2.1 When a person is injured as a result of someone else’s (a defendant’s) negligence, the defendant is liable to pay the injured person (the plaintiff) damages calculated as the amount needed to put the person back into the position they would have been in but for the injury.¹ Damages are assessed by reference to the magnitude of the plaintiff’s loss, not by reference to the magnitude of the defendant’s fault. Once it is established, on the balance of probabilities, that the defendant’s breach of duty caused the plaintiff’s injury, then the defendant is liable for the full loss. So, for example, a defendant who causes damage to a Rolls Royce will be required to pay far more by way of damages than a defendant who, by exactly the same act of negligence, damages an old beaten up car.

2.2 Where there is more than one defendant, solidary liability comes into play. Solidary liability, also termed “liability in solidum”² but more commonly called “joint and several liability”, describes situations where each of two or more concurrent wrongdoers is liable severally and all are liable jointly for the damage caused. For the principle to apply, each defendant must be found to have breached a duty of care and caused damage to the plaintiff. Solidary liability enables the plaintiff to take action against any one of the defendants and receive full compensation from that defendant. It is then up to that defendant, through the system of contribution, to seek to recover a share of the damages from any other liable defendant. A plaintiff may of course take action against more than one of the defendants,³ but it may be more convenient for the plaintiff to choose only one defendant and leave it to the defendants to sort out the issue of apportionment among themselves by way of contribution. Plaintiffs are not involved at the contribution stage: instead, the defendant against whom compensation has been recovered bears the responsibility for recovering contribution from the other defendants. In practice, however, rules of court ensure that the question of contribution is usually dealt with in the same proceedings as the plaintiff’s original action.

2.3 Where the various defendants appear to have differing capacities to pay, a plaintiff will often choose to sue the one amongst them who appears to have what is known as the “deepest pocket”, that is, the one most likely to be able to pay damages. This is particularly important in cases where at least one of the other defendants is uninsured, insolvent or otherwise not amenable to jurisdiction. While in theory, the defendant sued can seek contribution against the others via the system of solidary liability, in practice it may not be possible to recover contribution from defendants who are insolvent, uninsured, or otherwise not amenable to jurisdiction. This means that “deep pocket” defendants may find themselves being targeted by plaintiffs where they are one of a number of those responsible for the damage. Concerns about the practical effects of this on certain types of defendants, and suggestions that liability insurance has become prohibitively expensive for certain types of professionals and public bodies, have led to calls for the replacement of solidary liability with a system known as “proportionate liability”.

PROPORTIONATE LIABILITY

2.4 Proportionate liability differs from solidary liability in that it divides the loss among multiple defendants according to their respective shares of responsibility. Under proportionate liability, a plaintiff can only recover from a particular wrongdoer that proportion of the full compensation which represents the wrongdoer’s liability. This can be contrasted with the situation at common law where once a defendant is found to be a cause of the plaintiff’s damage that defendant is liable for all of the foreseeable loss.⁴ The theory that defendants should be liable to compensate a plaintiff for only that proportion of the damage for which they are responsible was first developed in Europe in the nineteenth century.⁵ There have been a number of proposals for, and some implementations of, systems of proportionate liability in a range of jurisdictions. While they vary from jurisdiction to jurisdiction, most involve some modified or limited form of proportionate liability. A number of these are outlined later in this chapter.⁶

THE INTERIM REPORT (LRC 65)

2.5 As noted in Chapter 1, the issue of solidary liability has already been dealt with fully in LRC 65 which was published in July 1990 as an interim report on solidary liability.⁷ The report was prepared at the request of the then Attorney General, as part of a broader review of tort liability. The Commission also specifically considered and rejected the adoption of proportionate liability for non-economic losses in personal injury cases.

DEVELOPMENTS SINCE THE INTERIM REPORT

2.6 Since the interim report was published, debate about the relative merits of solidary versus proportionate liability has continued. A number of law reform reports have been published and there have been some developments in other jurisdictions and these are discussed below. In addition, the Commission received a number of submissions and representations on this issue in the course of its Contribution reference and for all of these reasons, it has been considered necessary to revisit the issue in the Commission’s final report on this reference.

The Davis Report

2.7 In the early 1990s an inquiry into the law of solidary liability was instituted by Commonwealth and New South Wales Attorneys General and conducted by Professor J L R Davis of the Australian National University. The inquiry was completed in 1995.⁸ The principal recommendation was that “joint and several liability be abolished, and replaced by a scheme of proportionate liability, in all actions in the tort of negligence in which the plaintiff’s claim is for property damage or purely economic loss”.⁹ Three other recommendations followed upon this. The first was that “joint and several liability for negligence which causes only property damage or economic loss be replaced by liability which apportions fault, in all circumstances, among those responsible for the damage or loss”.¹⁰ The second was that proportionate liability be made available, instead of joint and several liability, for contraventions of s 995 of the Corporations Law and s 52 of the Trade Practices Act 1974 (Cth) and equivalent State provisions.¹¹ The final recommendation arose from concerns expressed in LRC 65 about the application of proportionate liability in cases of vicarious liability and proposed that “any change to the present rules on joint and several liability should be expressed not to apply to instances of vicarious liability”.¹²

Discussion Paper on Contribution

2.8 In DP 38, which was published in September 1997, the Commission canvassed the arguments put in the Davis Report, and in particular, drew attention to some of the practical difficulties that would follow from its recommendations.¹³ The Commission concluded:

We, therefore, restate our opposition to the introduction of a system of proportionate liability and remain unconvinced by the arguments put forward in the Davis Report. Our support for solidary liability is, of course, dependent on the existence, in principle, of rights of contribution between joint and several wrongdoers.¹⁴

2.9 Three more reports dealing, at least in part, with the issue of solidary liability have been published since DP 38 was released in September 1997, namely: a report of the Canadian Standing Senate Committee on Banking, Trade and Commerce¹⁵ in March 1998; a report of the New Zealand Law Commission¹⁶ in May 1998; and an Expert Report commissioned by the Victorian Attorney-General’s Law Reform Advisory Council¹⁷ in August 1998 (the “Victorian Expert Report”).

