings between D1 and P. It is clear that where P obtains judgment against D1 in tort, this is sufficient to found a claim for contribution by D1 against D2. In Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport,³⁵ the High Court quoted with approval a passage from the dissenting judgment of Lord Justice Denning in Littlewood v George Wimpey & Co Ltd:

It seems to me clear that a tortfeasor cannot recover contribution until his liability is ascertained. If he had not been sued and has paid nothing and admitted nothing, he can have no cause of action for contribution, for the simple reason that he may never be called on to pay at all. The damaged plaintiff may go against the other tortfeasor only. Once the liability of the first tortfeasor has, however, been ascertained by judgment against him or by admission, then he has a cause of action for contribution against the second tortfeasor.³⁶

4.26 The High Court then went on to say that:

A decision that the liability imposed by the previous judgment is a liability which par (c) of sub-s (1) contemplated does not necessarily mean that the tribunal which discharges the responsibility of fixing the amount of contribution under sub-s (2) of s 5 cannot consider whether owing to the fault of the now plaintiff it stands at an excessive figure.³⁷

Thus, while D2 cannot defeat D1’s contribution claim on the basis that D1 is not liable to P, D2 can challenge the quantum determined in the original proceedings as excessive in order to determine what is “just and equitable” in the circumstances.

Finality of a finding that D1 is liable to P

4.27 There are several reasons why any finding in an action between P and D1 should be binding on D2 in a subsequent contribution action:³⁸

1. To the extent that D1 has satisfied the judgment in P’s action, D1 will have conferred a benefit upon D2 by removing or reducing D2’s liability to P.

2. D1 cannot be said to have benefited D2 officiously, because the payment was made pursuant to a legal obligation.

3. Since D2 can raise against D1’s claim for contribution any defence that should have enabled D2 to defeat or reduce P’s claim against him or her, D2 is not prejudiced by being bound by the outcome of litigation to which he or she was not a party.

4. Preventing D2 from reopening the issue decided in the action between P and D1 is an efficient use of judicial time and public funds, and if D2 has to pay P in any event, he or she is not substantially prejudiced by this extension of issue estoppel.

4.28 On the other hand, if D2 is not able to defend D1’s claim for contribution by establishing that D1 ought not to have been held liable to P in the original litigation, then D2 will have been deprived of a defence that D2 could have raised if D2 had been brought into the original action as a co-defendant or by D1’s service of a third party notice upon him or her.

4.29 The Irish Civil Liability Act 1961 specifically implements both aspects of the High Court’s reasoning in the Bitumen and Oil Refineries case. Section 29(1) provides:

In any proceeding for contribution, the contributor shall not be entitled to resist the claim on the ground that the claimant who has paid the injured person was not liable to such person; but, subject to this section and to the general law of estoppel, he may resist the claim on the ground that he himself is not liable to such person and, for this purpose, may dispute any question of law or fact even though that question arises also on the liability of the claimant to the injured person; and the contributor may in the same way dispute the amount of the damage suffered by the injured person.³⁹

4.31 The Ontario Commission also adopted the principle in the Civil Liability Act 1961 (Ireland) in respect of D2’s right to prove, in the contribution action, that the court erred in assessing the quantum of the injured person’s loss in P’s action against D1.⁴² The Commission was of the view that there is an important distinction between relitigating the issue of D1’s liability to P and relitigating the issue of quantum:

[S]ince D2 is, by definition, a wrongdoer, she is not prejudiced by being compelled to accept the fact of D1’s liability. Such is not the case where the quantum of P’s loss is in issue. Here, the inability to contest the earlier finding may be of critical importance to D2, who may wish to argue in the contribution claim that, since P’s loss is actually less than that determined in P v D1, not all of D1’s payment to P has, in fact, benefited D2. Moreover, it bears emphasizing that, where P’s judgment against D1 has not been satisfied or where P believes that her loss is more than the court held in her suit against D1, P may commence an action against D2. In such an action, the court would have to deal with the quantum of the damage suffered by P, obviously without reference to the results reached on the same issue in P v D1. Accordingly, the Commission cannot see why that very issue ought not to be justiciable in the contribution action.⁴³

This is also the position adopted by the High Court in the Bitumen case.

Consent judgments obtained by fraud or collusion

4.32 Another issue which should be addressed is whether consent judgments between D1 and P and judgments obtained by fraud or collusion should be treated as final judgments.

4.33 The New Zealand Law Commission, in considering the finality of judgments for the purposes of contribution claims, excluded consent judgments or payments into court as being “essentially in the nature of compromise without a determination of liability by the court”, preferring to consider only judgments given “on the merits”.⁴⁴ In the Northern Ireland case of James P Corry & Co Ltd v Clarke⁴⁵ it was held that D1 was not a tortfeasor for the purposes of a contribution claim merely because D1 had entered into a consent judgment with P.

4.34 The New Zealand Law Commission also suggested that it should be possible to review a case if the judgment has been obtained by fraud or collusion on the part of P or D1, but if the judgment is given against D1 “in good faith”, then the New Zealand Law Commission could see no reason why D2 would be prejudiced if D1 were allowed to rely on the judgment, provided D2 was still able to challenge his or her own liability to P.⁴⁶ The Ontario Law Reform Commission, despite stating that it could see “no policy justification for permitting D2 to open up the issue of D1’s liability”, recommended that judgments obtained by collusion or fraud should be an exception to the general principle. The Ontario Law Reform Commission provided no reasons for allowing this exception.⁴⁷

4.35 However, it can also be argued that there is nothing particularly special about a judgment “on the merits”, after a fully contested hearing when consent judgments and judgments obtained by fraud or collusion have exactly the same effect, namely, of discharging some of D2’s liability to P.⁴⁸

Proposal 2

In contribution proceedings brought by D1 against D2, following a judgment (whether on the merits or by consent) against D1 in favour of P, it should be no defence for D2 to establish that D1 was not liable to P. D2 may, however, contest any issue relevant to D2’s liability to P, even if that issue was decided in favour of P in P’s action against D1, and may also argue that the level of damages awarded in the judgment given against D1 was excessive.

Where D1 and P settle without judgment

4.36 While the High Court has decided authoritatively that judgment against D1, in an action brought by P, is a sufficient basis for D1 to initiate a claim for contribution, there is no such statement as to the way in which settlement of a claim between P and D1 will affect D1’s claim for contribution from D2.

4.37 The rights of contribution between concurrent wrongdoers will be affected in part by the kind of settlement reached between the plaintiff and the settling defendant. We have decided to deal with issues relating to partial settlements separately to those relating to full settlements.⁴⁹

• A full settlement is a settlement between D1 and P that is in full satisfaction of P’s claim. A plaintiff who reaches a settlement with a defendant may decide to give up all causes of action in relation to that damage. In this instance, the settlement will be the final determination of all of the plaintiff’s rights in relation to that damage. The primary issue will be whether the settling defendant (D1) can use the settlement reached with P as the basis of a claim for contribution from D2.

