Chapter 5
What has happened

Introduction

5.1The current legal rule regarding the liability of multiple wrongdoers for the same damage is joint and several liability. This is in keeping with the recommendation of the Law Commission in 1998. The Commission’s recommendations to have contribution and contributory negligence rules apply in contract cases as well as torts and equity have not been taken up at this stage. However, as we pointed out in Chapter 2, the subsequent allowance of concurrent liability in tort and contract has lessened the significance of the remaining differences in treatment. The overall result is that the normal liability rule in New Zealand is joint and several liability, with defendants generally able to seek contribution from each other and to plead contributory negligence where appropriate.

5.2Despite this relatively settled position, debate has continued over the merits or otherwise of joint and several liability, and whether an alternative such as proportionate liability should replace the existing rule.

5.3This continuing debate has been fuelled by several major liability phenomena that have occurred over the last decade and a half, especially:
  • the leaky homes crisis, which has created thousands of potential or actual plaintiffs seeking redress, most often from multiple defendants;
  • a series of interlinked financial crises, which arguably have increased the chances of professional advisers (such as auditors) being pursued in the aftermath of a corporate collapse;
  • similar or related issues especially in Australia, leading to state and federal governments introducing changes that have moved the liability rules substantially towards proportionate liability, plus other initiatives to limit liability of professionals, including caps on liability.

5.4We deal with what has happened in Australia and what this might mean for New Zealand in Chapter 6. In this Chapter we review the other crises and note how they have influenced the debate on joint and several liability and the possible alternatives.

5.5It is important to remember that any changes that might result from the present review will have no effect on losses that have already occurred. Any liability still to be determined as a result of either leaky homes or finance company collapses must be dealt with under the legal rules applying at the time of the alleged wrong and the resulting damage. The relevant rule will be joint and several liability in all “same damage” cases that have already arisen. Our interest in these events is what they can tell us about the operation of joint and several liability, or how proportionate liability or some other option might work in its place.