New Zealand

2.10 The Report of the New Zealand Law Commission on apportionment of civil liability deals almost exclusively with the issue of solidary liability.¹⁸ The New Zealand Commission concluded that there was “no sufficiently compelling case for departure from the solidary liability rule”.¹⁹

Canada

2.11 The Canadian Standing Senate Committee on Banking, Trade and Commerce confined its deliberations to solidary liability amongst co-defendants in situations involving financial loss in the context of the Canada Business Corporations Act²⁰ and other statutes dealing with financial institutions and cooperatives. The Committee concluded that it is “reasonable to apply a liability regime other than joint and several liability to claims for financial loss”,²¹ based on the perceived impact of joint and several liability on the accounting and other related professions in particular. The Committee’s recommendation was that there be a “modified proportionate liability regime for claims for economic (financial) loss arising by reason of any error, omission, statement or misstatement in financial information” issued under a variety of Canadian federal statutes²² and that joint and several liability would continue for individual plaintiffs who could be classified as “unsophisticated plaintiffs” and for all plaintiffs whose claims arise out of fraudulent or dishonest conduct. The Committee tended towards a “net worth test” to distinguish between sophisticated and unsophisticated plaintiffs, but recommended further consultations on this point.²³

Victoria

2.12 The Victorian Attorney-General’s Law Reform Advisory Council commissioned an expert report to consider “the likely economic impact of the replacement of joint and several liability with proportionate liability in cases of purely economic loss and property damage”.²⁴ The Report concluded that “on the evidence currently available there is no clear economic or other justification for a wholesale shift to a system of proportionate liability”.²⁵ However, this cautious approach, adopted after considering a variety of issues including those related to insurance, deterrence, and corrective and distributive justice, does not preclude more precisely targeted options for reform. One option suggested was that proportionate liability could be introduced specifically for particular professional groups who provide financial and business advice, such as auditors and solicitors.²⁶ Another was the introduction of a capping regime in relation to such professional activities. The preferred option, however, was to investigate mechanisms for “consensual limitations” on solidary liability.²⁷

The American experience

2.13 According to the American Tort Reform Association (“ATRA”) 34 American states have now modified the doctrine of solidary liability in some way,²⁸ mostly by introducing a limited form of proportionate liability.

2.14 Caution should be exercised in drawing comparisons with US law as so many aspects differ from Australian law. Matters such as the absence of effective joinder provisions, the continued use of juries in civil matters and different costs rules have added to the general pressure for civil justice reforms in the United States, one of which has been the limited introduction of various forms of proportionate liability.

THE ARGUMENTS

2.15 The arguments concerning the advantages and disadvantages of each system have been extensively canvassed in LRC 65, the Davis Report and DP 38. They are briefly reviewed below under the following general headings:

• policy issues;
• procedural issues; and
• economic issues.

2.16 Arguments in favour of solidary liability tend to focus on the issue of fairness to the plaintiff in an action for damages.

2.17 First, solidary liability aims to ensure, as much as possible, full compensation for a plaintiff.²⁹ Obviously this will not be possible in situations where no defendants are solvent or otherwise amenable to jurisdiction. Nor will it be possible where there is only one defendant who is also insolvent. The Davis Report questioned the appropriateness of full compensation in cases other than those involving personal injury and also noted that various statutory limits on full recovery had been enacted in a number of jurisdictions.³⁰ The Report doubted “whether the interest in financial security should always be completely protected by law”.³¹

2.18 There has, of course, been a general trend in Australia and elsewhere to impose statutory limitations on recovery. For example, in New South Wales statutory limits have been imposed on certain losses for personal injury under motor accidents and workers compensation legislation.³²

2.19 The Professional Standards Act 1994 (NSW) now offers a means of limiting the liability of professionals in situations not involving death or personal injury, breach of trust, or fraud and dishonesty.³³ A scheme under the Act may apply to any class or classes of an occupational association, or to all members of the association³⁴ and will limit the liability to damages of a member of such an occupational association by either a “monetary ceiling” or a “limitation amount”.³⁵ A number of schemes have already been approved by the Professional Standards Council.³⁶ It has been suggested that limiting the amount of damages recoverable is a remedy only for catastrophic cases, and does not deal with the question of justice between the parties.³⁷

2.20 While it is often assumed that there is a qualitative distinction between personal injuries that affect bodily integrity, and those injuries that cause solely economic or property loss, this may not always be the case. Instances can be envisaged where loss of property or financial security, for example, in the case of small investors or home owners, could be equally devastating compared with some types of physical injury.

2.21 Secondly, since each wrongdoer has caused what the law characterises as indivisible damage to the plaintiff, it is fair that each wrongdoer is fully liable for that damage. The mere existence of other wrongdoers should not prejudice a plaintiff’s chance of full recovery.³⁸ Justice between multiple wrongdoers is then achieved, so far as possible, by the availability of rights of contribution and without any impact on the plaintiff’s full recovery.

2.22 One argument consistently put to the Commission in submissions and consultations has been that plaintiffs who are willing participants in financial transactions can never be considered entirely “innocent”. On this ground they then cannot expect to receive full compensation if one of the wrongdoers is unable to pay.³⁹ Such views, however, ignore the wide field that can be covered by the term “financial transactions” including purchase of residential properties and consumer transactions. This argument also fails to take account of the role of contributory negligence: where a plaintiff is found not to have taken adequate care for their own interests, reductions in damages can be made to take account of that conduct on the part of the plaintiff.⁴⁰ But it is not appropriate to suggest that simply engaging in certain kinds of lawful activity (such as financial investments) should inevitably preclude someone from what would otherwise be their entitlement to seek a legal remedy in cases of negligence. In any event, this argument is not specific to the debate about solidary and proportionate liability in that the number of defendants is irrelevant to this issue. It is, therefore, beyond the scope of this inquiry. And, to the extent that acceptance of a certain degree of risk by plaintiffs may have any relevance, that is a matter better addressed at the contractual level between the parties to such transactions.⁴¹

2.23 The proponents of proportionate liability are chiefly concerned with the question of fairness to wrongdoers in situations where there are multiple wrongdoers, at least one of whom is not amenable to judgment. The problem is that under a solidary liability regime, a solvent wrongdoer may be called upon to pay more than what would otherwise be their proportionate share of the plaintiff’s damage because of the inability of other concurrent wrongdoers, through, say, bankruptcy or absence from jurisdiction, to pay what would otherwise be their proportionate shares. It has also been suggested that, in such circumstances, a plaintiff will endeavour to fix even a small measure of responsibility for the damage on a solvent (usually deep-pocket or insured) defendant who will in effect bear the whole loss. This is claimed to be especially unfair in that one who was only “marginally at fault” would bear the entire responsibility for compensating the plaintiff. It is then argued that that defendant – the solvent wrongdoer – should be liable to pay only that sum which represents his or her responsibility for the damage to the plaintiff. However, as already explained,⁴² current tort rules provide that even a small amount of fault on the part of a defendant may lead to that defendant being found liable for the whole amount of the damage caused.⁴³ This would be the situation where there was only one defendant. The question is then asked: Why should it be any different for a defendant simply because there are other defendants present who would also, by themselves, be found liable for the whole of the damage sustained by the plaintiff?

