New Zealand Law Commission Paper on Joint and Several Liability

The Law Commission of New Zealand recently released an Issues Paper on Joint and Several Liability:

"Joint and several liability is most often compared or contrasted with an alternative rule usually called 'proportionate liability'. The difference in the two liability rules can be stated quite simply:

• under joint and several liability each defendant held liable for the same damage is liable for the whole of that damage, regardless of how many other defendants are also liable for the damage (but may seek contributions from the other defendants); whereas
• under proportionate liability each liable defendant is liable only for the proportion of the loss or damage that a court determines is just, taking into account each defendant’s relative level of fault or comparative responsibility (...)"

"The two regimes do envisage different approaches as to who should bear the cost of determining who caused the loss, and also who bears the risk of a defendant not paying. On the first point, joint and several liability requires liable defendants to apply in Court for contribution from other defendants if they wish to achieve fair apportionment between defendants. In contrast proportionate liability requires the plaintiff to claim and prove a percentage or share of their loss from each defendant, who may of course contest both their liability and the appropriate share. In addition, in joint and several liability the defendants bear the risk of the insolvency or absence of any defendants. In proportionate liability the share allocated to an insolvent or absent defendant cannot be recovered by the plaintiff unless there is a further rule to re-allocate uncollectable shares. In joint and several liability this loss can simply be recovered from other solvent defendants (...)"

"As noted above, the issue primarily turns on who is the most appropriate party to bear the risk of non-recovery. Should it be the plaintiff, in which case a proportionate model of liability will be a fairer or efficient method of allocating risk? Should it be the liable defendants, in which case joint and several liability will be an efficient way of allocating risk? These questions will form the heart of this paper"

The Law Commission previously reviewed this area of law in the 1990s. The current paper summarizes the previous reports, as well as comparing the New Zealand approach to that in Australia, the United States, Canada and the United Kingdom.