Joint and Several Liability Notes

Joint and Several Liability

  • Introduction by Yvonne re: Professor Geoff MacLay.
    • Geoff worked at the Law Commission but was not a principal commissioner on the mentioned report.

Policy vs. Law

  • Focus on the difference between policy and law.
  • Government considering proportionate liability in NZ, especially due to concerns in building cases and auditor liabilities.
  • Initial consultation has occurred.
  • Debate framed against Law Commission report (2014), which suggested no substantive change.
  • Australia has a proportionate liability regime.
  • Important to ask the right questions: Should we adopt proportionate liability? Should we change the joint and several liability rules?
Example of Acts in Compensation
  • Sir Owen Woodhouse asked to reform the law of industrial accidents but instead addressed how to deal with accidents in general in a civilized society.
  • Accidents are a cost of progress.
  • Luck and chance have an enormous impact on our lives.
  • Inevitable death toll/injury from cars.
  • Focus not just on fault but on the reality that cars hurt people, but are good.
  • How do you deal with the reality of accidents in a modern society?

Law Commission's Reference

  • Commission reference focused on whether NZ should change from joint and several liability to proportionate liability.
  • Minister of Justice asked the Law Commission, but it was the wrong question.

Morning Report

  • Listen to Morning Report to stay involved with public life and policy debates.
  • Stock-in-trade is ideas.
  • Listen to test your mind.

Leaky Homes Crisis (Video Clip Discussion)

  • 20 years since the leaky home disaster began.
  • Still costing councils tens of millions of dollars every year.
  • Changes proposed to streamline consenting rules but warnings about another building catastrophe.
  • Remote inspections being rolled out nationwide.
  • Streamline things to get things done faster, seen too many shortcuts.
  • Auckland Council paid out 25,000,00025,000,000 in weather tightness related claims last year alone.
  • The industry welcomes innovation but says it needs to come with other protections such as more training.
Minister's Objective
  • Minister is worried about the cost of the inspection system imposed on councils.
  • KPI: Build more houses.
  • Remote invigilation/inspection: making it easier to build houses.
  • Reduce regulatory stops to build more houses, reduce people sleeping in cars, and make house prices more affordable.
Nature of Leaky Homes Crisis
  • Crisis has been ongoing for over 20 years.
  • Auckland City Council's contingent liability: approximately 225,000,000225,000,000.
  • Significant money allocated to fixing leaky homes in Auckland.
  • Wouldn't that money be better spent on infrastructure (e.g., Harbour Crossing)?
  • Hamlin case: 1994 and 1996, Court of Appeal and Privy Council.
  • Standards changed, and some builds were in accordance with standards, but the standards were insufficient for the environment.
Discussion Points
  • Is it short term or long term value that is more important?
  • Is the goal to build for 20-30 years instead of 100 years?
  • Old houses can be cold and damp.

Joint and Several Liability - Revision

  • What is joint and several liability?
    • If four people contributed to negligence and caused a loss, they are liable in indivisible shares, liable for everything.
    • Under the Law Reform Act, they can seek contributions from each other as joint tortfeasors.
    • Sue the local authority.
  • The local authority will join the builder, who joins the building products manufacturer, who joins the architects, all these people in court. The indivisible sheer thing means they're all potentially liable for it all.
  • You have a trial about the proportions.
    • The local authority is liable for somewhere in the 20s.
    • The builder might be liable in the 50s or 60s. The architect might be liable for something.
    • Building products might be liable for something else.
    • They will all pay according to those proportions.
  • The most important thing in civil litigation is actually having someone solvent to sue.
  • Many cases driven by needing to find solvent defendants.
  • Joint and several liability = liable for it all, even if only 20% responsible.
  • Local authority potentially liable for all losses.
  • Minister Pink might think this is a bad setup.
  • Change the joint and several rules to the system in Australia, where you only pay that 20%.
  • If someone goes bankrupt, you don't have to pay for the other shares; you just pay for your share.

Policy Perspective

  • Reducing council liability might be a good question but it's up for debate.

Better Questions

  • How can we stop building leaky homes in the first place?
  • Did tort law stop us building defective buildings?
  • Tort law is terrible even regarding personal injury.
  • What is the system that stops us building leaky homes?
  • Stop wasting money on things that don't work.
  • Regulatory issues.
  • Building industry authority failed to produce the needed infrastructure.
  • Should defendants be protected, or should the rights of those who have been harmed be prioritized over potential tortfeasors?
  • The proportionate system is more just for the tortfeasors.
  • Most significant decision is to buy a house, and it is absolutely terrible.
  • What do we do with this problem of people who have to make these investments to buy houses? How do we compensate that when things go wrong? Or should we?
  • Joint and several liability deals with a small part of that question.

Compensation Question

  • Who does bear the loss under the current system?
  • Typically, the councils (Auckland City Council problem) or the ratepayers.
  • Capitalistic view: The home owner bears the loss because it is a bad investment.
  • Consider that we offset risk or get insurance to help mitigate risk.
  • Strengthen accountability mechanisms.
  • Building Act: Warranties in place.
  • What actually happens in these places that have a different legal system or different legal rule?
  • You would require warranties, which is partly what we've done in relation to the Building Act, but you'd strengthen those, right?

Current System Evaluation

  • Might stop shoddy buildings.
  • Might have some compensation. How much help is that?
  • Auckland ratepayers have a contingent liability. How is this helpful?
Council Liability
  • When is a council liable? Is it always liable if anything goes wrong?
  • If your house is falling apart, you need to show there was a negligent inspection.
  • Test for negligence: Reasonable building inspector. Is it the reasonable person?
  • What should the inspector be doing? The reasonably prudent inspector.
  • Show that they have done something which is not reasonable.
  • Have to show that it actually results in damage.
  • You can’t even measure the foundation before they put the concrete down and so they might not be able to see what's underneath the concrete or whatever, you had to show that they had done something which is not reasonable.
Court cases
  • If you have one of these complex apartment buildings in Auckland, one of my tips is don't buy an apartment in a fancifully named apartment building because the name like Nautilus, don't choose though, one with an ordinary address.
  • Council was negligent in the inspection of those elements, whether the council could have actually seen what was wrong, and also that they contributed.
  • It's only householders who are lucky enough that the council has been negligent as well as the builder that can sue the council.
  • If you're a homeowner, all you care about is the fact your building is falling apart.
  • Council has made a mistake, they've done something that reasonable council would not have done, if you haven't done something that a reasonable council would do.
Joint and Civil Liability
  • What's the answer in relation to joint and civil liability the Law Commission gives?
    • Should you the basic rule that you're liable for everything that you have contributed to?
    • That's what the Law Commission sees.

Policy Work vs Legal Thinking

  • Policy people are focused on what brings the greatest good to the greatest number.
  • There's no point bankrupting Auckland City Council and making them pay for all leaky homes if we can't have a harbour crossing, right, what's more important for Auckland and what would bring better results for Aucklanders in general is being able to actually move around their city for your city. You need to think of the border picture.
  • The biggest impact you can have as a society.
  • New Zealanders are obsessed quite rightly with fear trial.
  • When you contract your criminal justice system, focus on that so much that you create the system we have at the moment where people are waiting literally, both people who are accused and people who are victims waiting for years, waiting literally, like when I read in the paper, X is not going be tried for 18 months, it's like a tragedy, is a great tragedy for that person and it's a great tragedy for their victims too.
  • You need to always bear in mind what the big game is too, what this actually means for the things we can do as a society.