APPORTIONMENT OF DAMAGES FOR BREACH OF CONTRACT

• Published date: 01 December 1991
• Citation: (1991) 3 SAcLJ 118
• Author: TER KAH LENG
• Date: 01 December 1991

Introduction

The effect of the plaintiff’s blameworthiness on the extent of damages recoverable in a contractual action has been a controversial point since 1945 when the Law Reform (Contributory Negligence) Act was first enacted in England. The Act was enacted to abolish “one of the most notorious blots on the common law”1 namely, contributory negligence as a total defence to a claim in tort. By giving the court power to apportion liability so as to permit recovery of a proportion of the damage sustained, the Act gave recognition to the fact that it is as unjust to award 0% to a plaintiff who has contributed to the damage as it is to award him 100%. The context of the Act and language make it clear that it is concerned only with tortious and not contractual liability. The Act refers to “fault” and it is unrealistic to speak of fault in the context of contractual actions. Yet, the application of contributory negligence in contract has been a controversial point. Glanville Williams expressed this uncertainty as far back in 1951 in his classic treatise Joint Torts and Contributory Negligence:

“Notwithstanding the guidance given by judicial decisions, there are many dark places in this part of the law.”

Again in 1974, Roskill LJ in De Meza and Stuart v Apple, Van Straten, Shena and Stone2 observed that the point had been argued more than once though never decided in the English Court of Appeal. The reason it was left open or unresolved was usually the finding of fact that there was no contributory negligence.

There are cases covering this point in England, Australia and New Zealand, each with identical statutes following the English Act. This article examines the extent to which these decisions conclusively resolve the question whether contributory negligence applies to claims brought in contract. It also highlights the findings and provisional recommendations of the English Law Commission’s Working Paper No. 114 on Contributory Negligence as a Defence in Contract and examines the implications of the defence in contract law.

Contributory Negligence in Contract

The question of contributory negligence in contractual claims can arise in a

number of situations. Hobhouse J at first instance in Forsikringsaktieselskapet Vesta v Butcher3 identified three categories:

1. (1) where the defendant’s liability arises from some contractual provision independent of any negligence on his part;

2. (2) where the defendant’s liability arises from a contractual obligation to take care (or its equivalent) but does not correspond to a common law duty to take care;

3. (3) where the defendant’s liability in contract is the same as his liability in the tort of negligence independently of the existence of any contract, (emphasis added)

For the purpose of this discussion, the distinction between contract and tort is important. Greer LJ in Jarvis v May, Davies, Smith, Vanderwell & Co4 laid down the test, relevant to the present discussion:

“The distinction in the modern view, … may be put thus: where the breach of duty arises out of a liability independently of the personal obligation undertaken by contract, it is tort and it may be tort even though there may happen to be a contract between the parties, if the duty in fact arises independently of that contract. Breach of contract occurs where that which is complained of is a breach of duty arising out of the obligations undertaken by the contract.”

Since then, English courts have been hesitant in imposing duties in tort wider than the obligations which a defendant has assumed under a contract. This reluctance has a bearing on the question whether contributory negligence applies in contract. For this purpose, reference will be made to the Singapore Act which is substantially similar to corresponding statutes enacted in England, Australia and New Zealand.

The Singapore Contributory Negligence and Personal Injuries Act (Cap. 53)

Section 3(1) of the Act reads:

“Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable

having regard to the claimant’s share in the responsibility for the damage…” (emphasis added)

“Fault” is defined by section 2 as follows:

“fault means negligence, breach of statutory duty or other act or omission which gives rise to a liability in tort or would, apart from this Act, give rise to the defence of contributory negligence.” (emphasis added)

Of immediate concern to this article is the meaning to be ascribed to the word “fault” when used with reference to the defendant’s conduct in relation to the plaintiff’s claim. Does fault refer only to those acts and omissions which would found a tort action or does it include also acts or omissions which constitute a breach of contractual terms? The question will be examined in relation to each of the following categories.

