Harder, Sirko --- "Contributory negligence in contract and equity" [2014] OtaLawRw 4; (2014) 13 Otago LR 307

Last Updated: 22 May 2016

^{Contributory Negligence in Contract and Equity}

Sirko Harder^*

Introduction

The victim of a civil wrong (breach of contract, tort or equitable wrong) may have contributed to the occurrence of the wrong or to the resulting loss through a failure to take reasonable care of her affairs prior to (becoming aware of) the wrong.¹ Such conduct by the victim of a wrong is called contributory negligence in this article, following the parlance in Commonwealth countries.² Contributory negligence is the breach of a “duty to oneself”,³ but not necessarily the breach of an actual duty owed by the plaintiff towards the defendant.⁴ The breach of a “duty to oneself” does not constitute contributory negligence unless the breach was a cause of the plaintiff’s loss in the “but for” sense and the “duty to oneself” breached aims to prevent the risk that has materialised.⁵

At common law, contributory negligence was generally a complete

^* Reader, Sussex Law School. Ideas contained in this article were presented before the Obligations Group at Melbourne Law School in 2011, at the Eighth Remedies Discussion Forum at the Monash University Prato Centre in 2013, and at the Faculty of Law of the University of Western Australia in 2014. The author is grateful to the audiences for fruitful discussions of the topic of this article.

¹ The victim’s failure to take reasonable care of her affairs after (becoming aware of) the wrong is addressed by the doctrine of mitigation, at least in Commonwealth countries. Both pre-wrong and post-wrong conduct by the plaintiff are subjected to the same rules in the Restatement (Third) of Torts: Apportionment of Liability (2000) § 3 cmt b, an approach supported by Yehudar Adar “Comparative Negligence and Mitigation of Damages: Two Sister Doctrines in Search of Reunion” (2013) 31 Quinnipiac L Rev

^783.

^{2 In the US, the term “contributory negligence” is used solely in the context}

^{of the complete defence at common law whereas the term “comparative}

^{negligence” is used in the context of apportionment.}

^{3 Marshall v British Columbia (1988) 23 BCLR (2d) 320 (CA) at 326 per Locke}

^JA.

^{4 Davies v Swan Motor Co (Swansea) Ltd [1949] 2 KB 291 (CA) at 324 per}

^{Denning LJ (“When a man steps into the road he owes a duty to himself}

^{to take care for his own safety, but he does not owe any duty to a motorist}

^{who is going at an excessive speed to avoid being run down.”); Dhaliwal}

^{v Premier Fitness Clubs Inc [2012] ONSC 4711, (2012) 220 ACWS (3d) 853}

^{at [81] per Campbell J (“Contributory negligence does not depend upon}

^{any duty of care, but rather depends upon the objective foreseeability of}

^{harm to oneself.”).}

^{5 Jones v Livox Quarries Ltd [1952] EWCA Civ 2; [1952] 2 QB 608 (CA) at 616, 618; Joslyn v Berryman}

^{[2003] HCA 34, (2003) 214 CLR 552 at [16] per McHugh J; Gary Davis and}

^{Jane Knowler “Astley v Austrust Ltd. Down but Not Out: Contributory}

^{Negligence, Contract, Statute and Common Law” [1999] MelbULawRw 30; (1999) 23 MULR 795}

^{at 802.}

defence to liability in negligence and some other torts,⁶ but statutes in all major Commonwealth countries have introduced an apportionment of liability to those torts and sometimes beyond. In most jurisdictions, liability is to be apportioned on the basis of the causative potency and degree of blameworthiness of each party’s conduct.⁷

In the area of negligence liability, it is widely accepted that apportionment is fairer than requiring one party to bear the whole loss,⁸ obviates the need to choose “all or nothing”,⁹ and generally gives both parties an incentive to take cost-effective precautions.¹⁰ Those considerations of fairness, flexibility and efficiency are not unique to tort and would support a spread of apportionment to contract¹¹ and equity. Courts in Canada and New Zealand have recognised this in some cases. However, at least in Australia and in England and Wales, neither liability for breach of fiduciary duty nor strict contractual liability is subject to an apportionment by virtue of contributory negligence.¹²

Judges, commentators and law reform commissions have debated whether an apportionment by virtue of contributory negligence ought to be available in contract and equity. That debate usually takes place just for contract or just for equity. At least in part, this is due to the custom of discussing the measure of compensation for certain types of wrong in isolation rather than the law of obligations as a whole. Another reason for discussing contract and equity separately may be the assumption that the arguments against apportionment are unique to the type of wrong under discussion. However, the argument against apportionment of liability for breach of fiduciary duty is also the key argument against

⁶ Eg Butterfield v Forrester [1809] EngR 175; (1809) 11 East 60, 103 ER 926.

^{7 Eg Gilrose Finance Ltd v Ellis Gould [2000] UKPC 14; [2000] 2 NZLR 129 (PC) at [9]. The}

^{criteria are discussed by Leonard Charles Schwartz “Apportionment of}

^{Loss under Modern Comparative Fault: The Significance of Causation}

^{and Blameworthiness” (1991) 23 U Toledo L Rev 141.}

^{8 Gary T Schwartz “Contributory and Comparative Negligence: A}

^{Reappraisal” (1978) 87 Yale LJ 697 at 722–727.}

^{9 Victor E Schwartz, Comparative Negligence (5th ed, LexisNexis, Newark,}

^{2010) at §22.02(c).}

^{10 It seems widely accepted that apportionment is more efficient than full}

^{compensation, but it is controversial whether apportionment is more}

^{efficient than a complete exoneration of the defendant; see Richard A}

^{Posner Economic Analysis of Law (8th ed, Aspen, New York, 2011) at §6.4.}

^{11 John Barclay Phillips “Out with the Old: Abandoning the Traditional}

^{Measurement of Contract Damages for a System of Comparative Fault”}

^{(1999) 50 Ala L Rev 911; Ter Kah Leng “Apportionment of Damages}

^{for Breach of Contract” (1991) 3 Sing Ac LJ 118 at 131–132. The main}

^{European and international instruments on contract law provide for an}

^{apportionment of compensation by virtue of contributory negligence; see}

^{Reinhard Zimmermann “Limitation of Liability for Damages in European}

^{Contract Law” (2014) 18 Edin LR 193 at 213–223.}

^{12 In this article, the term “strict contractual liability” denotes an obligation}

^{to pay compensatory damages for breach of contract where that obligation}

^{can arise even though the defendant is not at fault.}

apportionment of strict contractual liability, namely that the availability of apportionment would undermine the strictness of the defendant’s obligations. It is therefore appropriate to address that argument for contract and equity together, which is done in this article.¹³

This article argues that both liability for breach of fiduciary duty and strict contractual liability should in principle be subject to an apportionment by virtue of contributory negligence.¹⁴ It is argued that the availability of apportionment would not undermine the strictness of the defendant’s obligations in either area. This article thus recommends legislative reform insofar as an apportionment regime cannot be created by developing the common law (in the sense of judge-made law, including equity) or by interpreting existing apportionment legislation. It is the premise of the argument made in this article that a judge, as opposed to a jury, undertakes the apportionment exercise. It will not be discussed whether the involvement of a jury would make a difference.

This article starts by briefly outlining when and how contributory negligence affects liability for breach of contract or for an equitable wrong under the current laws of the major Commonwealth countries. It then proceeds to examining the possible versions of the policy argument that the availability of apportionment would undermine the strictness of the defendant’s obligations, and the merits of each version. Finally, in order to demonstrate that the availability of apportionment would not undermine the strictness of a defendant’s obligations, this article investigates when a buyer of goods is expected to check them for defects, and when a fiduciary’s principal is expected to obtain independent legal advice.

I Current Law in the Major Commonwealth Countries

Contributory negligence may affect liability for breach of contract or for an equitable wrong under the laws of the major Commonwealth countries. It may lead to an apportionment of liability in certain circumstances, although there are significant differences between the countries. Alternatively, contributory negligence may completely exonerate the defendant by removing the loss from the scope of liability. The circumstances in which contributory negligence leads to an apportionment or exclusion of liability will now be briefly outlined.

A Apportionment in Contract

When discussing an apportionment of contractual liability by virtue of contributory negligence, it is convenient to distinguish three categories of contractual liability, as done in the English case Forsikringsaktieselskapet

¹³ Other arguments for disallowing an apportionment of strict contractual liability are discussed in Sirko Harder Measuring Damages in the Law of Obligations: The Search for Harmonised Principles (Hart, Oxford, 2010) at

^164–167.

^{14 This default position may, of course, be varied by express or implied}

^{agreement, subject to legislation controlling unfair contract terms.}

Vesta v Butcher.¹⁵ Category 1 concerns strict contractual liability, that is liability not dependent on fault. This is the usual situation of contractual liability and includes, for example, the delivery of defective goods by a seller of goods. Category 2 concerns the breach of a contractual duty of care that is not concurrent with a duty of care in tort. Those circumstances are relatively rare¹⁶ but may arise, for example, where a service provider other than a professional breaches the duty to render the services with reasonable care and skill.¹⁷ Category 3 concerns the breach of a contractual duty of care that is concurrent with a duty of care in tort. The prime example is careless conduct by a professional¹⁸ such as an accountant, lawyer or surveyor.¹⁹ A case of strict contractual liability concurrent with liability in tort falls into category 1.²⁰

An apportionment of contractual liability by virtue of contributory negligence has traditionally been unavailable at common law.²¹ Some

¹⁵ [1986] 2 All ER 488 (QB) at 508; [1989] UKHL 5; [1988] 3 WLR 565 (CA).

