Chapter 1
Introduction to the review

Structure of this paper

1.20This paper is intended to raise issues for discussion and encourage submissions. In the paper we describe some options that could be selected to amend or replace the existing rule of joint and several liability. We also describe how the current rule works. We have not indicated any preference for the status quo or for another option, though we have set out some common arguments for and against different models. We expect there to be divergent views on joint and several liability and the other possibilities. We look forward to drawing on these views in our consideration of submissions.

1.21Chapter 1 of the paper comprises this Introduction.

1.22In Chapter 2 we describe the rule of joint and several liability. The chapter notes the important connection between principles of causation and the rule. It then describes how the rule operates in practice. The chapter finishes with some historical background on the rule and some aspects of how the liability rules function in tort, equity and contract.

1.23In Chapter 3 we describe and discuss the main alternatives to joint and several liability: proportionate liability; “hybrids” that combine elements of joint and several and proportionate liability; statutory schemes that cap liability; or contracting out. Discussion of the relative merits of the alternatives is left till Chapter 9.

1.24Chapter 4 summarises the Law Commission’s conclusions from its previous review, in the 1990s. The 1990s Review had wider terms of reference than the current Reference. We include the Commission’s recommendation to retain joint and several liability, plus the suggested amendments to the laws of contribution and contributory negligence.

1.25In Chapter 5 we examine the major liability events or crises that have re-ignited or sustained debate over joint and several liability and whether it should be replaced by a new rule. We cover the leaky homes crisis in New Zealand and global financial crises, especially their impacts in New Zealand. We note similar events in Australia, which we discuss in Chapter 6.

1.26Chapter 6 details relevant developments in Australian jurisdictions over the past decade. These include the introduction of proportionate liability as the liability rule that applies in negligence and analogous cases. We also consider what weight New Zealand should give to CER when deciding whether to adopt a new liability regime.

1.27Chapter 7 reviews how joint and several liability has been dealt with in other jurisdictions. Our review includes the United Kingdom, Canada and the United States. The review shows that there is clearly no international consensus. Joint and several liability remains the rule or dominant rule in the United Kingdom and Canada, whereas individual states in the United States have adopted a bewildering variety of approaches, from complete retention, through to many variations and to complete replacement of joint and several liability.

1.28In Chapter 8 we summarise economic arguments that have been raised regarding the relative economic efficiency of joint and several liability and proportionate liability. We concentrate on New Zealand commentary, plus some interesting inputs from Australia and the United States. Our tentative conclusion is that neither rule emerges as a clear “winner” in terms of efficiency, though the enquiry confirms the importance of dealing with known issues such as “deep pockets”.

1.29In Chapter 9 we examine the relative advantages and disadvantages of joint and several liability and the main alternatives. We do not favour any particular option at this stage. We note however that a move to proportionate liability, especially in the building sector, could be justified only if adequate consumer and plaintiff protection is available, for instance a compulsory or comprehensive home warranty scheme. However, it is also our preliminary view that any changes to liability rules should be general and not limited to particular sectors.