Sections of Commonwealth legislation concerning proportionate liability can pose a threat to insurers, according to lawyers Allens Arthur Robinson.

Senior associate Jennifer Patterson told an insurance seminar that the insurers need to be careful with coverage they provide in relation to CLERP 9 (Corporate Law Economic Reform Program) where damages relate to economic loss under Section 52 of the Trade Practices Act, because the proportionate liability provisions and other tort law reform legislation across the states and territories are “piecemeal”.

Victoria and the Commonwealth are the only jurisdictions in which the legislation relating to proportionate liability is in operation. NSW, WA and Queensland have passed varying forms of the laws but they are not in operation yet.

Ms Patterson told Sunrise Exchange News it is important for insurers to be aware of the relevant amendments to the Trade Practices Act, and their effect on cases and underwriting.

If an economic loss claim is brought under Section 52 or a state equivalent, proportionate liability provisions may mean that several defendants would no longer be jointly liable for damages against them. The plaintiff may not be able to recover some or all of the damages awarded if one defendant is impecunious. 

The result may be that plaintiffs will try to bring actions under other provisions of the Trade Practices Act that are not affected by the removal of joint and several liability between defendants. “This means it is a fertile field for inventive plaintiff lawyers,” Ms Patterson said.