^{16 Adam Kramer The Law of Contract Damages (Hart, Oxford, 2014) at 366.}

^{An example is Raflatac Ltd v Eade [1999] 1 Lloyd’s Rep 506 (QB).}

^{17 Roger Halson “The protected contractual interests” in Donald Harris,}

^{David Campbell and Roger Halson Remedies in Contract and Tort (2nd ed,}

^{Cambridge University Press, Cambridge, 2005) at 87, n 11. A duty to be}

^{careful when rendering services in the course of a business is imposed,}

^{for example, by s 13 of the Supply of Goods and Services Act 1982 (UK)}

^{and by s 60 of the Australian Consumer Law, set out in the Competition}

^{and Consumer Act 2010 (Cth), sch 2.}

^{18 Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145 (HL) at 193–194.}

^{19 Or a doctor, save that a contractual relationship between a patient and the}

^{British National Health Service (NHS) is not recognised: Dow v Tayside}

^{University Hospitals NHS Trust 2006 SLT (Sh Ct) 141 at [17]. However,}

^{an “NHS patient is entitled to the benefit of the contractual duty owed}

^{by the doctor pursuant to his contract with his NHS employers”: Rees v}

^{Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309}

^{at [131] per Lord Scott.}

^{20 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd}

^{(The Good Luck) [1988] 1 Lloyd’s Rep 514 (HC) at 554–555; [1990] 1 QB 818}

^{(CA) at 903–904; [1992] 1 AC 233 (HL) at 266–267; Banque Keyser Ullmann}

^{SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665 (CA) at 720–721;}

^{Barclays Bank plc v Fairclough Building Ltd (No 1) [1994] EWCA Civ 3; [1995] QB 214 (CA) at}

^{233 per Simon Brown LJ; ANZ Bank New Zealand Ltd v Frost & Sutcliffe}

^{[2014] NZHC 1640 at [26]; Law Commission Contributory Negligence as a}

^{Defence in Contract (Report No 219, 1993) at [3.29].}

^{21 AS James Pty Ltd v Duncan [1970] VicRp 90; [1970] VR 705 (VSC) at 722 per McInerney J (“I}

^{am not persuaded that contributory negligence ... is a defence in actions}

^{for breach of contract”); Forsikringsaktieselskapet Vesta v Butcher [1989] AC}

^{852 (CA) at 879 per Sir Roger Ormrod (“Had contributory negligence been}

^{a defence at common law to a claim for damages for breach of contract the}

^{reports and the textbooks prior to 1945 would have been full of references}

^{to it.”); Astley v Austrust Ltd [1999] HCA 6, (1999) 197 CLR 1 at [76] per}

^{Gleeson CJ, McHugh J, Gummow J and Hayne J (“No case can be found}

^{in the books where contributory negligence, as such, was ever held to}

^{be a defence to an action for breach of contract.”); Glanville L Williams}

^{Joint Torts and Contributory Negligence (Steven and Sons, London, 1951)}

commentators have suggested a long-standing exception for cases where the claimant’s conduct constitutes an independent legal wrong against the defendant,²² and for category 3 cases,²³ such as a carrier injuring the passenger, an innkeeper damaging the guest’s goods, and a landlord failing to keep the property in repair. Others “remain quite unconvinced that contributory negligence, as such, at common law had any relevance in a claim in contract”.²⁴ They ascribe the results in the seemingly deviating cases to causation²⁵ or the substantially tortious nature of liability.²⁶

Over the past decades, the common law has undergone a change in at least some of Canada’s common law jurisdictions. The Manitoba Court of Appeal has held apportionment by virtue of contributory negligence available at common law in category 3 cases,²⁷ and courts in Alberta,²⁸ British Columbia,²⁹ New Brunswick³⁰ and Ontario³¹ have

at 216–222; PA Chandler, “Contributory Negligence and Contract: Some

^{Underlying Disparities” (1989) 40 NILQ 152 at 154–162.}

^{22 Edwin Peel Treitel on the Law of Contract (12th ed, Sweet & Maxwell,}

^{London, 2007) at [20–111].}

^{23 Edwin Peel Treitel on the Law of Contract (12th ed, Sweet & Maxwell,}

^{London, 2007) at [20–106]; Glanville L Williams Joint Torts and Contributory}

^{Negligence (Steven and Sons, London, 1951) at 214–215.}

^{24 Forsikringsaktieselskapet Vesta v Butcher [1989] UKHL 5; [1989] AC 852 (CA) at 879 per Sir}

^{Roger Ormrod. See also AS James Pty Ltd v Duncan [1970] VicRp 90; [1970] VR 705 (VSC)}

^{at 721–722.}

^{25 Forsikringsaktieselskapet Vesta v Butcher [1989] UKHL 5; [1989] AC 852 (CA) at 879 per}

^{Sir Roger Ormrod; Ann Spowart Taylor, “Contributory Negligence – A}

^{Defence to Breach of Contract?” (1986) 49 MLR 102 at 103–104. See also}

^{Jane Swanton “Contributory Negligence as a Defence to Actions for}

^{Breach of Contract” (1981) 55 ALJ 278 at 281.}

^{26 PA Chandler “Contributory Negligence and Contract: Some Underlying}

^{Disparities” (1989) 40 NILQ 152 at 156–162; NE Palmer and PJ Davies}

^{“Contributory Negligence and Breach of Contract – English and}

^{Australasian Attitudes Compared” (1980) 29 ICLQ 415 at 420.}

^{27 Fuerst v St Adolphe Co-Op Parc Inc [1990] 3 WWR 466 (MBCA) at 473. Cf}

^{Giesbrecht v Canada Life Assurance Co [2011] MBQB 244, (2011) 271 Man R}

^{(2d) 151 at [192].}

^{28 Canadian Western Natural Gas Co v Pathfinder Surveys Ltd (1980) 12 CCLT}

^{211 (ABCA).}

^{29 Intrawest Corp v Hart [2002] BCSC 234, 100 BCLR (3d) 173, 14 CLR (3d)}

^{260 at [52]; Crown West Steel Fabricators v Capri Insurance Services Ltd [2002]}

^{BCCA 417, (2002) 214 DLR (4th) 577 at [34] per Newbury JA (the majority}

^{applied the contributory-negligence provision of British Columbia’s}

^{Negligence Act but did not firmly reject the idea that apportionment is}

^{available at common law). See also Seaboard Life Insurance Co v Bank of}

^{Montreal [1999] BCJ No 1598 (BCSC) at [187]–[189].}

^{30 Doiron v Caisse populaire d’Inkerman Ltée (1985) 17 DLR (4th) 660 (NBCA)}

^{at 671–683; Coopers & Lybrand Ltd v HE Kane Agencies Ltd (1985) 17 DLR}

^{(4th) 695 (NBCA) at 705–708.}

^{31 Tompkins Hardware Ltd v North Western Flying Services Ltd (1982) 139 DLR}

^{(3d) 329 (ONSC) at 340–341; Ribic v Weinstein (1982) 140 DLR (3d) 258}

^{(ONSC) at 272–273; Treaty Group Inc v Drake International Inc (2005) 36}

held apportionment available at common law in all contract cases.³² To the same end, the Court of Appeal for England and Wales apportioned liability in a category 1 case, but based this decision on an application of causation principles rather than an apportionment by virtue of contributory negligence.³³

Each major Commonwealth jurisdiction now has a statute providing that contributory negligence on the part of a tort victim leads to an apportionment of liability rather than a complete exoneration of the tortfeasor.³⁴ The applicability of those statutes to contractual liability differs between the jurisdictions, which is partly, but not wholly, due to a different wording of the statutes. Identical language can be found in the relevant statutory provisions of the UK and New Zealand.³⁵ The Court of Appeal for England and Wales has held the British statute applicable in category 3 cases but not in category 1 or category 2 cases.³⁶ In the

CCLT (3d) 265, (2005) 15 BLR (4th) 83 (ONSC) at [69]; affirmed in [2007] ONCA 450, (2007) 86 OR (3d) 366; K-Line Maintenance & Construction Ltd v Scepter Corp (2009) 91 CLR (3d) 73 (ONSC) at [161]; Laxey Partners Ltd v Strategic Energy Management Corp [2011] ONSC 6348, (2011) 108 OR (3d)

440 at [127]. See also Bensuro Holdings Inc v Avenor Inc [2004] OJ No 4875 (ONCA) at [4], where the conceptual basis of apportionment was seen in causation, not contributory negligence.

³² An apportionment at common law is supported by Nick Seddon “Contract Damages where Both Parties Are at Fault” (2000) 15 JCL 207 at 217–218. An apportionment at common law in category 3 cases is also supported by Gary Davis and Jane Knowler “Astley v Austrust Ltd. Down but Not Out: Contributory Negligence, Contract, Statute and Common Law” [1999] MelbULawRw 30; (1999) 23 MULR 795 at 813–816; Michael Tilbury and JW Carter “Converging Liabilities and Security of Contract: Contributory Negligence in Australian Law” (2000) 16 JCL 78 at 97–99.

³³ Tennant Radiant Heat Ltd v Warrington Development Corp [1988] 11 EG 71; [1988] 1 EGLR 41 (CA); followed in W Lamb Ltd v J Jarvis & Sons plc (1998)

60 Con LR 1 (QB), where it could not be established whether the damage had been caused by the plaintiff’s fault or the defendant’s fault or both. The approach taken in Tennant is supported by KR Handley “Reduction of Damages Awards” in PD Finn (ed) Essays on Damages (Law Book Company, Sydney, 1992) at 125. However, Tennant was distinguished in Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck) [1990] 1 QB 818 (CA) at 904, and any apportionment at common law was denied in Hi-Lite Electrical Ltd v Wolseley UK Ltd [2011] EWHC 2153 (TCC), [2011] BLR 629 at [238].

³⁴ In many jurisdictions, the relevant statute applies only to certain torts, in particular those where contributory negligence constitutes a complete defence at common law, and does not apply to other torts, in particular intentional torts.

³⁵ Law Reform (Contributory Negligence) Act 1945 (UK), ss 1(1), 4; Contributory Negligence Act 1947 (NZ), ss 2, 3.