2.24 On balance the introduction of proportionate liability may not be the best way to solve the question of justice for some defendants. The better policy approach to any perceived unfairness in holding a D responsible for the entirety of P’s loss may be to look at the broader rules governing tort law: specifically, the principles of causation, remoteness and proximity in tort.⁴⁴ It is clear that policy considerations are also affecting judicial decision making in cases involving professional groups who claim to be subjected to such unfairness.⁴⁵ For example, in the High Court’s first direct consideration of the liability of auditors to a third party investor, it was held that there was no proximity and hence no duty of care to that investor.⁴⁶ Justice McHugh articulated some of the implications of extending the liability of auditors, including cost and provision of auditing services, and the administration of the court system.⁴⁷ He noted that the trend in other jurisdictions has been “very much against expanding the liability of auditors for negligent misstatements”⁴⁸ and later concluded that “the demands of corrective justice do not require the imposition of such a duty”.⁴⁹

Limited introductions of proportionate liability

2.25 As noted above, most proposals for, and implementations of, proportionate liability have been limited or modified in some way. Following are some examples.

2.26 Proportionate liability where plaintiff is contributorily negligent. At common law, contributory negligence by a plaintiff was a complete defence to an action in negligence.⁵⁰ However this position has been altered by statute so that damages are apportioned between a contributorily negligent plaintiff and the defendants to an action. This was achieved in New South Wales by Part 3 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) which provides that damages recoverable in a case involving contributory negligence “shall be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage”.⁵¹

2.27 An apportionment of responsibility due to contributory negligence between plaintiffs and defendants can be seen as somewhat analogous to the apportionment of responsibility among multiple defendants under both solidary liability (with contribution) and proportionate liability. In fact it has been suggested that the move to apportionment for contributory negligence has opened the way to a revision of the doctrine of solidary liability.⁵² It is argued that, because solidary liability arose at a time when only plaintiffs who were not contributorily negligent could recover damages, a concurrent wrongdoer should not now be in a position of having to bear more than his or her share of responsibility for compensation when a plaintiff, who is partly to blame for his or her own loss, can receive only a proportion of the damages which would otherwise have been due.

2.28 There are a number of ways of implementing forms of proportionate liability when a plaintiff is contributorily negligent. One is simply to provide that where a plaintiff is contributorily negligent, such liability as is attributed to the defendants is not solidary but proportionate. This is the situation in British Columbia under the Negligence Act.⁵³

2.29 Another way is to allow proportionate liability but to preserve a right, where at least one of the defendants is insolvent or otherwise unavailable, for the plaintiff (who was contributorily negligent) to seek a secondary, or conditional, judgment which would divide liability for so much of D2’s share as remained unpaid between P and D1.⁵⁴ This was proposed in 1951 by Professor Glanville Williams⁵⁵ whose aim was to spread the risk arising from an insolvent, or otherwise unavailable, defendant so that the whole burden would not fall either entirely on the remaining defendant(s), as would be the case if solidary liability were wholly retained, or fall entirely on the plaintiff, as would be the case if the doctrine were abolished.⁵⁶ Williams’ proposals were adopted by s 38 of the Civil Liability Act 1961 (Ireland).

2.30 While there are conceptual links between the law relating to contributory negligence and the law relating to contribution,⁵⁷ there are also significant conceptual difficulties. Both are concerned with fairly apportioning responsibility and both become relevant only when the plaintiff has established all the elements of a cause of action against at least one defendant. Put simply, the main conceptual distinction is that a defendant must be found to be in breach of a duty of care that was owed to P, while a plaintiff need not be in breach of any duty of care for contributory negligence to be found. For example, in motor accidents, passengers who fail to wear seat belts are not to blame for the accident, in that the accident is not caused by that failure, but that failure may increase the magnitude of the damage suffered and for that reason, a reduction is made for contributory negligence.⁵⁸

2.31 It has also been suggested that allowing proportionate liability where a plaintiff is contributorily negligent may not achieve the desired result with respect to claims against professionals. In many cases, where, for example, auditors have been negligent, contributory negligence on the part of the plaintiff will simply not be established.⁵⁹ This can be seen in the Federal Court’s refusal to accept as a general proposition that “a person who has suffered loss because of a failure of duty by a professional adviser is negligent if he or she failed to read and understand complex legal documents”.⁶⁰

2.32 Accordingly the Commission rejects any attempt to introduce proportionate liability on the basis that contributory negligence is already available.

2.33 An industry specific approach. An industry specific approach to the introduction of proportionate liability has already been achieved, with appropriate safeguards, with respect to building works in New South Wales,⁶¹ Victoria,⁶² South Australia,⁶³ and the Northern Territory.⁶⁴

2.34 In New South Wales the Environmental Planning and Assessment Amendment Act 1997 (NSW) came into effect on 1 July 1998. This Act inserted Part 4C into the Environmental Planning and Assessment Act 1979 (NSW) and implements a system of proportionate liability with respect to “building actions”⁶⁵ and “subdivision actions”.⁶⁶ However, it also recognises the need to ensure that defendants are able to pay and, consequently, the need for plaintiffs to be fully compensated⁶⁷ by requiring that “accredited certifiers” and “building practitioners” are covered by such insurance as may be specified by regulation.⁶⁸ This ensures that plaintiffs will be protected against the possible insolvency of defendants.⁶⁹ Regulations concerning insurance have been inserted as Part 7D of the Environmental Planning and Assessment Regulation 1994 (NSW).