• A partial settlement refers to the situation where a person settles a claim by the injured person in such a way that other concurrent wrongdoers remain liable to P, although the sum that they may be required to pay to the successful plaintiff will be reduced by the amount of the settlement. In this instance, the settlement will not be a final determination of the plaintiff’s rights in relation to the damage. In such cases the resolution of rights of contribution between concurrent wrongdoers is rather more complex. Typically, P will reach a settlement with D2 which is not a final determination of P’s rights in relation to the damage. P will then proceed to bring a separate action against D1. If this action is successful, D1 may then wish to claim contribution from the settling defendant, D2.

4.38 Two consequential matters should also be raised at this stage, namely the issue of the different legal consequences attaching to joint wrongdoers and the policy of encouraging settlements.

• Joint wrongdoers. Chapter 7 includes a detailed discussion of the different legal consequences attaching to “joint” wrongdoers rather than “several” wrongdoers.⁵⁰ One of these consequences is known as the settlement bar rule, which specifies that a release or a release by accord and satisfaction with a joint wrongdoer discharges the liability of all. It is possible for a plaintiff to retain the right to bring actions against other joint wrongdoers, but in this case the basis of the settlement between the plaintiff and the settling defendant is a “covenant not to sue” rather than a release. The aim of the proposals for reform in Chapter 7 is, as far as possible, to remove the distinction between joint wrongdoers and several wrongdoers. As far as settlements are concerned, it is proposed that the settlement bar rule be abolished for all joint wrongdoers. The impact of this reform would be that the rules concerning settlements for joint wrongdoers would become the same as for several wrongdoers. The crucial issue for joint wrongdoers would, therefore, be whether the settlement reached with the defendant was a final determination of the plaintiff’s rights in relation to the damage.

• Policy of encouraging settlements. In reviewing the way in which settlements affect the law of contribution, there is a policy issue which requires special consideration, namely that the law of contribution should not discourage parties from settling disputes, that is, by not throwing up barriers which would prevent either D1 or P reaching a settlement. One way of encouraging settlements is to ensure that P’s decision to settle, in part or in full, does not adversely affect D1’s claim for contribution. This means that, as far as possible, P’s final settlement with D1 should be able to be used by D1 as the basis for a claim of contribution from D2.

Full settlements

4.39 There are two issues which arise when D1 settles with P and seeks to use the settlement as the basis of a claim for contribution against D2. The first is whether D2 can resist this claim on the ground that D1 was never liable to P. The second is whether the amount for which D1 settled with P should be the sum which the court apportions between D1 and D2 in the contribution proceedings.

4.40 Where D1 was never liable to P. The question whether D2 can resist a claim for contribution brought by D1 on the ground that even though D1 settled with P, D1 was never liable to P, has not been decided by any appellate court in Australia.⁵¹ However, in the South Australian case of Bakker v Joppich,⁵² Justice Wells, after discussing the High Court’s decision in Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport, stated:

Both on principle and authority, I am of the opinion that, with respect to the first question, the word “liable” in the first line of par (c) of sub-s (1) of s 25⁵³ comprehends all circumstances in which a defendant becomes, under any head, legally liable to the plaintiff to pay damages on account of acknowledged or alleged negligence: liability, within the meaning of that passage exists, inter alia, where the defendant has submitted to judgment on that account or has made an accord and satisfaction.⁵⁴

While Justice Wells clearly recognises D1’s entitlement to rely on a full settlement as the basis for a claim to contribution, it is not clear to what extent D2 can resist the claim on the ground that D1 was not liable to P.

4.41 In England, s 1(4) of the Civil Liability (Contribution) Act 1978 (Eng) requires that the settlement between D1 and P is a bona fide settlement, and that D1 “would have been liable assuming that the factual basis of the claim against him could be established”. This provision seems to mean that D2 will have some room to resist D1’s claim for contribution on the grounds that D1 was never liable to P.⁵⁵

4.42 The English position can be contrasted with s 3 of Ontario’s Negligence Act⁵⁶ which specifically deals with settlements. It was held in Marschler v G Masser’s Garage⁵⁷ that D1 was entitled to recover an indemnity from D2 where D1 had reached a settlement with P, but was subsequently found (in the contribution proceedings between D1 and D2) not to be liable to P at all. Notwithstanding the fact that D1 was not a “tortfeasor”, the court ordered that D2 indemnify D1. The court interpreted the term “tortfeasor” as “a person who impliedly assumes or admits liability when he enters into a settlement”.⁵⁸ In New South Wales, this decision would be the equivalent of finding that D1’s settlement with P rendered D1 “liable” to P for the purposes of s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

4.43 The Ontario Commission recommended that in the case of full settlements between D1 and P, D1 should be entitled to claim contribution from D2 and argued that there were good reasons for confirming by legislation the position adopted in Marschler’s case and extending it to other heads of civil liability. The only qualification to this was that a court should be empowered to refuse to make an order for contribution where “the person claiming contribution made the settlement without believing that he was or might be liable and without regard to any legal proceedings that might be instituted against him by the injured person for the claim settled”.⁵⁹ The Ontario Commission noted that in so finding, it strayed from the unifying principle of unjust enrichment. If D1 was never liable to P, then D1’s payment to P cannot be regarded as conferring a benefit on D2. A gratuitous payment would be regarded as a collateral payment which would not affect the extent of D2’s liability to pay damages to P.⁶⁰

4.44 The basis for the Ontario Commission’s recommendation was that a limitation on D2’s right to resist D1’s claim for contribution could be justified on a number of grounds:

• It would encourage the settlement of claims.⁶¹
• It seems contrary to common sense for D2 to be able to defeat D1’s claim by establishing that D2 was exclusively liable to P, whereas D1’s claim may succeed if D1 establishes that he or she was indeed liable to P, no matter how small D1’s fair share of responsibility is ultimately determined to be.
• The benefit to D2 will normally be quite clear; D2 has been saved from having to pay a sum to P that he or she could otherwise have been legally compelled to pay. This is not the kind of “unrequested” benefit for which it is unfair to require D2 to pay: D1’s payment has not deprived D2 of any real choice about the way in which D2 will allocate his or her resources.⁶²

4.45 The limited capacity of D2 to resist a claim for contribution on the grounds that D1 was never liable will encourage settlements without unduly impinging on the capacity of D2 to defend a claim for contribution. D1 will still have to establish that D2 would have been liable to P. Where D1 has settled for an unreasonably high figure with P, D2’s position may be protected by allowing D2 to argue that the quantum of the settlement is excessive.

