Alternatives to joint and several liability
3.14There are advantages and problems with both joint and several liability and proportionate liability. Neither system is objectively a clear winner. This has been recognised in a number of jurisdictions, and various “hybrids” have been proposed or adopted in an effort to reach a “fair” or at least acceptable compromise.
3.15The hybrids typically involve joint and several liability applying in some situations and proportionate liability in others, often with limitations or restrictions on the “pure” operation of one or other scheme in an effort to lessen the perceived unfairness on either plaintiffs or some defendants. For instance, solvent, insured defendants who have not been held to be the principal wrongdoers may be relieved of joint and several liability.
3.16While hybrid approaches can come in many forms, two types are most frequently cited. The first can be called the “major/minor” or “peripheral wrongdoer” hybrid. The essential features are that “major” or “main” wrongdoers continue to be jointly and severally liable, while “minor” or “peripheral wrongdoers” are proportionately liable. The legislation would designate a threshold, for example providing that a defendant who is less than say 20% at fault is a “minor” or “peripheral” wrongdoer. The minor defendant will not be liable to pay the entire amount of a damages award if all other liable defendants go missing, or if they are the only one with funds. Of course, the percentage threshold (or other determining factor) between major and minor responsibility must inevitably be somewhat arbitrary and a matter for debate. We will discuss this issue further in Chapter 9.
3.17The second hybrid approach can be called the “plaintiff at fault” or “contributory negligence” hybrid. Under this regime, where the plaintiff is blameless the liable defendants will be jointly and severally liable. However, if the plaintiff is also at fault and the Court therefore holds that the plaintiff has been contributorily negligent, proportionate liability will apply. This retains the fundamental idea of joint and several liability that a blameless plaintiff can look to any defendant who has caused the loss to make it good and should not be made to bear the risk of a liable defendant’s insolvency or absence. However it recognises that this rationale arguably should not apply where the plaintiff is also at fault.
3.18There is more than one possible variant for this approach. At its simplest, pure proportionate liability applies if the plaintiff is held contributorily negligent, or perhaps if her level of negligence is held to be higher than a low threshold – perhaps 10% of the fault. This means that the negligent plaintiff bears the risk of an absent defendant.
Example 4: Simple proportionate liability if plaintiff is partly at fault
- Under the original “faulty retaining wall” scenario if P failed to advise D1 of an underground spring running near the property and P is accordingly judged to be 15% contributorily negligent, D1’s share of liability is judged to be 35% and the others’ shares are unchanged from Example 1:
- If D1 is bankrupt P will end by bearing 50% of the total loss or $50,000 out of $100,000, rather than the $15,000 share that her negligence would deliver if all defendants could pay.
3.19A variant to address the arguable unfairness to the plaintiff of this result is to require proportionate reallocation of the absent wrongdoer’s share among all the remaining (solvent) liable parties, including the contributorily negligent plaintiff. This means the plaintiff may still recover most of the absent defendant’s share, less a further proportionate deduction for their own fault. The effect on the other defendants will depend on how many of them remain and the level of the plaintiff’s fault – but will still be better than having to pay up to 100% of damages.
Example 5: reallocation of absent wrongdoer’s share amongst those remaining
- Using the allocation outlined in paragraph 3.18 above:
- P is contributorily negligent to the extent of $15,000 (out of loss of $100,000).
- D1 is liable for $35,000 but cannot pay.
- D2 and D3 have already paid P $30,000 and $20,000 respectively, as ordered.
- To re-allocate D1’s unpaid share proportionately, D2 must pay ($30,000/$65,000) x $35,000 =$16,154, D3 must pay ($20,000/$65,000) x $35,000 =$10,770 – and P must bear the remaining ($15,000/$65,000) x $35,000 = a further $8,076 of unrecoverable loss.
3.20The defendants are still worse off than their assessed share of fault might suggest – but are not potentially liable for 100% of the damages.