THE COMMISSION’S REFERENCE
1.1 On 12 August 1985 the Commission was given a reference to inquire into and report on:
The reference, made under the Commission’s Community Law Reform Program, was prompted by a letter from Justice Clarke of the Supreme Court which suggested that the current joint tortfeasor legislation be amended to permit rights of contribution between a tortfeasor and a person in breach of contract and between persons in breach of separate contracts. Justice Clarke pointed out that, in the case of the current legislation, that is the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), a real problem arises where a plaintiff’s claim against one or more of the defendants is properly classified as one for breach of contract only, for:
If the plaintiff’s claim is for damages for breach of contract against one or both of the two defendants then there is simply no allowing for contribution between them. An example which occurs fairly regularly is a claim by an entrant against an occupier for breach of its contractual duty. It seems quite absurd that the court is able to apportion liability where an action is framed in tort but deprived of such jurisdiction where, despite the tortious nature of the claim, the action is categorised as one for breach of contract.1
1.2 In 1990 the Commission released an Interim Report on solidary liability.2 This Report (“LRC 65”) was produced after a request by the then Attorney General who was conducting a review of the general law of tort liability in New South Wales.3 Since one of the issues being considered in the review was reform of the doctrine of solidary liability,4 it was decided that the Commission should prepare a report on this principle which is the “starting point for any consideration of the law of contribution”.5 This Discussion Paper will revisit LRC 65 in light of some recent developments6 and then canvass the issues relevant to the remainder of the contribution reference.
THE PURPOSE OF THIS DISCUSSION PAPER
1.3 The purpose of this Discussion Paper is to put forward a series of proposals for the reform of the law of contribution between concurrent wrongdoers and to generate debate about the issue among interested persons, especially those with a working knowledge of the operation of the law in this area. The proposals are tentative, the Commission not having finalised its views on these issues. Matters raised in consultations and submissions will be taken into account in finalising a report on the reference to the Attorney General. This report may include draft legislation. To assist in the preparation of responses to this Discussion Paper, we have summarised at the end of each chapter the questions which have been discussed in that chapter and on which we particularly seek responses.
BACKGROUND TO THE CURRENT LAW OF CONTRIBUTION
1.4 The present state of the law is such that concurrent wrongdoers are each liable for the whole of the damage which an injured party has suffered (the principle of “solidary liability”), and the satisfaction of that liability by one of the wrongdoers will discharge all the wrongdoers.7 The injured party may choose to take action against any or all of the wrongdoers. This may be achieved by one action or in several. Where a court holds one of the wrongdoers responsible for the damage, or where one of the wrongdoers satisfies a judgment for more than his or her “proper share”, that wrongdoer may in some cases seek assistance or recompense from the other wrongdoer(s) in meeting the plaintiff’s claim. Such claims are known as contribution claims.
1.5 Where two or more concurrent wrongdoers are responsible for the same damage, it is not necessarily always the case that they will be liable in tort. It may be that liability is founded on breach of contract, breach of some equitable obligation or breach of statute. For example, two suppliers, in breach of contract, may each fail to supply goods to a manufacturer causing loss to the manufacturer which could have been avoided if either supplier had performed its contract. It may also be the case that one concurrent wrongdoer will be liable to the plaintiff for the same damage on a different basis from that of another concurrent wrongdoer. For example, a builder may enter a contract which contains a term the effect of which is to ground the builder’s liability exclusively in contract. The builder may then erect a house on foundations which fail to comply with the standards specified in the contract and which are inadequate; the local authority may be negligent in not identifying this inadequacy. When the defect in the house becomes manifest, the builder is liable to the owner in contract and the local authority is liable in tort. The wrongdoers are, in such an instance, referred to collectively as “mixed concurrent wrongdoers”. The Law Reform (Miscellaneous Provisions) Act 1946 (NSW) provides only for contribution between joint tortfeasors and does not deal with the rights of mixed concurrent wrongdoers, or wrongdoers who are other than tortfeasors.
1.6 Contribution between concurrent wrongdoers forms merely one part of a wider law of contribution which spans many areas of traditional legal classification (such as torts, contract, equity and restitution) and which is concerned with the circumstances in which a person (D1) who has made, or is liable to make, a payment to a third person (TP) in discharge of a liability owed to TP can claim from another person or persons (D2) the whole or part of that payment because the payment discharges a common liability of D1 and D2 to TP. This wider body of law not only encompasses contribution claims between co-obligors (such as co-sureties and insurers) but also claims for general average contribution in maritime law.8 This wider law of contribution, however, falls outside the Commission’s terms of reference: D1 and D2 are not necessarily “wrongdoers”; nor are they responsible for the same damage.