Category 1 cases

These cases involve a breach of a contractual provision not dependent on a finding of negligence or “fault” on the part of the defendant. As such, liability for breach will turn on the construction of the relevant contract, not of the Act and there can be little dispute that the Act does not apply.5 A case in point is Basildon DC v JE Lesser (Properties) Ltd,6 where the plaintiffs claimed under a deed of indemnity against the defendants who had agreed to indemnify them against breaches of a building contract. In answer to the plaintiffs’ allegations of breach concerning foundations, the defendants pleaded contributory negligence. They contended that the 1945 Act applied to a claim in contract, or alternatively, where a breach involved a failure to take care. Judge John Newey QC took the view that in contract blameworthiness was irrelevant. There was no room for contributory negligence, although in the assessment of damages, causation and mitigation were relevant. The judge stated that it would be surprising if Parliament when limiting the effect of contributory negligence in tort introduced it into contract. In dismissing the plea, the judge followed the view of Prichard J in the New Zealand case of Rowe v Turner Hopkins & Partners7 (below) that contributory negligence did not apply to a contractual claim unless the claim also gave rise to tort liability. The present case concerned only a contractual claim; it was expressly conceded that no duty of care was owed. It followed that the Act did not apply to a claim in contract not dependent on a finding of negligence.

Category 2 cases

These concern a defendant’s breach of a contractual duty of care which does not correspond to a common law duty of care which would exist in the given case independently of contract. In other words, these are situations of contractual as opposed to tortious negligence or to borrow the phrase “negligent breach of contract,” used again and again by Glanville Williams, although described as unfortunate that it should have crept into legal language. The issue here is whether the defendant’s breach of a contractual, as opposed to a general duty to take care, amounts to “fault” so as to enable the Act to apply. Judicial and academic opinion are divided.

In 1951 Glanville Williams wrote that broad considerations of justice and equity required that the Act should be applied to both contract and tort. He argued that negligence may occur by way of a negligent breach of contract or by a negligent tort, so that “fault” could be construed to include a negligent breach of contract. He submitted that where there was concurrent liability in contract and tort, the Act should be applied. Glanville William’s views were adopted by Crisp J in the Tasmanian case of Queensbridge Motors & Engineering Co Pty Ltd v Edwards8 and Smith v Buckley9 but not followed in James Pty Ltd v Duncan.10 Support for Glanville William’s views can also be found in De Meza & Stuart v Apple, Van Straten, Shena & Stone.11 There, Brabin J held at first instance that the Act applied even though the plaintiff’s claim was for breach of contract as the contract gave rise to a duty of care. On appeal, the issue of contributory negligence did not arise for consideration and the Court of Appeal expressed no view on the correctness or otherwise of Brabin J’s conclusion.

The view that the Act does not apply in Category 2 situations will now be examined. In the earlier mentioned Australian case of James Pty Ltd v Duncan, P hired from D a landing craft to accommodate drilling equipment to be used by P for drilling operations at sea. Subsequently, the landing craft and drilling equipment sank during bad weather. P sued D in contract for breach of the implied term that the landing craft should be seaworthy and fit for use with a drill rig and alternatively for negligence in the control and management of the landing craft. D counter-claimed for the hire of the landing craft, cost of salvage and repair and loss of earnings. D further pleaded contributory negligence and apportionment under section 25 of the Wrongs Act 1958. The question arose whether P’s claim

was in contract or tort or both and whether D had a counter-claim in contract or tort or both, and if the claim of either party was in contract, whether the 1958 Act could apply. Having considered various authorities, McInerney J came to the conclusion that the claim of P and the counterclaim of D were founded on contract. Two questions of law arose:

1. (1) whether contributory negligence is a defence to a contractual claim (more specifically) for breach of a contractual duty to take care and

2. (2) whether P’s damages ought to be apportioned under the 1958 Act.

McInerney J observed that those were questions on which there was surprisingly little authority. The learned...