4.46 The approach of examining the question as part of a broader consideration of general principles was taken by the Scottish Law Commission which decided that all that should be required to enable D1 to claim contribution from D2 would be a payment by D1 which has the effect of reducing or extinguishing D2’s liability in damages in respect of P’s loss.⁶³ For the purposes of the recommendation “payment” was taken to include payment by provision of goods and/or services where the value of such could be ascertained.⁶⁴ The Scottish Law Commission particularly rejected the need to show that any agreement reached between the parties was “bona fide”.⁶⁵

4.47 The Scottish Law Commission relied heavily on the idea of fairness between concurrent wrongdoers, in particular the idea that D2 should not be able to benefit by having his or her share of the liability discharged by D1, however gratuitous the payment. Their recommendation was also formulated bearing in mind the other policy considerations of encouraging settlements and not prejudicing the position of injured parties.⁶⁶ These objectives appear to have been met in the recommendation. It was considered, in any case, that the greatest safeguard for D2 would be a power in the court to ensure that D1’s right of relief is limited to what would be a just sum having regard to the extent of D2’s liability to P.⁶⁷

4.48 It should be borne in mind, however, that the approach of the Scottish Law Commission is quite different from the approaches adopted by other law reform agencies in that, by focusing solely on whether D2’s liability has been discharged by D1, it has entirely dispensed with the need to consider the questions of establishing D1’s liability as a separate issue.⁶⁸

Proposal 3

A settlement between D1 and P which is a final determination of P’s rights in relation to that damage should be the basis of D1’s right to claim contribution from D2. Where D2 is liable to P, D2 should not be entitled to resist the claim for contribution on the ground that D1 was never liable to P.

4.49 The sum to be apportioned. The second issue in relation to a settlement between D1 and P is whether the amount of the settlement should be treated as the sum to be apportioned between D1 and D2. In the South Australian case of Bakker v Joppich, Justice Wells stated that the “power to pronounce what is a just and equitable contribution enables the court to make due allowance for the factor of improvidence, unreasonableness, or negligence on the part of the defendant (D1)” and further stated that:

the amount which he has agreed to pay on either legal foundation [by submission to judgment or by settlement by accord and satisfaction] may be used as the basis for assessing contribution, by reference to the percentage of the third party’s responsibility subject to such variation as may be called for if it clearly appears to the Court that the sum agreed upon is, for one reason or another, improvident or unreasonable.⁶⁹

Thus the amount agreed to as part of the settlement between P and D1 is the starting point for apportionment between D1 and D2, but the amount agreed upon in the settlement must be objectively reasonable.

4.50 In Anderson v Haskins,⁷⁰ Justice O’Loughlin expressed the view that in Bakker v Joppich Justice Wells had created a presumption of reasonableness in favour of the amount of the settlement between D1 and P:

I feel compelled to say that I support the views expressed by Wells J; they have, in their favour, the benefit of discouraging unnecessary and expensive litigation. If a judgment or an accord has been struck between parties who have been properly advised, and a third party, who may be affected, is not bound thereby but may seek to go behind that judgment or accord, it is not a matter of concern to me that he may face a difficult task in rebutting the presumptions to which I have referred. The onus will still remain on the party seeking contribution to prove that the third party is liable: cf Bitumen & Oil Refineries Ltd v Commissioner for Government Transport.

4.51 The majority of the Full Court of the South Australian Supreme Court in Saccardo Constructions Pty Ltd v Gammon⁷¹ rejected this interpretation of Bakker v Joppich, stating that the quantum of the settlement between D1 and P would not be presumed to be reasonable in contribution proceedings initiated by D1 and that D1 could be required to prove the quantum of damages as in any other suit.⁷² It was felt that the prospect of a potential costs order was sufficient to prevent D2 putting D1 to full proof of the quantification of damages in the settlement with P.⁷³

4.52 Section 1(4) of the Civil Liability (Contribution) Act 1978 (Eng) allows that contribution may be claimed by a “person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him” by the injured person. The section has been interpreted to require that a claim for damages may be quantified by reference to the amount for which P settled only if the settlement figure was reasonable.⁷⁴

4.53 Under s 3 of the Ontario Negligence Act, D1 is required to “satisfy the court that the amount of the settlement was reasonable, and in the event that the court finds the amount of the settlement was excessive it may fix the amount at which the claim should have been settled”. The onus of proving the reasonableness of the settlement figure is upon D1, who will normally be able to discharge this burden by leading evidence from which the court can approximate what P would have recovered if he or she instituted legal proceedings. The onus then shifts to D2, who faces the burden of proving it was excessive.

4.54 The New Zealand Law Commission recommended that, in determining the “distributable sum”, D1 has to show that:

• the compromise made by D1 with P was made bona fide; and
• D2 is (or was) responsible to P for an amount equal to or exceeding the amount claimed by D1 by way of contribution.⁷⁵

If these matters are proved, the court should proceed to apportion the responsibility of the loss/damage suffered by P between the defendants.

4.55 With regard to the sum to be apportioned in the contribution proceedings, the Scottish Law Commission observed that the best way of protecting D2 from an excessive settlement between D1 and P was to ensure that D1’s right to contribution was limited to a “just sum” and rejected the requirement that a settlement be bona fide for D1 to have a right to claim contribution.⁷⁶

4.56 A presumption of reasonableness in favour of the amount of the settlement or accord between D1 and P still permits D2 to contest the quantum of the settlement reached between D1 and P. The introduction of such a presumption will encourage settlements and reduce costly and unnecessary litigation. In this respect, the Commission accepts that the arguments put forward in support of a presumption of reasonableness by Justice O’Loughlin⁷⁷ are persuasive. The aim of this proposal is therefore to treat a settlement or accord between D1 and P, so far as is possible, in the same way as a judgment against D1 in favour of P. It appears to the Commission that a more limited review of the settlement figure reaches an adequate balance between the need to encourage settlements and the need to ensure that the quantum of D2’s contribution is just and equitable.

4.57 The Commission’s proposal is simpler than the proposal put by the New Zealand Law Commission, which places greater limitations on D1’s capacity to rely on the settlement with P when claiming contribution from D2. The Commission’s proposal gives the settlement figure reached between D1 and P a higher status than that recommended by the Ontario Commission, which recommended that the onus be on D1 to establish that the settlement with P was a “reasonable” one.

Proposal 4

In contribution proceedings, the sum agreed to between D1 and P in settlement of P’s claim should have the benefit of a presumption of reasonableness. D2 may challenge a claim for contribution on the ground that the quantum of the award was unreasonable and the court may order D2 to pay a sum which the court considers appropriate in the circumstances.

Partial settlements

4.58 There are two basic issues raised by partial settlements, where P retains the right to proceed against other defendants. The first is whether D1, who is sued to judgment, is able to claim contribution from D2 who, at the time of the claim for contribution, is no longer liable to P, because D2 and P have already settled. The second issue is whether D2, the settling wrongdoer, can retain a right to claim contribution from D1 after D1 has been sued to judgment or settled with P. The resolution of these issues is dependent upon balancing a variety of competing policy concerns:

• the interest in encouraging settlements without resort to litigation;
• allowing plaintiffs maximum opportunity to recover the full extent of their loss from any or all of the defendants;
• not prejudicing those who are not parties to the settlement by an agreement made between the injured person and one of the wrongdoers; and
• the need to provide clear and workable rules by which the rights and duties of the parties are regulated.