2.35 Victoria, South Australia and the Northern Territory have implemented similar schemes. However, it has been pointed out that those engaged in building litigation usually rely, in addition to actions in contract and in negligence, on the misleading and deceptive conduct provisions of the Trade Practices Act 1974 (Cth)⁷⁰ which makes no provision for contribution.⁷¹ This allows some litigants to circumvent any regimes which apportion liability.⁷²

2.36 Proportionate liability could be extended to other professional groups. One possibility is that it could be made available to those accredited under the Professional Standards Act 1994 (NSW). One suggestion from Victoria has been the introduction of proportionate liability for “auditors and solicitors as well as others who provide financial business advice”.⁷³ The New Zealand Law Commission also considered, but rejected, an industry specific proposal.⁷⁴ The Canadian Standing Senate Committee on Banking, Trade and Commerce, because of constitutional requirements, was limited to considering proportionate liability with respect to the provision of financial services under federal statutes.⁷⁵

2.37 Proportionate liability for types of plaintiffs. The Canadian Standing Senate Committee on Banking, Trade and Commerce sought to mitigate the effect of an introduction of proportionate liability in cases of financial loss under Federal statutes by advocating the recognition of a class of plaintiffs, described as “unsophisticated”,⁷⁶ to whom solidary liability would continue to apply. The “unsophisticated” plaintiffs would be identified by means of a net worth test.⁷⁷ There are a number of problems with such an approach. These include:

• the arbitrariness of any financial limit, however defined;
• the potential for avoidance of proportionate liability by asset stripping, for example by the creation of two dollar companies and family trusts; and
• the procedural complexity where there is more than one plaintiff, and at least one is sophisticated.

2.38 Where defendant is responsible for less than a specified percentage of liability. Another means of alleviating perceived unfairness to a defendant who is considered only marginally at fault is to establish a system whereby a defendant will be proportionately liable so long as the defendant’s share of responsibility is less than a specified percentage.

2.39 Schemes of this nature have been introduced in a number of American States. For example, while Texas has introduced proportionate liability, it has retained solidary liability in circumstances where a defendant is more than 50% responsible, as well as where a defendant is more than 15% responsible in certain defined circumstances of harm arising from toxic torts.⁸⁰ Other States that have introduced limited forms of proportionate liability, but retained solidary liability where a defendant is more than 50% responsible, include Wisconsin⁸¹ and Montana.⁸²

2.40 However, it can be argued that whatever percentage was arrived at as the threshold, it would be an arbitrary distinction, with no rationale for preferring one particular cut-off point over another.

2.41 Judicial discretion. This method was considered by the New Zealand Law Commission, namely to allow liability to be reduced, if at all, according to the justice of each case.⁸³ Some civil law systems recognise a form of proportionate liability even where there is a single defendant – so that a momentary lapse will not necessarily mean liability for the full loss suffered. However, there is nothing in this particular policy argument that goes specifically to cases involving multiple defendants. Instead, it is an argument more in the nature of a general critique of the existing tort system, and as such is outside the scope of this enquiry.

2.42 Conclusion. Ultimately these “half-way houses” that go some way to introducing proportionate liability are unsatisfactory in that they simply introduce more complexity and uncertainty into the legal system. Accordingly the Commission does not consider them an appropriate means of balancing the rights of plaintiffs and defendants.

Procedural issues

2.43 In this section we consider the procedural implications of the various systems of liability. In considering whether one system of liability is likely, in practical terms, to lead to more complexity in the conduct of litigation than another, we also consider the related question of who should ideally bear some of the procedural burdens which arise.

2.44 The Davis Report dismissed concerns raised about practical problems involved in the introduction of proportionate liability as “more apparent than real”,⁸⁴ and stated that there was no evidence of problems in the Republic of Ireland where the Civil Liability Act 1961 has been in force for over 30 years; in British Columbia, where a system of proportionate liability has been in place for 10 years;⁸⁵ or in various unspecified jurisdictions in the United States. Some submissions to the Commission have claimed that proportionate liability will in fact be simpler from a procedural point of view, highlighting the apparent complexity of the current system of contribution and its potential for separate proceedings.⁸⁶

The burden of conduct of proceedings

2.45 A system of proportionate liability if introduced will most likely involve a number of procedural difficulties that are quite different to the present system of solidary liability. These will tend to fall on plaintiffs whereas solidary liability tends to shift the burden of what may be complex legal proceedings onto defendants.⁸⁷

2.46 One of the procedural difficulties relates to the manner in which the proportionate share of each concurrent wrongdoer would have to be determined. Problems may arise where all the concurrent wrongdoers are represented in the action, in that the plaintiff would have an interest in the determination of proportionate liability for each defendant. It would, for example, be in the plaintiff’s interest to argue for a greater proportionate liability to attach to the defendants who are most able to pay.⁸⁸ This would involve increased complexity in the presentation of a plaintiff’s case. The task of dividing responsibility is sometimes seen as best undertaken between the wrongdoers themselves rather than between the plaintiff and individual wrongdoers, especially where the plaintiff has not contributed to his or her own loss.

2.47 A question also arises as to how far a plaintiff should go in taking action against all those who might conceivably be liable in some degree in case one of the other defendants raises those others’ liability in order to minimise their own. At present it is usually the defendants who decide who to bring in as co-defendants since it is in their interest to identify other defendants from whom they may seek contribution.⁸⁹ Defendants may also be in a better position to identify other potential wrongdoers,⁹⁰ particularly when complex chains of events are involved. Plaintiffs may have to choose from a wider range of defendants in order to ensure something near full recovery.

General issues

2.48 Clause 2(3)(a) of the draft model provisions to implement the Davis Report states that in apportioning responsibility between defendants in the proceedings “the Court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings”.⁹¹ Assuming some of the defendants are absent, how does a judge apportion liability in the absence of some defendants, or even in the absence of all but one defendant? Are other defendants then bound by that apportionment? It has been suggested that this may involve liability being fixed on persons who are not parties or even not specifically identifiable.⁹² There may also be adverse impacts on the cost and efficiency of litigation, especially in cases where defendants are subject to winding up proceedings or bankruptcy.⁹³

2.49 It has also been suggested that a plaintiff might be under-compensated in some cases, where an initial determination of liability between the plaintiff and a defendant was different from the proportion determined at a later trial of liability with respect to another defendant.⁹⁴ Options for getting around such difficulties include restricting the assignment of shares of liability solely to the parties to a particular action together with the implementation of a procedure whereby a defendant may join other defendants to the plaintiff’s claim. This option could be seen as expanding the scope and complexity of litigation.

2.50 The question of the onus of proof under a system of proportionate liability has not been adequately addressed. One view put to the Commission in consultations was that the onus with respect to the roles of absent defendants would have to be on the defendants before the court, otherwise the plaintiff would have to prove a negative – that the other defendants were not liable.⁹⁵

2.51 There is also the problem of the extent to which the action between P and D1 creates an estoppel in respect of claims between D2 (D3, D4, etc) and D1.⁹⁶

2.52 Practical difficulties may also be encountered if proportionate liability is implemented only in certain circumstances, for example, with respect to economic loss but not non-economic loss, yet both forms of loss are suffered in the one incident.⁹⁷ The existence of two sets of rules, one of which applies where economic loss is involved and the other where it is not,⁹⁸ will give rise to unwanted complexity.

