This article introduces a set of model proportionate liability provisions in the IBQC Model Building Act.

The exercise responds to decades of divergent jurisprudence, inconsistent statutory wording across Australian jurisdictions, and interpretive uncertainty arising from subtle variations in legislative parlance, including recent uncertainty concerning the application of proportionate liability regimes to arbitration proceedings following the High Court’s decision in Tesseract International Pty Ltd v Pascale Construction Pty Ltd [2024] HCA 24. 

Background and Rationale

Australia’s proportionate liability landscape is fragmented. Rather than operating under a nationally uniform regime, proportionate liability exists through multiple statutory variants enacted across the Commonwealth, States and Territories. Those regimes differ in a number of important respects, including:

• definitions of apportionable claims;
• treatment of arbitration proceedings;
• permissions or prohibitions concerning contracting out;
• procedural mechanisms governing concurrent wrongdoers.

Over time, these legislative divergences have generated inconsistent judicial outcomes, procedural inefficiencies, and interpretive uncertainty. The model provisions seek to recalibrate the drafting architecture through the use of clearer language, deliberate definitional precision, and policy settings informed by extensive review of Australian proportionate liability jurisprudence.

Key Features of the Model Provisions

1. Express Exclusion of Arbitration Proceedings

The High Court’s decision in Tesseract International Pty Ltd v Pascale Construction Pty Ltd exposed some vexing issues in the navigation of proportionate liability regimes and private arbitration frameworks.

The majority held that the relevant South Australian proportionate liability legislation was capable of applying in arbitral proceedings notwithstanding the inability of arbitrators to compel participation of non-parties to an arbitration agreement. The decision highlighted the potential for fragmented adjudication, incomplete apportionment exercises, inconsistent findings, and procedural inefficiency.

In response, the model provisions impose an express embargo upon the application of the regime to arbitration proceedings. The exclusion is deliberate and policy-driven, intended to establish a clearer demarcation between court and tribunal proceedings on the one hand, and private arbitral processes on the other.

2. Clear Jurisdictional Scope

The definition of “court” expressly includes “tribunal” to minimise the risk of narrow interpretive arguments that the regime applies only to traditional judicial forums.

3. Positive Obligations Regarding Concurrent Wrongdoers

Defendants are required to notify plaintiffs of potential concurrent wrongdoers where reasonable grounds exist. Failure to do so may expose defendants to indemnity costs consequences. The mechanism is intended to encourage procedural transparency and reduce tactical concealment. In one Australian jurisdiction the mechanism does not exist.

4. Streamlined Apportionment Framework

The provisions:

• limit each concurrent wrongdoer’s liability to that party’s just proportion of responsibility;
• Permit sequential proceedings against additional concurrent wrongdoers while preventing over-compensation.

5. Contracting Out —  Silence

The model provisions do not presently prohibit contracting out of proportionate liability. The issue remains under active policy consideration, including whether future anti-avoidance provisions should render the regime mandatory within its intended statutory field of operation.

International Relevance

Elements of the drafting exercise have also attracted interest in New Zealand in the context of recent reform considerations concerning the Cabinet sanctioned transition from joint and several liability to proportionate liability. While no suggestion is made that the wording will necessarily be adopted, aspects of the model have formed part of the broader comparative policy discourse.

Conclusion

The Australian experience demonstrates that drafting nuance can materially shape legal outcomes in proportionate liability legislation and the fact that the choice of words really do matter. The absence of nationally uniform drafting has contributed to interpretive divergence, procedural uncertainty, and substantial jurisprudential inconsistency.

These model provisions represent an attempt to develop a clearer and more coherent legislative template capable of reducing ambiguity, improving procedural efficiency, and promoting greater interpretive consistency across jurisdictions.

The provisions are advanced as a model template only. Constructive feedback from practitioners, academics, parliamentary counsel, jurists, and policymakers is welcomed as part of an ongoing iterative refinement process.

STRAIGHT OUT OF THE IBQC MODEL BUILDING ACT

The following Division sets out an alternative approach providing for proportionate liability.

