Presentation Transcript

1. Multiple Causes of Loss and Claims for Contribution

   Stephen Todd Professor of Law, University of Canterbury Professor of Common Law, University of Nottingham
2. Contribution between tortfeasors Law Reform Act 1936, s 17(1)(c) Where damage is suffered by any person as a result of a tort (whether a crime or not) – (c) Any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise
3. Marlborough DC v Altimarloch Joint Venture Ltd (SC, 2012) Purchasers of land were misled about the water permits for the land by (i) the vendors’ real estate agents (ii) the vendors’ solicitors (iii) the council in issuing the LIM
4. Marlborough DC v Altimarloch Joint Venture Ltd (SC, 2012) The vendors were liable to the purchasers for their agents’ misrepresentations pursuant to s 6 of the Contractual Remedies Act 1979 The council owed a duty of care to the purchasers pursuant to the decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) The vendors sought a contribution from the council towards the damages they had to pay to the purchasers
5. Marlborough DC v Altimarloch Joint Venture Ltd (SC, 2012) Issues What was the measure of damages payable by the vendors under s 6 CRA 1979? What was the measure of damages payable by the council for a negligent misstatement? What was the cause of the purchasers’ loss? Could a party in breach of contract seek a contribution in equity from a tortfeasor? Were the vendors and the council liable in respect of the same damage?
6. The measure of damages in contract Damages in contract may be awarded to achieve performance, by compensating the plaintiff for loss of the bargain This loss may be measured in different ways – by the difference in value between what was promised and what was supplied, and by the cost of curing the breach
7. The measure of damages in contract Thedamages payable by the vendors based on difference in value were $400,000 – the difference in the value of the property with and without the water rights. But damages based on the cost of putting right the breach were $1,055,907 - the cost of buying extra rights and of building a dam to make up for the water shortfall By a 3-2 majority the SC awarded the latter sum
8. The measure of damages in tort Tort damages seek to restore the plaintiff to the position he or she would have been in had the tort not been committed. So the measure of damages in the claim against the council was not performance based but was represented by the difference between the contract price and the value of the land without the water rights - $125,000
9. The cause of the purchasers’ loss By a 3-2 majority the SC held that the council had caused loss to the purchasers McGrath J - The LIM resulted in the contract becoming unconditional, and it thereby caused the loss along with the vendors’ misrepresentation. Tipping J - the contract ultimately was not loss-making: the purchasers were not left with a shortfall in their claim for breach of contract
10. Contribution in equity There could be no contribution claim under the LRA s 17(1)(c) as the vendors were contract-breakers, not tortfeasors Could the vendors seek contribution from the council in equity? Four members of the court agreed that the test was whether the liabilities were ‘of the same nature and extent’, but could not agree on what this required
11. Contribution in equity Tipping J - Equity would order contribution when two parties were under a coordinate liability – a liability of the same nature and extent – to make good one loss. Here the liabilities were distinctly dissimilar An order for contribution would overpay the vendors, who would receive more than the property was truly worth Blanchard J took a similar view
12. Contribution in equity McGrath J - Equity eschewed too technical an approach. The reality was that both the council and the vendors made the same error, with the same result that caused the purchasers loss of the same nature. The vendors would not be “overpaid” and would not receive any “profit”. An order for contribution would simply hold the council to account. Anderson J agreed
13. Contribution in equity Elias CJ had sympathy for the wider view but considered that the council did not cause loss, so there was no occasion for contribution. Outside the application of s 6 of the 1979 Act she thought there was force in McGrath J’s approach
14. Conclusions Subsequent decisions confirm that Altimarloch has not has not expanded the relevant principles of law concerning the availability of a right to contribution in equity Coutts v Davenports Harbour Lawyers (2012) Financial Markets Authority v Hotchin (2013) However, the decision does not bar any such expansion, and the opportunity for further development of the law remains
15. Conclusions What matters is whether the damage overlaps, not whether the liabilities of A and B are “of the same nature and extent” Perhaps the courts could develop a test which asks whether payment of a plaintiff by A discharges, in whole or part, any obligation to pay the plaintiff owed by B. The amount of any award would still be in the discretion of the court