Contents

Chapter 1
The reasons for this review

Introduction

1.1This Report examines and makes recommendations on what rule or rules should govern the situation where two or more civil defendants are held liable to a plaintiff for the same, indivisible damage. The reference to undertake a fresh look at this issue4 was generated by Cabinet in 2011 as a result of deliberations on measures responding to the leaky buildings crisis.
1.2The reference reflects the fact that the issue has been and remains important and controversial for parties to litigation where there is likely to be more than a single defendant. Whether plaintiffs will be more or less able to recover all of the losses they have suffered depends on whether joint and several liability, or some form of proportionate liability applies. Defendants, on the other hand, will either remain liable to pay up to 100 per cent of losses, or alternatively only a proportionate share that reflects their share of responsibility. This is because of the differences in the two rules. As we explained in our Issues Paper.5

1.3The key issue is how each rule allocates the risk of an absent, insolvent or otherwise unavailable liable defendant. The current rule of joint and several liability protects the plaintiff by holding each liable defendant liable for the whole loss they caused or contributed to. If one liable defendant is not available, the plaintiff can enforce judgment against the remaining liable defendant(s) for any part of the damages that remains unpaid. Alternatively, the plaintiff can simply enforce judgment against a party who can pay, and leave that party to seek contribution from others. By contrast, proportionate liability protects defendants from having to pay any more than what the court determines is their share of the responsibility or blame, comparative to other defendants. If the plaintiff cannot collect any defendant’s share, it remains unpaid. Thus under joint and several liability the risk of a defendant not paying is borne by the other liable defendants, while under proportionate liability, the risk is borne by the plaintiff.

1.4Given the differing allocation of risk and the direct cost consequences on either plaintiffs or liable defendants, the choice of which rule should apply remains contentious. The debate is also often phrased in terms of fairness. Is it fair that a single defendant with possibly slight responsibility for the damage suffered by the plaintiff may nevertheless be required to meet the whole cost? Or is it fair that a plaintiff cannot recover all of their loss, even though there may be liable defendants available who have been held to have caused the damage and have the ability to pay?6 Other commentators have explored whether one rule or the other is more efficient in economic terms, but no obvious consensus has emerged.7

1.5The task for this Report is therefore to reach a conclusion on matters that are relatively well canvassed, but that are still contentious. This required us to approach and analyse options, so far as possible, afresh and without preconceived views. After a study of the options and the available literature, and after consultations with many interested groups, we developed criteria to assist with a principled evaluation and choice between the options. The criteria take into account:

4The Law Commission undertook a review of joint and several liability and produced a Report in 1998: Law Commission Apportionment of Civil Liability (NZLC R47, 1998).
5Law Commission Review of Joint and Several Liability (NZLC IP32, 2012) [Issues Paper] at 3.
6A problem with these arguments is that they tend to be phrased in terms of fairness or unfairness to one side or the other. The challenge for this review has been to arrive, after analysis, at the choice of the rule that is most fair and appropriate, balancing where necessary the respective interests of plaintiffs and defendants.
7See Issues Paper, above n 5, at ch 8 for a summary of some of the main contributions.