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What is proportionate liability?

Reading time: 11 mins

Proportionate liability means that a person is only responsible for the part of the loss or damage that they caused. In other words, if someone is proportionally liable, they are not responsible for the part of loss or damage caused by others.

Think of proportionate liability like a cake. If the cake represents all of the loss or damage suffered by the innocent party, only parties found legally liable must contribute to a slice of the cake. The bigger the contribution to the loss, the bigger the slice. But a party cannot be legally responsible for a slice of the cake that represents loss or damage that is caused by someone else.

A plaintiff can only recover from a particular defendant only that part of the loss for which that defendant is personally responsible.

According to proportionate liability law, liability is proportional to the level of legal responsibility.

Author: Farrah Motley, Director of Prosper Law and a commercial contract lawyer.

An overview of proportionate liability

In Australia, the law of proportionate liability is an important part of our Common Law. Several people can be held responsible for the same wrong and proportionate liability says how their liability will be shared. The aim of this article is to provide a brief overview of some aspects of proportionate liability as they apply in Australia today.

Proportionate liability is a legal principle that allows for shared liability. It is a form of several liability, rather than joint and several liability. As opposed to proportionate liability, joint liability means that all the defendants are liable for the full amount of the damages. And this is the case even though they may only be partially responsible. Proportionate liability can also be vicarious or strict.

proportionate liability

Vicarious and proportionate liability

In all State and Territories in Australia, the proportionate liability regime does not affect the liability of a person who is vicariously liable for a proportion of any apportionable claim for which another person is liable.

This sounds like a mouthful. But what it really means is that if you are legally responsible for the unlawful actions of someone else, proportionate liability will not apply.

Strict proportionate liability

It is not well settled at law whether the proportionate liability legislation applies to strict (or absolute) contractual duties. Some case law says that proportionate liability does not apply to absolute contractual duties. On the other hand, some conclude that it will apply provided the Court finds that some carelessness has occurred.

Proportionate liability legislation

Below is a list (with links) to the proportionate liability laws in Australia:

Australia

  • Competition and Consumer Act 2010 (Cth) – Part VIA (CCA)
  • Australian Securities and Investments Commission Act 2001 (Cth) – Part 2, Division 2, Subdivision GA (ASIC Act)
  • Corporations Act 2001 (Cth) – Part 7.10, Division 2A (Corporations Act)

Queensland

New South Wales

Victoria

South Australia

  • Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) – Part 3

Australian Capital Territory

Northern Territory

Western Australia

Tasmania

Proportionate liability and case law

Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALR 529

The High Court of Australia discussed statutory apportionment in Wynbergen v The Hoyts Corporation Pty Ltd (1997) 149 ALR 25. The High Court’s decision demonstrates that contribution between two or more parties may not be assessed at 100% against one and none against the other.

The relevant test was set out by the High Court in Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALR 529. In that case, the High Court said:

proportionate liability

“The making of an apportionment between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man and of the relative importance of the acts of the parties in causing the damage.”

Reid v Amaca Pty Ltd (in Admin) and Seltsam Pty Ltd [2020] VSC 276

Reid sued the manufacturers of asbestos products, Amaca and Seltsam. He therefore claimed damages for malignant mesothelioma caused by asbestos exposure. The exposure occurred during the construction of his home from 1975 to 1976. Reid later settled with each of Amaca and Seltsam for a total sum of $1.4 million plus his legal costs.

Amaca commenced proceedings against Seltsam claiming contribution under Pt IV of the Wrongs Act 1958 (Vic) (“the Wrongs Act”). Amaca claimed statutory contribution from Seltsam towards the damages that it was required to pay Reid.

Section 23B(1) of the Wrongs Act permits a wrongdoer to recover contribution from any other person who is also a wrongdoer.

The parties agreed that in order to show that Reid would have succeeded against Seltsam, Amaca needed to show that:

  • it was probable that Reid inhaled dust liberated from Seltsam products
  • Seltsam owed a relevant duty of care to Reid
  • Seltsam breached its duty of care which it owed to Reid
  • Seltsam’s breach was a cause of Reid’s mesothelioma

The Court found that Reid’s mesothelioma was caused by exposure to asbestos sheeting, through inhalation of dust and fibres. Seltsam product was found to be used in the construction of the house. It was also proven that Reid inhaled asbestos dust and fibre liberated from Seltsam products and Amaca products.

Reid’s exposure to Seltsam products was of more relative importance in causing the mesothelioma. Therefore, Seltsam was ordered to contribute 70% towards Reid’s damages (and 30% from Amaca).

Ingrid Stephenson v Parkes Shire Council [2015] NSWSC 719

A helicopter crashed after it clipped overhead power lines and killed all three occupants. The Supreme Court of New South Wales apportioned liability as between the aviation company, the employer and the controller of the power lines.