Effect on settlements

2.53 It has been suggested that the introduction into litigation of complicated questions of proportionate liability would have the undesirable effect of hindering settlements. The resultant uncertainty in litigation may be more likely to benefit defendants, in particular those supported by insurers.⁹⁹ On one side it can be argued that, if solidary liability were abolished, a defendant’s liability would be lower, easily predicted and settlements would become easier, whereas on the other side it can be argued that a reduction of risk at trial might reduce the incentive to settle.¹⁰⁰ However, the Davis Report has suggested that the experience in British Columbia has been that all parties need not be joined for settlement negotiations to take place.¹⁰¹

Dangers of non-uniform approach

2.54 If the introduction of proportionate liability is not uniform across the State and Federal jurisdictions, forum shopping will occur. An example of what may eventuate can be seen in the understanding that actions under the Trade Practices Act 1974 (Cth) could provide a way of getting around the limitations under the Professional Standards Act 1994 (NSW)¹⁰² and of getting around proportionate liability in building cases.¹⁰³

2.55 However, there may also be implications for Australia’s place in the international market if Australia were to retain the system of solidary liability. One witness to the Canadian Standing Senate Committee claimed that, given the changes to the legal and economic environment and changes in other jurisdictions, retaining the current position in Canada “would be fundamentally out of step with the global approach to liability for the provision of professional services”.¹⁰⁴

Conclusion

2.56 The Commission is of the view that arguments about the complexity of the respective systems are finely balanced. While the regime of solidary liability with contribution on the face of it seems to permit multiple proceedings, the reality is that rules of court relating to joinder of parties ensure that most matters are dealt with in one proceeding in any case. For example, the Victorian Expert Report considered that there may be little to distinguish the two forms of liability so far as procedural costs go, citing the flexibility of joinder provisions in Australian courts and the scope for estoppel which may arise if issues are not dealt with in the same proceedings.¹⁰⁵ However, the Commission is still of the opinion that a system which encourages defendants to identify other potential wrongdoers will ultimately be the most efficient since it ensures that as many wrongdoers as possible are before the court in one proceeding. This is best achieved by the current system.

Economic issues

Effect on liability insurance

2.57 Recent proposals for reform of the law of solidary liability in New South Wales have been made against a backdrop of general concern amongst professional groups, particularly accountants and auditors,¹⁰⁶ about the increasing costs of liability insurance.¹⁰⁷ Similar concerns have been expressed in other jurisdictions such as England, with attacks on solidary liability there being led by accountants and the building industry.¹⁰⁸

2.58 It is claimed that the doctrine of solidary liability has contributed to the growing costs of insurance, in particular in the liability insurance market. This is because the system is said to encourage the fixing of even a small amount of responsibility on to a professional who is likely to be covered by liability insurance in the hope that that professional can pay the share of any other wrongdoers who may be insolvent or otherwise not amenable to jurisdiction.

2.59 As with other law reform agencies,¹⁰⁹ the Commission has been unable to reach a conclusion on the effect of solidary liability on the liability insurance market.¹¹⁰ While claims of a liability insurance crisis are frequently made, empirical evidence to support this is scarce and most of the evidence is purely anecdotal. The Ontario Law Reform Commission considered the arguments concerning the liability insurance crisis, including claims that there is only anecdotal evidence of a crisis with much of the necessary reliable evidence being in the hands of the insurance industry itself, and concluded that such claims were an unsatisfactory basis on which to alter the present rule of solidary liability.¹¹¹ In New South Wales the Attorney General’s review of tort liability was “prompted by reports of the cost of insurance, claims of excessive awards of damages and an expansion of findings of liability” but noted in its discussion paper that the review had been “somewhat hampered by the absence of firm statistical data on many of the issues raised” and relied on anecdotal evidence from the various submissions received.¹¹²

2.60 Submissions to the Commission have argued strongly that there is a link between solidary liability and the liability insurance crisis, with one submission suggesting that this can be supported by “anecdotal evidence and logical argument”.¹¹³ While there is no doubt that costs of liability insurance have increased in recent years,¹¹⁴ the Commission is not convinced that this is solely or even principally attributable to solidary liability.

2.61 Equally, if not more, difficult to predict is the likely effect of proportionate liability on the liability insurance market. Clearly, in a simple competitive insurance market, a reduction in liability would result in a reduction in claims and, presumably, a reduction in premiums. However, the conclusion could easily be that the form of liability may be only a relatively small component of the factors which have gone towards generating the perceived liability insurance crisis.¹¹⁵ A number of factors make it extremely difficult to predict the effect of different liability regimes on the liability insurance market:

• the insurance companies and professional organisations are unwilling to reveal commercially sensitive information relating to premiums and levels of insurance;¹¹⁶
• insurance cycles are hard to determine because the Australian insurance market is subject to developments in the global economy generally and the international re-insurance market in particular;¹¹⁷
• any changes are unlikely to be detected in the short to medium term because of the length of time taken to sort out the larger claims in the system (upwards of ten years).¹¹⁸

2.62 The report also noted that it is by no means clear that it will be cheaper for plaintiffs to spread risks by taking out first party insurance under proportionate liability:

. . . arguments regarding the efficiency of plaintiff insurance assume that plaintiffs will act rationally and in an informed way in selecting appropriate insurance cover. This assumption may be inappropriate for a significant number of plaintiffs - particularly if they are required to estimate risks associated with a wrongdoer’s conduct based on information which is not fully available in the market, and may best be known by co-wrongdoers.¹²⁰

Deterrence to entry to the professions

2.63 It has been suggested that people will not seek entry to various professions if the risks under solidary liability are too great.¹²² Obstetricians are said to be an example of a professional group that is already not attracting practitioners because of the professional liability situation.¹²³ However, the problem for obstetricians is not usually that of being one of several wrongdoers some of whom are not amenable to recovery. To the extent that there is a problem arising from an increasing incidence of litigation against certain groups, the introduction of proportionate liability will not alleviate the situation.

