Chapter 9
The case for change


9.22The Commission does not consider that a shift from joint and several liability to proportionate liability could be limited to the building sector. In Australia the shift to proportionate liability first occurred in the building industry in the states of New South Wales and Victoria. However, this was later extended to all negligence/lack of reasonable care actions claiming economic loss or property damage. We consider that if New Zealand were to make such a shift then it should also be applied universally, to the same range of potential actions. This would have the advantage of harmonising New Zealand law with that of Australia. 

The insurance experience in Australia for determining risk and recent litigation history concerning proportional liability may then be usefully applied in New Zealand where appropriate.142
9.23An additional advantage of a comprehensive shift from joint and several liability to proportionate liability may be simplicity. All those affected should only have to deal with a single system for allocating liability when there are multiple defendants.143  This advantage, however would still apply if New Zealand retained joint and several liability. The only people who would have to deal with the complexity of two liability allocation systems are those who operate on both sides of the Tasman. This is a factor to be taken into account in considering which liability system is most appropriate for New Zealand.

9.24In the end, the decision on whether to reform the liability rules for multiple defendants must be based on an overall assessment. Key considerations will include the appropriate allocation of the risk for absent defendants and whether and how each system or rule deals with known difficulties such as the deep pockets issue. An essential test is which rule or combination of measures is most likely to produce results that are efficient, and fair to and between the parties. We expect that submissions in response to this paper will help us address these issues.

Q30 Overall, do you think that joint and several liability is a fair system?
Q31 Overall, do you think that proportionate liability is a fair system?
Q32 What, if anything, could be done to improve the fairness or efficiency of outcomes under joint and several liability (either to the plaintiff, the defendant, or overall)?
Q33 If proportionate liability were to replace joint and several liability, what if any adjustments would you consider necessary to ensure fair outcomes?
Q34 How do you think the interests of plaintiffs and defendants should be balanced in a fair system of apportioning liability? How important is avoiding disproportionate burden on some defendants, compared to ensuring that plaintiffs receive an effective remedy?
Q35 What, if any other changes do you think are necessary or desirable to improve our liability rules? Why?
Q36 Overall, do you think that New Zealand should retain joint and several liability or shift to proportionate liability or adopt a hybrid option? Why?
142But it must be noted that the exact extent or coverage of the proportionate liability regime, beyond pure negligence actions, is one of the key issues still to be harmonised between Australian states. If New Zealand were to adopt proportionate liability regime then it will be important to engage with Australian state and federal authorities on the preferred outcome of harmonisation.
143However, Australian experience shows that at least for a transitional period there could be added complexity, as parties seek Court rulings on whether proportionate liability extends to a given case, e.g. arguments over whether alleged co-defendants are liable for the same or distinct damage.