When will proportionate liability apply?



Proportionate liability will generally not be available concerning claims for personal injury, under statutory causes of action, (such as workers' compensation claims), or claims involving fraud.

Broadly speaking, proportionate liability will apply to claims for monetary compensation, economic loss or damage to property, in an action for damages, arising from a failure to take reasonable care. These are said to be 'apportionable claims'.

Proportionate liability may apply to any claim on a contract for services, as there is implied by operation of law into every contract for services, an obligation on the service provider to exercise reasonable care.

Rarely will it be in the interests of a claimant to bring a claim under a proportionate liability regime.

At the time of publication, there is uncertainty as to when it can be said that a claim arises from a failure to take reasonable care so as to engage proportionate liability. The possibilities include:

  • when a claim is framed as a breach of an obligation to exercise reasonable care; or
  • when a claim, as a matter of fact, arises from a failure to take reasonable care.

In some states, if a claimant wishes to avoid engaging proportionate liability, it should not frame its case in negligence or allege a breach of an obligation to exercise reasonable care.

CASE STUDY



Keith Woods v Rodney Mario De Gabriele and Others

[2007] VSC 177



Facts


Woods was one of many people who lost money through the collapse of the Westpoint Group of companies and he sued his financial advisers.
His financial advisers sought to join other parties, including a company in liquidation, to reduce their liability.
Woods then sought to amend his claim so that it would not rely upon a breach of the term that his advisers exercise reasonable care. Instead, he wished to rely upon the breach of statutory causes of action that did not engage the proportionate liability regimes.


Result


  • The court said that Woods' attempt to amend his claim was a blatant attempt to avoid the proportionate liability regimes.
  • The court said that a claim should be regarded as apportionable if the facts on which the claim was based included allegations of a failure to exercise reasonable care, no matter what legal tag the lawyers applied to the claim.


How is the apportionment of responsibility assessed?



In assessing the responsibility of a defendant under the Commonwealth, NSW, NT and Queensland regimes, courts may look to the proportionate responsibility of defendants who have not been joined to the litigation.

In Western Australia, Tasmania and South Australia, courts must look to the proportionate responsibility of defendants who are not joined.

In Victoria, courts may only look to the proportionate responsibility of a party who has not been joined if that party is dead, or is a company which has been wound up.

Under the Commonwealth regime and in most states, once litigation has commenced, a defendant is under a duty to inform a claimant of the identity of other persons who may be responsible for the claim, and the circumstances of that responsibility.


Differences between the various regimes



Some of the differences between the operation of the regimes are shown below:

Issue
Cth
NSW
Qld
NT
Commencement
Claim arises after 26 July 2004
Claim arises after 26 July 2004 and action commenced after 1 December 2004
Action commenced after 10 March 2005
Where loss or damage occurs partly or wholly after 1 June 2005
Contract out?
No
(silent)

Yes
No
No (but only as between the plaintiff and defendant)
Apportionment of loss to absent wrongdoer?
Court may
Court may
Court may
Court may
Is the defendant encouraged/obliged to inform plaintiff of identity of other wrongdoers?
Yes
(encouraged)

Yes
(encouraged)

Yes
(obliged)

Yes
(encouraged)


Issue
Vic
WA
SA
Commencement
Action commenced after 1 January 2004
Claim arises after 1 December 2004
Claim arises after 1 October 2005
Contract out?
No
(silent)

Yes
No
(silent)

Apportionment of loss to absent wrongdoer?
No
(except when dead or corporation wound up)

Court must
Court must
Is the defendant encouraged/obliged to inform plaintiff of identity of other wrongdoers?
No
Yes
(encouraged)

Yes
(obliged)


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