4.59 Under the current law the plaintiff is entitled to obtain full compensation for the harm sustained and each of the tortfeasors is entitled to pursue their rights of contribution provided for by s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). In such circumstances, each of the tortfeasors is “liable” to the plaintiff and hence has the right to claim contribution from other tortfeasors. Each of the tortfeasors is a person who “is, or would if sued have been, liable” and hence can be the subject of a contribution claim.

4.60 There are three options for dealing with partial settlements:⁷⁸

• the first allows for a series of multiple actions which aim to achieve full compensation to the plaintiff and a fair allocation of liability amongst the tortfeasors;
• the second denies any right of contribution to D2, who has settled with P and protects D2 from any claims by D1; and
• the third limits the damages which P can recover from D1 having settled with D2.

4.61 Multiple actions. This option allows for a series of multiple actions, the end result of which is that the plaintiff is fully compensated and the concurrent wrongdoers pay an amount which reflects their degree of responsibility for P’s loss. If P, after reaching a partial settlement with D2, subsequently brings an action against D1, the quantum of D1’s liability will be reduced by the size of the settlement between P and D2. In this action, D1 may join D2 and claim contribution from D2 for any amount by which the judgment against D1 exceeds D1’s fair share of the liability. Similarly, D2 may claim contribution from D1 if D2 has settled with P for an amount which turns out to be greater than what would otherwise have been D2’s fair share. This option seems to represent the current legal position.⁷⁹ It was adopted by the Civil Liability (Contribution) Act 1978 (Eng) following recommendations by the English Law Commission⁸⁰ and was also recommended by the Ontario Commission.⁸¹

4.62 No right of contribution. This is the most radical option. It denies any right of contribution to D2, who has settled with P, and protects D2 from any subsequent claim for contribution by D1, who has either been found liable to P or settled with P. In the action brought by P against D1, P recovers only that proportion of the loss for which D1 is responsible. Any settlement between P and D2 is ignored for the purpose of quantifying D1’s liability. This involves a departure from the principle of solidary liability, which requires the court to allocate responsibility for P’s loss among D1 and the concurrent wrongdoers who have settled, although they are not parties to the litigation. The overall effect of the scheme is to provide D1 with some certainty but at the expense of throwing the risk of loss on to the plaintiff.

4.63 One way contribution. The third option is the one proposed by Glanville Williams, and subsequently adopted by the Civil Liability Act 1961 (Ireland).⁸² It prevents P, the injured party, from recovering, as a result of a partial settlement with D2 and a judgment against D1, more than the amount that he or she would have recovered if he or she had not settled with D2. This is achieved by s 17(2) of the Civil Liability Act 1961 (Ireland), which provides that if P settles with D2 and then sues D1, P’s damages will be the difference between P’s total loss and the amount of either P’s settlement with D2 or D2’s proposed share of the liability, whichever is greater. D1 has no right of contribution against D2, but D2 may claim contribution from D1. Its major difference from the second option is that P loses the right to retain any of the benefit obtained as a result of a favourable settlement with D2.

4.64 The third option is less likely to promote settlements than the second option because, if P underestimates the degree of fault of D2 and settles for too low a figure, P bears any shortfall. P therefore bears the risk of settling at a figure that is too low without being able to benefit from settling for a figure that is too high. The second option is somewhat better for P because P is entitled to keep the full amount of the settlement with D2, irrespective of whether that settlement subsequently turns out to be too high. This benefit for P, together with the protection of D2 from further claims offered by the second option, may have the effect of encouraging settlements. In contrast, the first option protects the plaintiff’s interests but does so without encouraging settlements.

4.65 As noted, the current legal position probably preserves the right of P to obtain full compensation and affirms the right of D1, who is sued to judgment by P, to recover contribution from D2. The process by which each of the parties’ rights is determined is a complicated one that leaves the settling defendant, D2, vulnerable to claims for contribution after reaching a settlement with P. There are, therefore, two reasons for considering reform of this area of law. First, the current process for aligning the rights of the parties is both complex and expensive. Secondly, there is little incentive for D2 and P to reach a settlement so long as D2 remains vulnerable to a claim for contribution.

4.66 There are, however, a number of arguments against any reform of the current legal position. The first is that both the second and third options involve a greater risk that the plaintiff will be under-compensated. In the case of the second option, there is also the possibility that the plaintiff will be over-compensated. A proposal by the Commission in conformity with either option would therefore involve the recognition of a limited exception to the principle that a plaintiff is entitled to full compensation. The second argument against any reform in this area is that partial settlements do not prevent the plaintiff bringing actions against any of the other defendants. In this sense, a policy of encouraging partial settlements may or may not be consistent with an overall policy of encouraging settlements.

4.67 Overall, the Commission is not persuaded that a change in the law is warranted. The current legal position protects the right of the plaintiff to obtain full compensation for the harm sustained. The relatively complex state of the law is balanced against the uncertain basis of any policy encouraging other than final settlements. Finally, the current legal position allows the parties maximum room to negotiate a settlement which would be a final determination of all of P’s rights in relation to the damage.

Proposal 5

The Commission proposes that, in the case of a partial settlement between D2 and P, D1 should have a right of contribution from D2; D2 should have a right of contribution from D1; and P should be entitled to bring an action against D1 in order to obtain full compensation.

4.68 Releases and indemnities. A specific instance of a partial settlement is where P releases D2 from liability altogether, leaving P with a single cause of action against D1. An example of such an arrangement may be found in AWA Ltd v Daniels.⁸³ In this case, the plaintiff, AWA, sued the auditor, Daniels (D1). The auditor cross claimed against the non-executive directors (D2), claiming contribution from the non-executive directors as defendants liable for the losses incurred by AWA. AWA had, however, given indemnities and releases to the directors to ensure that they gave evidence in support of AWA’s claim against the auditors. If the non-executive directors were found to have been in breach of their duties of due care and diligence, which they were not, D1 (the auditors) would have claimed contribution from them. The non-executive directors would have relied on the indemnities given to them by AWA with the consequence that the overall level of damages which AWA would have recovered from the auditors would have been reduced by the amount of the indemnity.

4.69 A release and indemnity given by P to D2 is a special form of a settlement which is not a final settlement. It appears to the Commission that the same rules should apply for all settlements which are not final settlements.

Proposal 6

In circumstances where a release and indemnity is given by P to D2, the rights of contribution between D1 and D2, should be the same as in the case of partial settlements.

Where P fails in an action against D2

4.70 Section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) provides that a tortfeasor liable in respect of the plaintiff’s damage (D1) may “recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage”. The requirement that D1 may claim contribution from any other tortfeasor (D2) “who is, or would if sued have been, liable” has given rise to a number of problems in the following circumstances:

• where D1 claims contribution from D2 when D2 has already successfully defended an action against P;⁸⁴
• where D1 claims contribution from D2 when P is unable to take action against D2 because of the operation of a time bar;
• where P’s action against D2 fails for want of prosecution; and
• where P brings an action against D1 and D2 with each defendant joining the other as a third party, and where there is a finding that D1 is liable to P but that D2 is not liable to P.