^{36 Forsikringsaktieselskapet Vesta v Butcher [1989] UKHL 5; [1989] AC 852 (CA) at 860–867, 875,}

^{879; Lipkin Gorman v Karpnale Ltd [1989] 1 WLR 1340 (CA) at 1360; Banque}

^{Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665 (CA)}

^{at 720–721; Bank of Nova Scotia v Hellenic Mutual War Risks Association}

^{(Bermuda) Ltd (The Good Luck) [1990] 1 QB 818 (CA) at 904; Barclays Bank}

decision by the New Zealand Court of Appeal in Mouat v Clark Boyce,³⁷

^{Cooke P considered New Zealand’s statute applicable in category 2 and}

^{category 3 cases but not in category 1 cases,38 Gault J considered the}

^{statute applicable in category 3 cases but not in category 1 cases and left}

^{open its applicability in category 2 cases,39 and Richardson J left open the}

^{statute’s applicability in any contract case.40 New Zealand courts have}

^{since rejected an application of the statute in category 1 cases.41}

In Astley v Austrust Ltd,⁴² the High Court of Australia held the then statute of South Australia inapplicable in any contract case even though that statute, as the relevant statutes of all other Australian jurisdictions at that time, was worded in the same way as the statutes in the UK and New Zealand. In response to the High Court’s decision, the statutes of all Australian jurisdictions have been amended so as to apply in category

^{3 cases and in South Australia also in category 2 cases.43}

The relevant statutes of Canada’s common law jurisdictions differ in their language from the statutes of the other countries under discussion and also differ between themselves. The statutes of Alberta, British Columbia, Nova Scotia and Saskatchewan have been applied in category

^{3 cases,44 whereas the statutes of New Brunswick and Ontario have been}

plc v Fairclough Building Ltd (No 1) [1994] EWCA Civ 3; [1995] QB 214 (CA) at 230; UCB Bank plc v Hepherd Winstanley & Pugh [1999] Lloyd’s Rep PN 963 (CA).

37. [1992] NZCA 324; [1992] 2 NZLR 559 (CA); reversed on the question of liability in principle in [1994] 1 AC 428 (PC).

^{38 [1992] NZCA 324; [1992] 2 NZLR 559 (CA) at 564–565.}

^{39 [1992] NZCA 324; [1992] 2 NZLR 559 (CA) at 574–575.}

^{40 [1992] NZCA 324; [1992] 2 NZLR 559 (CA) at 571.}

^{41 Vining Realty Group Ltd v Moorhouse [2010] NZCA 104, (2010) 11 NZCPR}

^{879 at [67]; ANZ Bank New Zealand Ltd v Frost & Sutcliffe [2014] NZHC}

^{1640 at [23], [26]. The applicability of the statute in category 3 cases was}

^{accepted by the parties in Marchand v Jackson [2012] NZHC 2893.}

^{42 [1999] HCA 6, (1999) 197 CLR 1 (Callinan J dissented). The High Court’s}

^{refusal to apply the statute in category 3 cases has been criticised by}

^{many commentators; eg Gary Davis and Jane Knowler “Astley v Austrust}

^{Ltd. Down but Not Out: Contributory Negligence, Contract, Statute and}

^{Common Law” [1999] MelbULawRw 30; (1999) 23 MULR 795; JLR Davis “Contributory Negligence}

^{and Breach of Contract: Astley v Austrust Ltd” (1999) 7 TLJ 1; Michael Legg}

^{“The High Court’s Decision on Concurrent Liability and Contributory}

^{Negligence in Astley v Austrust Limited” (1999) 18 Aust Bar Rev 262; Jane}

^{Swanton “Contributory Negligence is Not a Defence to Actions for Breach}

^{of Contract in Australian Law – Astley v Austrust Ltd” (1999) 14 JCL 251;}

^{Michael Tilbury and JW Carter “Converging Liabilities and Security of}

^{Contract: Contributory Negligence in Australian Law” (2000) 16 JCL 78.}

^{43 Civil Law (Wrongs) Act 2002 (ACT), s 101; Law Reform (Miscellaneous}

^{Provisions) Act 1965 (NSW), s 8; Law Reform (Miscellaneous Provisions)}

^{Act 1956 (NT), s 15; Law Reform Act 1995 (Qld), s 5; Law Reform}

^{(Contributory Negligence and Apportionment of Liability) Act 2001}

^{(SA), s 4(1)(b); Wrongs Act 1954 (Tas), s 2; Wrongs Act 1958 (Vic), s 25;}

^{Law Reform (Contributory Negligence and Tortfeasors’ Contribution)}

^{Act 1947 (WA), s 3A.}

^{44 Canadian Western Natural Gas Co v Pathfinder Surveys Ltd (1980) 12 Alta}

held inapplicable in any contract case.⁴⁵

In summary, any contractual liability can be apportioned by virtue of contributory negligence in at least some, and possibly all, of Canada’s common law jurisdictions, by applying the relevant statute or at common law or both. In Australia, England and Wales, and New Zealand, apportionment is available in category 3 but is unavailable in category 1; it is available in category 2 in South Australia but not in the rest of Australia or in England and Wales, the New Zealand position being unclear. While some of the differences between jurisdictions can be attributed to different wording of the relevant legislation, most differences cannot. The reasons for those differences are not apparent.

B Apportionment in Equity

The idea of reducing equitable compensation for an equitable wrong in order to reflect the plaintiff’s unreasonable conduct prior to the defendant’s wrong has been rejected for most equitable wrongs in most jurisdictions. Statutes providing for an apportionment of liability by virtue of contributory negligence have never been applied to equitable wrongs. In interpreting such statutes, Canadian courts have held that a breach of trust does not constitute “fault”,⁴⁶ and that a breach of fiduciary duty does not constitute “negligence”.⁴⁷

There has been controversy as to whether an apportionment of liability by virtue of contributory negligence ought to be available as a matter of

LR (2d) 135 (CA), applying Alberta’s Contributory Negligence Act, RSA

^{1970, c 65, s 2(1); Crown West Steel Fabricators v Capri Insurance Services Ltd}

^{[2002] BCCA 417, (2002) 214 DLR (4th) 577 at [21] per Mackenzie JA, with}

^{whom Finch CJBC agreed, applying British Columbia’s Negligence Act,}

^{RSBC 1996, c 333, s 1; Finance America Realty Ltd v Speed & Speed (1979) 38}

^{NSR (2d) 374 (SC), applying Nova Scotia’s Contributory Negligence Act,}

^{RSNS 1967, c 54, s 3; Husky Oil Operations Ltd v Oster (1978) 87 DLR (3d)}

^{86 (SKQB) at 91–93, applying Saskatchewan’s Contributory Negligence}

^{Act, RSS 1965, c 91, s 2.}

^{45 Dominion Chain Co Ltd v Eastern Construction Co Ltd (1976) 68 DLR (3d)}

^{385 (ONCA) at 390 (affirmed, without final determination of this issue,}

^{in [1978] 2 SCR 1346) in relation to Ontario’s Negligence Act, RSO 1970,}

^{c 296; Doiron v Caisse populaire d’Inkerman Ltée (1985) 17 DLR (4th) 660}

^{(NBCA) at 675 in relation to New Brunswick’s Contributory Negligence}

^{Act, RSNB 1973, c C-19, s 1.}

^{46 Carl B Potter Ltd v Mercantile Bank of Canada [1980] 2 SCR 343 at 352 in}

^{relation to Nova Scotia’s Contributory Negligence Act, RSNS 1967, c 54,}

^{s 1(1).}

^{47 Vita Health Co (1985) Ltd v Toronto-Dominion Bank (1994) 118 DLR (4th) 289}

^{(MBCA) at 296 in relation to Manitoba’s Tortfeasors and Contributory}

^{Negligence Act, RSM 1987, c T-90, s 4. However, it has been said in obiter}

^{dicta that a breach of fiduciary duty constitutes “fault” for the purpose}

^{of British Columbia’s Negligence Act, RSBC 1996, c 333, s 1(1): Petersen}

^{v Proline Management Ltd [2007] BCSC 790, (2007) 74 BCLR (4th) 183 at}

^{[56]–[59]; affirmed, without discussion of the present issue, in [2008]}

^{BCCA 541, (2008) 86 BCLR (4th) 337.}

equity itself. It seems to be commonly accepted that a trustee’s obligation to reconstitute the trust fund after a wrongful disbursement of trust assets is not affected by a contribution that the beneficiary made to the disbursement.⁴⁸ But diverging views have been taken in relation to breach of fiduciary duty and breach of an equitable duty of care and skill.⁴⁹

In two cases, Day v Mead⁵⁰ and Mouat v Clark Boyce,⁵¹ the New Zealand Court of Appeal upheld a reduction of equitable compensation for breach of fiduciary duty on the ground that the principal had contributed to the loss through unreasonable conduct. In both cases, the fiduciary was concurrently liable at common law (breach of contract and negligence respectively), but the possibility of apportioning equitable compensation for breach of fiduciary duty was not stated to be limited to cases of concurrent liability. Those two cases thus established for the law of New Zealand the possibility of reducing equitable compensation for breach of fiduciary duty by virtue of unreasonable conduct on the principal’s part. “[T]hat position appears now to be under attack”.⁵² In a more recent case, the Supreme Court of New Zealand regarded contributory negligence as irrelevant to claims for a breach of fiduciary duty that constitutes fraud, and expressly left open the relevance of contributory negligence to any equitable claim.⁵³ However, this statement was an obiter dictum made in a footnote without any discussion of the issue or reference to previous cases.