In early 2006, Parkes Shire Council engaged South West Helicopters to undertake an aerial survey. The purpose of the survey was to determine the presence of noxious weeds. On 2 February 2006, a helicopter departed from the Parkes aerodrome to conduct the survey.

Country Connection Airlines owned the helicopter which was being operated by South West who held the relevant licence. On board were the pilot, Thrupp, who was an employee of South West. There was also Ian Stephenson and Malcolm Buerckner. Both Stephenson and Buerckner were employed by the Council.

Mr Stephenson was a noxious weed officer. At approximately 9.30am that day, the helicopter was in the vicinity of an area known as “The Dungeons”. The helicopter struck an overhead power line which was the property of Essential Energy (EE). Upon striking the power line, the helicopter exploded and crashed into a valley, killing all three persons on board.

As a result of the incident, numerous proceedings were instituted against the Council and South West. The widow of the late Buerckner brought proceedings that were later settled out of court.

What the Court held

In December 2014, the Court found that the Council owed a non-delegable duty of care to its employees, including Stephenson. And it found that the Council had breached that duty of care by failing to impose a flight threshold. This was found to have caused the accident. The Council was also found to have owed and breached its duty of care to South West.

South West owed a duty to its passengers including Stephenson and a failure of the chief pilot to conduct a proper briefing with the pilot, Thrupp, was a breach of duty and was a cause of the accident. It was also found that EE owed a duty of care to aircraft owners, including South West, and to passengers, including Stephenson. It breached its duty of care by failing to mark the power lines which was a cause of the accident.

proportionate liability
  • As to apportionment, there were many failures on the part of the Council. They had failed to:
  • ascertain the height threshold for the flight
  • impose a threshold by giving a direction to the pilot
  • conduct a risk assessment
  • access data held by the Council as to the presence of overhead wires in the area of the aerial survey undertaken

Such failures were substantial.

Further, no risk assessment was carried out by South West when it must have known of the risk of a wire strike.

Thrupp was found to have acted dangerously in flying as he did and there was no need for him to do so.

Although the failures of the Council were significant, the Council was entitled to rely upon the experience of South West with the ultimate control of the flight conditions resting with South West. And, the wire struck by the helicopter was difficult to detect and EE could have marked the wire in some way which would have made it more visible. However, EE’s failure to do so was “of less causal potency than the acts and omissions of either the Council or South West”. Therefore, the Court apportioned liability for the accident as against South West at 70%, the Council at 20% and EE at 10%.

South West successfully appealed the primary judge’s findings. The court found that the primary judge made a mistake and that the claims were excluded by s 35(2) of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (the CACL Act). Because of this, they should have been dismissed.

The findings of the High Court

The Council appealed to the High Court of Australia: [2019] HCA 14. The sole issue on appeal was whether a claim under torts for damages for negligently inflicted psychiatric harm consequent upon the death of a passenger during air carriage to which Pt IV of the CACL Act applies is precluded by that Act.

The Stephensons were entitled to claim damages from South West pursuant to s 28 of the CACL Act. That entitlement was, by reason of s 35(2), exclusive of their entitlement to claim damages for negligence under the law of tort. There is no reason to seek to read down s 35(2). It wasn’t required in order to enable the Stephensons to make a claim in respect of Stephenson’s death. In this regard, s 35 did not deny their claims; the Stephensons each had a claim under the CACL Act. By dispensing with the need to prove negligence on the part of South West, s 35(2) facilitated the prosecution of those claims. An integral aspect of the scheme was, however, that s 34 limited the temporal availability of those claims.

Contracting out of proportionate liability legislation

Contracting out means that parties to a contract agree that the proportionate liability laws will not apply to their agreement. Parties can also agree to indemnify (or ‘reimburse’) one another on a basis that is different to the proportionate liability laws. In order to contract out of the proportionate liability regime, parties are required to allocate liability under the contract between them in a way that is inconsistent with proportionate liability.

Anyone who chooses to contract out of proportionate liability legislation must take care to read their insurance policy. This is because some insurance policies will not cover an insured for loss that it did not cause.

Because of this, an insured that chooses to contract out of proportionate liability legislation may later find themselves facing insurance coverage issues. This is because it waives the insurer’s right to seek recovery from someone else who may have caused or contributed to the loss.

How can Prosper Law help?

Prosper Law is Australia’s online law firm. We provide legal advice to businesses and individuals across Australia. Our areas of legal practice include contracts, eCommerce, publishing, legal counsel and employment law.

If you need to talk to commercial contracts lawyer, get in touch today.

Contact the team at Prosper Law today to discuss how we can provide you with commercial legal advice for a fixed fee or at affordable hourly rates.

Want to get to know Prosper Law better? Check out our About page.

About the Author

Farrah Motley
Director of Prosper Law. Farrah founded Prosper online law firm in 2021. She wanted to create a better way of doing legal work and a better experience for customers of legal services.

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