4.71 A further consideration arises where D2 is liable for the same damage caused to P as D1, but where the quantum of damages for which D1 and D2 are each liable is different as would be the case where contributory negligence was available to only one of the defendants.⁸⁵ In Mahony v J Kruschich (Demolition) Pty Ltd⁸⁶ the High Court decided that the reference to “any tortfeasor liable in respect of that damage” in s 5(1)(c) did not require that D1 and D2 each be responsible for exactly the same damages. Provided that both D1 and D2 are liable in tort for the same damage, it does not matter that the amounts of damages which each must pay are different.

Where D2 successfully defends an action “on the merits”

4.72 The issue whether D1 can claim contribution from D2 when D2 has successfully defended an action brought by P depends upon the meaning of “liable” where it occurs for the second time in s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). This part of the subsection specifies that any tortfeasor “may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage”. In George Wimpey & Co Ltd v British Overseas Airways Corporation,⁸⁷ the House of Lords decided that the English equivalent of s 5(1)(c) prevented any claim for contribution against D2 in these circumstances. In order for D1 to establish a claim for contribution, D1 had to establish either that D2 was liable to P, or that, if D2 had been sued, D2 would have been liable to P. Where D2 had the benefit of a judgment in an action against P, D2 could not meet either of these criteria. The problem for D1 in this circumstance is that D1’s rights of contribution are lost in an action to which D1 is not a party. Despite this, the Civil Liability (Contribution) Act 1978 (Eng) provides that any judgment by P against D2 “should be conclusive in the proceedings for contribution as to any issue determined by that judgment in favour of [D2]”.⁸⁸ The Ontario Law Reform Commission recommended the adoption of a rule which prevented D1 claiming contribution from D2 where D2 successfully defended an action brought by P “on the merits”.⁸⁹ The Ontario Law Reform Commission’s rationale for reaching this conclusion is that if D1 had a right to contribution against D2, the latter would face a kind of “double jeopardy”.⁹⁰ Finally, the Ontario Law Reform Commission argued that the benefits flowing from allowing D1 to re-open D2’s liability to P would not outweigh the costs associated in giving D1 this right.

4.73 For these reasons, the Commission’s provisional view is that there be no right of contribution for D1 where D2 has, on the merits, successfully defended an action brought by P. This does not involve any change in the law and is consistent with the relevant provision of the Civil Liability (Contribution) Act 1978 (Eng).

Where P’s action against D2 is time barred

4.74 A variation of this situation occurs where P brings an action against D1 at a time when P is no longer able to bring an action against D2 because of the expiration of the limitation period in relation to P’s action against D2.⁹¹ The related issue of contractual limitations is dealt with in Chapter 6.⁹²

4.75 In Brambles Constructions Pty Ltd v Helmers⁹³ the High Court decided that the words “or would if sued have been, liable” in s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) meant “if sued at any time”. The consequence of this decision is that D1 is entitled to claim contribution from D2 in circumstances where P’s own action against D2 is statute barred because the relevant limitation period has expired.⁹⁴ In Brambles, D2 was not successful in defending D1’s claim for contribution because the plaintiff had not attempted to bring the time barred action against D2. However, in George Wimpey & Co Ltd v British Overseas Airways Corporation,⁹⁵ D2 was successful in defending D1’s claim because P had previously sued D2 and been defeated by the time bar. D1’s success in making a claim for contribution against D2, therefore, depends on whether P did or did not attempt to take action against D2 once the cause of action had become statute barred.⁹⁶ However, it can be argued that a successful claim by D2 that P’s action against D1 had previously been found to be statute barred would not constitute a hearing on the merits and D2 would therefore not deserve protection from a contribution claim by D1 in such circumstances.

4.76 Responses to this situation have been varied. The Scottish Law Commission has recommended that D1 be bound by a finding made in favour of D2 where P’s right to an action against D2 is barred at the time P commenced an action against, or settled with, D1.⁹⁷ The Ontario Law Reform Commission has recommended that D2 should remain liable to a claim for contribution from D1, even though P’s right to an action against him or her has become barred, chiefly on the grounds that D1 should not be prejudiced by P’s delay in instituting proceedings against D2.⁹⁸ Similar reasoning was followed by the New Zealand Law Commission.⁹⁹ The Commission proposes that the rule in George Wimpey be modified so that a statute bar in an action between D2 and P should not be a defence to a claim by D1 for contribution from D2 and, therefore, that D1 should only be prevented from claiming contribution from D2 where D2 has been successful on a hearing “on the merits”.¹⁰⁰

Where P fails for want of prosecution

4.77 A further, related, issue arises where P’s action against D2 fails for want of prosecution. In Canberra Formwork Pty Ltd v Civil & Civic Ltd¹⁰¹ Justice Blackburn decided that the dismissal of a cause of action for want of prosecution was not a final order determining the question of liability. Hence the principle in George Wimpey did not prevent D1 claiming contribution from D2 in these circumstances. The English Law Commission and the Ontario Law Reform Commission each recommended that D1’s claim for contribution from D2 be allowed to proceed where P’s action against D2 failed for want of prosecution.¹⁰² The Commission sees no reason to reform the rule which allows D1’s claim for contribution to proceed in these circumstances.

Where D2 is found not liable in third party proceedings

4.78 Another issue arises where D1 and D2 are both parties to an action brought by P, and have joined each other as a third party. It is possible that D1 will be held responsible for P’s loss, while D2 is found to be not liable to P. In these circumstances, D1 may wish to appeal against the decision in favour of D2 in order to preserve a claim for contribution against D2. An “appeal” of this kind by D1 is not prevented by operation of the rule in George Wimpey & Co Ltd v British Overseas Airways Corporation.

4.79 In Castellan v Electric Power Transmission Pty Ltd,¹⁰³ the New South Wales Court of Appeal found that D1 had no right to “appeal” from the ruling of the trial judge that D2 was not liable to P. This was because after the trial, D1 had paid the full amount of damages owing to P. In the opinion of Justice Asprey, this had the effect of discharging the liability of all of the concurrent tortfeasors. Once the liability of all of the defendants had been discharged, Justice Asprey found that the rule in George Wimpey & Co Ltd v British Overseas Airways Corporation prevented D1 claiming contribution from D2.¹⁰⁴ However, all of the judges in Castellan recognised that, if D1 had not executed the judgment and paid the damages to P, D1 would have had a right of appeal from the ruling of the trial judge that D2 was not liable to P.¹⁰⁵ An appeal in these circumstances was allowed in Kelly v Newcastle Protective Coating Pty Ltd.¹⁰⁶ The Commission is unable to identify any reason why D1’s appeal from the finding of the trial judge in these circumstances should not be allowed to proceed. As a result, the Commission proposes that the right of D1 to appeal from the finding of the trial judge in these circumstances should be formally recognised.

