This article is written by Asha Kumari Manjhi ,bhadrak law college, 3 year LL. B student during on internship at Le Droit India.
Keywords :
Joint and several liability
Legal regims
Deterrence : opening remarks
Fairness : several remarks
Division of the burden of insolvency
Insurance under joint and several libility
Introduction :
The Law and economics analysis of the comparison of joint and several liability examines the relative incentives for both deterrence and settlement generated by the two rules and their fairness. Under joint & several liability, the burden of one defendant’s insolvency falls exclusively on its co-defendants. Joint and several liability undermines the market for insurance. Inn this article we will delve into the various aspects of jont and several liability with case Laws and explore landmark judgments shaping the landscape.
Understanding joint & several liability:
Joint and several liability governs many situations in which more than two tortfeasors contribute to a harm suffered by a individual.
In the anti-trust context,a price-fixing conspiracy may often involve more than two companies often more than two generators deposit waste at a site that subsequently suffers a release of hazardous substance into the environment.
Basic Framework :
Independent Probabailities –As a consequence of joint & several liability, the plaintiff recovers its full damages not only if it prevails against both defendant but also if it prevails against one and loses to the other.
Perfectly Co-rrelated Probabailities –
The Problem changes considerably when the plaintiff’s probabailities of success against both defendants are perfectly co-rrelated.
The effects of Limited Solvency- Under non-joint liability,the limited solvency of the defendants does not effect the choice between settlement and litigation.The situation is different under joint and several liability.
We consider first how limited solvency would affect the choice between settlement and litigation if the plaintiff’s probabailities of success are independent.
Illustration and Examples :
Division of the Plaintiff’s Recovery :
The second issue concerns the allocation of expected liability among litigating defendants. From this perspective ,joint and several liability performs badly. It places a disproportionates burden on the defendant with the smaller share of the liability, except when the plaintiff’s probabilities of success are perfectly co-rrelated.
Example :
Row and Column are 25% and 75% at fault , respectively; the plaintiff’s probabilities of prevailing against each of the defendants remains at 50% and these probabilities are independent.
Landmark Judgments:
Landowners and builders –
A recent supreme court judgment held that landowners are jointly and severally liable with builders for a deficiency in service, even if they revoke a power of attorney for the development.
Karnataka state Road Transport v/s Renny Mammen and Others –
This 1990 judgment ruled that in case of joint tortfeasors , the liability is joint and several.
Challenges in Enforcement:
Difficulty Identifying a single tortfeasor :
In some cases, it can be difficult to identify a single party responsible for a loss.
Example – In cases of asbestos related mesothelioma, it can be difficult to determine which party is responsible for the resulting illness.
Discontent with the model :
Some municipalities ,such as Ottawa Alberta ,have expressed discontent with the joint and several libility model.In 2022, Ottawa ‘s city council recommended reforms to the Attorney General.
Varying Outcomes :
The outcomes of a joint and several libility case can vary depending on the jurisdiction, the facts of the case ,and any legislative modifications.
Recent Developments :
Government response :
The Government accepted the Law Commission’s recommendation to keep joint and several liability as the applicable rule when multiple defendants are liable for the same damages.
Hybrid approach :
Most U.S states have limited the use of joint and several liability or developed a hybrid approach. For example, a state might only allow joint and several liability to apply to parties responsible for more than 50% of the damage.
Law commission recommendations :
The Law Commission recommended that the government consider the following:
1.Relief for minor defendants
2.Supplementary contributuion
3.Recommendations affecting the building sector
4. Caps on auditors and audit firms liabilities
Conclusion
In sum, from the perspectives of inducing deterrence and inducing settlements, and promoting fairness, there is no dominant relationship between joint and several liability and non-joint liability. From a deterrence perspective, the comparison between the two rules turns on the levels of solvency of the defendants. In contrast, from settlement and fairness perspectives, the comparison turns on the correlation of the plaintiff’s probabilities of success against the defendants.
References :
1 . Indian Oil Corporation Ltd. vs Nepc India Ltd. on 25 October, 2002.
- Income-Tax Officer, Nellore vs M. Sundararamireddy on 26 September, 1964.
- Khenyei vs New India Assurnace Co.Ltd.& Ors on 7 May, 2015.
- LexisNexis: Joint and several liability arises when two or more people under the same contract make a promise to the same person.
- Hallellis: Joint and several liability can occur in contract law or tort law.
