Chapter 4
What we said last time

What was recommended

4.4The four main areas the Law Commission addressed in the Preliminary Paper, and then Final Report, were:45
  • Whether concurrent defendants should be liable jointly and severally, or just severally (i.e. proportionately liable);
  • Whether there should be an extension of rights of contribution between defendants;
  • How the problem of the uncollectable contribution might be addressed; and
  • Whether there should be an extension of the concept of apportioning damages to reflect the plaintiff’s fault.

Joint and several liability as opposed to several liability

4.5As highlighted earlier in this chapter, the Law Commission recommended in the Preliminary Paper that joint and several liability be retained. It was acknowledged that there were arguments in favour of doing away with the rule. The reasons were the perceived unfairness of a relatively minor wrongdoer being left to bear a major, or even the total, liability share; that it would remove the need for complicated rules concerning apportionment of liability between defendants; and that joint and several liability may fail to adequately take into account the plaintiff’s contributory negligence. However the Commission ultimately concluded that:46
The factor which weighs with us most heavily at present is the effect on plaintiffs which abrogation of the rule would have. We stress a number of times in this paper the commitment of the common law to the objective of fully compensating a plaintiff for all loss which has been suffered. Joint and several liability is one means of achieving this: any risk of an absent or insolvent defendant must be borne by a co-defendant (if there is one). If there is only one defendant and he or she is insolvent the plaintiff fails to recover. But if there are two defendants, the plaintiff can recover from either and, if D2 is insolvent, D1, not the plaintiff, bears the burden. Although it recognises the contrary arguments, the Law Commission has yet to be persuaded to recommend any departure from this position.

4.6Therefore, the following was proposed as section 6 of the attached Bill:

Concurrent wrongdoers are jointly and severally liable for the whole of the damages payable to a wronged person in respect of a loss.

4.7The Law Commission’s position was unchanged in the Final Report.47 The Commission did not consider that a “compromise scheme” was possible. A discretionary approach where the courts could reduce the amount of a defendant’s liability “in such manner and for such reasons as they considered just” would be too uncertain, and fundamental changes in the law should not be made to “placate a particular interest group”.48

Extension of rights of contribution between defendants

4.8For defendants in contractual claims, the consequences flowing from joint and several liability are exacerbated by the rules governing contributions.49 At present, contribution is restricted to defendants in tort and equity. Subject to any right to equitable contribution,50 a defendant sued in contract will be unable to claim contribution from other defendants, whether the other defendants are liable in contract, tort, or equity. Similarly, a defendant sued in tort will be unable to claim contribution from others who would be liable for the same damage under contract.
4.9In the Preliminary Paper, the Commission noted the unfairness of this rule and recommended that the right to contribution among defendants be extended whatever the basis of civil liability, as had already been enacted in England and Wales in the Civil Liability (Contribution) Act 1978.51 This recommendation was carried through to the Final Report, although the draft provision that would accomplish this was amended for clarity.52

The problem of uncollectable contribution

4.10Our earlier preliminary paper also considered what should be done when a co-defendant is missing, insolvent or otherwise “judgment proof”. A consequence of the joint and several rule is that the co-defendant’s share of the judgment is borne by the other co-defendants.

4.11In the Preliminary Paper, the Commission proposed that a concurrent wrongdoer, on finding that a co-defendant was unable to pay their share of the judgment, should be able to return to court within one year and have that share redistributed in proportion to the original allocations.53 Where the plaintiff was not at fault, this redistribution would be between the remaining defendants. However, where the plaintiff was partially at fault, they too would become a party for the purpose of the redistribution.
4.12In the Final Report, the Law Commission reconsidered its position with respect to this last point.54 It was stated that:55

Such a proposal, it can be argued, runs completely contrary to the reasons we have advanced in support of solidary liability [joint and several liability]. If the correct view is that D1 is liable to P for all of P’s loss, and questions of contribution among defendants are irrelevant to that liability, why should P’s net entitlement be diminished because D1 cannot collect the share of P’s entitlement that should be contributed by another defendant?

The Commission therefore concluded that “no part of an uncollectable contribution should be allocated to P.”56

Extension of the apportionment of damages to reflect the plaintiff’s fault

4.13The Preliminary Paper also considered the rules around contributory negligence. The issue at hand was whether, in light of the proposals to extend contribution between defendants to all bases of liability, the circumstances in which fault by the plaintiff can be taken into account should similarly be extended. In other words, should the contributory negligence rules apply to contractual claims where the plaintiff was partially at fault? Should the provisions addressing fault by the plaintiff in contractual claims be brought in line with tort57 and equity,58 or is it justified to have a separate rule for contractual claims?
4.14In the Preliminary Paper, the Commission decided that contributory negligence should be available for contract, and it was commented that “[t]he question whether the plaintiff’s action or inaction has been contributory to the loss and the exact apportionment of that responsibility will be matters for the court to decide on the facts of the case”.59
4.15It was considered that this would be sufficiently broad to take into account situations where, for example, the terms of the contract are such that the plaintiff is entitled to rely entirely on the defendant’s performance and in such cases “there can be no question of reducing the plaintiff’s damages for any failure to monitor the performance of the defendant or anticipate default”.60 This was carried forward into the Final Report.61

 

Questions
Q13 Should contributory negligence operate as a partial defence for all claims, regardless of whether the defendant is liable in contract, tort, or equity?
Q14 Should defendants be able to recover contributions from all other potentially liable parties regardless of whether the defendant is liable in contract, tort, or equity?
Q15 Should the rules relating to contributory negligence and contributions be the same whether the claim is based in contract, tort, or equity?
45At [90].
46At [168].
47At [6]-[9].
48At [10].
49Law Reform Act 1936, s 17.
50As to which, see Marlborough District Council v Altimarloch Joint Venture Ltd [2012] NZSC 11.
51Apportionment of Civil Liability (1992), above n 3 at [175].
52The Commission accepted the criticism of the New South Wales Law Commission that the provision in the draft Bill needed clarifying. Apportionment of Civil Liability (1998), above n 4 at [13]. See New South Wales Law Commission Contribution Between Persons Liable for the Same Damage (Discussion Paper 38, 1997).
53Above n 3 at [180]-[187].
54Above n 4 at [11].
55At [11].
56At [12].
57See the Contributory Negligence Act 1947.
58Established in Day v Mead [1987] 2 NZLR 443.
59Apportionment of Civil Liability (1992) above n 3 at [191].
60At [193].
61Subject to one minor amendment, relating to the reliance by a promisee on a promisor’s contract, recommended by a submitter. Apportionment of Civil Liability (1998) above n 4 at [14].