In the decision by the Supreme Court of Canada in Canson Enterprises Ltd v Boughton & Co, La Forest J,⁵⁴ speaking for four of the eight judges, regarded an apportionment of equitable compensation on the ground of contributory negligence as possible and approvingly cited Day v Mead. McLachlin J,⁵⁵ speaking for three judges, and Stevenson J⁵⁶ both rejected La Forest J’s views as involving an inappropriate fusion of law and equity but recognised the relevance of unreasonable plaintiff conduct as a matter of causation. Canadian law on this issue has remained unsettled,

48. Lloyds TSB Bank Plc v Markandan & Uddin (a firm) [2010] EWHC 2517 (Ch), [2011] PNLR 6 at [42]. See also De Beer v Canaar & Co (No 2) [2002] EWHC

^{688 (Ch) at [92]. Cf Laxey Partners Ltd v Strategic Energy Management Corp}

^{[2011] ONSC 6348, (2011) 108 OR (3d) 440 at [127].}

^{49 With regard to breach of confidence in the form of breach of privacy, the}

^{possibility of apportionment was impliedly rejected in Mosley v News}

^{Group Newspapers Ltd [2008] EWHC 1777 (QB), [2008] EMLR 679 at [224].}

^{50 [1987] NZCA 74; [1987] 2 NZLR 443 (CA).}

^{51 [1992] NZCA 324; [1992] 2 NZLR 559 (CA).}

^{52 Matthew Conaglen “Remedial Ramifications of Conflicts between a}

^{Fiduciary’s Duties” (2010) 126 LQR 72 at 97.}

^{53 Amaltal Corp Ltd v Maruha Corp [2007] NZSC 40, [2007] 3 NZLR 192 at}

^{[23], n 17.}

^{54 [1991] 3 SCR 534 at 583–585.}

^{55 [1991] 3 SCR 534 at 543–556.}

^{56 [1991] 3 SCR 534 at 591.}

with some decisions denying⁵⁷ and others supporting⁵⁸ the possibility of apportioning equitable compensation for breach of fiduciary duty. Such possibility has been denied by the English High Court.⁵⁹

In Australia, there was initially some judicial support for an apportionment of equitable compensation for breach of fiduciary duty by virtue of unreasonable conduct on the principal’s part,⁶⁰ but the High Court of Australia categorically rejected the idea of such an apportionment in Pilmer v Duke Group Ltd.⁶¹ Even though this statement was an obiter dictum for the majority in the High Court, who denied the existence of a fiduciary relationship in casu, the High Court’s “strong”⁶² view prevents Australian courts from reducing equitable compensation for breach of fiduciary duty on the ground of the principal’s unreasonable conduct.⁶³

It is unclear whether equitable compensation for breach of an equitable duty of care can be apportioned by virtue of the principal’s unreasonable conduct prior to the breach. In the decision by the English Court of Appeal in Bristol and West Building Society v Mothew, Millett LJ, with whom Otton LJ agreed on that issue, suggested that “the common law

⁵⁷ Vita Health Co (1985) Ltd v Toronto-Dominion Bank (1994) 118 DLR (4th) 289 (MBCA) at 296; Zivadinovich v Mehta (1999) 117 OAC 328 (ONCA) at [6]; Reid v Graybriar Industries Ltd [2006] ABQB 519, (2006) 61 Alta LR (4th)

264 at [178]–[179]; Giesbrecht v Canada Life Assurance Co [2011] MBQB 244, (2011) 271 Man R (2d) 151 at [192].

⁵⁸ M Tucci Construction Ltd v Lockwood (2000) 8 BLR (3d) 113 (ONSC) at [168]; Lemberg v Perris [2010] ONSC 3690, [2010] 6 CTC 116 at [88]; Laxey Partners Ltd v Strategic Energy Management Corp [2011] ONSC 6348, (2011) 108 OR (3d) 440 at [127]; Wardrope v Smith [2013] ONSC 330, (2013) 224 ACWS (3d) 420 at [167].

^{59 Nationwide Building Society v Balmer Radmore [1999] PNLR 606 (Ch) at}

^{676–677; Leeds & Holbeck Building Society v Arthur & Cole [2002] PNLR 78}

^{(QB) at 80; De Beer v Kanaar & Co (No 2) [2002] EWHC 688 (Ch) at [92];}

^{Lloyds TSB Bank plc v Markandan & Uddin (a firm) [2010] EWHC 2517 (Ch),}

^{[2010] EWHC 2517; [2011] PNLR 6 at [39]–[42].}

^{60 Beach Petroleum NL v Abbott Tout Russell Kennedy (1997) 26 ACSR 114}

^{(NSWSC) at 286 per Rolfe J (“the authorities are pushing towards a}

^{recognition, in a case such as the present, of rules of apportionment if}

^{that is appropriate. Logically it would seem a sound approach.”); Duke}

^{Group Ltd (in liq) v Pilmer [1999] SASC 97, (1999) 73 SASR 64 at [856] per}

^{Doyle CJ, Duggan and Bleby JJ (“It would be inherently unjust, and we}

^{would say, inequitable, to require a defendant, whose fiduciary breach}

^{unlocked the door to the plaintiff acting in obvious disregard of its own}

^{interests, to bear sole responsibility for the total loss thereby suffered}

^{by the plaintiff where the plaintiff’s own conduct has made a material}

^{contribution to that loss.”).}

^{61 [2001] HCA 31, (2001) 207 CLR 165 at [86], [173].}

^{62 Harris v Digital Pulse Pty Ltd [2003] NSWCA 10, (2003) 56 NSWLR 298 at}

^{[362] per Heydon JA.}

^{63 Eg Mulvaney Holdings Pty Ltd v Thorne [2012] QSC 127 at [60]; Bathurst}

^{Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012]}

^{FCA 1200 at [3329].}

rules of causation, remoteness of damage and measure of damages” apply to equitable compensation for breach of an equitable duty of care, as opposed to breach of fiduciary duty.⁶⁴ Millett LJ did not expressly mention contributory negligence but his reference to the “measure of damages” and his general analogy to common law damages may suggest that he envisaged the possibility of reducing equitable compensation for breach of an equitable duty of care by virtue of contributory negligence. Millett LJ’s statement has been endorsed by the New Zealand Court of Appeal,⁶⁵ but has been doubted by the High Court of Australia.⁶⁶

C Denial of Liability on the Ground of Causation or Remoteness

An apportionment of liability is not the only way in which unreasonable conduct on the plaintiff’s part prior to the defendant’s wrong can affect the defendant’s liability. Such conduct may exclude liability altogether by breaking the chain of causation between the wrong and the loss or, at least in contract, by rendering the loss too remote.⁶⁷ While unreasonable plaintiff conduct may have this exonerating effect even where an apportionment of liability is available,⁶⁸ the possibility of denying liability on causation or remoteness grounds is particularly important where an apportionment of liability is not available. Three English cases illustrate this proposition.

Contributory negligence led to an exclusion of liability on causation grounds in Quinn v Burch Bros (Builders) Ltd,⁶⁹ a category 1 contract case. When the defendant, in breach of contract, failed to provide the plaintiff with a step-ladder as requested, the plaintiff climbed on a trestle without it being safely footed on the floor. He fell to the ground and sustained injuries. It was held that the defendant was not liable to compensate the plaintiff for the loss suffered, on the ground that the plaintiff’s unreasonable use of the trestle had broken the chain of causation between the defendant’s failure to provide the step-ladder and the plaintiff’s injury.

⁶⁴ [1998] Ch 1 (CA) at 17.

^{65 Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR}

^{664 (CA) at 681–682, 688.}

^{66 Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15, (2003) 212}

^{CLR 484 at [39].}

^{67 In equity, it might also be possible to deny equitable compensation as}

^{a matter of discretion. It has been recognised that the conduct of the}

^{plaintiff may make it inequitable to order an account of profits: Warman}

^{International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 at 560. The same principle}

^{might apply to equitable compensation.}

^{68 Eg O’Connor v BDB Kirby & Co [1972] 1 QB 90 (CA); Esplin v Murray [1999]}

^{NSWSC 338 at [65]; Mallesons Stephen Jacques v Trenorth Ltd [1998] VSCA}

^{15, [1999] 1 VR 727.}

^{69 [1966] 2 QB 370 (CA). See also Compania Naviera Maropan SA v Bowaters}

^{Lloyd Pulp and Paper Mills Ltd [1955] 2 QB 68 (CA) at 78; Sole v WJ Hallt}

^{Ltd [1973] QB 574 (QB) at 582; Perpetual Trustees Australia Ltd v Paladin}

^{Wholesale Funding Pty Ltd [2011] FCA 473, (2011) 193 FCR 300 at [24].}

Contributory negligence partially exonerated an equitable wrongdoer on causation grounds in Alliott J’s decision in Lipkin Gorman v Karpnale Ltd.⁷⁰ Between April and November 1980, a partner in the plaintiff firm of solicitors, without the knowledge of his partners, wrongfully withdrew more than £200,000 from clients’ accounts with the defendant bank to fund his gambling addiction. On 3 July 1980, the bank manager became aware of that addiction. On 1 October 1980, the rogue solicitor ’s partners became aware of one unauthorised withdrawal but failed to conduct even a modest investigation, which would have revealed the earlier unauthorised withdrawals and led to an immediate revocation of the rogue partner ’s signing power. With regard to withdrawals made between 3 July and 1 October 1980, Alliott J held the bank liable towards the plaintiffs as constructive trustee for rendering knowing assistance to the rogue solicitor ’s breach of trust. While the English Court of Appeal rejected any liability on the bank’s part,⁷¹ it put no doubt on the following statement made by Alliott J:⁷²

I hold that the plaintiffs’ reaction in the first week of October 1980 was totally inadequate to the circumstances they had stumbled on. From then on they have no one to blame but themselves for their loss, and it would be inequitable to grant them any relief ... for any loss sustained after 1 October 1980.