Proposal 7

In an action brought by P against the contributor (D2), any judgment in favour of D2, following a hearing on the merits, should be conclusive evidence that D2 is not “liable” to P for the purposes of D1’s claim for contribution against D2, except where:

1. P’s action against D2 fails for want of prosecution;

2. D1 is appealing from a decision in favour of D2 where both D1 and D2 are parties to the action brought by P and where both are joined as third parties; and

3. P’s action against D2 fails because the action has become statute barred.¹⁰⁷

BASIS OF APPORTIONMENT OF LIABILITY

4.80 Section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) provides the basis for apportionment of liability between D1 and D2 in contribution proceedings. This section states that:

In any proceedings under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage.

4.81 The apportionment of liability between wrongdoers is at the heart of a scheme for providing rights of contribution. Apportionment of liability is also the most difficult element of the right to claim contribution to define with any degree of specificity. Section 5(2) allows a court a wide discretion to achieve a just and equitable apportionment, having regard to the extent of each person’s responsibility. “Responsibility” here is taken to mean more than fault, and invites consideration of individual culpability as well as of the relevant “causal factors”.¹⁰⁸

4.82 The High Court in Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport¹⁰⁹ indicated that the quantum of damages for which D1 is liable to P is only the starting point of D1’s claim for contribution against D2. In establishing the amount which D2 is required to contribute to D1, D2 is entitled to attempt to establish that the amount of damages paid to P by D1 was unreasonable.

4.83 Further, s 5(2) provides that an order to make contribution includes the power to order that the contributor make a payment which amounts to a full indemnity. This provision allows a court a wide discretion in apportioning liability including the power to order one defendant to pay 100% of the plaintiff’s liability. The extent of this discretion is important in allowing the court to apportion responsibility between the wrongdoers in a just and equitable way. This may be particularly important where one of the defendants has committed an intentional tort.¹¹⁰

4.84 The English Law Commission recommended retaining the requirement that the amount of contribution recoverable be that amount which is found to be “just and equitable”.¹¹¹ This formulation has been supported by other law reform agencies.¹¹² In considering the appropriate standard for apportionment, the Ontario Commission recommended replacing the existing reference to “comparative fault” in the Negligence Act¹¹³ with a provision similar to s 5(2). The basis of this recommendation was that the formulation in s 5(2) provided for a greater degree of discretion, which was an essential ingredient for a legislative scheme which would extend rights of contribution to mixed concurrent wrongdoers.¹¹⁴

4.85 In Scotland s 3(2) of the Law Reform (Miscellaneous Provisions) Act 1940 provides for the apportionment of liability in that D1 is entitled to recover from D2 “such contribution, if any, as the court may deem just”.¹¹⁵ The Scottish Law Commission found the English provision attractive but felt that the reference to D2’s “responsibility” could cause problems where defendants were liable on different bases.¹¹⁶ Although it was recognised that the English provisions “seemed to work well in practice”, it was decided not to depart from the existing rule which was seen as “an appropriate formula to enable the courts to take into account a whole variety of factors which may be relevant in a particular case”.¹¹⁷

4.86 The Commission proposes that the discretion in s 5(2), which allows a court to determine the level of contribution on the basis of a “just and equitable” amount and “responsibility” should be retained, chiefly because no better alternative has presented itself and these bases work well in the context of contributory negligence where there is an established body of law dealing with them.

Valuing goods and services

4.87 We have already mentioned the suggestion of the Scottish Law Commission that payments reducing or extinguishing D2’s liability could include the provision of goods and services.¹¹⁸ This reform has also been suggested by other law reform agencies so long as the value of such goods and services can be ascertained. Such a provision is seen as being particularly appropriate to the settlement of claims in contract.¹¹⁹ The Ontario Law Reform Commission recommended that if the provision of goods and services were involved, the court before which the claim for contribution is brought should place a value on such goods and services so as to determine the amount of contribution recoverable.¹²⁰ The Hong Kong Law Reform Commission also recommended that such forms of payment be included as a means of discharging a defendant’s liability for the purposes of a contribution claim.¹²¹

Proposal 8

Where the value of goods and services can be ascertained, they should be included as a means of discharging D2’s liability for the purposes of a contribution claim.

QUESTIONS ARISING IN CHAPTER 4

4.1 Should contribution be available, in the discretion of the court, for torts that are also crimes?

4.2 Should rights to claim contribution extend to intentional wrongdoers?

4.3 Should contribution be available for strict liability torts?

4.4 Are there reasons for not extending rights of contribution to all tortfeasors?

4.5 Should D2 be able to raise a defence in contribution proceedings that D1 was not liable to P?

4.6 Where there is a final settlement between D1 and P, should D2 be able to resist D1’s claim for contribution on the grounds that D1 was never liable to P?

4.7 In proceedings for contribution should there be a presumption of reasonableness in favour of the amount of the settlement between D1 and P?

4.8 Where P and D1 have settled should D1 be required to prove the quantum of damages in an action for contribution against D2?

4.9 Where P and D2 reach a partial settlement should D2 be entitled to protection from any subsequent claim for contribution by D1 and should D2 be denied the right to seek contribution from D1?

4.10 Where P and D2 reach a partial settlement:


(a) should P be prevented from recovering, in an action against D1, more than P would have recovered if there had been no settlement with D2; and

(b) should D1 be prevented from claiming contribution from D2?




4.11 Where P and D2 reach a partial settlement:


(a) should D1 have a right of contribution from D2;

(b) should D2 have a right of contribution from D1; and

(c) should P be entitled to bring an action against D1 to obtain full compensation?




4.12 Should the rights of contribution between D1 and D2 in circumstances where a release and indemnity is given by P to D2 be the same as those outlined in proposal 5?

4.13 Should D1 have a right of contribution against D2 where D2 has, on the merits, successfully defended an action brought by P?

4.14 Should a statute bar in an action between D2 and P be a defence to a claim by D1 for contribution from D2 and if so, why?

4.15 Are there reasons for not allowing D1’s claim for contribution to proceed where P’s action against D2 has failed for want of prosecution?

4.16 Where D1 and D2 are both joined as third parties to an action, should D1 be allowed to appeal from a finding of the trial judge that D2 was not liable to P?

4.17 Is the requirement that the amount of contribution recoverable be “just and equitable having regard to the extent of that person’s responsibility for the damage” appropriate, or is there a more desirable formulation?

4.18 Should goods and services, whose value can be ascertained, be included as a means of discharging D2’s liability for the purposes of a contribution claim?

1. The provisions in the other States are substantially similar: Law Reform (Tortfeasors Contribution, Contributory Negligence, and Division of Chattels) Act 1952 (Qld) s 5 and 6; Wrongs Act 1936 (SA) s 25 and 26; Law Reform (Contributory Negligence and Tortfeasors’ Contribution) Act 1947 (WA) s 7; Tortfeasors and Contributory Negligence Act 1954 (Tas) s 3; Law Reform (Miscellaneous Provisions) Act 1956 (NT) s 12 and 13; Law Reform (Miscellaneous Provisions) Act 1955 (ACT) s 11 and 12.