1.7 For the purposes of this reference, contribution can be formally defined as the right of one defendant (D1) to claim contribution from another defendant (D2) where both D1 and D2 are wrongdoers liable for causing the same damage to the plaintiff (P). The most common example of such a claim for contribution arises where D1 claims contribution from D2 where D1 has paid P’s damages in full.
1.8 In order to understand the current law relating to contribution between concurrent wrongdoers in New South Wales, it is necessary to consider the position with respect to joint and several wrongdoers (particularly tortfeasors) at common law, and the changes effected in relation to tortfeasors by the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).
Joint and several wrongdoers at common law
1.9 There is, at common law, a distinction between tortfeasors who are joint wrongdoers and those who are several wrongdoers.9 The effects of this distinction, which are outlined below, have been rendered all but irrelevant with respect to tortfeasors by alterations to the law contained in the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).
Joint wrongdoers
1.10 Joint wrongdoers are those who can be said to be responsible for the same wrongful act.10 Situations in which joint wrongdoers are most commonly found are agency, vicarious liability and common action.11 Joint tortfeasors were jointly and severally liable for the whole of the damage suffered by an injured party, that is, they could be sued individually for the full amount of the injured party’s loss and could be sued jointly in the same action. This gave rise to a number of consequences:
1. a judgment against a number of joint tortfeasors could be executed in full against any one of them;
2. the judgment bar rule was said to have effect so that judgment against one tortfeasor released all the others;12 and
3. the release of one tortfeasor, by deed or accord and satisfaction, released all the others (the settlement bar rule).13
Joint tortfeasors were also subject to the rule in Merryweather v Nixan14 which precluded tortfeasors who paid more than their proportionate share of the damages from seeking contribution from their fellow tortfeasors.
Several wrongdoers
1.11 “Several wrongdoers” are responsible for separate wrongful acts which, however, contribute to the same damage. A simple illustration involves the situation where a passenger in a motor vehicle suffers personal injury in an accident, caused both by the negligence of the driver of the vehicle and that of the driver of another vehicle. They are severally liable for the full amount of the damage suffered by the injured party, but are not jointly liable for the same wrongful act. The judgment bar rule was presumed not to apply in the case of several wrongdoers, so that the release of one wrongdoer would not necessarily release the others.15
Statutory variation of the common law
1.12 Statutory exceptions to the rule in Merryweather v Nixan were first enacted in England to allow apportionment of liability for misrepresentations in company prospectuses in s 3, 4 and 5 of the Directors Liability Act 1890 (Eng),16 and concerning collisions between certain ships in s 3 of the Maritime Conventions Act 1911 (UK).17
1.13 Changes to the law regarding tortfeasors generally were introduced in 1935 in England by the Law Reform (Married Women and Tortfeasors) Act 1935 (Eng).18 In New South Wales these changes were reproduced virtually verbatim in the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Section 5 of the New South Wales Act essentially abolishes the effects of the distinction between tortfeasors as joint wrongdoers and tortfeasors as several wrongdoers.
1.14 The judgment bar rule is abolished by s 5(1)(a) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) so that a judgment recovered against one tortfeasor shall not be a bar to an action against another tortfeasor who would, if sued, have been liable as a joint tortfeasor. This puts joint tortfeasors in the same position as several tortfeasors.
1.15 While the judgment bar rule has been expressly abrogated by the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), the rule that the release of one joint wrongdoer releases all other joint wrongdoers has not been expressly abrogated.19 The High Court, interpreting the Australian Capital Territory equivalent of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW),20 has held that the unity of a cause of action against joint tortfeasors has been effectively severed. This means that there is no conceptual basis for the rule concerning the release of joint wrongdoers and that it has, therefore, been abrogated.21
1.16 Section 5(1)(b) places a limit on the sums recoverable under judgments given where more than one action is brought so that the sums recoverable cannot, in the aggregate, exceed the amount of the damages awarded by the first judgment. The actions are described as being brought against tortfeasors liable in respect of the damage “whether as joint tortfeasors or otherwise”.
1.17 Finally, s 5(1)(c) allows contribution to be recovered by any tortfeasor from any other tortfeasor who would, if sued, have been liable in respect of the same damage “whether as a joint tortfeasor or otherwise”. This has the effect of abolishing the rule in Merryweather v Nixan.