Unreasonable plaintiff conduct does not always break the chain of causation. The plaintiff’s conduct must reach a certain degree of unreasonableness to have that effect. Where the plaintiff’s conduct does not reach that degree, the defendant’s liability will remain unaffected in the absence of an apportionment regime. In The Good Luck,⁷³ for example, the trial judge found the breach of a strict contractual obligation (among other breaches of contract) and imposed liability for the whole of the plaintiff’s loss resulting from that breach, even though the judge also found that the plaintiff was one third to blame for the loss.

Contributory negligence led to an exclusion of liability on remoteness grounds in Berryman v Hounslow LBC,⁷⁴ a category 1 contract case. The plaintiff lived on the fifth floor in the defendant council’s block of flats, in which there were two lifts. While one lift was out of service for refurbishment, the plaintiff descended with her two children in the

⁷⁰ [1987] 1 WLR 987 (QB). See also Corporacion Nacional Del Cobre De Chile v Sogemin Metals Ltd [1997] 1 WLR 1396 (Ch) at 1404; Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB), [2008] EMLR 679 at [224]–[226].

⁷¹ [1989] 1 WLR 1340 (CA). The further appeal was concerned only with the casino’s liability, not the bank’s: [1991] 2 AC 548 (HL).

^{72 [1987] 1 WLR 987 (QB) at 1019. May LJ expressly approved that aspect of}

^{Alliott J’s judgment in general terms: [1989] 1 WLR 1340 (CA) at 1360.}

^{73 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd}

^{(The Good Luck) [1988] 1 Lloyd’s Rep 514 (QB) at 554–555. On appeal,}

^{the finding of breach was overturned but the trial judge’s treatment of}

^{contributory negligence was approved: [1990] 1 QB 818 (CA) at 903–904;}

^{[1992] 1 AC 233 (HL) at 266–267.}

^{74 [1997] PIQR P83 (CA).}

other lift, and returned shortly afterwards with the children and five bags of shopping. Neither lift worked. She carried the bags upstairs one at a time, having her baby constantly on her hip. As a result of the strain, she suffered a slipped disc. The council was found to have breached its contractual duty to keep the lifts in reasonable repair, but the English Court of Appeal considered the injury unforeseeable and thus too remote, “given that anyone climbing the stairs would be likely to lessen the load, to take it in stages, to take their time and/or to get help”.⁷⁵ Whatever the merits of that decision, it cannot be the case that every instance of unreasonable conduct on the plaintiff’s part prior to the wrong is unforeseeable.⁷⁶ Were it so, contributory negligence would always render the damage too remote and the apportionment legislation would never come into play.

To summarise, some, but not all, instances of unreasonable conduct on the plaintiff’s part prior to the defendant’s wrong lead to an exclusion of the defendant’s liability for the plaintiff’s loss on the ground of causation or remoteness, whether or not an apportionment of liability would otherwise be available. It is therefore important to know when unreasonable plaintiff conduct has that effect and when it does not. Unfortunately, all that can be said with certainty is that the conduct must reach a certain degree of unreasonableness to exonerate the defendant. A slight change in the degree of unreasonableness (or a slight change in the evidence on, or the judge’s assessment of, the degree of unreasonableness) may thus lead to a total transfer of the loss from one party to the other. This can be avoided through a flexible apportionment regime.

II Merits of the Key Argument against Apportionment

The key policy argument for disallowing an apportionment of liability for breach of fiduciary duty or strict contractual liability by virtue of contributory negligence is that the availability of apportionment would undermine the strictness of the defendant’s obligations because the plaintiff would come under a duty to monitor the defendant and to watch her own affairs even though the plaintiff should be able to rely upon the defendant fulfilling his duties. With regard to breach of fiduciary duty, Nolan and Davies argue that “it is of the essence of a fiduciary relationship that the beneficiary is relieved of the need to watch over his own affairs and monitor the fiduciary”.⁷⁷ Using the same argument in the

⁷⁵ [1997] PIQR P83 (CA) at P89 per Henry LJ speaking for the court.

^{76 In Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda)}

^{Ltd (The Good Luck) [1992] 1 AC 233 (HL), the defendant argued that}

^{the plaintiff ’s unreasonable conduct had not been in the parties’}

^{contemplation and thus had rendered the loss too remote. Lord Goff (at}

^{267–268) said that this was an issue of causation rather than remoteness.}

^{77 Donal Nolan and John Davies “Torts and Equitable Wrongs” in Andrew}

^{Burrows (ed) English Private Law (3rd ed, Oxford University Press,}

^{Oxford, 2013) at [17.202]. See also Nationwide Building Society v Balmer}

^{Radmore [1999] PNLR 606 (Ch) at 677; Pilmer v Duke Group Ltd [2001]}

^{HCA 31[2001] HCA 31; , (2001) 207 CLR 165 at [171]–[172] per Kirby J; Matthew Conaglen}

context of strict contractual liability, the Law Commission for England and Wales has said:⁷⁸

If the defendant commits himself to a strict obligation regardless of fault, the plaintiff should be able to rely on him fulfilling his obligation and should not have to take precautions against the possibility that a breach might occur.

It is not easy to ascertain the precise content of this argument, which shall be called the undermine-obligations argument. The following discussion will identify possible interpretations of the argument and evaluate the merits of each version.

One possible interpretation of the undermine-obligations argument is the suggestion that in cases of strict contractual obligations or fiduciary relationships the plaintiff’s conduct can never be unreasonable because the plaintiff is entitled to trust the defendant. This suggestion may be contained in the following statement by Handley:⁷⁹

Equity has not hitherto considered that a beneficiary is bound to protect himself against his fiduciary. The relationship is not at arm’s length and the beneficiary is entitled to place trust and confidence in the fiduciary. The basis for a finding of contributory negligence is therefore lacking.

It is doubtful that the strictness of a contractual or fiduciary obligation absolves the plaintiff from the need to take any precautions, even those that are obvious, are easy to take and prevent significant loss. The High Court of Australia has said in relation to liability in negligence:⁸⁰

“Remedial Ramifications of Conflicts between a Fiduciary’s Duties” (2010) 126 LQR 72 at 98 (“It is inconsistent with the protective function served by fiduciary doctrine to require a principal to be as vigilant in respect of his own interests as he would need to be without fiduciary doctrine’s protection.”); KR Handley “Reduction of Damages Awards” in PD Finn (ed) Essays on Damages (Law Book Company, Sydney, 1992) at 127; RP Meagher JD Heydon and MJ Leeming Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, LexisNexis Butterworths, Chatswood (NSW), 2002) at [23-020]; Sarah Worthington “Review of Hochelaga Lectures. Fusing Common Law and Equity: Remedies, Restitution and Reform by Andrew Burrows” (2003) 119 LQR 519 at 521.

⁷⁸ Law Commission Contributory Negligence as a Defence in Contract (Report No 219, 1993) at [4.2]; citation omitted. See also PA Chandler “Contributory Negligence and Contract: Some Underlying Disparities” (1989) 40 NILQ

^{152 at 172–173. The argument is rejected by Ariel Porat “Contributory}

^{Negligence in Contract Law: Toward a Principled Approach” (1994) 28}

^{UBC Law Rev 141.}

^{79 KR Handley “Reduction of Damages Awards” in PD Finn (ed) Essays on}

^{Damages (Law Book Company, Sydney, 1992) at 127. See also Carl B Potter}

^{Ltd v Mercantile Bank of Canada [1980] 2 SCR 343 at 352 per Ritchie J (“I}

^{know of no authority for the proposition that a cestui que trust owes a}

^{duty to its trustee to ensure that the terms of the trust are observed.”);}

^{Zivadinovich v Mehta (1999) 117 OAC 328 (ONCA) at [6].}

^{80 Astley v Austrust Ltd [1999] HCA 6, (1999) 197 CLR 1 at [29] per Gleeson}

^{CJ, McHugh, Gummow and Hayne JJ.}

A plaintiff may be guilty of contributory negligence ... even if the “very purpose” of the duty owed by the defendant is to protect the plaintiff’s property. Thus, a plaintiff who carelessly leaves valuables lying about may be guilty of contributory negligence, calling for apportionment of loss, even if the defendant was employed to protect the plaintiff’s valuables.

It is unclear why the same principle should be inapplicable in cases involving strict contractual liability or breach of fiduciary duty. Furthermore, an absolute trust by the plaintiff in the defendant can be justified (if at all) only within the scope of the defendant’s obligations towards the plaintiff. No fiduciary assumes responsibility for every aspect of the principal’s life. Even a guardian is not under a fiduciary duty with regard to every aspect of the ward’s life.⁸¹ Still less does a contracting party assume responsibility for every aspect of the other party’s life. Outside the scope of the defendant’s obligations towards the plaintiff, the plaintiff is not entitled to trust the defendant absolutely, but is under the usual “duties to onseself”. Unreasonable conduct on the plaintiff’s part may therefore occur and may increase the loss caused by the defendant’s wrong. For example, a restaurant owner ’s failure to check a newly-bought deep fat fryer for defects is not unreasonable, as the restaurant owner is entitled to rely on the seller ’s guarantee of fitness for purpose.⁸² But the restaurant’s owner ’s failure to have fire extinguishers in the restaurant is unreasonable and may increase the damage if a defect in the deep fat fryer causes a fire.

Another interpretation of the undermine-obligations argument is the suggestion that an introduction of apportionment into areas in which apportionment is currently unavailable would create the danger of reasonable conduct by the plaintiff being erroneously classified as unreasonable. This suggestion is perhaps made by Conaglen,⁸³ whose criticism of the apportionment of equitable compensation in Taylor v Schofield Peterson⁸⁴ (which will be discussed further below) might involve the argument that the principal’s conduct in that case should not have been regarded as unreasonable.

