The Law Commission has been asked to review the joint and several liability rule, and to consider alternatives.
The joint and several liability rule determines the liability of multiple parties in civil proceedings where a person has suffered loss, and how responsibilities for the loss are allocated where there are several liable defendants. The application of the rule in New Zealand has been controversial in the building and construction sector as a result of the leaky buildings crisis.
The Law Commission is carrying out a broad review of the effects of the rule across all sectors. The review also identifies and considers possible alternatives.
The most commonly proposed alternative is a system of proportionate liability. Other alternatives combine some elements of joint and several liability with elements of proportionate liability, or involve introducing caps on total liability in some circumstances or for some defendants.
The Commission has analysed submissions received in response to an issues paper it released last year. The Commission expects to deliver its final report in the last quarter of 2013.
References to the review in the media
Scoop 'Review of joint and several liability' 10 October 2011
- Published 30 May 2012
The Government has asked the Law Commission to review the application of the joint and several liability rule in New Zealand.
Where two or more parties are liable for the same loss or damage to another party, because of separate wrongful acts, the joint and several liability rule holds both or all of the wrongdoers 100% liable for the loss caused. The party who suffered the loss can claim against one wrongdoer to recover the whole of the loss. That defendant can then seek contribution from any other wrongdoers.
The Law Commission will consider whether the rule should be retained, replaced or amended, either generally, or in relation to particular professions or industries, including the building and construction industry, auditors and accountants.
The Commission will consider the key advantages and disadvantages of different forms of liability, including:
- joint and several liability;
- proportionate liability;
- liability capped by statute; and
- contractual limitations on liability.
Obtain a Hard CopyAvailable online only.Published 21 Nov 2012
The Law Commission has released an Issues Paper on Joint and Several Liability. The paper is available below in PDF and eBook form, or you can view the online version. The Commission is seeking submissions and comments on the Paper. These can be made via email to firstname.lastname@example.org or posted to Peter McRae, Senior Legal and Policy Adviser, Law Commission, PO Box 2590, Wellington 6011, DX SP 23534. The deadline for submissions is Thursday 31 January 2013.
The Issues Paper describes how the rule of joint and several liability works, and identifies its key strengths and weaknesses. Its purpose is to raise issues and encourage submissions based on an informed view of the current law and the alternatives.
The Paper describes the leading options for the apportionment of liability, and examines the advantages and disadvantages with each option. At this stage, the Commission has no preference for any particular option (including the status quo).
The Law Commission previously reviewed this area of law in the 1990s. This Paper summarises the previous Reports, as well as examining the commentary on liability options in light of more recent developments such as the leaky buildings crises and financial collapse. The Paper compares the New Zealand approach to that in Australia, the United States, Canada and the United Kingdom. In particular, it examines how proportionate liability operates in Australia and the implications of CER for this review. Finally, the economic literature is summarised to provide an analysis of which options may produce more economically efficient outcomes.
Following consultation on the Issues Paper, the Commission will release a final report in 2013.
- Published 8 Mar 2013
The full text of submissions received is available below, with submissions organised alphabetically by submitter. Some submitters have requested anonymity or confidentiality for aspects of submissions provided. These requests have been assessed against the grounds contained in s 9 of the Official Information Act, and information has been redacted or excluded in some instances.
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- Published 21 Nov 2012
The Law Commission has released an Issues Paper on its Review of Joint and Several Liability and is now seeking submissions from the public.
In New Zealand, civil liability is governed by the principle of joint and several liability. This rule provides that where two or more people are liable for the same loss, then each defendant will be potentially liable for the whole of the loss.
The joint and several liability principle has been controversial in recent years, particularly as a result of the leaky homes crisis and financial crises.
The Law Commission is now seeking views on the options for reforming the system of liability, and also for the advantages of the status quo. The closing date for submissions is Thursday 31 January 2013. The Issues Paper is available here.