Concurrent Wrongdoers – the Plaintiff/Claimant has the risk of an insolvent wrongdoer

16/04/2018

The Civil Liability Act 2002 (the Act) in New South Wales creates the concept of concurrent wrongdoers who may have several liability for a Plaintiff’s loss in certain circumstances.  It is critical to ascertain whether the concept of a concurrent wrongdoer under the Act is applicable in your case and how it is to be managed by each of the parties to the dispute. 

Prior to the Act the previous position was that the Defendants were held jointly and severally liable for the loss suffered by the Plaintiff due to the negligent acts or omissions of numerous Defendants.  The effect of this was that a Plaintiff could recover from any of the Defendants the full amount of the total loss/Judgment and the Defendants were left to make claims between the Defendants to determine the respective contributions payable by each of the Defendants.

If one of the Defendants was impecunious then the solvent Defendant(s) bore the cost of that impecunious Defendant.

Since the introduction of the Act and the concurrent wrongdoer concept referred to, now the Plaintiff in the appropriate circumstances will not recover the full amount of his or her loss from the Defendant who has the assets to pay but rather the amount recoverable against the named Defendant(s) is set at an amount proportionate to the particular Defendant(s) responsibility for the loss of a Plaintiff.

In those circumstances if one of the Defendants is unable to pay its share of the claim the Plaintiff is out of pocket.

It is critical to properly consider the Plaintiff’s claim and the Defendant’s position in cases where there is more than one wrongdoer who is responsible for the loss.

The concurrent wrongdoer concept is a scheme established to reduce the liability of the specific Defendant(s) where those Defendant(s) are only partially responsible for the loss of the Plaintiff.

The Act applies to an “apportionable claim” as defined under the Act.  An “apportionable claim” is a claim for economic loss or damage to property in an action for damages arising from:

1. Failure to take reasonable care (but does not include a claim for personal injury); and
2. Specific claims under the Fair Trading Act or the Australian Consumer Law (NSW).

The Act does not apply in relation to an action or damage arising from a breach of Statutory Warranty under the Home Building Act brought by a person having the benefit of the statutory warranty.

Under the Act the concurrent wrongdoers must each have caused the “damage or loss” that is the subject of the claim.  This was pointed out by the majority of the High Court Justices in the case of Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Limited [2013] HCA10 who were considering the decision of the New South Wales Court of Appeal in that case.

In the Hunt & Hunt case Messrs Caradonna & Flamnia forged the signature of Mr Alessia Vella’s and used the Certificates of Title to a number of properties, to secure loans which were to be provided and subsequently were provided by the Respondent Mitchell Morgan.  Mitchell Morgan would not have entered into the Loan Agreement nor advanced the funds but for this fraud.

Hunt & Hunt prepared the Mortgage documents on behalf of Mitchell Morgan which were to secure money owed by Mr Vella to Mitchell Morgan.  The difficulty was that as Mr Vella was the victim of a fraud he was not liable to pay Mitchell Morgan and effectively there was no money secured by the Mortgage.

Hunt & Hunt were negligent in the drafting of the Mortgage.

The New South Wales Court of Appeal concluded that the loss fell within two categories.  The first was the loss due to the failure by Messrs Caradonna & Flamnia.  Secondly namely the loss caused by Hunt & Hunt in not having security for the money paid out.  The minority in the High Court supported the findings of the New South Wales Court of Appeal. 

A Defendant to a claim needs to consider whether the claim is appropriately subject to the concurrent wrongdoer concepts provided for by the Civil Liability Act 2002, and are all the concurrent wrongdoers named as a Defendant(s).  Appropriate action is required to be taken by the Defendants in nominating those concurrent wrongdoers in particular one that is not named as a Defendant.

Thereafter the Plaintiff would have to consider whether the Plaintiff would seek to join the claimed “wrongdoer” to the proceedings.

There are many matters for consideration at this stage.  The Plaintiff would need to properly consider the risks associated with either joining another Defendant or not joining another Defendant.  There are significant risks as to the outcome of the proceedings, recoverability and costs of joining another Defendant or choosing not to join another Defendant.

In some cases a person as Plaintiff bringing a claim, can consider drafting a claim against a particular Defendant utilising causes of actions to which the concurrent wrongdoers provisions do not apply.  It is critical where a possible concurrent wrongdoer is impecunious.

In some circumstances it is possible for a party to contract out of the civil liability scheme.  This will need to be considered at the time of documenting the arrangements between the parties.

If you have a circumstances where an issue may arise in relation to a claim against a concurrent wrongdoer or you have any queries regarding the onus of a concurrent wrongdoer in potential proceedings please contact the experienced Lawyers at Watson & Watson by contacting Richard Watson, accredited specialist commercial litigation or his Personal Assistant Shereen DaGloria to discuss this important matter.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.