It is true that reasonable conduct by a plaintiff may be erroneously classified as unreasonable (although Taylor v Schofield Peterson should not be seen as an example). However, it would go too far to exclude the possibility of an apportionment for the sole purpose of preventing

⁸¹ Paramasivam v Flynn [1998] FCA 1711; (1998) 160 ALR 203 (FC) at 218; B (KL) v British Columbia [2003] SCC 51, (2003) 230 DLR (4th) 513 at [39]–[50]; South Australia v Lampard-Trevorrow [2010] SASC 56, (2010) 106 SASR 331 at [329]–[337]. A guardian may be under a duty of care with regard to every aspect of the ward’s life, but a breach of that duty can “only” lead to liability in negligence, which is subject to apportionment by virtue of contributory negligence.

^{82 Law Commission Contributory Negligence as a Defence in Contract (Report}

^{No 219, 1993) at [4.4].}

^{83 Matthew Conaglen “Remedial Ramifications of Conflicts between a}

^{Fiduciary’s Duties” (2010) 126 LQR 72 at 98–100.}

^{84 [1998] NZHC 2363; [1999] 3 NZLR 434 (HC).}

court error. There is always a danger that courts improperly use a power granted to them, but that does not justify the exclusion of a power that is desirable if used properly. For example, the tort of negligence, which imposes liability for breach of a duty of care, has emerged even though a duty of care may occasionally be imposed in circumstances in which it should not be imposed. Prevention of court error is not a convincing version of the undermine-obligations argument.

Yet another interpretation of the undermine-obligations argument is the suggestion that the possibility to apportion liability for breach of fiduciary duty or strict contractual liability by virtue of contributory negligence would impose upon the plaintiff “duties to oneself” that are not imposed at present. For example, Chandler has argued in the contractual context that such possibility “would be tantamount to imposing upon the plaintiff a duty to check up on his own actions lest failure to do so contributed to his ultimate loss”.⁸⁵

This version of the undermine-obligations argument is fundamentally flawed. An introduction of apportionment into areas where apportionment is currently unavailable would not impose any new “duty to oneself” upon the plaintiff. It would merely provide the court with a third option of responding to the breach of an already existing duty on the plaintiff’s part. At present, the court has only two options of response: to disregard the plaintiff’s unreasonable conduct and award full compensation, or to completely exonerate the defendant on the ground of causation or remoteness. An apportionment regime would provide the court with another option, namely to award compensation for part of the loss.⁸⁶

This new option of responding to unreasonable plaintiff conduct would not affect cases of reasonable plaintiff conduct and would not influence the classification of certain conduct as reasonable or unreasonable. As Andrew Burrows points out with regard to breach of trust, “the content of the trustee’s duty – to look after the trust property for the benefit of the beneficiary – means that a beneficiary could rarely, if ever, be regarded as ‘at fault’, compared with the trustee, in relation to that property”.⁸⁷

Now it might be argued that while an introduction of apportionment into areas in which apportionment is currently unavailable does not formally impose new duties upon the plaintiff, it does so in fact because

⁸⁵ PA Chandler “Contributory Negligence and Contract: Some Underlying

^{Disparities” (1989) 40 NILQ 152 at 172.}

^{86 The idea of having the third option is supported by Andrew Burrows}

^{Remedies for Torts and Breach of Contract (3rd ed, Oxford University Press,}

^{Oxford, 2004) at 141–144 (for contract); Joachim Dietrich “The Decline}

^{of Contributory Negligence and Apportionment: Choosing the Black or}

^{White of All-Or-Nothing Over Many Shades of Grey?” (2003) 11 TLJ 1. By}

^{contrast, an all-or-nothing approach is favoured for equity by Jill Martin}

^{“Fusion, Fallacy and Confusion; a Comparative Study” [1994] Conv 13}

^{at 21.}

^{87 Andrew Burrows “Remedial Coherence and Punitive Damages in Equity”}

^{in Simone Degeling and James Edelman (eds) Equity in Commercial Law}

^{(Law Book Company, Pyrmont (NSW), 2005) at 384.}

it “awakens” duties that are currently dormant, in other words, it ties consequences to the breach of duties that the plaintiff can currently breach with impunity because an apportionment of liability by virtue of such breach is unavailable. This version of the undermine-obligations argument is still flawed. Even today, the duties in question are not dormant since the law does not tolerate every breach of them. A major breach of the duties may exonerate the defendant on causation or remoteness grounds.

This leads to another possible interpretation of the undermine- obligations argument, which goes as follows. Even though the plaintiff in the cases under discussion is already under “duties to oneself”, the defendant’s liability is currently affected only by a major breach of those duties but would be affected even by a minor breach were apportionment of liability available. Plaintiffs whose conduct is not sufficiently unreasonable to exclude liability on causation or remoteness grounds would no longer be safe from a reduction of their compensation, which would undermine the strictness of the defendant’s obligations.

It is true that an introduction of apportionment into areas in which apportionment is currently unavailable would lead to a reduction in compensation for some plaintiffs who currently recover in full. But it is not clear why this would undermine the strictness of the defendant’s obligations. Furthermore, if such an undermining effect does exist, it logically follows that the defendant’s obligations are strengthened by the fact that an introduction of apportionment would also lead to partial recovery by some plaintiffs who currently obtain nothing. Where a court finds that the plaintiff’s unreasonable conduct renders it unjust to burden the defendant with the whole loss suffered by the plaintiff, the unavailability of apportionment forces the court to completely exonerate the defendant on causation or remoteness grounds. As Vann points out with regard to breach of fiduciary duty, the “fear that allowing a plea of contributory negligence would relieve defendants of liability is paradoxically realised by not allowing such a plea”.⁸⁸

In the context of contractual liability, the fact that the availability of apportionment may actually benefit the plaintiff is illustrated by the English case Sole v W J Hallt Ltd.⁸⁹ The defendant employed the plaintiff to fix plasterboards to form ceilings in a house being built on the defendant’s land. In breach of his occupier ’s duties, the defendant failed to provide

⁸⁸ Vicki Vann Equitable Compensation in Australia: Principles and Problems (VDM, Saarbrücken, 2009) at 334, who argues that a careful consideration of the risk allocation between the parties obviates the need to resort to contributory negligence. See also Joachim Dietrich “The Decline of Contributory Negligence and Apportionment: Choosing the Black or White of All-Or-Nothing Over Many Shades of Grey?” (2003) 11 TLJ 1 at

7–8; Geoff McLay “Equitable Damages” in Andrew S Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [32.8.4].

^{89 [1973] QB 574 (QB).}

the plaintiff with boards to cover a stairwell. The plaintiff nonetheless started the work and, while looking at the ceiling, stepped back and fell into the stairwell, sustaining injuries. Swanwick J held the defendant concurrently liable in contract and tort and went on to say:⁹⁰

My finding is that it was negligent of the plaintiff to walk backwards in the direction of what he knew, if he thought about it, was an unguarded stairwell, and while looking at the ceiling. If his claim had had to be pleaded in contract, I would have felt compelled ... to hold that his contributory negligence was such as to amount to a novus actus interveniens and a break in the chain of causation, particularly as it occurred after the defendants’ negligent act in breach of their contract. But holding as I do that it is open to him to found his claim in tort ..., I find that he was one-third to blame. He is, therefore, entitled to recover two-thirds of his total damages.

An exclusion of liability compelled by the absence of an apportionment regime creates the further problem that it may constitute a precedent for complete exoneration even in cases in which an apportionment is available. Consider again the example of fire damage increased by the lack of fire extinguishers in a restaurant. If the fire was started by a defective deep fat fryer, the court may well deny the seller ’s liability for breach of warranty in relation to loss that would have been avoided had fire extinguishers been available, on the ground that the restaurant owner ’s failure to install fire extinguishers broke the chain of causation or rendered the loss too remote. That finding might become a precedent for a complete exclusion of liability even in cases in which an apportionment is available, for example where negligent conduct causes a fire in a restaurant that lacks fire extinguishers.

Furthermore, the impact of an apportionment regime in cases of strict contractual liability and breach of fiduciary duty must not be overestimated. The strictness of the defendant’s obligations would be an important factor in determining each party’s share in the responsibility for the damage. Where the plaintiff’s breach of duty (in the sense of a “duty to oneself”) is minor, the court will reduce the plaintiff’s compensation by a low percentage only or not at all. With regard to breach of fiduciary duty, Cooke P said in Day v Mead:⁹¹

[B]efore reducing an award on the ground that the claimant has been partly the author of his own loss, the Court will have to give much weight to the well-established principle that, largely for exemplary purposes, high standards are expected of fiduciaries. A strong case is needed to relieve the fiduciary of complete responsibility.

The final interpretation of the undermine-obligations argument is this. Courts are more willing to impose “duties to oneself” upon the plaintiff where only a major breach of those duties affects the defendant’s liability.

⁹⁰ [1973] QB 574 (QB) at 582. See also David Logan “Contributory Fault in

^{Contract – A Step Back?” (2000) 10 SLT 81 at 83.}

^{91 [1987] NZCA 74; [1987] 2 NZLR 443 (CA) at 452.}

In areas in which an apportionment of liability is currently unavailable, the courts have placed plaintiffs under more onerous “duties to oneself” than they would have done had apportionment already been available. If even a minor breach of those duties were now to affect the defendant’s liability, the burden on the plaintiff would be too high, which would undermine the strictness of the defendant’s obligations. The factual premise of this argument cannot be made out. It cannot be demonstrated that the courts have placed plaintiffs under more onerous “duties to oneself” where apportionment is unavailable than where it is available. On the contrary, the following Part will show that the courts have been cautious in imposing “duties to oneself” upon the plaintiff in cases involving strict contractual liability or breach of fiduciary duty, as the plaintiff in those cases is generally entitled to rely upon the defendant within the scope of the defendant’s obligations.

III A Plaintiff’s Duty to Monitor the Defendant and Watch Her Own Affairs

The undermine-obligations argument is based on the fear that if liability for breach of fiduciary duty or strict contractual liability became apportionable by virtue of contributory negligence, a duty (in the sense of a “duty to oneself”) on the plaintiff’s part to monitor the defendant and to watch her own affairs would either be introduced for the first time or would become more significant since even a minor breach of it by the plaintiff could affect the defendant’s liability. This argument displays distrust in the courts’ ability to sensibly define the plaintiff’s duties by considering the nature of the defendant’s obligations.