Deterrence to entrepreneurial enterprise/service provision

2.64 It has been suggested that defensive practice aimed at avoiding liability in areas like accounting will lead to increased costs to the community since those who most need advice will be unlikely to get it in future.¹²⁴ It was put to the Commission that some small accounting firms have abandoned their auditing practices altogether, while others have shed some existing clients.¹²⁵ It was also suggested that local government bodies, as institutions with “deep pockets”, may start withdrawing necessary services under the current regime,¹²⁶ or impose more regulations and controls than would otherwise be warranted.¹²⁷ Again most of the situations outlined here are not problems that will be solved by the introduction of proportionate liability. The problem is rather the tendency of plaintiffs to act rationally in only taking action against those from whom they can recover damages; a finding of liability in such circumstances; and, what some argue is an excessive level of damages. This is the case regardless of whether there are one or more possible defendants.

Incentive to be risk averse

2.65 The doctrine of solidary liability is said to have a detrimental effect on risk minimisation in that it encourages plaintiffs to take action against well-resourced defendants no matter how little their level of responsibility. This, it is argued, will do little towards encouraging well-resourced defendants to engage in risk minimisation. However, this argument first does not take into account the existence of a system of contribution between tortfeasors. In most circumstances where contribution arises there will be no reason for a defendant to think that any other defendant will be insolvent. Secondly the view that solidary liability is detrimental to risk minimisation concentrates on the incentive to minimise comparative fault rather than the more fundamental concern to avoid negligence altogether.¹²⁸ In LRC 65 the Commission concluded:

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.¹²⁹

2.67 The recent Victorian Expert Report has suggested that, taking a simple economic model, solidary liability (with or without contribution) is as efficient in terms of deterrence as proportionate liability.¹³¹ The Victorian Expert Report differs from the New Zealand view by suggesting that many of the factors that need to be added to the simple model may have negative impacts on both solidary and proportionate systems of liability. It also suggested that transaction costs, such as legal costs, may not differ greatly between the two systems given the flexibility of joinder in the Australian Courts.¹³²

2.68 A further complicating factor considered by the Victorian Expert Report was the impact of insolvent or absent wrongdoers. While lower incentives to exercise due care may arise for wrongdoers who can anticipate their own absence or insolvency, higher levels of deterrence may also arise for those wrongdoers who can anticipate being left to bear the burden of absent or insolvent defendants.¹³³ The question then remains as to whether this form of deterrence is efficient under a system of solidary liability with contribution. The study’s chief argument is that solidary liability will tend to encourage some potential wrongdoers, such as accountants and lawyers, to act as “gate keepers”, that is, to supervise the activities of other potential wrongdoers. It is suggested that the presence of a gate keeper may:¹³⁴

• help to prevent the risk arising at all;
• lead to more efficient activity levels by professionals in the right position, for example, “refusal by a Big Six auditor to carry out an audit for a particularly risky client may be the most efficient precaution”; and/or
• serve to improve the information available to participants in capital markets by alerting them to potentially risky players.

Conclusion

2.69 It is clear that there is a very limited range of situations where problems with solidary liability occur. These situations must involve a finding of liability against a deep-pocket or insured defendant in circumstances where there are other defendants at least some of whom are not amenable to recovery by the plaintiff.

2.70 There are other ways of dealing with the problem of findings of liability, particularly among professionals, which might not have quite the effect on the legal system as a shift to proportionate liability. The following are raised as possible solutions to the problems put to the Commission:

• Limited liability partnerships. These are not a direct solution to problems arising from solidary liability, but rather more a solution to the joint and several liability of people in partnerships, at least as considered by the Canadian Senate Committee on Banking, Trade and Commerce.¹³⁵ Limited liability partnerships were also considered by the New Zealand Law Commission.¹³⁶
• Liability caps. These are an obvious solution to the problem of excessive damages. Liability caps are already in place in New South Wales under motor accident and workers’ compensation legislation and are discussed in more detail earlier in this chapter.¹³⁷
• Consensual limitations. Despite recommending a cautious approach to wholesale reform of the current system of solidary liability in Victoria, the Victorian Expert Report gave some support to allowing consensual limitations to solidary liability to be agreed between appropriate parties.¹³⁸ The Common Law Team of the English Law Commission suggested, in 1996, that liability for professionals may be capable of being limited by agreement and noted that such agreements would remain subject to normal common law and statutory controls in relation to contract.¹³⁹ It has also been suggested that duties of care owed to third parties can be contained by “non-contractual disclaimers (of which the plaintiff had notice) limiting liability”.¹⁴⁰

1. This principle is known, with some inaccuracy, as restitutio in integrum.

2. The term in solidum has been adopted by the New Zealand, Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 25 and Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 31.

3. This is facilitated by modern rules of procedure which allow for the liberal joinder of parties: see B C Cairns, Australian Civil Procedure (4th edition, LBC Information Services, 1996) at 306 and 310.

4. See Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound (No 1)) [1961] AC 388. See also New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998) at para 7.

5. Bluntschli was the first to argue this in his commentary to the Civil Code for the Canton Zurich: H Stoll, “Consequences of Liability: Remedies” in A Tunc (ed), International Encyclopedia of Comparative Law Vol 11 (Torts) Part 2 at para 162.

6. See para 2.25-2.42.

7. For the history of this aspect of the reference see LRC 65 at para 2.

8. J L R Davis, Inquiry Into the Law of Joint and Several Liability: Report of Stage Two (Commonwealth of Australia, 1995) (the “Davis Report”); and J L R Davis, Inquiry Into the Law of Joint and Several Liability: Report of Stage One (Commonwealth of Australia, 1994). Draft Model Provisions to Implement the Recommendations of the Inquiry into the Law of Joint and Several Liability (1996) have also been released by the New South Wales and Commonwealth Governments.

9. Davis Report at 34.

10. Davis Report at 36.

11. Davis Report at 39.

12. Davis Report at 41. See also LRC 65 at para 43.

13. DP 38 para 2.47.

14. DP 38 para 2.49.

15. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998).

16. New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998).

17. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998).

18. The other matters raised in their Discussion Paper (New Zealand, Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19 , 1992)) were considered uncontroversial.

19. New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998) at 9.

20. RSC 1985, c C-44.

21. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 28.

22. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 47.

23. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 50.

24. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at iv.

25. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at v.

26. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 4.1.

27. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 4.1-4.4. See para 2.70 below.

28. American Tort Reform Association, “Mission Statement and General Information” (as at 1 March 1999) <http://www.aaabiz.com/atra/atrm.htm>.

29. LRC 65 at para 11 and 44. See also Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 33; New Zealand, Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 168; University of Alberta, Institute of Law Research and Reform, Contributory Negligence and Concurrent Wrongdoers (Report 31, 1979) at 31.