2. (1799) 7 TR 186; 101 ER 1337.

3. (1991) 172 CLR 243.

4. In the majority judgment Mason CJ, Deane, Gaudron and McHugh JJ found that there could be no duty of care where the only relationship between the plaintiff and the defendant was involvement in a joint illegal enterprise and where the criminal activity was, of its nature, “fraught with serious risks”: see Gala v Preston (1991) 172 CLR 243 at 254. Brennan J, in a separate judgment, found that involvement in a joint illegal enterprise would “sterilise” the duty of care, otherwise owed to an injured party, only where “the admission of a duty of care impairs the normative influence of the law creating an offence”: Gala v Preston (1991) 172 CLR 243 at 271-272.

5. England and Wales, Law Revision Committee, Third Interim Report (Cmd 4637, July 1934) at 7.

6. See Gala v Preston (1991) 172 CLR 243 at 270-273.

7. Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5(2). See para 4.83.

8. (1799) 8 TR 186; 101 ER 1337.

9. G L Williams, Joint Torts and Contributory Negligence (Stevens & Sons, London, 1951) at 87-88.

10. Applying the Civil Liability (Contribution) Act 1978 (Eng).

11. K v P [1993] 1 All ER 521.

12. See, eg, Bell Canada v Cope (Sarnia) Ltd (1980) 11 CCLT 170 (Ont HC). See also Manitoba Law Reform Commission, Twenty-Second Annual Report 1992-1993 at 31-33. It should be noted that the issue of intentional torts is more relevant to the legislation in some Canadian Provinces than to legislation derived from the English contribution provisions: see University of Alberta, Institute of Law Research and Reform, Contributory Negligence and Concurrent Wrongdoers (Report 31, 1979) at 37-38.

13. In any case, the reasoning adopted by the English Law Revision Committee in 1934, and reproduced at para 4.8, must apply similarly in the case of intentional torts.

14. See, eg, Williams (1951) at 87-90 (eg, where the intentional tort is a property related tort such as conversion). Note that in one sense the difference between intentional and unintentional torts may now be more distinct since the recognition of the possibility in Australia that there may be no separate tort of negligent trespass: see Platt v Nutt (1988) 12 NSWLR 231.

15. This argument is similar to some of those concerned with whether the defence of contributory negligence should be available for tortfeasors who have committed intentional torts: see, eg, R P Balkin and J L R Davis, Law of Torts (2nd ed, Butterworths, Sydney, 1996) at 147-148. The issue of whether there should be a defence of contributory negligence is different because it involves weighing the impact of the tort against the plaintiff, where the tort may involve invasion of a plaintiff’s basic rights, against the actions of the defendant. This may be said to require a court to make an apportionment where it would not be just to do so. A right to contribution however only involves weighing the relative fault of two defendants.

16. See Williams (1951) at 87-90; Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 61-63.

17. New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 178.

18. J R Morris, Apportionment of Civil Liability (Legal Research Foundation Inc, Publication No 28, 1987) at 8-9.

19. The best known instance of strict liability at common law was the former rule in Rylands v Fletcher which has now been absorbed by the general principles of negligence: Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520, especially at 556 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ. For other instances of strict liability at common law see J F Clerk, Clerk & Lindsell on Torts (17th ed, Sweet & Maxwell, London, 1995) at 33-35.

20. Workers Compensation Act 1987 (NSW) s 151Z; Leonard v Smith (1992) 27 NSWLR 5.

21. See paras 4.18-4.19 and 5.4-5.5.

22. But see, eg, Southgate v Commonwealth of Australia (1987) 13 NSWLR 188 which states that liability imposed by the Damage by Aircraft Act 1952 (NSW) is not a breach of statutory duty, and therefore not a “tort”.

23. See, eg, TAL Structural Engineers Pty Ltd v Vaughan Constructions Pty Ltd [1989] VR 545 at 556-557 per Kaye J with whom Hampel and Ormiston JJ agreed. In this case D1’s liability to P was based on the tort of breach of statutory duty and it was acknowledged that D1’s right of contribution from D2 could be founded on the basis of D2’s liability to P for either breach of a common law duty of care or breach of statutory duty.

24. Statutory Duties (Contributory Negligence) Act 1945 (NSW) s 2 and Law Reform (Miscellaneous Provisions) Act 1965 (NSW) s 7. Whether the defence of contributory negligence should be available raises different issues from those that are relevant in determining whether there should be a right to contribution for breach of statutory duty: see Williams (1951) at 357-361; Balkin and Davis (1996) at 147-148.

25. This is a further example of the application of the reasoning in Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337.

26. J G Fleming, The Law of Torts (8th ed, Law Book Company, Sydney, 1992) at 331.

27. Many provisions of the Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW) create independent causes of action, eg, in s 52 and 82 of the Trade Practices Act 1974 (Cth), the measure of damages is similar to that in tort: Gates v City Mutual Life Assurance Society Ltd (1985) 160 CLR 1. See also Fair Trading Act 1987 (NSW) s 42 and 68.

28. Australia and New Zealand Banking Group Ltd v Turnbull & Partners Ltd (1991) 33 FCR 265 which says that a breach of s 52 of Trade Practices Act 1974 (Cth) is not a tort; but see J C Campbell, “Contribution, Contributory Negligence and Section 52 of the Trade Practices Act - Part I” (1993) 67 Australian Law Journal 87 which states that the causes of action created by s 52 and s 82 of the Trade Practices Act 1974 (Cth) are either “torts” or a form of “statutory tort” and within the terms of s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

29. J D Heydon, “Damages under the Trade Practices Act” in P D Finn (ed), Essays on Damages (Law Book Company, Sydney, 1992) 42 at 53.

30. Williams (1951) esp at 94.

31. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 61-65.

32. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) esp at paras 3.1-3.5.

33. “Judgment” can be taken to include consent judgments and awards in court annexed arbitrations. Cf New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 220.

34. See George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169.

35. (1955) 92 CLR 200 at 210.

36. (1953) 2 QB 501 at 519.

37. Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200 at 212 per Dixon CJ, McTiernan, Webb, Fullagar, Taylor JJ.

38. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 114.

39. But in Ireland a claimant (D1) is also considered liable for the purposes of establishing a right to claim contribution where D1 has paid a reasonable consideration for a release or accord either in settling with the injured person without barring the injured person’s claim against other concurrent wrongdoers or paying to the injured person a sum on account of damages: s 22(2) Civil Liability Act 1961 (Ireland).

40. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 116; New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at paras 220-234.

41. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 115.

42. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 116.

43. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 116.

44. New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 220.

45. [1967] NI 62 (CA).

