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- Introduction
There is a strong relation between tortious and contractual liability.[1] These areas of law have been regarded as both historically and notionally interlinked, where a person should be able to bring an action in tort even though the impugned conduct also constitutes a breach of contract.[2] Courts are willing to accept that situations may arise where there is concurrent liability in tort, contract, and even under statute.[3] In light of the preceding statements, concurrent liability can be defined as a principle that dictates that a single cause of action may be brought under multiple areas of law. Much controversy has arisen as to the process of selecting a cause of action or a combination of actions. Arguments have surfaced with respect to allowing the plaintiff to freely choose the cause of action which best suits them and what may be wrong with this practice. It is effective to explore the justifications for embracing concurrent liability, and identify the issues which arise for either party in allowing the plaintiff to choose the cause of action. Finally, this paper will consider the reasons why it is appropriate that the extent of the defendant’s liability rest upon the request of the plaintiff rather than be dictated by law.
- Concurrent Liability: A Brief Explanation
The High Court has recognised the principle applied in the case of Henderson[4] that there is no rule to restrict a claimant to a remedy under one particular area of law.[5] They accepted that concurrent liability is an existing issue and that a breach of contract may also be actionable under the tort of negligence[6]. This is equally true in respect of actions brought under contract or tort which may simultaneously be actionable under statute. The majority in Astley[7] confirmed that a claimant should be permitted to select the “best” remedy for them. The question which arises is what is meant by the term “best” in this context.
Each remedy has a distinct nature and hence impact on the Plaintiff. Therefore, to determine what is “best” for the plaintiff is to establish what is the most advantageous and favourable outcome;[8] that is, the “most suitable, helpful, and productive remedy”[9] that can be awarded by law in those particular circumstances.
III. Difference in Elements to be satisfied
The Courts have recognised the difference between various causes of action, particularly in tort and contract, and have indicated that it is not always sensible to “assimilate” them.[10] The position of the Plaintiff will differ in terms of the evidential burden and other relevant elements that must be satisfied in order for a Plaintiff to succeed in a cause of action. In Astley[11] it was acknowledged that different causes of action “have different elements, different limitation periods, different tests for remoteness of damage and…different apportionment rules.”[12] Therefore, a Plaintiff, who is free to choose is most likely to select the one whose elements can be easily satisfied. It follows that the Plaintiff will presumably determine the cause of action(s) they wish to pursue by exploring the most convenient avenue with the highest prospects of success. While this may be opportune for a claimant, it leaves the defendant open to multiple attacks and liabilities. For example, a defendant who breaches a term of contract is also in breach of their common law duty to take reasonable care; that is, that they are guilty of negligence in tort.[13] This is also a breach of section 5B of the Civil Liability Act [14] and actionable under statute.
Another example is the element of damage. Where proof of damage is an essential element in a case of tort, actual damage need not be proven in a cause of action in contract in order for a plaintiff to recover compensation. [15]
Also, where there is an exemption clause prohibiting an action under contact the plaintiff is free to sue in tort for negligence subject to satisfying the elements. Hence, the plaintiff is able to recover for the defendant’s negligent act which is not precluded by the exemption clause.[16]
Here, the law provides limited guidance for the defendant as to what cause of action they may be faced with, and hence what remedy this may attract.
However, the distinction between the two causes of action are of “considerable importance”, and the advantages of each differ; therefore there is no reason for recognising the duty of the defendant under one to the exclusion of the other.[17]
- Available Remedies
The major difference between tort and contract is the general principle for breach. While the object of compensation in contract is to place the Plaintiff in the position they would have been in had the contract been performed[18], tort damages are awarded in order to bring them back to the state they would have been in but for the wrong.[19] Therefore, the remedies available for each cause of action will differ based on the object of the cure. A simple example is the remedy of rescission. The Plaintiff may find that rescinding the contract is the best cure for their situation. This remedy is also available under statue for example section 237(2) of the Australian Consumer Law[20] which can be relied on by a Plaintiff in cases of commercial nature. There are various statutes which have incorporated rescission as a remedy for contravention of provisions under the Act. However, it would be disadvantageous for the claimant to bring an action in tort as well, given the remedies they are seeking are recoverable best in contract or statute.
An illustration of this is where there has been a breach of a contract for performance of professional services which also gives rise to negligence due to the implied tortious duty of care.[21] In the case of Melancon[22] the Court accepted that the plaintiff is able to bring an action under contract to recover compensation for breach of contract, and then recover in an action in tort, any damages which are not recoverable under contract for that breach.[23] This places a heavy burden on the defendant who may be found liable to compensate multiple times for that same breach. An issue which may arise for the Plaintiff is that where the number of issues is increased, they are running the risk of losing on certain issues whereby the court will apportion the costs and award the defendant in some instances costs on an indemnity basis for the issues on which the Plaintiff lost[24]. The Plaintiff will be required to pay these costs if they were to lose on certain issues even if they are ultimately successful.[25]
Another example is the case of innocent misrepresentation. Historical, the Courts did not allow for a claim of innocent misrepresentation to be brought in the absence of a contract. Therefore no remedies were available except in contract. Although this is no longer the case, it remains that courts are reluctant to allow a plaintiff to recover in tort for a claim of economic loss arising from a beach in tort.[26] Academics have suggested that there has been movement towards allowing a claimant to recover in a case of tort for the economic loss suffered in the absence of a contractual agreement.[27] At present, it is clear that a Plaintiff who is seeking to achieve the best outcome in such a matter would choose to bring their case in contract in order to maximise prospects of success.