30. An example of an argument in favour of separate treatment of instances of injury to property or purely economic loss may be found in the Attorney General’s 1990 review of tort liability where it was argued that “[t]here is no interference with a plaintiff’s physical ability to work and earn money and therefore no compensation for the loss of this capacity. The plaintiff will not be forced to rely on the social welfare system and will not require ongoing medical and other care”: New South Wales, Attorney General’s Department, Tort Liability in New South Wales (Legislation and Policy Division, Discussion Paper, 1990) at para 4.45. A Standing Senate Committee in Canada has also concluded that financial loss should not be afforded the same recognition as personal injury: Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 17.

31. Davis Report at 32.

32. Motor Accidents Act 1988 (NSW) Part 6; Workers Compensation Act 1987 (NSW) Part 5. See also J Swanton and B McDonald, “Reforms to the Law of Joint and Several Liability: Introduction of Proportionate Liability” (1997) 5 Torts Law Journal 109 at 121.

33. Professional Standards Act 1994 (NSW) s 5.

34. Professional Standards Act 1994 (NSW) s 17.

35. Professional Standards Act 1994 (NSW) s 21 and 22.

36. Those administered by the Institute of Chartered Accountants in Australia and the Australian Society of Certified Practising Accountants, the College of Investigative and Remedial Consulting Engineers of Australia Inc, the Institution of Engineers Australia and the Association of Consulting Engineers Australia, and the Professional Surveyors Occupational Association of NSW Inc: New South Wales, Professional Standards Council, “Registered Professional Standards Schemes” (as at 1 March 1999) <http://www.lawlink.nsw.gov.au/psc.nsf/pages/liability_index>.

37. Accounting bodies, Consultation.

38. LRC 65 at para 14-15. See also Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 34.

39. B K Cutler, Submission at 5; Australian Council of Professions Ltd, Submission at 1-2; National Joint Limitation of Liability Task Force, Australian Society of CPAs and The Institute of Chartered Accountants in Australia, Submission at 1; Law Society of NSW, Submission 1 at 3.

40. For example, the High Court has agreed with the reasoning of the NSW Court of Appeal (in Daniels v Anderson (1995) 37 NSWLR 438 at 567-568) which held that contributory negligence may, depending on the facts of the case, be available to reduce the liability of a negligent auditor: Astley v Austrust Ltd [1999] HCA 6 at para 29.

41. See para 2.70 below.

42. See para 2.1 above.

43. See Overseas Tankship (UK) Ltd v The Miller Steamship Company [1967] 1 AC 617 at 636. See also New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998) at para 7.

44. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 3.4. But see Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 22.

45. See Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 and Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 20-22.

46. Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241.

47. Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 283.

48. Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 281.

49. Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 289.

50. See Butterfield v Forrester (1809) 11 East 60; 103 ER 926; J G Fleming, The Law of Torts (9th edition, LBC Information Services, 1998) at 303.

51. Law Reform (Miscellaneous Provisions) Act 1965 (NSW) s 10.

52. See New Zealand, Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 162; and LRC 65 at para 18.

53. The effect of s 1 and 4 of the Negligence Act (RSBC 1996, c 333) with regard to solidary liability was not fully realised until the British Columbia Court of Appeal interpreted them as providing that, where a plaintiff is found to be contributorily negligent, the liability of the tortfeasors is not solidary but several: Leischner v West Kootenay Power and Light Co Ltd (1986) 24 DLR (4th) 641 at 665-667. The British Columbia Law Reform Commission has recommended that the doctrine of solidary liability not be abrogated where a plaintiff is found to be contributorily negligent: Law Reform Commission of British Columbia, Report on Shared Liability (LRC 88, 1986) at 22.

54. G L Williams, Joint Torts and Contributory Negligence (Stevens & Sons, London, 1951) at 404. Contributory negligence of the plaintiff is not required for there to be an apportionment of an uncollected share among remaining defendants. For example, the British Columbia Law Reform Commission has recommended along these lines: Law Reform Commission of British Columbia, Report on Shared Liability (LRC 88, 1986) at 22; and Connecticut has implemented such a scheme: Connecticut General Statutes § 52-572h(c) and (g). See also Williams (1951) at 171-172. However, such schemes would require a plaintiff to face court proceedings a second time and it has been suggested that the costs of the adjudication to allocate the defendant’s share would outweigh the fairness of the ultimate result: Davis Report at 37.

55. Williams (1951).

56. Williams (1951) at 403.

57. Some law reform agencies have reviewed both contributory negligence and contribution together: eg, 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 Williams (1951) at Part 2.

58. See Froom v Butcher [1976] 1 QB 286.

59. See A Burrows, “Should One Reform Joint and Several Liability” in N J Mullany and A M Linden (ed), Torts Tomorrow: A Tribute to John Fleming (LBC Information Services, Sydney, 1998) 102 at 115.

60. Australian Breeder Co-operative Society Ltd v Jones (1997) 150 ALR 488 at 545. See also the comments of Heerey J in Henderson v Amadio Pty Ltd (1995) 62 FCR 1 at 194: “I do not see that it is negligent to rely on apparently competent and trusted accountants as the applicants ... did”. But see Beach Petroleum NL v Abbott Tout Russell Kennedy (1997) 26 ACSR 114 at 303-304.

61. See Environmental Planning and Assessment Act 1979 (NSW) Part 4C.

62. See Building Act 1993 (Vic) s 131.

63. See Development Act 1993 (SA) s 72.

64. See Building Act 1993 (NT) s 154-158.

65. A “building action” is defined as “an action (including a counter-claim) for loss or damage arising out of or concerning defective building work. “Building work” includes “the design, inspection and issuing of a Part 4A certificate or complying development certificate in respect of building work”: Environmental Planning and Assessment Act 1979 (NSW) s 109ZI.

66. A “subdivision action” is defined as “an action (including a counter-claim) for loss or damage arising out of or concerning defective subdivision work”: Environmental Planning and Assessment Act 1979 (NSW) s 109ZI.

67. Building Act 1993 (Vic) s 135(1).

68. Environmental Planning and Assessment Act 1979 (NSW) s 109ZN, 109ZO and 109ZP.

69. See also Swanton and McDonald (1997) at 113.

70. Section 52.

71. See K Tapsell, “Severing Liability in Building Cases” (1998) 36(7) Law Society Journal 42 at 44. See also para 3.32-3.33 below.

