Chapter 5
What has happened

Summary

5.34The major liability events of the last decade have helped keep reform of joint and several liability a live issue. This is understandable. It is clear that some defendants in leaky homes cases, particularly territorial authorities, end up bearing a disproportionate burden because other defendants are insolvent, have disappeared or no longer exist. Similarly the effect on Arthur Andersen of being brought down by the catastrophic collapse of their client is obvious, even if the wounds could be classed as self-inflicted.

5.35These phenomena are not enough by themselves to make a case for change. Any change to rules for apportionment of liability can only be justified if it deals efficiently and fairly with negative effects as well as bringing the perceived benefits. The principal options all face significant hurdles in this respect.

5.36Our analysis of the relative advantages and disadvantages of the status quo and the alternatives is set out in Chapter 9.

Questions
Q16 Do you consider that leaky homes claims have exposed problems in the operation of the rule of joint and several liability? If so, what are they?
Q17 Which of joint and several liability or proportionate liability do you think would produce fairer outcomes in leaky building cases? Why?
Q18 Do you consider that the joint and several rule has adequately protected homeowners’ interests in leaky homes cases?
Q19 Could a change to proportionate liability be limited to a specific sector?
Q20 If New Zealand were to shift to a system of proportionate liability in the construction sector, would a compulsory builders’ warranty scheme be necessary to protect the interests of the homeowner? If so, how should this be funded and run?
Q21 In the wake of the global financial crisis, do you consider that auditors and other professional advisers should be able to cap their liability, as in Australia? If so, how should a liability cap operate? What classes of defendant should receive the benefit of liability caps?