There are instances when it is more advantageous for a Plaintiff to select one cause of action rather than multiple. Other than for reasons of potential loss, the Plaintiff may be seeking to achieve a certain outcome which is not available in conjunction with other causes of action. An example of this is restitution. Although equity is not the focus here, it remains an effective illustration for this proposal. The remedy of restitution aims to “reverse the defendant’s gain” rather than “reverse the Plaintiff’s loss”[28] by obliging the defendant to reimburse the plaintiff for the benefit derived at the Plaintiff’s expense.[29] The Plaintiff is able to elect to receive restitution whereby they waive their right to bring an action in tort.[30] Such a remedy is not available in tort and therefore a claimant must elect to bring the case under equity if this is the best remedy for them. However, in a case of contract where there is evidence of part consideration, a claim for restitution is likely to fail as restitution requires total failure of consideration.[31] Therefore, the plaintiff is likely bring the case in contract where they will still be able to recover compensation and perhaps other remedies such as estoppel. It is evident how disadvantageous this can be for a defendant who as a result of the flexibility granted to the plaintiff[32], is highly unlikely to escape liability.
Some remedies which are available in some areas of law are not obtainable in others. For example, exemplary damages which are available in tort and are not in equity. This is due to the underlying principle which dictates that equity “abhors” punishment.[33]
- Other Contributing Factors
It is arguable that the plaintiff is most likely to pursue the claim under the action that affords the defendant limited defences in that situation. Justice Callinan in dissent held that it was ‘unfair and anomalous’ to allow a Plaintiff to pursue an action in contract so as to deny the defendant their right to argue contributory negligence in tort.[34]
The case of Astley[35] addressed the issue of apportionment giving no exact opinion on the matter, although acknowledging that concurrent liability may be somewhat unjust on a defendant.[36] Their Honours stated that it may be effective to impose apportionment statute “where damages are payable for breach of a contractual duty of care”[37] so that the defendant need not pay the full amount of compensation where there has been proportionate liability. They indicated that this would require reform of legislation.[38] The legislature has since responded and reform has taken place whereby a defendant may argue contributory negligence under statue for breach of contract in a case where the duty is concurrently of tortious nature.[39] The Civil Liability Act[40] has also incorporated an apportionment provision which requires a court to assess the extent of the wrongdoers’ “responsibility for the loss or damage” in apportioning liability.[41]
Another consideration may be the availability of aggravating factors, for example, where a Plaintiff makes a claim in negligence rather than contract in order to impose the higher standard of care upon the opposing party[42] and hence recover more compensatory damages, including possibly aggravated damages. A further example is where it is difficult for a claimant to prove the element of causation in tort and selects to bring the case in contract claiming vicarious liability on the part of the defendant.[43]
- Statute
The introduction of the Competition and Consumer Act[44]created a more uniform approach to dealing with commercial cases.[45] It has been acknowledged that the principle of damages has been adopted from the common law approach.[46]
Section 236 of the ACL[47] dictates that an individual is entitled to recover compensation for damage suffered as a result of the actions of another.[48] This may be an outcome of a breach in tort, contract, or both. Therefore, a plaintiff who has a cause of action in common law may choose to sue under statute also or alternatively if the nature of the case permits.
However, the Courts have rejected the analogy between tort and compensation under statute, claiming that it would be incorrect to conclude that the damages recoverable under statue are of the same measure to that at common law.[49] They argue that the provisions of the Act must be construed with regard to the intention of the legislature.[50]
Broadly speaking, the elements to be satisfied under statute are similar to that in contract and tort. The object of compensation is also relatively identical; to place the plaintiff in the position they would have been in but for the contravention.[51] The main distinction which may deter or encourage a plaintiff to pursue an action is the rule for awarding damages. While in contract and tort, the plaintiff is awarded a “once and for all” lump sum payment, this is not always the case under statute. It was stated in Murphy v Overton Investment Pty Ltd[52] that the court must assess the loss or damaged suffered before deciding whether a lump sum payment is the most sufficient remedy. The court indicated that in some instances, compensation may not be the only remedy available.[53]
Therefore, while objectively actions under statute may not appear to differ from contract and tort, it is effective for the Plaintiff to determine what they are seeking to recover and what remedy they are after before deciding whether it is better for them to bring an action under common law or statute.
VII. Is This Fair On the Defendant?
It is arguable that the legislature cannot predict all potential cases that may arise, and therefore the law cannot simply dictate which cause of action should be pursued in each circumstance. It’s appropriate for the party bringing the case to select the cause of action which best suits them. This is not unfair to the defendant as they are still entitled to plead any available defences, raise arguments,[54] and present any evidence which they believe may support their case.
