Chapter 8
Economic arguments

Summary

8.21The economic arguments demonstrate that particular situations where deep pockets may emerge deserve to be examined carefully. The arguments do not go so far to suggest that proportionate liability is the only or even the obvious answer in such cases, however. Nor in the Law Commission’s view do they suggest a need or justification for the adoption of a more universal of proportionate liability, on efficiency grounds.

Questions
Q27 To what extent should a liability rule balance fairness or justice concerns with economic efficiency? How can the best balance be achieved? If there must be a trade-off between fairness and efficiency, which should be preferred?
Q28 Do you think it is true that some categories of defendants in New Zealand tend to become “deep pockets”? Which defendants are particularly affected? Do you think this is a problem? Why or why not?
Q29 Do you favour using proportionate liability to deal with the issues of “deep pockets”? Are there other options to prevent “deep pockets” bearing disproportionate liability? Are there other ways to prevent “deep pockets” becoming risk averse?