LAW REFORM (CONTRIBUTORY NEGLIGENCE AND APPORTIONMENT OF LIABILITY) (PROPORTIONATE LIABILITY) AMENDMENT BILL 2005

Part 2—Amendment of Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001

4—Insertion of Part heading

Before section 1 insert:

Part 1—Preliminary

5—Amendment of section 3—Interpretation

(1) Section 3—before the definition of claimant insert:

apportionable liability —see subsection (2);

(2) Section 3—After the definition of damages insert:

defendant includes a third party (that is, the defendant to a third-party claim);

(3) Section 3, definition of derivative liability—delete the definition and substitute:

derivative liability means—

(a) a vicarious liability (including a partner's liability for the act or omission of another member of the partnership); or

(b) a liability of a person who is subject to a non-delegable duty of care for the act or omission of another that places the person in breach of the non-delegable duty; or

(c) if an insurer or indemnifier is directly liable to a person who has suffered harm for the act or omission of a person who is insured or indemnified against the risk of causing the harm—the liability of the insurer or indemnifier; or

(d) a liability as nominal defendant under a statutory scheme of third-party motor vehicle insurance;

(4) Section 3—delete the definition of fault;

(5) Section 3—before the definition of harm insert:

group—a group consists of a person who is directly liable for a particular act or omission and the person or persons (if any) who have a derivative liability for the person's act or omission;

(6) Section 3—after the definition of harm insert:

innocent—wrongdoing is innocent if the wrongdoer whose act or omission actually caused the harm neither intended to cause harm nor was negligent in causing harm;

negligent wrongdoing means—

(a) a breach of a duty of care that arises under the law of torts; or

(b) a breach of a contractual duty of care; or

(c) a breach of a statutory duty of care that is actionable in damages or innocent wrongdoing that gives rise to a statutory right to damages;

notional damages—a plaintiff's notional damages is the amount of the damages (excluding exemplary damages) to which the plaintiff is, or would be, entitled assuming—

(a) no contributory negligence; and

(b) the defendant were fully liable for the plaintiff's harm and were not entitled to limitation of liability under—

(i) this Act; or

(ii) any other Act that limits the liability of defendants of a particular class (as distinct from one that imposes a general limitation of liability); or

(iii) a contract;

(7) Section 3, definition of relevant statutory duty of care—delete the definition and substitute:

special limitation of liability means a limitation of liability to which a defendant is entitled under—

(a) an Act (other than this Act) that limits the liability of defendants of a particular class (as distinct from one that imposes a general limitation of liability); or

(b) a contract;

wrongdoer means—

(a) a person who commits an act, or makes an omission, that causes or contributes to harm (including a person whose act or omission contributes to his or her own harm); or

(b) a person who has a derivative liability for harm resulting from the act or omission of someone else;

Note—

A person may be considered a wrongdoer even though the person—

• has died; or

• has been wound up or has ceased to exist; or

• has become insolvent; or

• cannot be found.

wrongdoing means an act or omission that causes or contributes to harm (including such an act or omission on the part of the person who suffers the harm); and a reference to the wrongdoing of a wrongdoer (or a defendant) is to be understood as a reference to wrongdoing for which that person is directly liable or for which that person has a derivative liability.

(8) Section 3—after the contents of section 3 as amended by this section (now to be designated as subsection (1)) insert:

(2) A liability is an apportionable liability if the following conditions are satisfied:

(a) the liability is a liability for harm (but not derivative harm) consisting of—

(i) economic loss (but not economic loss consequent on personal injury); or

(ii) loss of, or damage to, property;

(b) 2 or more wrongdoers (who were not acting jointly) committed wrongdoing from which the harm arose;

Example—

A , who acts with intention to defraud, prepares a false and deceptive statement. B, who is not aware of the fraud, negligently publishes the statement to C, who relies on it and suffers financial loss in consequence. C brings an action against A and B under section 56 of the Fair Trading Act 1987. In this case, B's liability is an apportionable liability but A's is not.

(3) A liability to pay exemplary damages is not however to be regarded as an apportionable liability.

6—Amendment of section 4—Application of Act

Section 4(2)—after paragraph (b) insert:

7—Amendment, redesignation and relocation of section 5—Judgment does not bar an action against person who is also liable for the same harm

(1) Section 5(4)—delete subsection (4) and substitute:

(4) The relevant amount is—

(a) in a case that does not involve apportionable liability—the amount of damages awarded in the judgment first given (or, if that amount is varied on appeal, the amount as varied);

(b) in a case involving apportionable liability—the amount fixed in the judgment first given as the plaintiff's notional damages¹ (or, if that amount is varied on appeal, the amount as varied).

1 See section 8.

(2) Section 5—redesignate the section as amended by this section as section 12 and relocate it so that it follows the heading to Part 4—General provision (see section 11 of this Act).

8—Insertion of Part heading

Before section 6 insert:

Part 2—Concurrent liability and contributory negligence

9—Right to contribution

(1) Section 6(2)—After "but is subject to" insert "Part 3 and"

(2) Section 6(3)(a)—After "third party proceedings" insert ", or proceedings between the parties,"

10—Amendment of section 7—Apportionment of liability in cases where the person who suffers primary harm is at fault

Section 7(2)—delete "another's fault" and substitute:

another's negligent wrongdoing

11—Substitution of sections 8 and 9

Sections 8 and 9—delete the sections and substitute:

Part 3—Apportionable liability

8—Limitation of defendant's liability in cases of apportionable liability

(1) If a defendant's liability on a claim for damages is apportionable, the liability is limited under this section.