In order to determine whether that distrust is justified, it will now be investigated whether and to what extent the courts have so far placed plaintiffs under a duty to monitor the defendant and to check their own affairs in cases of strict contractual liability and breach of fiduciary duty. Two areas will be explored: the duty of a buyer of goods to check the goods for defects, and the duty of a fiduciary’s principal to obtain independent legal advice before entering into a transaction upon which the fiduciary advises the principal. It will be demonstrated that in both areas the courts have struck an appropriate balance between the plaintiff’s interest in being able to rely upon the defendant and the defendant’s interest in not being liable for loss caused by unreasonable conduct on the plaintiff’s part. There is no reason to doubt the courts’ ability to maintain that balance if an apportionment of liability by virtue of contributory negligence became available.

A Obligation of a Buyer to Check the Goods for Defects

An example of a duty (in the sense of a “duty to oneself”) of a plaintiff to monitor the defendant is the duty of a buyer of goods to check the goods for defects. This duty has been judicially considered in determining whether a breach of it rendered the loss resulting from the defect too remote or broke the chain of causation between the seller ’s breach and the loss. The courts have struck an appropriate balance between the

buyer ’s interest in being able to rely on the seller ’s warranty that the goods be fit for purpose and the seller ’s interest in not being liable for loss caused by the buyer ’s failure to check the goods.

When receiving the goods, the buyer is not obliged (in the sense of a “duty to oneself”) to immediately check them for defects but can rely on the seller ’s warranty that they are fit for purpose. This flows from the general principle that “a man is entitled to act in the faith that the other party to a contract is carrying out his part of it properly”.⁹² The buyer ’s entitlement to rely on the seller ’s warranty prevailed in G C Dobell & Co Ltd v Barber and Garratt,⁹³ which involved the sale of linseed cake from India to be used as cattle food. Legislation implied a warranty by the seller that the linseed cake was suitable to be used as cattle food. It was generally known at that time that linseed cake imported from India was liable to contain castor seed, which is poisonous to cattle. Nevertheless, the buyer delivered the linseed cake to sub-buyers without checking it for castor seed. It turned out that the linseed cake contained castor seed, and some cattle died or became ill. The buyer was liable towards its sub-buyers and sought to be indemnified by the seller, based on the seller ’s breach of the implied warranty. While Greer LJ took the view that the buyer ’s failure to check the linseed cake had exonerated the seller,⁹⁴ the majority in the English Court of Appeal held the seller liable on the ground that the buyer had been entitled to rely on the seller ’s warranty.⁹⁵

Both Lawrence LJ and Greer LJ added in obiter dicta that any resale of the linseed cake after the buyer became aware of the contamination would not have increased the seller ’s liability.⁹⁶

When receiving the goods, the buyer is under no “duty to oneself” to check the goods for defects even if the buyer is under such a duty towards a third party, for example an employee of the buyer. If the buyer refrains from checking the goods in reliance on the seller ’s warranty and is held liable towards the third party, the seller must indemnify the buyer against this liability. The significance of the scope of the warranty was emphasised by Winn LJ in Hadley v Droitwich Construction Co Ltd:⁹⁷

⁹² Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd [1955] 2 QB 68 (QB) at 77 per Devlin J; approvingly quoted in Reardon Smith Line Ltd v Australian Wheat Board [1956] AC 266 (PC) at 282 per Lord Somervell.

^{93 [1931] 1 KB 219 (CA).}

^{94 [1931] 1 KB 219 (CA) at 245–247.}

^{95 [1931] 1 KB 219 (CA) at 231 per Scrutton LJ, 237 per Lawrence LJ. The same}

^{decision had been made, on almost identical facts, in Pinnock Brothers v}

^{Lewis & Peat Ltd [1923] 1 KB 690 (KB) at 698; British Oil and Cake Co Ltd v}

^{Burstall & Co (1923) 39 TLR 406 (KB) at 407.}

^{96 [1931] 1 KB 219 (CA) at 238 per Lawrence LJ, 246–247 per Greer LJ. The}

^{same view was taken in Biggin & Co Ltd v Permanite Ltd [1951] 1 KB 422}

^{(KB) at 436–437 (referring to mitigation doctrine); Compania Naviera}

^{Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd [1955] 2 QB 68 (QB)}

^{at 78.}

^{97 [1968] 1 WLR 37 (CA) at 43 (emphasis original). Approvingly quoted, eg,}

[I]n a case where A has been held liable to X, a stranger, for negligent failure to take a certain precaution, he may recover over from someone with whom he has a contract only if by that contract the other contracting party has warranted that he need not — there is no necessity — take the very precaution for the failure to take which he has been held liable in law to the plaintiff.

Such a warranty was present in Mowbray v Merryweather.⁹⁸ The plaintiff stevedores undertook to discharge a cargo from a ship owned by the defendant, who undertook to provide all necessary and proper derricks, cranes, chains, winches and other gearing reasonably fit for the purpose of discharging the cargo. He supplied a chain so defective that it broke in the process of discharging the cargo, thereby seriously injuring an employee of the plaintiffs. The plaintiffs paid compensation to their employee and sought reimbursement from the defendant, based on his breach of warranty. He argued that the loss was too remote because the plaintiffs could have discovered the defect in the chain by exercise of reasonable care. The English Court of Appeal rejected that argument on the ground that, while the plaintiffs were under a duty towards their employee to check the chain, they were under no such duty towards the defendant because, as between them and the defendant, they were entitled to rely on his warranty.⁹⁹ Even though the court asked whether the plaintiffs were under a duty towards the defendant, the court was in fact discussing a “duty to oneself”.

After receiving the goods, the buyer remains entitled to rely on the seller ’s warranty for a reasonable period, as long as the goods do not start to show signs of possible defects. As Lord Diplock said in Lexmead (Basingstoke) Ltd v Lewis:¹⁰⁰

The implied warranty of fitness for a particular purpose relates to the goods at the time of delivery under the contract of sale in the state in which they were delivered. I do not doubt that it is a continuing warranty that the goods will continue to be fit for that purpose for a reasonable time after delivery, so long as they remain in the same apparent state as that in which they were delivered, apart from normal wear and tear.

Lexmead (Basingstoke) Ltd v Lewis demonstrates that the buyer comes under a duty to check the goods at some point after delivery once the goods start to show signs of possible defects. In July 1971, the owner of a Land Rover bought a towing hitch and coupled his Land Rover to a trailer. Between March and June 1972, a brass spindle and handle became detached from the towing and, subsequently, only dirt held the towing

in Lexmead (Basingstoke) Ltd v Lewis [1982] AC 225 (HL) at 276 per Lord Diplock; Marr (Contracting) Pty Ltd v White Constructions (Act) Pty Ltd [1991] FCA 552; (1991) 32 FCR 425 (Full Ct) at 434 per Beaumont J, 441 per Burchett J.

^{98 [1895] UKLawRpKQB 173; [1895] 2 QB 640 (CA).}

^{99 [1895] UKLawRpKQB 173; [1895] 2 QB 640 (CA) at 644, 645, 646–647. The same decision was made,}

^{on similar facts, in Scott v Foley, Aikman & Co (1899) 5 Com Cas 53 at 56–57;}

^{16 TLR 55 (QB).}

^{100 [1982] AC 225 (HL) at 276.}

pin in position. When the Land Rover coupled to the trailer was driven on the road on 10 September 1972, the trailer suddenly became detached and careered into the path of another car, killing two people and injuring another two people in that car. The owner of the Land Rover was held liable in negligence towards the victims of the accident (on the ground that he must have noticed that the handle was missing and continued to use the towing hitch for another three to six months without having it checked by an expert) and sought reimbursement from the seller of the towing hitch. Even though it was held that the towing hitch had not been fit for purpose, liability on the seller ’s part was denied on the ground that the buyer had no longer been able to rely on the seller ’s warranty of fitness for purpose once it became apparent to the buyer that the locking mechanism was broken.¹⁰¹

Where the seller purports to have rectified the defects, the buyer is once again entitled to rely on the seller ’s warranty. This is demonstrated, although in the context of a lease of property rather than the sale of goods, by The Kate.¹⁰² The first defendant, which owned the bed of a river and the quays and berths alongside, leased one of the quays to the second defendant and undertook to keep the quay and river berths in good order and condition. On demand by the lessee, the lessor carried out work on the berths meant to clear uneven places. Three weeks later, the plaintiff’s ship suffered damage while lying aground at the quay in question. It turned out that the berths were still in a bad condition. Both the lessor and the lessee of the quay were held liable in negligence towards the plaintiff, and the lessor was held contractually liable to indemnify the lessee in respect of the latter ’s liability towards the plaintiff. In reliance on Mowbray v Merryweather, it was held that the lessee’s loss was not too remote from the lessor ’s breach of contract because the lessee’s breach of duty towards the plaintiff (namely the failure to warn the plaintiff of the dangerous berth) constituted no breach of duty towards the lessor.¹⁰³

Again, by referring to a duty towards the lessor on the lessee’s part, the court was in fact discussing a “duty to oneself”.

B Obligation of a Fiduciary’s Principal to Obtain Independent Advice

An example of a duty (in the sense of “duty to oneself”) to watch one’s own affairs is the duty of a fiduciary’s principal to obtain independent legal advice before entering into a transaction upon which the fiduciary advises the principal. The existence and extent of that duty has been considered for the purpose of determining whether and when the principal’s failure to obtain independent legal advice breaks the chain

¹⁰¹ [1982] AC 225 (HL) at 276–277. Similarly, in Hunnerup v Goodyear Tyre & Rubber Co (Aust) Ltd (1974) 7 SASR 215 (SC) at 229–230, it was said that a seller of defective car tyres is not liable with regard to an accident that occurs a certain time after the tyres have shown signs of possible defects. This view was based on the mitigation principle rather than an expiry of the warranty.

