Chapter 1
Introduction to the review

Introduction

1.1In 2011 the Minister Responsible for the Law Commission referred a request to the Law Commission that it conduct a review of joint and several liability. Joint and several liability is the legal rule that currently applies when two or more defendants are held liable to a plaintiff for the same loss or damage. The Reference arose after discussions at Cabinet level and anticipated that the Commission’s review would be a broad one and consider issues and include input from the range of sectors affected by civil liability issues. These include but are not limited to the construction sector, business and professional services, local government and any other potential parties to complex litigation that may involve more than one defendant. The terms of reference for the Review are attached as an appendix to this paper.

1.2Joint 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:

1.3There are nuances to these broad propositions. Joint and several liability will only arise if the wrong-doing by each defendant caused or contributed to the same damage. Otherwise, the concurrent defendants may be separately liable for distinct losses; or they may be liable on a different basis, either in contract, tort or equity depending on the nature of the relationship between the plaintiff and each defendant.

1.4The 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.

1.5Joint and several liability therefore provides an indirect path to proportionate liability, provided all defendants are available and able to pay. When a plaintiff claims against one defendant only, that defendant may join other potential defendants. In practice the Court determines the proportion of the damages to be incurred by each defendant. Usually a defendant is also able to claim from other defendants who have contributed to the damage after judgment is issued.1  Each defendant may be liable to other liable defendants as the Court finds just and equitable “having regard to the extent of that person's responsibility for the damage”.2  It is only when not all of the defendants are able to pay that joint and several liability will result in a defendant bearing the share of the loss apportioned to other defendants.

1.6In short, there are two propositions. In joint and several liability it is sufficient for the claimant to identify one or more parties who are responsible for the same loss. They will be able to recover the full amount of the damages from any one of them, though they cannot secure more than the total assessed. The defendant can then claim a proportionate share from all other liable defendants who have contributed to the damage. In proportionate liability the plaintiff has to identify all the defendants and claim a proportionate share from each of them.

1Unless the plaintiff’s claim lies purely in contract. Contribution between tortfeasors has been permitted since 1936, see Chapter 2; and equitable contribution can be sought by one defendant against another in appropriate circumstances.
2Law Reform Act 1936, s 17(2)