In August 2025, the Government signaled a shift in the liability settings for the construction sector – a move from joint and several liability to proportionate liability. You can read the commentary in our previous article Proportionate Liability – the Next Evolution? – Hesketh Henry. On 24 November 2025 measures intended to protect homeowners under the new regime were announced, including mandatory home warranties and a requirement for design professionals to hold professional indemnity insurance, as well as increased disciplinary penalties for licensed building practitioners who act negligently.
It is intended the new legislation will come into effect in mid-2026 as part of a broader building Amendment Bill, and following a consultative process led by MBIE it is understood that drafting is under way. The changes to the liability settings will have impacts not just on allocation of responsibility for losses but on how project participants contract and manage project risks. The devil is in the detail and robust discussion in the construction and insurance sectors will be critical to the development of this legislation.
In this article we examine the difference between joint and several liability and a proportionate liability system. In follow-up articles, we will consider some of the key issues to be addressed.
Joint and several liability
Where the wrongful acts of two or more persons cause or contribute to the same loss or damage suffered by another party, the joint and several liability rule says that each and all of the wrongdoers are 100% liable to the plaintiff for the loss caused.
So if, for example, the designer of a building makes an error such that the building is not structurally sound, the constructor of the building makes errors in the construction that also reduce structural soundness, and the building consent authority (BCA) issues CCC when the building fails to comply with the Building Code structural requirements, each of these will have caused the owner to suffer the economic loss of having a non-code compliant building that needs structural remediation.
In such a situation, there are three important elements to joint and several liability:
- The first is joint liability. On the example given, the designer, the constructor and the BCA collectively share responsibility to the building owner for the entire loss. This does not mean that the building owner can collect the entirety of their loss cumulatively from each person (that would be double recovery), but that the people responsible are all collectively – jointly – liable. Subject to any limitation defences, the building owners can sue all of them if they so choose.
- The second is several liability. Each person involved is individually responsible to the building owner for the entire loss, they are all severally Again, this does not mean that the building owners can engage in double recovery; rather it means they can select from which of the liable defendants they will seek recovery. If they so choose, they can recover the entirety of their loss from a single solvent and liable defendant.
- The third is a right of contribution from joint tortfeasors. This follows from the concept of joint liability. Although each of the responsible group is individually liable to the plaintiff for the entire loss, as among themselves, they can claim a contribution from the other parties to the extent they can establish those parties contributed to the loss. In New Zealand this takes the form of a joint tortfeasor claim for contribution under the Law Reform Act 1934 (LRA).
Consequences
Because each party is responsible to the plaintiff for 100% of the loss, irrespective of their individual degree of fault, the plaintiff can elect to sue and recover from the most solvent party or parties. The burden is effectively placed on those defendants to join other negligent players as third parties or (if found liable) to subsequently bring a joint tortfeasor claim under the LRA to recover contribution from them – a time-consuming and costly process. Furthermore, the solvent defendant against whom a judgment is executed also bears the risk of the insolvency of other parties who contributed to the loss. In that event, it is the solvent defendant, not the plaintiff, who will be left out of pocket.
Proportionate liability
It is sometimes said that under proportionate liability, each defendant is only responsible for the work they carried out or the decisions on which they signed off. While that is true, this is not the core difference between proportionate and joint and several liability. Even under joint and several liability, the conduct of each defendant must contribute to causing the loss, and no defendant is being held liable solely for someone else’s conduct.
Rather, the difference is that proportionate liability looks at the conduct of all the parties who contributed to the loss and then attributes responsibility based on the relative impact each party’s particular negligent conduct had in causing that loss. So, for example, it might be concluded that a constructor who employed careless building practices had a greater role in bringing about a building defect than a BCA who inspected the works but failed to identify the errors. This type of apportionment is not dissimilar to that which happens in joint tortfeasor claims amongst defendants under the joint and several system.
A proportionate liability approach, however, means that a plaintiff can only recover a portion of its loss from each defendant, and so would have to join every potential defendant to recover the total loss. If a defendant is unavailable or insolvent, or the claim against it is time-barred, the plaintiff will bear that defendant’s portion of the loss.
Put very simply, joint and several liability gives the plaintiff the best opportunity of recovering its loss by allowing it to recover 100% from solvent defendants. But this can lead to unfairness between defendants.
By contrast, proportionate liability provides a fairer allocation of loss as between defendants. However, the plaintiff will be left out of pocket if there are insolvent parties that are also uninsured. It is to mitigate this risk that the proposed measures relating to guarantees, professional indemnity insurance and LBP penalties have been announced.
In subsequent articles we will address the potential efficacy of such measures to protect homeowners as well as questions concerning how the change to proportionate liability will be implemented – will there be contracting out, how should the start date be determined, will the regime apply to alternative dispute resolution processes such as arbitrations, and how will joint tortfeasor claims under the LRA be affected?
If you have any questions about this, please get in touch with our construction team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