(2) If the limitation applies, the defendant's liability is limited to a percentage of the plaintiff's notional damages that is fair and equitable having regard to—

(a) the extent of the defendant's responsibility for the harm; and

(b) the extent of the responsibility of other wrongdoers (including wrongdoers who are not party to the proceedings) whose acts or omissions caused or contributed to the harm.

(3) For the purpose of subsection (2)—

(a) 2 or more wrongdoers who are members of the same group are to be treated as a single wrongdoer; and

(b) if the plaintiff was guilty of contributory negligence, that contributory negligence will be brought into account as wrongdoing and a percentage assigned to it; and

(c) if 2 or more wrongdoers are each entitled to the benefit of a limitation of liability under this section (for some reason other than that they are members of the same group), the aggregate percentage assigned to them cannot exceed—

(i) if there is no contributory negligence on the plaintiff's part—100%; or

(ii) if there is contributory negligence on the plaintiff's part—100% less a percentage representing the extent of the plaintiff's responsibility for his or her harm.

(4) In a case involving apportionable liability, the court must proceed as follows:

(a) the court first determines the plaintiff's notional damages;

(b) the court gives judgment against any defendant whose liability is not subject to limitation under this section for damages calculated without regard to this Part;

(c) the court determines, in relation to each defendant whose liability is limited under this section, a proportion of the plaintiff's notional damages equivalent to the percentage representing the extent of that defendant's liability;

(d) the court then gives judgment against each such defendant based on the assessment made under paragraph (c) (but in doing so must give effect to any special limitation of liability to which any of them may be entitled).

Example—

A Ltd (which runs a forestry business) has engaged B (an independent contractor) to protect its forest from fire. C (an arsonist) sets the forest on fire. B is negligent in failing to detect and stop C's malicious act. A Ltd sues B and C for damages. In this case, B would be entitled to a limitation of liability under this section but C would not. In working out the amounts for which judgment should be given, the court would determine first the amount of damages necessary to cover the damage caused by the fire. Judgment for that amount would be given against C. In determining the amount for which judgment should be given against B, responsibility for the damage would be divided between B and C on essentially the same basis as would formerly have been applicable to an action for contribution between them. Judgment would be given against B for an amount reflecting the proportionate responsibility assigned to B on that basis.

(5) The plaintiff is not entitled to recover, by way of damages under the judgment, more than the amount fixed as the plaintiff's notional damages.

Example—

Suppose that A has suffered a loss of $1 000 for which B, C and D are liable. The liability of B and C is limited to 20% and 30% respectively, but D's liability is not limited. Judgment is therefore given against B for $200, against C for $300 and against D for $1 000. In this case, the court would fix $1 000 as the plaintiff's notional damages—thus limiting the damages that the plaintiff is entitled to recover under the judgment to that amount. If A proceeded first to recover in full against B and C, recovery against D would be limited to $500. Conversely, recovery in full against D would preclude recovery against B and C. But rights of contribution may arise—see section 9.

(6) However, this section does not affect the award of exemplary damages and, if such damages are awarded, they may be recovered in the ordinary way from a defendant against whom they were awarded.

9—Contribution

In a case in which the liability of one or more wrongdoers is limited under this Part, the provisions of Part 2 regarding contribution apply but subject to the following qualifications:

(a) no order for contribution between wrongdoers whose liability is limited may be made;

Exception—

Contribution will be allowed between wrongdoers who are members of the same group, in respect of the liability of the group, in the same way (and subject to the same exceptions) as apply under Part 2.

(b) no order for contribution may be made in favour of a wrongdoer whose liability is limited against a wrongdoer whose liability is not limited;

(c) no order for contribution may be made in favour of a wrongdoer whose liability is not limited (A) against a wrongdoer (B) whose liability is limited unless A has fully satisfied the judgment debt, and, if such an order is made, the amount of contribution awarded against B cannot exceed the amount of B's liability for damages under the judgment.

10—Procedural provision

(1) If a defendant entitled to a limitation of liability under this Part has reasonable grounds to believe that a person who is not a party to the action may be liable on the plaintiff's claim, the defendant must provide the plaintiff with information that is in the defendant's possession, or reasonably available to the defendant (and not equally available to the plaintiff), about—

(a) the other person's identity and whereabouts; and

(b) the circumstances giving rise to the other person's liability.

(2) If a defendant fails to comply with its obligation under this section, a court may order the defendant to pay costs incurred in proceedings that could have been avoided if the obligation had been carried out.

(3) A court may order that costs payable under this section be assessed on the basis of an indemnity.

11—Separate proceedings

If a plaintiff brings separate actions for the same harm against wrongdoers who are entitled to a limitation of liability under this Part, the judgment first given (or that judgment as varied on appeal) determines for the purpose of all other actions—

(a) the amount of the plaintiff's notional damages; and

(b) the proportionate liability of each wrongdoer who was a party to the action in which the judgment was given; and

Part 4—General provision

12—Transitional provision

(1) The Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (the principal Act) and the amendments made to the principal Act by this Act are intended to apply only prospectively.

(2) It follows that—

(a) the law of the State, as in force before the commencement of the principal Act, applies to a cause of action that arose before its commencement; and

(b) a cause of action that arose after the commencement of the principal Act but before the commencement of Part 3 of this Act is unaffected by that Part.

South Australian Bills

LAW REFORM (CONTRIBUTORY NEGLIGENCE AND APPORTIONMENT OF LIABILITY) (PROPORTIONATE LIABILITY) AMENDMENT BILL 2005