Chapter 2
The current law

Joint and several liability under contract

2.20In the Preliminary Paper published in 1992, the Commission noted some problems with the operation of the rule of joint and several liability in claims founded in contract. The two specific issues relevant to joint and several liability were first that the Contributory Negligence Act 1947 does not apply to contractual claims. The second was that a defendant liable for breach of contract is not entitled to seek contribution from other defendants, as would be possible for defendants in tort or equity.

2.21The Contributory Negligence Act 1947 does not explicitly cover contractual claims. This means that in contractual claims, liability is not reduced when the plaintiff’s own actions caused the loss. The difficulties arising from this were exacerbated by the decision of the Court of Appeal in McLaren Maycroft & Co v Fletcher Development Co Ltd,19  which held that concurrent liability in contract and tort is unavailable. Thus, once a party was held liable in contract, they cannot be liable in tort and by necessary implication the provisions of the Contributory Negligence Act are not applicable. This case has now been rejected. In Price Waterhouse v Kwan Tipping J firmly stated:20

The decision of this Court in McLaren Maycroft & Co v Fletcher Development Co Ltd [1973] 2 NZLR 100 (CA) might be thought to have some lingering effect precluding concurrent liability in tort and contract in New Zealand. That decision can now, however, safely be regarded as having been overtaken by later developments. It can no longer be taken as representing the law of New Zealand.

2.22The developments in the case law mean that concerns canvassed in the Preliminary Paper of 1992 are not as substantial as they once were. However, in that paper, the Commission noted that simply overturning McLaren Maycroft would not be sufficient, as it “would be unsatisfactory merely to apply the provisions of the Contributory Negligence Act 1947 to claims in contract.” Instead, the Commission considered that a more careful or principled approach was required, with legislative provision for contributory negligence rules to be extended to contract cases.

2.23The second issue was contributions between defendants in contract claims. Section 17 of the Law Reform Act 1936 is limited to providing for contributions from joint tortfeasors. As with the contributory negligence rules, the decision of McLaren Maycroft was seen to reinforce the restriction. Because a party to a contract could not also be liable in tort for the same damage, if a defendant was found liable for damages in contract, section 17 could not apply and contributions would be unavailable. The decision to over-rule McLaren Maycroft means that co-contractors who are also liable in tort may now be pursued for contributions. Not every breach of contract will also lead to tortious liability, but this is not such a significant issue after Mouat v Clark Boyce,21  the effect of which has been that most professional duties are both contractual and tortious.

2.24The Commission noted in 1992 that more thoroughgoing reform would be required to resolve the problems. In the Preliminary Paper, the Commission expressed the view that the desirable result should be that liable defendants who are subject to joint and several liability should be able to plead contributory negligence where relevant and/or seek contribution from other liable defendants, regardless of the cause(s) of action pleaded or the basis of the judgment against each defendant. The removal of the ban on concurrent liability has moved us closer, but not all the way to, that result.

19McLaren Maycroft Co v Fletcher Development Co Ltd [1973] 2 NZLR 100.
20Price Waterhouse v Kwan [2000] 3 NZLR 39 at [17].
21Mouat v Clark Boyce [1992] 2 NZLR 559.