This project reviews the joint and several liability rule, and considers alternatives. The Commission carries out a broad review of the effects of the rule across all sectors.
The joint and several liability rule determines the liability of multiple parties in civil proceedings where a person has suffered loss, and how responsibilities for the loss are allocated where there are several liable defendants. The application of the rule in New Zealand is in focus in the building and construction sector as a result of the leaky buildings crisis.
The most commonly proposed alternative is a system of proportionate liability. Other alternatives combine some elements of joint and several liability with elements of proportionate liability, or involve introducing caps on total liability in some circumstances or for some defendants
Where two or more parties are liable for the same loss or damage to another party, because of separate wrongful acts, the joint and several liability rule holds both or all of the wrongdoers 100% liable for the loss caused. The party who suffered the loss can claim against one wrongdoer to recover the whole of the loss. That defendant can then seek contribution from any other wrongdoers.
The Law Commission will consider whether the rule should be retained, replaced or amended, either generally, or in relation to particular professions or industries, including the building and construction industry, auditors and accountants.
The Commission will consider the key advantages and disadvantages of different forms of liability, including:
- joint and several liability;
- proportionate liability;
- liability capped by statute; and
- contractual limitations on liability