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Proportionate liability – what does it mean?

Richard Faulks

26 Nov 2019

Topics

  • Building & Construction
  • Business Law
  • Commercial Disputes
  • Dispute Resolution
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There are many cases where a person is wronged because of a breach of contract or breach of duty of care and suffers financial loss. In this article, Richard Faulks discusses how proportionate liability applies to this situation.

The law

The law has provisions that deal with such liabilities, and in most cases where there is more than one person who is responsible for the loss, the court limits a person’s liability to reflect how involved they were in the wrongdoing. However, a recent case in the ACT has shown that, where the Building Act applies, it may result in the usual laws regarding proportionate liability not applying to the situation, and one party can be held responsible for the total loss caused.

Proportionate liability in the ACT

Civil claims for loss in the ACT are governed by the Civil Law (Wrongs) Act 2002 (‘Act’). For the purpose of these comments, I am adopting the wording used in Act.

In that legislation, there are provisions dealing with circumstances where there is more than one wrongdoer in causing a loss to another person. The provisions of the Act provide that:

  • where there is more than one wrongdoer involved, the liability of any one defendant is limited to an amount reflecting the proportion of loss or damage caused by that defendant
  • the court, in making that assessment, must have regard to the responsibility for the loss of that particular wrongdoer
  • the court can only give judgment against the defendant for that apportioned amount.

Hyblewski v Bellerive Homes Pty Ltd

In the recent case of Hyblewski v Bellerive Homes Pty Ltd, a homeowner brought court proceedings against the builder and certifier of the residential property for defective building work. The claim related to various defects in the property purchased by the plaintiff, including:

  • failure to install a moisture barrier in connection with concrete slabs
  • poor quality brickwork
  • installation of a party wall that should have been two separate walls
  • failure to install nib walls (bricked and tiled wall between vanity and shower) in accordance with plans.

Findings

During the course of the matter, the homeowner settled their claim against the builder but the claim against the certifier proceeded to a court hearing. Ultimately, the court rejected the arguments by the certifier and found in favour of the homeowner. The findings of the judge included:

  • that, if the certifier had acted with reasonable care and skill and carried out his duties under the relevant legislation, the defects would not have occurred
  • the breaches by the certifier caused the relevant losses to the homeowner
  • the wording of the Building Act, which applied to this case, meant that, in circumstances where there was only judgment against one defendant, the proportionate liability provisions under the Civil Law (Wrongs) Act did not apply.

Judgment was entered for the full amount of the loss against the certifier notwithstanding that a settlement had previously been reached with the builder.

Significance

This case should be a warning to those involved in building disputes of a similar nature that where settlement is reached with one defendant, it may have wide-reaching consequences in terms of the other defendant if that second defendant is found liable for the loss.

How can we help?

If you’d like to find out more about proportional liability, particularly in the context of the business and construction industry, contact our Commercial Disputes team on 02 6285 8000 or by email.

*The content of this article is provided for information purposes only, and we do not accept any liability for reliance upon the information contained in this article.  This information cannot be relied upon as legal advice.