A. Outline of the Existing System

11. Solidary liability allows a plaintiff to recover the whole of his or her loss from any one of a number of concurrent wrongdoers. A plaintiff is therefore not constrained to sue all wrongdoers in order to obtain full recovery. The plaintiff may choose to sue only one wrongdoer or may sue two or more wrongdoers in a single action. The choice of who to sue will normally be dictated by considerations such as the ease of proof of the plaintiff’s case against particular defendants and the perceived ability of each defendant to satisfy a judgment against them. If a plaintiff does successfully sue two or more defendants in a single action, judgment against each of those defendants will be entered for the entire amount of the plaintiff’s claim. The plaintiff is then free to take steps to enforce one or more of these judgments, the only limit being that the plaintiff cannot recover in total more than the total amount of his or her loss. Therefore, even when two or more defendants are sued by the plaintiff, a single defendant might still end up satisfying the whole or a substantial part of the plaintiff’s claim. It is apparent that in such a system the plaintiff need not be concerned with the issue of the relative responsibility of various concurrent wrongdoers.

12. Generally speaking a defendant sued by the plaintiff has no right to join, or insist that the plaintiff join, any other concurrent wrongdoer as a co-defendant to the plaintiff’s action.⁵ A defendant may, however, join as a third party any concurrent wrongdoer against whom that defendant would have a claim for contribution or indemnity in respect of his or her liability to the plaintiff.⁶ This procedure does not result in the third party becoming a defendant to the plaintiff’s action. The plaintiff will still only receive judgment against the defendant he or she originally sued. However, that defendant may in turn receive judgment against the third party in respect of his or her contribution claim.

B. Criticisms of the Doctrine

1. Unfairness to Defendants

13. Solidary liability has been criticised as leading to the targeting of defendants on the basis of ability to pay rather than degree of fault. It is argued that it is unfair that a particular defendant should be called upon to meet more than his or her proportionate share of the plaintiff’s damage and that the system allows a plaintiff too much discretion in determining against whom to enforce liability.

14. The Commission is not persuaded by the argument that it is unfair in principle that a plaintiff should be allowed to recover his or her full damage from a single defendant. It is not accurate to say that each of a number of concurrent wrongdoers is only responsible for a part of the plaintiff’s loss. In all but exceptional cases,⁷ the causal responsibility of each wrongdoer extends to the whole of a plaintiff’s loss. Each wrongdoer is liable on the basis that, had it not been for his or her negligence or other breach of duty, the whole of the loss to the plaintiff would have been avoided. An example will help to illustrate the point. Assume P engages a builder to build a house and also an architect to supervise the building. The house is structurally unsound due both to the faulty workmanship of the builder and the negligent failure of the architect to detect these defects. In the Commission’s opinion it would not be unfair in this situation to allow P to recover the full cost of repairing the building from either of the builder or architect. Had the architect not been negligent the defects in workmanship would have been discovered and remedied. The whole basis of the duty that the architect owed to the plaintiff was directed towards ensuring that the builder completed the building in accordance with specifications and in a workmanlike manner. In these circumstances it can hardly be an answer to a claim from the plaintiff for the architect to point to the fault of the builder. Similar arguments would apply if it were the builder rather than the architect that was sued. This is not to say that no issue as to the division of responsibility between the builder and the architect arises, it clearly does. However, this is an issue that properly arises as between the tortfeasors themselves.

15. It is also relevant to point out that the nature or extent of negligence is not necessarily any less simply because the negligence of some other person also plays some part in causing injury or loss to a plaintiff. The failure to fence off a dangerous area is no more or less culpable depending on whether a particular plaintiff came into the area as a result of someone else’s negligence (for example that of a teacher who failed to properly supervise a class) or as a result of events for which no-one was at fault. To give another example, assume that P is the driver of a car that stops suddenly in traffic and that D1 is a driver of a following car which negligently runs into the back of P’s car, causing injury to P. Had D1 exercised reasonable care he would have stopped his car in time and avoided injury to P. The Commission does not accept that the extent of D1’s liability to P should depend on the circumstances leading to P’s car stopping, unless it can be shown that P was guilty of contributory negligence. P may have stopped his car for any number of reasons, some of which might be attributable to the negligence of some other person, others not. For example, P may have been forced to stop quickly due to a negligent pedestrian or due to the fact that a tree had fallen across the road as a result of natural forces. On either scenario the nature of D1’s negligence is exactly the same. It cannot be argued that D1 should not be fully liable to P simply because another event, the tree falling down, was partly a cause of P’s loss. Logically, the conduct of a negligent pedestrian should no more affect the extent of D1’s liability to P.

