Contents

Chapter 3
Tort law and Crown liability

General restrictions on government liability

Introduction

3.25Just because the Crown can be sued does not mean that it will always, or indeed often, be liable for breaches of the obligations that it owes under statute or common law. The Crown will only be liable if an underlying cause of action would make it liable. Most commonly this requires the Crown to have assumed obligations through contract or otherwise, or to have committed a tort. In the case of both the torts of breach of statutory duty and negligence, however, it is essentially left to judges to determine the overall scope of liability that might arise, sometimes in circumstances where no private individual could owe an obligation.

3.26Government departments have legitimate concerns that liability should not be imposed for policy choices, or indeed for the general implementation of policy, except under very specific regimes like the Human Rights Act 1993. Policy necessarily involves making determinations of what risks are to be guarded against, what benefits are to be conferred and who is going to bear the cost. Resource allocation necessarily involves deciding that some good causes will not receive government support, while others will.

3.27There is a question of whether the new statute should attempt to prescribe the circumstances in which liability should arise for breach of statutory obligations.

Section 6(2) of the Crown Proceedings ActTop

3.28The 1950 Act contains what might have been an important reservation on the ability of courts to recognise causes of action as arising from statutory duties. However, as it has been interpreted, section 6(2) does not in fact create such a limit and we have not proposed that it be carried over to the Crown Civil Proceedings Bill.

3.29Currently section 6(2) provides:

Where the Crown is bound by a statutory duty which is binding also upon persons other than the Crown and its officers, then, subject to the provisions of this Act, the Crown shall, in respect of a failure to comply with that duty, be subject to all those liabilities in tort (if any) to which it would be so subject if it were a private person of full age and capacity.

3.30This section was inherited from the United Kingdom 1947 Act. The intention of the drafters appears to have been to exclude Crown liability where Parliament had expanded the role of the government to provide services that were not provided by private individuals, but to catch those duties that were shared with other employers. In his 1948 book on the United Kingdom Act, Glanville Williams wrote:28

A statute that binds the Crown or its officers only is deemed to create a merely governmental duty which does not found civil liability. The object of the Act is to put the Crown on somewhat the same footing as a private matter, not to create a new department of tort by turning constitutional and administrative law into a system of duties owed by the Crown.

3.31The then-Treasury Solicitor, Sir Thomas Barnes, who had been heavily involved in the drafting of the United Kingdom Crown Proceedings Act, explained the reasoning behind this section in a 1948 article:29

The reason for this … limitation is that there are many Acts of Parliament which impose general duties upon particular Ministers, e.g., it is the duty of the Minister of Education to promote education of the people of England and Wales. Clearly, if the Minister fails to perform this duty, he should be answerable in Parliament and not elsewhere.

3.32The New Zealand provision has been the subject of conflicting interpretations in the High Court over whether section 6(2) is designed to limit the kinds of statutory duties that the Crown can be held liable for if breached, or whether it is intended to enable suits based on the breach of statutory duty tort.30
3.33Two reasons may account for the conflicting views. First, the section arguably failed to deal with the reality of many governmental duties that are not cast on the Crown, but rather on the Crown’s servants. For example, in child welfare cases the allegation has been that child welfare services have failed to protect a child. The obligation in question may have been owed not by the social welfare department as a whole, but by the Director-General or Chief Executive of the department.31 Secondly, the section deals with statutory duties, whereas in New Zealand government liability has been developed in negligence and not categorised as a breach of statutory duty even when a statutory duty might have been breached.
3.34In the most recent case to consider the section, McKenzie J in Goodship and Pranfield Holdings Ltd v Minister of Fisheries (Pranfield) held that the section did not operate as a prohibition on recovery, but rather enabled actions against the Crown:32

Subsection (2) imposes an additional liability on the Crown. It does not limit or exclude any liability to which the Crown may be subject under subsection (1). The proposition, as expressed by Bickford Smith, that “there is no liability under the Act for breach of those duties which are laid upon the Crown and its officers alone” is true only to the extent that liability for breach of such duties is not a liability in tort. If it is a liability in tort, then subsection (1) applies to impose liability, and subsection (2) does not remove the liability. The proposition that there may have been no liability in tort for breach of a statutory duty resting only on the Crown may well have been true more than half a century ago when the Crown Proceedings Act was passed. Developments in the law of tort in the intervening period have been such that that proposition cannot now be regarded as correct. The tort of breach of statutory duty is well recognised and established now. To the extent that liability for breach of statutory duty is a tortious liability, that tortious liability is, like any other, subject to s 6(1). The proposition that the Crown can do no wrong is no longer a foundation for an exemption of the Crown from tortious liability. The liability in tort to which the Crown is exposed by s 6(1) is not limited to its liability in tort at the time when the Act was passed. It includes its liability as that has been extended and expanded in the intervening period.

3.35The Court of Appeal, having found no causes of action under which the plaintiffs in Pranfield could recover, declined to review the operation of the defence.33

3.36In some ways the courts’ preference for negligence, as opposed to a separate breach of statutory duty tort, has made the debate over section 6(2) somewhat redundant, in a way that the authors of the 1950 Act could not have appreciated. It is not clear on the face of it whether this section, in fact, applies to negligence actions and, if it were to apply, what the impact of that application might be.

3.37Our present view is that section 6(2) should not be retained. It appears to us that by far the best mechanism for determining whether a particular statutory duty or power ought to give rise to a remedy in the breach of a statutory duty tort, or to a common law duty of care, is in the statute that creates those duties itself.

3.38It is not our aim in proposing the removal of section 6(2) to signal to both litigants and the courts that the intention was to essentially authorise an expansion of Crown liability in areas where courts otherwise would not have expanded liability. Rather, it would be a concession that the current provision is ineffective. It would be difficult to argue that the law of Australia is any more expansive in terms of the kinds of governmental duties that might be imposed, yet the various Crown Proceedings Acts in Australia do not include anything like our section 6(2).

The policy–operation distinctionTop

3.39One device that has been used by the courts to restrict government liability is the policy-operation distinction in negligence cases. Courts in a number of jurisdictions have recognised that it is inappropriate to impose duties of care when decision-makers are charged with making “policy” decisions, but that it might be appropriate to recognise duties of care where the public official is engaged in “operational” matters. The most famous articulation of the distinction was that by Lord Wilberforce in Anns v Merton London Borough Council.34 An early version of the distinction is included in the United States Federal Tort Claims Act.

3.40In many cases an easy distinction can be made between what might be “policy” and what might be “operational”. At the margins, the distinction is difficult to apply, and what some might consider to be an operational failure – for instance, to inspect – might be explained as a policy decision not to provide particular resources to enable the inspections.

3.41Nevertheless behind the distinction lies an important insight: that citizens might claim to be harmed, or at least not protected, by a legitimate governmental decision, but that the government should not find itself liable as a result. It is, however, difficult to generalise in what circumstances there ought to be, and in what circumstances there ought not to be liability, in a way that would make drafting a statutory provision possible. Therefore we have not included the distinction in the draft Bill. We are not intending, however, that this indicate a view that the courts should not examine whether a decision was a “policy” one and whether that might tell against recognition of a duty of care in negligence.

Approach in our draft BillTop

3.42Our Bill does not include an express limitation of the tort liability of the Crown. