1.1 On 12 August 1985 the Commission was given a reference to inquire into and report on:

1. the law governing rights to contribution between two or more persons responsible for the same damage; and

2. any incidental matter.

1.2 In 1990 the Commission released, as part of this reference, an Interim Report on solidary liability.² The Interim Report (“LRC 65”) was produced following a request by the then Attorney General who was conducting a review of the general law of tort liability in New South Wales.³ The Attorney General’s review included consideration of the reform of the doctrine of solidary liability,⁴ so it was considered necessary that the Commission report immediately on the doctrine, which essentially provides the reason for the existence of the law of contribution.⁵

1.3 The Commission released a Discussion Paper⁶ covering all issues relevant to the reference in September 1997. This Discussion Paper (“DP 38”) included 18 proposals for the reform of the law relating to contribution between persons liable for the same damage.⁷ Eight written submissions⁸ were received on matters raised in DP 38 and the Commission held consultations with nine groups and individuals.⁹

THE LAW OF CONTRIBUTION

1.4 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 wrongdoers and several wrongdoers¹⁰ (particularly tortfeasors) at common law, and the changes effected in relation to tortfeasors only by the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

Joint wrongdoers and several wrongdoers at common law

1.5 At common law there is a distinction between tortfeasors who are joint wrongdoers and those who are several wrongdoers.¹¹ The effects of this distinction, outlined below, have been rendered all but irrelevant with respect to tortfeasors by provisions of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

Joint wrongdoers

1.6 Joint wrongdoers are those who can be said to be responsible for the same wrongful act.¹² Situations in which joint wrongdoers are most commonly found are agency, vicarious liability and common action.¹³ Joint wrongdoers are jointly and severally liable for the whole of the damage suffered by an injured party, that is, they can each be sued individually for the full amount of the injured party’s loss and can be sued jointly in the same action. This was most commonly the case with respect to tortfeasors and 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;¹⁴ and

3. the release of one tortfeasor, by deed or accord and satisfaction, released all the others (the settlement bar rule).¹⁵

Several wrongdoers

1.7 “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 person, but are not jointly liable for the same wrongful act. The judgment bar rule is presumed not to apply in the case of several wrongdoers, so that the release of one wrongdoer does not necessarily release the others.¹⁶

Contribution

1.8 The principle of solidary liability as it applies at present is such that, in general, concurrent wrongdoers (that is, joint wrongdoers and/or several wrongdoers) are each liable for the whole of the damage which an injured party has suffered and the satisfaction of that liability by one of the wrongdoers will discharge all the wrongdoers.¹⁷ The injured party may choose to take action against any or all of the wrongdoers. This may be achieved by one action or by several.

1.9 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.

1.10 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.¹⁸ This wider law of contribution, however, falls outside the Commission’s terms of reference: D1 and D2, in such cases, are not necessarily “wrongdoers”; nor are they responsible for the same damage.

1.11 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.

The rule in Merryweather v Nixan

1.12 The case of Merryweather v Nixan, decided in 1799, set down the position at common law that contribution is not available between joint tortfeasors. The principal reason given by Lord Kenyon was that “he had never before heard of such an action having been brought, where the former recovery was for a tort”.¹⁹ Commentators have taken this to be a reference to the maxim that “an action does not arise from a base cause”,²⁰ that is, that tortfeasors, as wrongdoers, ought not to be allowed to found a cause of action (in this case, for contribution) on their own wrongdoing. The decision in Merryweather v Nixan is considered to have been inadequately argued.²¹ Nevertheless the position was later extended to cover non-intentional torts and situations involving several concurrent tortfeasors as well as joint tortfeasors.²²

1.13 The effect of the doctrine of solidary liability together with the rule in Merryweather v Nixan made it necessary to enact a statutory right of contribution between joint wrongdoers. Such a provision generally ensures that a plaintiff’s right to obtain full compensation for an injury is protected without allowing that plaintiff the apparently unfair discretion of determining which defendant(s) to proceed against and, therefore, who will ultimately be liable to pay compensation, regardless of individual levels of responsibility. At the same time, each defendant is expected to pay an amount of damages equivalent to the extent of that defendant’s responsibility for the harm sustained by the plaintiff.

Statutory variation of the common law

1.14 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 1890²³ and concerning collisions between certain ships in 1911.²⁴

1.15 Changes to the law regarding tortfeasors generally, as opposed to other wrongdoers, were introduced in 1935 in England by the Law Reform (Married Women and Tortfeasors) Act 1935 (Eng).²⁵ The English legislation was the result of a report of the English Law Revision Committee.²⁶ In New South Wales these changes were reproduced in virtually identical terms in the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). The effects of s 5 of the New South Wales Act are as follows:

• The judgment bar rule has been 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.
• The rule that the release of one joint tortfeasor releases all other joint tortfeasors has, in effect, been abrogated.²⁷
• 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”.
• 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.

1. See, for example, Scottish Law Commission, Report on Civil Liability: Contribution (Scot Law Com No 115, 1988) at Part 4; Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at Chapter 10; New Zealand, Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) esp at para 55-67, 113-128 and 188-195. See also G L Williams, Joint Torts and Contributory Negligence (Stevens & Sons, London, 1951) at Part 2.

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. See LRC 65 at para 6.

6. New South Wales Law Reform Commission, Contribution Between Persons Liable for the Same Damage (Discussion Paper 38, 1997) (“DP 38”).

7. See DP 38 at xi-xiv.

8. B K Cutler, Submission; Australian Council of Professions Ltd, Submission; National Joint Limitation of Liability Taskforce, Australian Society of CPAs and the Institute of Chartered Accountants in Australia, Submission; Law Society of NSW, Submission 1; A D M Hewitt, Submission; Law Society of NSW, Submission 2; Insurance Council of Australia Ltd, Submission; and B Donovan, Submission.

9. Law firms, Consultation; Supreme Court Judges, Consultation; NSW Bar Association, Consultation; Insurance companies, Consultation; B McDonald, Consultation; Accounting bodies, Consultation; J L R Davis, Consultation; Australian Council of Professions Ltd, Consultation; R Cooter, Consultation.

10. Where two or more concurrent wrongdoers are responsible for the same damage, it is not necessarily the case that they will both be liable in tort. It may be that liability is founded on breach of contract, breach of some equitable obligation or breach of statute. 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. The wrongdoers are, in such instances, referred to collectively as “mixed concurrent wrongdoers”.

11. 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; and R P Balkin and J L R Davis, Law of Torts (2nd edition, Butterworths, Sydney, 1996) at 842.

12. See The Koursk [1924] P 140.

13. J W Salmond, Salmond’s Law of Torts (8th edition, Sweet & Maxwell, London, 1934) at 79-80.

14. Brinsmead v Harrison (1871) LR 7 CP 547.

15. Cocke v Jennor (1614) Hob 66; 80 ER 214.

16. This was the case with respect to several tortfeasors before the introduction of contribution legislation: J W Salmond, Salmond’s Law of Torts (8th edition, Sweet & Maxwell, London, 1934) at 82. See also The Koursk [1924] P 140; and J F Clerk, Clerk & Lindsell on Torts (8th edition, Sweet & Maxwell, London, 1929) at 60.

17. On satisfaction see Williams (1951) at para 9.

18. See generally R Goff and G Jones, The Law of Restitution (5th edition, Sweet & Maxwell, London, 1998) at Chapters 13-15.

19. Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337.

20. Ex turpi causa non oritur actio.

21. See J G Fleming, The Law of Torts (9th edition, LBC Information Services, Sydney, 1998) at 293.

22. See Williams (1951) at para 26.

23. Directors Liability Act 1890 (Eng) s 3, 4 and 5, later s 84(4) of the Companies (Consolidation) Act 1908 (Eng) and then s 37(3) of the Companies Act 1929 (Eng).

24. Maritime Conventions Act 1911 (UK) s 3. In New South Wales s 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 Fleming (1998) at 306.

25. 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.

26. England and Wales, Law Revision Committee, Third Interim Report (Cmd 4637, 1934).

27. Although not expressly abrogated by the Act: Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 584-585 per Brennan CJ, Dawson and Toohey JJ, at 591 per Gaudron J, and at 611-615 per Gummow J. The Tasmanian legislation expressly abrogates the rule: Tortfeasors and Contributory Negligence Act 1954 (Tas) s 3(3).