16. The Commission agrees with the proposition that the ultimate division of liability as between potential defendants should not depend on the plaintiff’s choice of whom to sue. However, it must be remembered that while a particular defendant might initially be called upon to pay more than his or her “share” of the plaintiff’s damages, that defendant might then be able to claim any excess from other concurrent wrongdoers by way of contribution proceedings. The practical effect of solidary liability in this situation is to shift from P to D1 the procedural inconvenience of pursuing claims against other concurrent wrongdoers and also to shift to D1 the risk that one or more of those concurrent wrongdoers will be insolvent and that therefore their share will be irrecoverable. As between an innocent plaintiff and a wrongdoer whose fault has caused the loss, this result seems unobjectionable. In cases in which the plaintiff is guilty of contributory negligence and therefore partly to blame for his or her own loss, it might be argued that the relative equities of the plaintiff and the defendant dictate a different result and that the plaintiff should at least bear part of the risk of the insolvency of one or more of the concurrent wrongdoers. This argument is examined at paragraphs 18 to 27.

17. In situations in which contribution rights do not exist between concurrent wrongdoers the effect of the doctrine of solidary liability is of greater concern. In such cases P’s decision to sue D1 rather than D2 can result in D1 being solely liable for P’s loss. This result follows regardless of the relative fault of D1 and D2 and whether or not D2 has the resources to meet a claim. However, this is not an argument for the abolition of the doctrine of solidary liability, but suggests the need for more general rights of contribution between concurrent wrongdoers. This matter will be considered in the Commission’s final report on this reference.

2. The Position of a Plaintiff at Fault

18. At common law, a plaintiff guilty of contributory negligence could, generally speaking, recover nothing. This inequitable rule has been replaced by legislation which allows for the apportionment of liability between plaintiff and defendant in such cases. Accordingly, a plaintiff found 20% responsible for his or her own loss can still recover 80% of that loss as damages.

19. It can be argued that the movement to apportionment for contributory negligence requires some revision of the doctrine of solidary liability. The rule of solidary liability arose at a time when only a completely innocent plaintiff could recover damages. That the advantages of solidary liability should also be extended to a plaintiff partly to blame for his or her own loss is open to question. It can be argued that a contributorily negligent plaintiff deserves no greater favour than a defendant also partly to blame for the plaintiff’s loss.

20. In some American jurisdictions it has been argued that the adoption of apportionment legislation signalled an intention that liability should only attach in direct proportion to the respective fault of each person whose negligence causedthe damage and that this reasoning should apply as much to multiple wrongdoers as it does between plaintiff and defendant. Where this argument has been accepted, it has been held that the legislation required the assessment of damages against each defendant on the basis of proportionate rather than solidary liability.⁸ Perhaps not surprisingly, this reasoning appears to have received most favour in those states that do not have a system of contribution between wrongdoers.

21. The application of the New South Wales apportionment legislation in situations where there is more than one defendant arose for decision by the Court of Appeal of the New South Wales Supreme Court in the case of Barisic v Devenport.⁹ That Court decided that the terms of the relevant legislation, section 10(1) of the Law Reform (Miscellaneous Provisions) Act 1965, required a unit approach to be taken to the question of apportionment. This approach requires that the responsibility of the plaintiff on the one hand be compared to the total responsibility of all other persons at fault on the other, so that the amount recoverable is scaled down equally in respect of each defendant. The total liability of the defendants as a group can then be recovered from any one of the defendants on the basis of solidary liability. The Court rejected the proposition that the apportionment legislation required the assessment of each defendant’s liability on a proportionate basis. This question only arises in the context of contribution proceedings between the defendants themselves.

22. The decision in Barisic definitively states the effect of the existing legislation. The question remains, however, whether there is a case for legislative reform to allow for some modification of the doctrine of solidary liability in cases where a plaintiff is guilty of contributory negligence. The most important underlying issue is the manner in which the risk of the insolvency of one or more defendants is to be spread between the remaining defendants and the plaintiff. Arguably a plaintiff at fault should bear some portion of the shortfall caused by insolvency. An example helps to illustrate the point.