GLOSSARY OF TERMS AND ABBREVIATIONS
1.18 Contribution is a very technical area of the law. The following glossary is provided to assist the reader:
| Civil wrong: | a wrong other than a crime. |
| Concurrent liability: | occurs where a defendant’s liability to a plaintiff can be placed, at least potentially, on more than one of the bases of tort, breach of contract, breach of an equitable obligation or breach of a statutory obligation. |
| Concurrent wrongdoer: | one of two or more wrongdoers (joint wrongdoers and/or several wrongdoers) whose acts concur to produce a single damage to a plaintiff under the same head of liability.22 |
| D1: | the defendant claiming contribution (from D2). |
| D2: | the person from whom contribution is sought (by D1). |
| Joint wrongdoers: | one of two or more wrongdoers who produce, by what is taken by law to be the same act, a single damage to a plaintiff. |
| Joint and several liability: | a synonym for “solidary liability”. |
| Mixed concurrent wrongdoer: | one of two or more wrongdoers (joint wrongdoers and/or several wrongdoers) whose acts concur to produce a single damage to a plaintiff under more than one head of liability. |
| P: | the plaintiff. |
| Several wrongdoers: | one of two or more wrongdoers who produce, by independent acts, a single damage to a plaintiff. |
| Solidary liability: | describes a situation where, of two or more concurrent wrongdoers, each is liable severally and all are liable jointly to an injured person and that injured person may choose to sue each wrongdoer separately or any number jointly and also may choose to recover full compensation from any one of the wrongdoers against whom judgment is entered. |
| Tort: | a civil wrong usually resulting in a defendant’s liability in damages. |
| Tortfeasor: | a wrongdoer whose liability is grounded in tort; the perpetrator of a tort. |
| Wrong: | a crime, tort, breach of contract, breach of trust or other equitable obligation, or breach of statutory obligation. |
| Wrongdoer: | a person who commits a wrong. |
FOOTNOTES
1. Justice Clarke, Letter (18 April 1984).
2. New South Wales Law Reform Commission, Contribution Among Wrongdoers: Interim Report on Solidary Liability (Report 65, 1990) (“LRC 65”).
3. New South Wales, Attorney General’s Department, Tort Liability in New South Wales (Legislation and Policy Division, Issues Paper, 1989); New South Wales, Attorney General’s Department, Tort Liability in New South Wales (Legislation and Policy Division, Discussion Paper, 1990).
4. New South Wales, Attorney General’s Department, Tort Liability in New South Wales (Legislation and Policy Division, Discussion Paper, 1990) at para 4.4.
5. LRC 65 at para 6.
6. See paras 2.17-2.19 and 2.29-2.42.
7. On satisfaction see G L Williams, Joint Torts and Contributory Negligence (Stevens & Sons, London, 1951) at para 9.
8. See generally R Goff and G Jones, The Law of Restitution (4th ed, Sweet & Maxwell, London, 1993) Chapters 12-14.
9. A third category of wrongdoers, namely those who have committed different wrongful acts and are responsible for different damage to the plaintiff, is not relevant to this discussion: see B M E McMahon and W Binchy, Irish Law of Torts (Professional Books, Abingdon, 1981) at 87.
10. See The Koursk [1924] P 140.
11. J W Salmond, Salmond’s Law of Torts (8th ed, Sweet & Maxwell, London, 1934) at 79-80.
12. Brinsmead v Harrison (1871) LR 7 CP 547.
13. Cocke v Jennor (1614) Hob 66; 80 ER 214.
14. (1799) 8 TR 186; 101 ER 1337.
15. J W Salmond, Salmond’s Law of Torts (8th ed, Sweet & Maxwell, London, 1934) at 82. See also The Koursk [1924] P 140 and J F Clerk, Clerk & Lindsell on Torts (8th ed, Sweet & Maxwell, London, 1929) at 60.
16. Later s 84(4) of the Companies (Consolidation) Act 1908 (Eng) and then s 37(3) of the Companies Act 1929 (Eng).
17. Sections 2 and 259-263 of the Navigation Act 1912 (Cth) deal with collisions between ships outside of Australian territorial waters. In New South Wales apportionment applies to all claims including those for collisions by vessels inside territorial waters: see J G Fleming, The Law of Torts (8th ed, Law Book Company, Sydney, 1992) at 271.
18. A brief history of the introduction of rights to contribution among tortfeasors in Canada may be found in University of Alberta, Institute of Law Research and Reform, Contributory Negligence and Concurrent Wrongdoers (Report 31, 1979) at 2-3. See also D Cheifetz, Apportionment of Fault in Tort (Canada Law Books, Aurora, 1981) at 5-11.
19. The Tasmanian legislation expressly abrogates the rule: Tortfeasors and Contributory Negligence Act 1954 (Tas) s 3(3).
20. Law Reform (Miscellaneous Provisions) Act 1955 (ACT) s 11.
21. Thompson v Australian Capital Television Pty Ltd (1996) 71 ALJR 131 at 134-135 per Brennan CJ, Dawson and Toohey JJ, at 138 per Gaudron J, and at 151-152 per Gummow J.
22. See, eg, Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR (NSW) 159 at 180 per Asprey JA. The terminology, which is in common use, probably originates in Williams (1951) at para 1.