46. New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 226.

47. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 115-116

48. See Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at paras 3.13-3.23; and Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 116 supporting consent judgments as being final.

49. This distinction is drawn in Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 90-91 and 96-109.

50. See paras 7.16-7.31.

51. This issue may be complicated by the terms of a settlement in which D1 agrees to make a payment to P without actually admitting liability. In Stott v West Yorkshire Road Car Co Ltd [1971] 2 QB 651 the English Court of Appeal found that such a settlement by D1 could be the basis of a claim for contribution from D2 but that D1 would, as part of the claim for contribution from D2, have to be able to prove that he or she was liable to P.

52. (1980) 25 SASR 468.

53. Section 25(1)(c) of the Wrongs Act 1936 (SA), equivalent to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

54. Bakker v Joppich (1980) 25 SASR 468 at 473.

55. See Stott v West Yorkshire Road Car Co Ltd [1971] 2 QB 651. This case was, however, decided under the Law Reform (Married Women and Tortfeasors) Act 1935 (Eng). In this case the Court found that D1, who settled without admitting liability, was required to establish liability to P. But see the judgment of Salmon LJ who followed the decision in Marschler v G Masser’s Garage (1956) 2 DLR (2d) 484.

56. RSO 1980 c 135.

57. (1956) 2 DLR (2d) 484.

58. Quoted in Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 87.

59. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 96. See also pages 87-88 and 95 of the same paper and New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at 59 which says that it is enough for D1 to show his or her genuine belief at the time of the payment.

60. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 91. Cf the views of the Scottish Law Commission outlined at paras 4.46-4.48 below.

61. See also J R Morris, Apportionment of Civil Liability (Legal Research Foundation Inc, Publication No 28, 1987) at 21.

62. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 93.

63. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at paras 3.20-3.22.

64. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.24.

65. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.16.

66. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.7.

67. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.14.

68. On this point see: Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.17 where it is stated: “Recovery of contribution without proof of D1’s liability is already possible under the present law where the court simply interpones authority to a joint minute settling P’s action against D1". Cf Supreme Court Act 1970 (NSW) s 101(2)(c).

69. Bakker v Joppich (1980) 25 SASR 468 at 475.

70. (1989) 8 MVR 425 at 433 (SA SC).

71. (1991) 56 SASR 552 at 559-560.

72. The decision was not unanimous. Mohr J, in dissent, found that D1’s settlement with P should have the benefit of a presumption of reasonableness. The primary rationale for Mohr J’s decision was that such a presumption would discourage unnecessary litigation (at 555-557).

73. Saccardo Constructions Pty Ltd v Gammon (1991) 56 SASR 552 at 560-561 per Matheson J and Zelling AJ.

74. Biggin & Co Ltd v Permanite Ltd [1951] 2 KB 314 (CA).

75. New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at 60.

76. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at paras 3.14 and 3.16.

77. Anderson v Haskins (1989) 8 MVR 425 at 433 (SA SC); see para 4.50 above.

78. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 96-105.

79. Balkin and Davis (1996) at 846-847.

80. England and Wales, Law Commission, Law of Contract: Report on Contribution (Law Com 79, 1977)

81. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 105-108.

82. The third option is the one adopted by the Workers Compensation Act 1987 (NSW): see Leonard v Smith (1992) 27 NSWLR 5.

83. (1992) 7 ACSR 759 at 774-775 (affirmed in part as Daniels v Anderson (1995) 37 NSWLR 438).

84. This was the issue dealt with in George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169.

85. For example, where one tortfeasor is liable under a statutory tort which may not allow contributory negligence to be raised.

86. (1985) 156 CLR 522.

87. [1955] AC 169.

88. Civil Liability (Contribution) Act 1978 (Eng) s 1(5).

89. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 168-169; see also England and Wales, Law Commission, Law of Contract: Report on Contribution (Law Com 79, 1977) at paras 22, 60-66. The recommendations of the English Law Commission in this respect were not adopted in the Civil Liability (Contribution) Act 1978 (Eng).

90. See also University of Alberta, Institute of Law Research and Reform, Contributory Negligence and Concurrent Wrongdoers (Report 31, 1979) at 76. The Scottish Law Reform Commission was primarily concerned with the great injustice involved in forcing D2 to defend himself or herself a second time on the same ground: Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.41.

91. See also paras 7.33-7.38.

92. See paras 6.24-6.31.

93. (1966) 114 CLR 213.

94. Reasons for retaining the rule in Brambles are discussed at para 7.37.

95. [1955] AC 169.

96. See also the discussion in Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159.

97. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.44.

98. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 157.

99. New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at paras 248-249.

100. See paras 7.32-7.44.

101. (1982) 41 ACTR 1. See also Hart v Hall & Pickles Ltd [1969] 1 QB 405 (CA).

102. England and Wales, Law Commission, Law of Contract: Report on Contribution (Law Com 79, 1977) at para 61; Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 168-169.

103. (1967) 69 SR (NSW) 159.

104. Castellan at 180. It seems that Asprey JA may have confused the way in which satisfaction of the judgment discharged the liability of all of the concurrent wrongdoers with the effect of the discharge on the claim for contribution. It will normally be the case that a defendant will discharge liability to the plaintiff prior to pursuing a claim for contribution. The relevant time for D2 to be liable to P is at the time at which P sustained the damage. See Williams (1951) at para 31.

105. Asprey JA found that in the absence of the satisfaction of P’s damages by D1, D1 would have had a right of appeal: Castellan at 186-187; Walsh JA found that irrespective of the satisfaction of P’s damages by D1, D1 had a right of appeal: Castellan at 172-175; Holmes JA agreed with the judgment of Asprey JA.

106. [1973] 2 NSWLR 45.

107. This element of the proposal is discussed in paras 7.32-7.44.

108. Fleming (1992) at 263-264.

109. (1955) 92 CLR 200 at 213.

110. K v P [1993] 1 All ER 521.

111. England and Wales, Law Commission, Law of Contract: Report on Contribution (Law Com 79, 1977) at para 69; Civil Liability (Contribution) Act 1978 (Eng) s 1(2).

112. Law Reform Commission of Hong Kong, Report on the Law Relating to Contribution Between Wrongdoers (Topic 5, 1984) at para 8.1; New Zealand Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at paras 106-109; Victoria, Chief Justice’s Law Reform Committee, Contribution (1979) and also Wrongs Act 1958 (Vic) s 24(2). See also J R Morris, Apportionment of Civil Liability (Legal Research Foundation Inc, Publication No 28, 1987) at 12-15.

113. RSO 1980 c 315.

114. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 196.

115. “Equitable” is presumably omitted from the formulation because of the Civil Law tradition in Scotland.

116. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.54.

117. Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at para 3.55.

118. See above at para 4.46.

119. For the proposal to extend contribution beyond merely liability in tort see Chapter 6 below.

120. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 117.

121. Law Reform Commission of Hong Kong, Report on the Law Relating to Contribution Between Wrongdoers (Topic 5, 1984) at para 5.13.