Proportionate Liability Regime: NSW Supreme Court clarifies how to properly identify potential concurrent wrongdoers

Key Points:

  • In 2004, the NSW government introduced a proportionate liability regime in the Civil Liability Act 2002, which fundamentally changed the way in which contribution between defendants for damages was determined. 
  • The proportionate liability regime effectively reverses the risk of an insolvent defendant from co-defendants to the plaintiff for certain types of claims.
  • There has been a great number of cases which consider the proportionate liability claim, but the NSW Supreme Court has now answered whether a defendant must specifically name potential concurrent wrongdoers, or simply make reference to a potential class of defendants.

Since the introduction of the proportionate liability regime in the Civil Liability Act 2002 (NSW) over 15 years ago, there has been a series of cases which have contributed to how the regime operates, including in the High Court of Australia decision of Hunt & Hunt Lawyers v Mitchell Nominees [2013] HCA 10.

The intention of the proportionate liability regime was to transfer the risk of an insolvent defendant from co-defendants to the plaintiff for certain types of claims. This replaced the previous common law position of joint liability in such matters.

Under this regime, a defendant will only be liable for the percentage to which it caused or contributed to the plaintiff’s damages, rather than being required to seek contribution from potential concurrent wrongdoers.

It would then be a matter for the plaintiff to take the risk of not joining them as defendants and suffering a reduction in damages, or to join the potential concurrent wrongdoers as defendants and open themselves up to cost consequences, should they lose.

However, one question on which there was little commentary on was whether a defendant must specifically identify a potential concurrent wrongdoer, or whether it is sufficient for a defendant to identify a class or group of potential defendants, and transfer the risk to the plaintiff to join some, all, or none of them.

In the recent decision of GC Group Company Pty Ltd v Bingo Holdings Pty Ltd (No 3) [2021] NSWSC 252, the Supreme Court of New South Wales has now commented on that issue.

In the case, the plaintiff (GC Group) commenced proceedings against the defendant (Bingo) seeking damages for contaminated recycled aggregate allegedly supplied by Bingo. As a result of the allegedly contaminated aggregate, GC Group claimed that it was required to perform substantial reconstruction works at its own cost and suffered loss and damage as a result.

However, Bingo sought leave of the Supreme Court to amend its Technology and Construction List Response to plead the proportionate liability provisions of the CLA, and as a result, identified some 700 customers or vehicles that delivered waste to Bingo which may have caused the alleged contamination in the recycled aggregate.

GC Group opposed leave being granted, arguing that Bingo was required to identify a particular person or persons as concurrent wrongdoers. It argued that if Bingo was correct, and the persons within the class of potential wrongdoers could not be identified, then it was left without any redress against them.

On the other hand, the Court identified that if Bingo was not correct it was potentially exposed to a claim to compensate GC Group, notwithstanding that Bingo did not contaminate the aggregate it supplied.

In resolving this issue, Stevenson J found in favour of GC Group and stated at [45] that the proportionate liability regime requires “a defendant who seeks to invoke s.35(1) to limit its liability for the alleged damage by reference to the asserted responsibility of another person, to identify that other concurrent wrongdoer to the plaintiff with sufficient particularity to enable the plaintiff, if so advised, to join that party as a defendant”. 

This finding is consistent with recent Court of Appeal authority to the effect that a defendant must also show that a plaintiff would have a cause of action against the parties named as concurrent wrongdoers in Trajkovski v Simpson [2019] NSWCA 52.

Lessons

Although the proportionate liability regime can be a powerful weapon for defendants, it is not a get out of gaol free card and defendants still have some work to do in order to obtain the full benefits.

This will require a careful examination of all circumstances in a claim, proactively identifying potential concurrent wrongdoers, and providing proper notice of those parties and how they might be liable to the plaintiff.

Hicksons are experts in all manner of civil, commercial, insurance and construction disputes where proportionate liability issues can regularly arise. We can assist with any issues, such as the above, which are affecting you or your business.

Post by Hicksons Partner, Lachlan Wilson.

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