Division 1 — Proportionate liability

6.1 Definitions

In this Division:

apportionable claim means a claim to which this Division applies.

concurrent wrongdoer, in relation to a claim:

a. means a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the loss or damage that is the subject of the claim; but

b. does not include a person in a class of persons excluded by the Model Building Regulations.

court includes tribunal, and in relation to a claim for damages means any court or tribunal by or before which the claim falls to be determined.

damages includes any form of monetary compensation but does not include payments of a class excluded by the Model Building Regulations.

6.2 Application of Division

1. This Division applies to a claim for loss or damage in an action for damages (whether in contract, tort or otherwise) arising out of or relating to defective, incomplete or non-compliant building work.
2. This Division does not apply to:

a. a claim arising out of personal injury; or

b. a claim in an arbitration proceeding; or

c. a claim of a kind excluded by the regulations.

1. For this Division, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action

6.3 Proportionate liability for apportionable claims

1. In any proceedings involving an apportionable claim:

b. the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant’s responsibility for the loss or damage; and

c. the court may give judgment against the defendant for not more than that amount.

1. If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

a. liability for the apportionable claim is to be determined in accordance with this Division; and

b. liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Division) are relevant.

1. In apportioning responsibility between defendants in the proceedings:

a. the court must exclude that proportion of the loss or damage in relation to which the plaintiff is contributorily negligent under any relevant law; and

b. the court must not have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings unless the concurrent wrongdoer is not a party to the proceedings because the concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or has died.

1. This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
2. A reference in this Division to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Division, under rules of court or otherwise.

6.4 Joining concurrent wrongdoers in the proceedings

1. The court may give leave for any one or more persons to be joined as defendants in proceedings involving an apportionable claim.
2. The court must not give leave for the joiner of any person who was a party to any previously concluded proceedings in respect of the apportionable claim.

6.5 Duty of defendant to inform plaintiff about concurrent wrongdoers

1. This section applies if:

a. a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the other person) may be a concurrent wrongdoer in relation to the claim, and

b. the defendant fails to give the plaintiff, as soon as practicable, written notice of the information that the defendant has about:

i. the identity of the other person, and

ii. the circumstances that may make the other person a concurrent wrongdoer in relation to the claim; and

c. the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim

1. The court hearing the proceedings may order that the defendant pay all or any of those costs of the plaintiff.
2. The court hearing the proceedings may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise.

6.6 Contribution not recoverable from defendant

A defendant against whom judgment is given under this Division as a concurrent wrongdoer in relation to an apportionable claim:

a. cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant), and

b. cannot be required to indemnify that other concurrent wrongdoer.

6.7 Subsequent actions

1. In relation to an apportionable claim, nothing in this Division or any other law prevents a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any loss or damage from bringing another action against any other concurrent wrongdoer for that loss or damage.
2. However, in any proceedings in respect of that subsequent action, the plaintiff cannot recover an amount of damages that, having regard to any damages previously recovered by the plaintiff in respect of the loss or damage, would result in the plaintiff receiving compensation for loss or damage that is greater than the loss or damage actually sustained by the plaintiff.

6.8 Division not to affect other liability

Nothing in this Division:

a. prevents a person from being held vicariously liable for a proportion of any apportionable claim for which another person is liable, or

b. prevents a partner from being held jointly and severally liable with another partner for an apportionable claim for which the other partner is liable, or

c. affects the operation of any other Act to the extent that it imposes several liability on any person in respect of what would otherwise be an apportionable claim.

This article has been approved by Tsigereda Lovegrove, 

Adjunct Fellow, Southern Cross University; Construction and Planning Lawyer; Manager, Lovegrove & Cotton Construction and Planning Lawyers; Board Member, International Building Quality Centre; and admitted to legal practice in both Australia and New Zealand.

Tsigereda Lovegrove was a member of the Lovegrove & Cotton law reform team engaged by the New Zealand Government, through the Ministry of Business, Innovation and Employment, to advise on proportionate liability reform pathways and liability settings under the Building Act 2004 (NZ).

Disclaimer

This article is of a general informational and policy discussion nature only. It does not constitute legal advice, should not be relied upon as legal advice, and readers should obtain independent legal or professional advice tailored to their specific circumstances.

Image Acknowledgements:

The digital renders used in this article were developed collaboratively by Kim Lovegrove and ChatGPT.