Proportionate liability – What is it? Why does it need fixing?

Nov 25, 2022 | Publication | 0 comments

In simple terms, proportionate liability is a system which limits some types of civil liability.

By way of illustration, if a manufacturer and a distributor are both responsible for faulty software, a system of proportionate liability might limit each of the manufacturer and distributor’s liability to an amount reflecting that proportion of the damage or loss claimed that is each of the manufacturer and distributor’s respective responsibility.

A court might find that the manufacturer is 70% responsible (and therefore liable for 70% of the damages) and the distributor is 30% responsible (and therefore liable for 30% of the damages).

Essentially, if a wronged party brings a claim which is covered by a proportionate liability regime, the court must consider what proportionate responsibility should be applied to each defendant.

Another type of system which proportionate liability has essentially replaced for some types of claims is the ‘joint and several liability’ system.

Applying the earlier example, the ‘joint and several liability’ system might make the manufacturer 100% responsible for the damages even though his negligence only caused 90% of the damages.  In other words, a joint and several liability may enable a plaintiff to recover all of the damages from any of the defendants regardless of their individual share of responsibility.

Proportionate liability regimes only apply to some types of civil claims.  For instance, claims relating to personal injury damages and intentional acts are generally not covered by proportionate liability regimes.

Parliaments across Australia rushed into law proportionate liability regimes in the early to mid 2000s.

There are numerous problems with proportionate liability regimes.

At a basic level, there is a lack of uniformity in the various jurisdictions across Australia.

There are also ambiguities in the various legislation which has caused unnecessary litigation.

Even more importantly however, proportionate liability regimes are fundamentally unfair.  In general terms, plaintiffs face greater costs and risks as a result of proportionate liability.  A diminished ability to provide just compensation for tortious, and to a lesser extent, contractual wrongs, results from proportionate liability systems.

Under proportionate liability regimes, plaintiffs bear the risk of impecunious concurrent wrongdoers.  Plaintiffs also bear the risk of not succeeding against concurrent wrongdoers.  It is also argued that proportionate liability regimes add to the cost and uncertainty of litigation.

Given the varying interests at play, and the practical difficulties of harnessing a uniform nationwide approach, there are many potential stumbling blocks to achieving reform.  Draft model provisions relating to proportionate liability were circulated in September 2011, and later revised in September 2013.  It seems that the momentum for reform has diminished.  Even if adopted, the model provisions do not address the injustices in the proportionate liability regimes across Australia which work against the interests of plaintiffs, without proper regard to the dictates of adequate compensation.

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. If you do not wish to receive newsletters from us, please let us know.

Latest Insights

5 Ways A Director Can Be Sued

Directors can be sued for all sorts of reasons.  Here are 5 of them. Reason #1: Insolvent Trading A director can be sued if the company he or she is a director of trades whilst insolvent.  A director has a duty to prevent the company trading and incurring...

7 Ways to Enforce a Judgment

After a judgment is obtained for an amount of money, there are numerous options open to a judgment creditor in relation to how to enforce the judgment (i.e. how to obtain the money which is owed pursuant to the judgment). Option #1: Issue a Bankruptcy Notice If the...

Who Can Bring a Compensation to Relatives Claim?

In the unfortunate event of a loved one's passing due to negligence or wrongful act, the Compensation to Relatives Act 1897 in New South Wales outlines the parameters for pursuing compensation on behalf of the deceased. Understanding who has the legal standing to...

10 Myths of Being Sued

If you or your business are sued, there are many myths about how the legal process will pan out.  Here are 10 myths about the legal process – all are incorrect. Myth #1: The matter will definitely go to a hearing Most matters settle before a Judge decides...

How can my business sue someone to recover money?

Lawyers are often asked about the process of recovering money owed as a result of, for instance, a failure to pay for goods or services or a breach of contract. Normally a business (or an individual) will issue a letter of demand as a precursor to suing someone to...