23. Assume P, D1 and D2 are all partly to blame for a motor accident in which P’s car suffers $3000 worth of damages. Assume also that P’s claim against D1 and D2 is reduced by $1000 to reflect P’s contributory negligence and that D1 and D2 are each held to be equally liable for the plaintiff’s recoverable loss of $2000. D2 is a man of straw and P recovers $2000 from D1. D1’s claim for contribution being worthless, the net result is that D1 is $2000 out of pocket (assuming that he is not covered by insurance) and P is $1000 out of pocket (the uncompensated portion of P’s total loss). Given that P and D1 were each nominally only responsible for one third of the loss, it can be argued that this result is unfair and that P should have had to bear a proportion of the loss caused because of D2’s insolvency. On this argument P should only have been allowed to recover $1500 from D1. It is clear that a simple movement from solidary to proportionate liability is not a satisfactory solution to this problem as this would simply shift the loss flowing from D2’s insolvency wholly from D1 to P.

24. One possible approach for sharing the risk of insolvency is that advocated by Glanville Williams in his leading treatise on the subject of joint torts¹⁰ and by the American Uniform Comparative Fault Act.¹¹ These models suggest that a plaintiff at fault should initially only be entitled to a primary judgment against each defendant representing that defendant’s proportionate share of responsibility. Accordingly, in the example just discussed, P would receive a primary judgment of $1000 against both D1 and D2. If the plaintiff is unable to recover against a particular defendant having taken reasonable steps to do so, a secondary judgment apportioning the insolvent defendant’s share between the plaintiff and the remaining defendants would then be available. Alternative procedures might also be considered. For instance, it might be that in the example given above P should be given judgments of $1500 against each of D1 and D2 (with overall enforcement limited to $2000) so that if D2 is insolvent P can recover D1’s ultimate liability (that is including D1’s share of D2’s insolvency) without necessitating further proceedings.

25. Before proceeding to give detailed consideration to possible procedures for sharing the risk of insolvency, it must first be determined whether to do so is correct in principle. It must be recognised that in many cases a plaintiff’s fault is different in kind to that of a defendant. A plaintiff’s fault need not be negligent in the sense that it exposes others to harm, it might consist merely of a failure to take adequate care to safeguard his or her own interests (for example the failure to wear a seatbelt). While some reduction for contributory negligence can still be justified to provide an incentive for accident prevention, it might well be unfair in such a case to equate the plaintiff’s conduct with that of a negligent defendant for the purpose of apportioning an insolvent defendant’s “share” of liability. Moreover, the arguments raised above concerning the nature and extent of an individual defendant’s liability to the plaintiff are valid whether or not the plaintiff is guilty of contributory negligence. An individual defendant’s responsibility can still be seen as extending to the whole of the plaintiff’s loss, or at least to the whole of the plaintiff’s recoverable loss after an appropriate reduction for the plaintiff’s fault.

26. The practical difficulties that would be involved with a scheme for apportioning the risk of insolvency also detract from the attractiveness of such a scheme. Problems arising in cases where all possible wrongdoers are not party to the proceedings are discussed in more detail at paragraphs 39 to 40. The proposal also raises the problem of the criteria to be used in establishing the insolvency of a concurrent wrongdoer and the prospect of more complex and costly litigation. The Commission is also concerned about the effect that uncertainty as to the amount ultimately recoverable by the plaintiff from a particular defendant would have on the settlement of claims. This matter is discussed in more detail with respect to proportionate liability generally at paragraph 42.

27. The fact of the widespread incidence of liability insurance and the existence and policy behind compulsory insurance schemes must also be considered. Adoption of the proposal under consideration might work in some cases to reduce the liability of a solvent defendant or an insurer, but would do so at the expense of a plaintiff who is generally in no position to pass on that loss to the wider community. In some cases it might lead to largely unproductive proceedings being taken by a plaintiff desperate for recovery against defendants of little means. This might lead to the bankruptcy of that defendant but little real benefit to the plaintiff. In areas of compulsory insurance, such as motor traffic accidents, the present policy is that a plaintiff who is injured as a result of the fault of another person within the ambit of the scheme should have access to compensation, subject to any reduction for contributory negligence. If a plaintiff can point to another driver at fault, the Commission does not believe his or her right to recovery should be jeopardised by the possible concurrence of the fault of some person outside the scheme, for example a negligent pedestrian. Reference to the example of the plaintiff’s car being hit from behind discussed above at paragraph 15 demonstrates how capricious such a result could be.