The defendant is able to take all measures to protect themselves from liability prior to the incident. For example, incorporate an exemption clause prohibiting a claim for breach of contract and even possibly claims in tort also. This would limit the claims that a Plaintiff is able to bring and the defendant would be protected from the risk of concurrent liability.
The law is moving towards the notion of ‘election’ and the idea that the plaintiff should be entitled to select the cause of action which will is most favourable to them.[55] An individual can take reasonable steps to protect themselves and limit liability however, if one chooses to take away the primary right of another, there is no reason why the law should limit the claimant’s entitlement to bring an action which they feel will best compensate for the damage they have suffered.
VIII. Conclusion
Although in the past “cause of action shopping” was not highly regarded nor permitted, this view has now changed and concurrent liability has been acknowledged by the Courts.[56] The law has evolved to allow a plaintiff to claim damages which arise from a single breach under contract and tort.[57] Statue law is also an avenue that a Plaintiff may choose to pursue a cause of action under in a situation where the outcome that will be derived is most favourable to them. What is favourable is dependent upon numerous considerations as was discussed. The issues surrounding concurrent liability are very limited for the plaintiff, however are severe for the defendant.
While the law aims to protect both parties, a remedy is essentially a secondary right that would not have arisen if the defendant did not breach the primary right of the plaintiff causing them harm[58], therefore in choosing to breach the law, the defendant must bear the consequences of their actions whatever they may be.
[1] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 423
[2] Ibid 428.
[3] Astley v Austrust (1999) 197 CLR 1 at 20.
[4] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 432
[5] Astley v Austrust (1999) 197 CLR 1 at 22.
[6] Ibid.
[7] Astley v Austrust (1999) 197 CLR 1.
[8] Ibid.
[9] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 432
[10] Commonwealth v Cornwell (2007) 229 CLR 519 at 4 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 15
[11] Astley v Austrust (1999) 197 CLR 1
[12] Astley v Austrust (1999) 197 CLR 1 at 23.
[13] Ibid.
[14] Civil Liability Act 2002 (NSW) s 5B
[15] Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 116 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 15
[16] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 433
[17] Astley v Austrust (1999) 197 CLR 1 at 23
[18] Robinson v Harman (1848) 1 Ex 850 at 855 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 91.
[19] Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 12.
[20] The Australian Consumer Law 2010 (Cth) s 237 (2) (‘Australian Consumer Law’).
[21] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 433
[22] Smith & Smith v Melancon [1976] 4 W.W.R 9 in G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 433
[23] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 433
[24] Rosniak v GIO (1997) 41 NSWLR 608.
[25] Colbran, S, Reinhardt, G, Spender, P, Jackson, S, Douglas, R, Civil Procedure Commentary and Materials (LexisNexis Butterworths. 5th edition, 2012) 1067.
[26] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 440
[27] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 439
[28] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 132
[29] Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221 at 257 (Deane J).
[30] United Australia Ltd v Barclays Bank Ltd [1941] AC 1.
[31] Baltic Shipping Co v Dillon (1993) 176 CLR 344.
[32] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 439.
[33] Harris v digital Pulse Pty ltd (2003) 56 NSWLR 298 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 351
[34] David de Jersey, ‘Turning up the heat on Professionals: Astley v Austrust’ (2001) 21 U. Queensland L.J. 97.
[35] Astley v Austrust (1999) 197 CLR 1
[36] David de Jersey, ‘Turning up the heat on Professionals: Astley v Austrust’ (2001) 21 U. Queensland L.J. 97.
[37] Astley v Austrust (1999) 197 CLR 1 at 88.
[38] Ibid.
[39] Barbara Mcdonald, ‘ Legislative Intervention in the Law of Negligence: The Common Law, Statutory Interpretation and Tort Reform in Australia’ (2005) 27(3) Sydney Law Review 443.
[40] Civil Liability Act 2002 (NSW)
[41] Civil Liability Act 2002 (NSW) s 35
[42] Calin v Greater Union Organisation Pty Ltd (1991) 173 CLR 33 in Bant, Elise et al, Remedies: Commentary and Materials (Thomson Reuters, 6th ed, 2015) 597
[43] Stubbe v Jensen [1997] 2 VR 439 (CA) in Bant, Elise et al, Remedies: Commentary and Materials (Thomson Reuters, 6th ed, 2015) 597
[44] Competition and Consumer Act 2010 (Cth)
[45] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 412
[46] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 414.
[47] The Australian Consumer Law 2010 (Cth) s 236 (1) (‘Australian Consumer Law’).
[48] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 414
[49] Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 416
[50] Ibid.
[51] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 425
[52] (2004) 216 CLR 388; [2004] HCA 3 at 52 in Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 426
[53] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 426
[54] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 436.
[55] Astley v Austrust (1999) 197 CLR 1
[56] Astley v Austrust (1999) 197 CLR 1 at 20
[57] G H L Fridman, ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422, 435
[58] Covell, Wayne, Keith Lupton and Jay Forder, Covell & Luptons Principles of Remedies (LexisNexis Butterworths, 5th ed, 2012) 4