^{102 [1935] P 100 (PD).}

^{103 [1935] P 100 (PD) at 111–113.}

of causation between a breach of fiduciary duty and the resulting loss. The courts have struck an appropriate balance between the principal’s interest in being able to trust the fiduciary and the fiduciary’s interest in not being liable for loss caused by the principal’s failure to obtain independent legal advice.

Since the principal is generally entitled to trust the fiduciary, the failure by the principal to obtain independent legal advice cannot be considered unreasonable where the principal is not aware of the conflict between the fiduciary’s duty and the fiduciary’s interest¹⁰⁴ or between the fiduciary’s duties to several principals.¹⁰⁵ A principal who is unaware of such a conflict has no reason to believe that independent legal advice may be important. It should make no difference that the fiduciary suggests that the principal obtain independent legal advice if the fiduciary does not also disclose the conflict of interest or duties. Even a principal who is aware of the fiduciary’s conflict is not necessarily under a duty (in the sense of a “duty to oneself”) to obtain independent legal advice. No such duty exists where the fiduciary actively dissuades the principal from obtaining independent advice,¹⁰⁶ and it may still not exist where the fiduciary is simply silent on the issue of independent advice.¹⁰⁷

By contrast, the failure to obtain independent advice may be unreasonable where the fiduciary firmly suggests that the principal obtain such advice, and where the principal is aware of the fiduciary’s conflict of interest or duties. Two cases from New Zealand illustrate this proposition.

The first case is Mouat v Clark Boyce,¹⁰⁸ where the plaintiff, an elderly widow, granted a mortgage over her home as security for a loan made to her son. The defendant solicitor acted in the matter for both her and her son. He told the plaintiff three times that she should have independent advice, but the plaintiff said that she did not need it as she trusted her son. She did in fact have misgivings but did not want to show her feelings before a stranger. The defendant sought no information on the financial state of either the plaintiff or her son and never discussed the matter with the plaintiff in the absence of her son. When the plaintiff’s son later defaulted and became bankrupt, the plaintiff was called on to

¹⁰⁴ These circumstances were present, eg, in Hodgkinson v Simms [1994] 3 SCR

^{377; Swindle v Harrison [1997] EWCA Civ 1339; [1997] 4 All ER 705 (CA); Longstaff v Birtles [2001]}

^{EWCA Civ 1219[2001] EWCA Civ 1219; , [2002] 1 WLR 470; Fico v O’Leary [2004] WASC 215 at}

^{[140]–[142]. In none of these cases was it suggested that the principal’s}

^{failure to obtain independent legal advice had been unreasonable.}

^{105 These circumstances were present in Farrington v Rowe McBride v Partners}

^{[1985] NZCA 21; [1985] 1 NZLR 83 (CA), where it was not suggested that the principal’s}

^{failure to obtain independent legal advice had been unreasonable.}

^{106 Commonwealth Bank of Australia v Smith [1991] FCA 375; (1991) 42 FCR 390 (Full Ct) at 393.}

^{107 Ridge View Development & Holding Co Ltd v Simper (1989) 67 Alta LR (2d)}

^{34 (QB); Brott v Maher [2004] VSCA 220; Mantonella Pty Ltd v Thompson}

^{[2009] QCA 80, [2009] 2 Qd R 524 at [143]; Eiszele v Hurburgh [2011] TASSC}

^65.

^{108 [1992] NZCA 324; [1992] 2 NZLR 559 (CA); [1994] 1 AC 428 (PC).}

^{pay the debt secured by the mortgage.}

In the plaintiff’s action against the defendant, the Privy Council eventually denied any liability on the defendant’s part on the ground that the defendant had acted with the plaintiff’s informed consent. What is important in the present context is that the New Zealand Court of Appeal had held the defendant liable for breach of fiduciary duty (and negligence) but reduced liability by one half on the ground that the plaintiff had been “heedless of her own interest in rejecting the advice she received and in failing to seek more information about her son’s financial position before deciding that trust of him was a sufficient basis for proceeding at once without obtaining the independent advice”.¹⁰⁹

The second case is Taylor v Schofield Peterson.¹¹⁰ Mr Taylor and Mr Schwass, who were running a business together, entered into an agreement in which Mr Taylor sold his share in the partnership to Mr Schwass and loaned the purchase price to Mr Schwass with interest payable but without security. A few years later, Mr Schwass went into bankruptcy and repaid nothing on the loan. Mr Taylor sought to recover his loss from the solicitor who had acted for both Mr Taylor and Mr Schwass with regard to the sale of the share and had previously been Mr Taylor ’s family solicitor for some years. It was held that the solicitor had breached her fiduciary duty towards Mr Taylor by acting for both parties to the agreement and by failing to advise Mr Taylor with sufficient emphasis that he should seek independent legal advice. It was further held that the solicitor ’s breach of fiduciary duty was a cause of Mr Taylor ’s loss. Finally, the court recognised the possibility of reducing equitable compensation by virtue of contributory negligence,¹¹¹ and reduced compensation by 20 per cent on the ground that Mr Taylor had acted unreasonably by failing to seek independent legal advice. Hammond J, who delivered the judgment of the New Zealand High Court, gave the following explanation as to why the deduction was not higher:¹¹²

If Mr Taylor had been told he “should” take independent legal advice, but declined, then that would doubtless be a strong consideration for making a very distinct allowance. But all that can be said in this case is that Mr Taylor was told he “could” take independent legal advice. He was not a sophisticated man. Indeed, most of the business arrangements in this case reveal distinct naivety on his part. He went to a family solicitor he trusted for advice.

109. [1992] NZCA 324; [1992] 2 NZLR 559 (CA) at 573 per Richardson J. The Privy Council did not address the issue of contributory negligence.

^{110 [1998] NZHC 2363; [1999] 3 NZLR 434 (HC).}

^{111 [1998] NZHC 2363; [1999] 3 NZLR 434 (HC) at 447, relying on Cooke P’s judgment in Day v}

^{Mead [1987] NZCA 74; [1987] 2 NZLR 443 (CA).}

^{112 [1998] NZHC 2363; [1999] 3 NZLR 434 (HC) at 447. The view that Mr Taylor behaved}

^{reasonably and ought to have received full compensation is taken by}

^{Matthew Conaglen “Remedial Ramifications of Conflicts between a}

^{Fiduciary’s Duties” (2010) 126 LQR 72 at 98.}

It is worth pointing out that the courts’ reluctance to classify conduct by the principal as unreasonable exists not only in respect of the failure to obtain independent legal advice but in respect of any conduct by the principal within the scope of the fiduciary’s duties. An illustration is the New Zealand case Everist v McEvedy.¹¹³ A solicitor acted for all parties in a transaction that replaced Mrs McEvedy’s secured loan to her daughter and son-in-law with an unsecured loan. In breach of fiduciary duty, the solicitor failed to inform Mrs McEvedy that her daughter and son-in-law had used the money in a business venture in Thailand. Tipping J rejected the argument that Mrs McEvedy had contributed to her loss by failing to advise the solicitor that she wanted the money to stay in New Zealand, on the ground that it had been the solicitor ’s very duty to inform Mrs McEvedy about the plan to invest the money in Thailand. He said:¹¹⁴

I accept in general terms ... that a client will sometimes have a duty to give her solicitor certain instructions and that in their absence the client may be regarded as partially responsible for any ensuing loss. The key question will often be whether the client has any reason to give instructions when they are not expressly sought. When a solicitor is dealing with a client’s money the onus is on the solicitor to obtain the client’s fully-informed consent to any dealing with that money.

Conclusion

At least in Australia and in England and Wales, neither liability for breach of fiduciary duty nor strict contractual liability can be apportioned on the ground that unreasonable conduct on the plaintiff’s part prior to (becoming aware of) the defendant’s wrong contributed to the occurrence of the wrong or the ensuing loss. This position has been defended with the argument that the availability of such an apportionment would undermine the strictness of the defendant’s obligations in those cases. The precise content of that argument is not entirely clear, but every possible version of it is unconvincing.

Crucially, the introduction of an apportionment regime into the two categories of case would not impose any new duty (in the sense of a “duty to oneself”) upon the plaintiff. It would merely provide the court with a third option of responding to the breach of an already existing duty, namely to apportion liability in proportion to each party’s share in the responsibility for the loss. Currently, the court has only the options of either disregarding the plaintiff’s unreasonable conduct and awarding full compensation, or completely exonerating the defendant on causation or remoteness grounds. A slight change in the degree of unreasonableness of the plaintiff’s conduct may shift the whole loss from one party to the other.

It is true that the introduction of an apportionment regime into the two

^{categories of case discussed would move the plaintiff’s “duties to oneself”}

¹¹³ [1996] NZHC 1231; [1996] 3 NZLR 348 (HC).

^{114 [1996] NZHC 1231; [1996] 3 NZLR 348 (HC) at 357.}

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into the limelight. But the courts can be trusted to sensibly delimit those duties by considering the nature of the defendant’s obligations. This is demonstrated by the way in which the courts have delimited the duty of a buyer of goods to check the goods for defects and the duty of a fiduciary’s principal to obtain independent legal advice before entering into a transaction upon which the fiduciary advises the principal. There is no reason to doubt that the courts would maintain their sensible approach if an apportionment of liability became available.

It is therefore suggested that both liability for breach of fiduciary duty and strict contractual liability ought to be subject to an apportionment by virtue of contributory negligence. In jurisdictions in which such an apportionment is not available already, an implementation of the suggestion made here would require legislative reform insofar as an apportionment regime cannot be created by developing the common law (in the sense of judge-made law, including equity) or by interpreting existing apportionment legislation.