Contents

Chapter 3
The appropriate liability system for multiple defendants

Complexity of proceedings

3.19The complexity of legal proceedings issue arises principally under proportionate liability. Under proportionate liability the plaintiff needs to identify all possible defendants who may have contributed to the loss. Failure to include a potentially liable defendant will result in less than full recovery.49 The incentive for the plaintiff is therefore to include any party who might conceivably have caused loss, no matter how tangential their alleged contribution may have been. Assuming the system allows them to do so, a defendant may also have an incentive to add defendants that the plaintiff has not joined.50

3.20In contrast, under joint and several liability it is not crucial for the plaintiff to identify and sue all possible defendants, since full recovery can be made from any one wrongdoer. Of course the defendants have the opportunity to join third parties in order to lay off some of the cost of the potential liability, or they may bring subsequent proceedings for contribution for the same purpose.

3.21Under either system of liability, the judge is required to deal with the allocation of relative fault between the defendants. However, it is only under proportionate liability that this allocation automatically takes place in the main proceedings.

3.22As was noted in our Issues Paper,51 both systems of liability are likely to lead to some level of complication in legal proceedings since they inevitable involve complex factual situations and multiple defendants. Each system of liability will have their own incentives acting upon the parties. The Australian experience suggests that defendants as well as the plaintiff can face difficult decisions about whether to add another party, whom the plaintiff has not sued.52

3.23Under joint and several liability it is the defendants who normally have the greatest incentive to join third parties in order to share the risk. In contrast, under proportionate liability, the plaintiff has the incentive to join as many defendants as possible, since each of them can only incur liability up to the proportion of their blameworthiness. The best opportunity for the plaintiff to ensure that they will receive full compensation for the loss is to join as many defendants as possible so that no one who has contributed to the loss is missed out. The result in both cases is complex proceedings involving as many parties who have potentially contributed to the loss as possible.

3.24The Australian experience also suggests other sources of complexity, including some that may be temporary and others that could conceivably be avoided by good legislative drafting and a simple, comprehensive scheme. As pointed out above, proportionate liability will not apply in Australia in every case. The question of whether a claim is subject to proportionate liability depends on the particular state legislation that applies. In all cases the key question will be whether the claim is an “apportionable claim”.53 Whatever terminology is used, it will inevitably take several years of litigation to determine its boundaries.
49This is a feature of systems that take account of the liability of “empty chairs”, see the discussion in ch 2 above. Depending on the procedural rules adopted, a plaintiff could still make tactical decisions not to join particular defendants. This would likely require a rule allowing defendants to add other defendants as well – with obvious effects on complexity.
50Again, depending on what the “empty chair” rules are.
51Issues Paper, above n 35, at [6.13].
52Differing rules among states make this area particularly difficult. Greenham, Morrow and Naylor note that in Western Australia, South Australia and Tasmania, courts must have regard to proportionate liability of non-parties. In New South Wales, Australian Capital Territory, Queensland, Northern Territory and the Commonwealth, courts may have regard to non-parties and in Victoria they must not unless the non-party is deceased or insolvent: Philip Greenham, Kate Morrow and Shelley Naylor “Single line accountability! Proportionate liability and joint and several liability” (2011) 6 C L Int 6.
53See for example Civil Liability Act 2002 (NSW), s 34. Cases have traversed, through to the High Court of Australia, as to what falls within the definition of “apportionable claim”. While after 10 years some of the possibilities have been settled (most recently in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10, (2013) 247 CLR 613 on the question of what constitutes the “same damage”), there are likely to be further ingenious arguments from plaintiffs to suggest that their claim is not “apportionable” on one or more grounds, meaning they can still pursue a single deep-pocketed liable defendant for all of their loss.