3. Effect on Risk Minimisation

28. The Issues Paper prepared by the the Attorney General’s Department put forward the following criticism of the operation of the doctrine of solidary liability:

This doctrine [solidary liability] has been criticised as giving rise to the targeting of the defendant with the deepest pocket. It also has the effect of diverting attention from the issue of responsibility and thereby fails to allow for consideration of risk minimisation. For example, if one of a number of defendants has taken careful risk minimisation steps so that that defendant’s level of responsibility is low, but that defendant is well resourced compared to the others, he or she will still have to pay the whole of the plaintiff’s damages. There is little incentive under this doctrine for risk minimisation.¹²

29. The Commission finds this argument unconvincing. First it ignores the existence of the system of contribution between defendants. This system allows for the apportionment of liability between tortfeasors in accordance with their respective level of fault and therefore provides ample incentive for each to minimise his or her degree of responsibility. There seems no reason to presume that a potential defendant should proceed in advance on the assumption that any other concurrent wrongdoer will necessarily be insolvent. Secondly, the argument concentrates on the incentive to minimise comparative fault rather than the more fundamental consideration that one of the aims of the tort system should be to provide an incentive to avoid negligence altogether. It is apparent that an opposing, and probably more cogent, argument can be put about the effect of the doctrine of solidary liability on risk minimisation. This argument states that the greater the potential liability the greater the resources that will be allocated to risk prevention. It follows that decreasing the potential liability of concurrent wrongdoers by abolishing solidary liability would reduce the incentive for effective accident prevention and might lead to potential defendants not taking safety measures that they otherwise might have implemented.¹³

4. The Liability Insurance Crisis Argument

30. There can be no doubt that the growth of the tort system has been fuelled by the modern prevalence of liability insurance. The tort system would quickly have become unworkable had it simply relied on shifting loss from a plaintiff to the individual responsible for that loss. Few defendants would have the means to fairly compensate even a moderately injured plaintiff and assigning liability might often have led to the impoverishment of both the plaintiff and the defendant.

31. Insurance (or the availability of deep pocket defendants such as large corporations or government bodies that might act as self-insurers) has provided a mechanism by which the cost of accidents can be distributed more widely to the general community. This cost might be reflected in increased insurance premiums or increased costs for goods and services. This development has been accompanied by a re-appraisal of traditional concepts of blameworthiness and liability, with increased emphasis being placed on ensuring the availability of compensation, particularly in areas where recourse to insurance is certain because of compulsory insurance schemes.

32. Although arguments in support of these developments can be made on both social and economic grounds,¹⁴ recent developments in the liability insurance market have called into question the affordability of, and justification for, the continued operation of the tort system in its present form. This debate reached its height in the United States in the mid-1980’s in the wake of a “crisis” in the liability insurance market which saw drastic increases in the cost of insurance and restrictions being placed on the availability of insurance. Traditional “deep-pocket” defendants, such as local government authorities, were particularly badly affected by these developments. In the resultant clamour for tort reform, the doctrine of solidary liability was attacked by insurers and others as one of the main areas contributing to the development of the crisis and several states passed legislation modifying or abolishing the doctrine.¹⁵

33. The Commission has examined the American experience in order to determine whether a case can be made for the abolition or modification of solidary liability. It is apparent that there is substantial disagreement among commentators and interest groups as to the causes of the crisis and the appropriateness and effectiveness of various measures taken to rectify it. A fundamental division of opinion emerges as to whether the crisis was precipitated by developments in the underlying tort liability system or was a result of the practices of the insurance industry itself.¹⁶ There is no firm empirical evidence upon which to assess the effectiveness of the various tort reform measures taken in particular states, and it is more difficult still to assess in isolation the impact of the abolition of solidary liability. It has not been established that those states that abolished or modified solidary liability fared any better with the general softening of the insurance market in the late 1980’s than did states which had not taken such measures.¹⁷

34. It is also open to debate to what extent the American experience provides a model for reform in this state. A number of uniquely local factors contributed to the tort crisis in the United States, including the high incidence and amount of awards of punitive damages, the contingency fee system and the widespread use of jury trials. Levels of awards for general damages in the United States have also traditionally been much higher than in Australia. Arguments concerning the effect of solidary liability must also be viewed with some caution due to the lack of any right of contribution between tortfeasors in some American states.

35. The experience of the American liability insurance market was reflected in Australia in certain areas of tort liability, although to a lesser extent. Again, it can be questioned whether these difficulties were attributable to local conditions or were simply the result of perceptions of risk caused by the American experience and the increased cost of reinsurance on the international market caused by the call on reinsurance by American markets.

36. In the light of the above the Commission is not persuaded that arguments relating to the cost and availability of insurance provide a sound basis for revision of the doctrine of solidary liability. The debate concerning the insurance crisis is described in more detail in the Report of the Ontario Law Reform Commission.¹⁸ It is noted that that Commission came to a similar conclusion. While there is anecdotal evidence of an increase in cost of insurance in certain areas, particularly relating to local government authorities, the Commission is not satisfied that these problems are sufficiently acute to justify a general abolition of solidary liability. Moreover, it is by no means clear what impact modification of solidary liability would have on these costs in any case.

