This project reviews the joint and several liability rule, and considers alternatives. The Commission carries out a broad review of the effects of the rule across all sectors.
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 is in focus in the building and construction sector as a result of the leaky buildings crisis.
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
Terms of reference
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
Review of Joint and Several Liability (NZLC IP32, 2012)
The Commission's Issues Paper, Review of Joint and Several Liability (NZLC IP32, 2012) 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 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.
Submissions on Issues Paper 32
The full text of submissions received is available in PDF form, 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.