72. Although there is some support from the Federal Court for findings of co-ordinate liability at law or in equity such as to give rise to a right to contribution under the Trade Practices Act 1974 (Cth): Re La Rosa; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83; Trade Practices Commission v Manfal Pty Ltd (No 3) (1991) 33 FCR 382 at 385; and All-State Life Insurance Co Ltd v Australian and New Zealand Bank Group Ltd (Australia, Federal Court, NG381/94, Beaumont J, 14 February 1995, unreported).

73. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 4.1.

74. New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998) at para 10, footnote 3.

75. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998).

76. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 47.

77. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 47-50.

78. See, for example, Trade Practices Act 1974 (Cth) s 51AC.

79. For example, Law firms, Consultation.

80. Civil Practice and Remedies Code (Texas) s 33.013.

81. § 895.045 of the Wisconsin Statutes.

82. Montana Code Annotated 1997 § 27-1-703.

83. New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998) at para 10.

84. Davis Report at 33.

85. For a history of the provision, which was in force, but its effect not appreciated until 1986, see para 2.28.

86. B K Cutler, Submission at 3; Australian Council of Professions Ltd, Submission at 2; National Joint Limitation of Liability Taskforce, Australian Society of CPAs and the Institute of Chartered Accountants in Australia, Submission at 7; Law Society of NSW, Submission 1 at 4-5.

87. LRC 65 at para 16.

88. See LRC 65 at para 38.

89. J L R Davis, Consultation.

90. B McDonald, Consultation. See also para 2.68.

91. Draft Model Provisions to Implement the Recommendations of the Inquiry into the Law of Joint and Several Liability (1996).

92. K Tapsell, “Severing Liability in Building Cases” (1998) 36(7) Law Society Journal 42 at 46.

93. See also Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 40.

94. LRC 65 at para 40.

95. Supreme Court Judges, Consultation.

96. See DP 38 para 4.27-4.31; B McDonald, Consultation.

97. LRC 65 at para 47.

98. This would be further complicated by the suggestion that statutory claims arising out of consumer transactions should also be exempted: see Draft Model Provisions to Implement the Recommendations of the Inquiry into the Law of Joint and Several Liability (1996) at 3.

99. LRC 65 at para 42.

100. Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 40.

101. Davis Report at 33.

102. Insurance companies, Consultation.

103. See K Tapsell, “Severing Liability in Building Cases” (1998) 36(7) Law Society Journal 42 at 46.

104. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 29.

105. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.6.

106. See, eg, J Burrows, “Going for Broke” Australian (22 October 1992) at 23; and “Joint and Several Liability: CLA Proposals” (1997) 11(1) Commercial Law Quarterly 21.

107. See J L R Davis, Inquiry Into the Law of Joint and Several Liability: Report of Stage Two (Commonwealth of Australia, 1995) at 11; New South Wales, Attorney General’s Department, Tort Liability in New South Wales (Legislation and Policy Division, Discussion Paper, 1990) at para 4.4.1-4.4.9.

108. See England and Wales, Law Commission, Common Law Team, Feasibility Investigation of Joint and Several Liability (Department of Trade and Industry, HMSO, London, 1996) at para 3.1-3.4. The Common Law Team also noted moves by the accounting profession in Canada: at para 6.10, on which see: Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 7.

109. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.10; University of Alberta, Institute of Law Research and Reform, Contributory Negligence and Concurrent Wrongdoers (Report 31, 1979) at 33; New Zealand, Law Commission, Apportionment of Civil Liability: A Discussion Paper (PP 19, 1992) at para 167; cf para 84-89.

110. See DP 38 at para 2.15-2.16; LRC 65 at para 30-36.

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

112. New South Wales, Attorney General’s Department, Tort Liability in New South Wales (Legislation and Policy Division, Discussion Paper, 1990) at para 3.1-3.2.

113. B K Cutler, Submission at 11. See also National Joint Limitation of Liability Taskforce, Australian Society of CPAs and the Institute of Chartered Accountants in Australia, Submission at 6 and Law Society of NSW, Submission 1 at 6-7.

114. See M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.9; National Joint Limitation of Liability Taskforce, Australian Society of CPAs and the Institute of Chartered Accountants in Australia, Submission at 4-5; and Law Society of NSW, Submission 1 at 6.

115. R Cooter, Consultation.

116. Law firms, Consultation; Accounting bodies, Consultation.

117. Insurance companies, Consultation.

118. Insurance companies, Consultation.

119. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.10.

120. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.10.

121. Para 2.68.

122. See Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 14.

123. Accounting bodies, Consultation.

124. See also C Blyth and B Sharp, “The Rules of Liability and the Economics of Care” (1996) 26 Victoria University of Wellington Law Review 91 at 105; Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 14.

125. Accounting bodies, Consultation.

126. Accounting bodies, Consultation. See also, for example: J Harris “Lawsuit Spree: Claims on Council Cost Us Thousands” Central Western Daily (Orange) (19 August 1998) at 1; S Tucker, “Councils Risk Being Sued” Blacktown Advocate (30 April 1997) at 19; S Osborne and S Tucker, “Councils Not Ready to Take the Risk” Penrith Press (29 April 1997) at 7; S Tucker, “Playing Areas Facing Closure” Manly Daily (22 April 1997) at 1; but cf S Mooney, “Council Opposes Limiting Payouts” Wentworth Courier (12 February 1997) at 13.

127. C Blyth and B Sharp, “The Rules of Liability and the Economics of Care” (1996) 26 Victoria University of Wellington Law Review 91 at 104-105.

128. The Ontario Law Reform Commission, while acknowledging that arguments in this area are theoretical and speculative, suggested that potential deep pocket defendants may, in particular, be motivated to implement optimal safety schemes, even those which might otherwise be considered uneconomic: Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (1988) at 39.

129. LRC 65 at para 29.

130. C Blyth and B Sharp, “The Rules of Liability and the Economics of Care” (1996) 26 Victoria University of Wellington Law Review 91 at 101.

131. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.1.

132. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.6.

133. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.7.

134. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 2.12.

135. Canada, Standing Senate Committee on Banking, Trade and Commerce, Joint and Several Liability and Professional Defendants (Report, 1998) at 57-62.

136. New Zealand, Law Commission, Apportionment of Civil Liability (Report 47, 1998) at para 15.

137. At para 2.18-2.19.

138. M Richardson, Economics of Joint and Several Liability Versus Proportionate Liability (Victorian Attorney-General’s Law Reform Advisory Council, Expert Report 3, 1998) at para 4.1-4.4.

139. England and Wales, Law Commission, Common Law Team, Feasibility Investigation of Joint and Several Liability (Department of Trade and Industry, HMSO, London, 1996) at para 5.10-5.26.