5. However, when D1 and D2 are jointly but not severally liable, and only D1 is sued, the court may on the application of D1 stay the proceedings against D1 until all joint wrongdoers are added by the plaintiff as defendants: New South Wales Supreme Court Rules 1978 Pt 8 r 5(2); District Court Rules 1973 Pt 5 r 2; Local Court (Civil Claims) Rules 1988 Pt 5 r 2.

6. When D1 and D2 are both sued by the plaintiff, either may apply by notice to have the issue of contribution between them considered by the court in the same proceedings.

7. The burden of proof of causation may be satisfied if it can be shown that a factor materially contributed to a state of affairs causing injury, even though it may be impossible as a practical matter to determine whether or not the injury would have occurred had it not been for that factor: McGhee v National Coal Board [1973] 1 WLR; Bonnington Castings Limited v Wardlaw [1956] AC 613; compare Wilsher v Essex Area Health Authority [1988] AC 1074. The but-for test is not determinative of cases where there are multiple sufficient causes of injury: see J G Fleming The Law of Torts (Law Book Co, 7th ed, Sydney, 1987) at 176.

8. See Laubach v Morgan (1978) 588 P 2nd 1071 (Supreme Court of Oklahoma), Bartlett v New Mexico Welding Supply Inc (1982) 646 P 2nd 579 (Court of Appeal of New Mexico). The argument was rejected by the Supreme Court of California: American Motorcycle Association v Viking Motorcycle Club (1978) 578 P 2nd 899.

9. [1978] 2 NSWLR 111.

10. G L Williams Treatise on Joint Torts and Contributory Negligence (Stevens & Sons Ltd, London, 1951) at 403-409.

11. National Conference of Commissioners on Uniform State Law, Uniform Comparative Fault Act. Section 2(d) provides as follows:

Upon motion made not later than [one year] after judgment is entered, the court shall determine whether all or part of a party’s equitable share of the obligation is uncollectable from that party, and shall reallocate any uncollectable amount among the other parties including a claimant at fault, according to their respective percentages of fault. The party whose liability is reallocated is nonetheless subject to contribution and to any continuing liability to the claimant on the judgment.

13. For a discussion of these arguments see: Ontario Law Reform Commission Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 37.

14. See Fleming, note 7 above, at 8-10 and the materials there cited.

15. For a brief description of the position regarding reform of solidary liability in various states of the United States see: J R Granelli “The Attack on Joint and Several Liability “ (1985) 71 ABA Journal 61.

16. See American Bar Association Report of the Commission to Improve the Liability Insurance System (1989 Midyear Meeting, Denver Colorado, February 1989), Larry S Stewart “The Tort Reform Hoax” (1986) 22 Trial 89. Compare National Conference of State Legislatures Resolving the Liability Insurance Crisis: State Legislative Activities in 1986, Collected Papers (1986); Tort Policy Working Group An Update on the Liability Crisis (US Government Printing Office, 1987). (The Working Group consists of senior administration officials of eleven federal agencies.)

17. The Ontario Report, note 13 above, refers (at 38) to two studies concerning the effect of reforms of solidary liability, the findings of which it describes as general and inconclusive. The Ontario Report at 38, fn 20, describes these studies as follows:

The first is a study made for the State of New York, which estimated that 9% of annual claims payouts of the city of New York were attributable to the operation of the doctrine of joint and several liability: New York, Insuring our Future: Report of the Governor’s Advisory Commission on Liability Insurance (1986) at 131. The Report gives no details of how the study arrived at this figure.

The second study was prepared for the Florida Senate Committee on Commerce in December, 1985: Dimento, Harrison and Belsky, “Joint and Several Liability: A Study of the Fiscal and Social Impact of Change in the Doctrine” (University of Florida, College of Law, mimeograph, December, 1985). Comparing information and data from five states that had abolished the doctrine, five states that had limited the doctrine and seven states in which the doctrine operated, the authors tentatively concluded that insurance coverage and rates appeared to be increasing in all the jurisdictions studied. Moreover, they found that a greater percentage of respondents from states that had abolished the doctrine reported insurance increases than those that had modified or retained the doctrine. However, in a recent conversation with a representative of the Commission, one of the authors of the study cautioned against placing much reliance on the findings of the study. The study also contained broad disclaimers of its reliability.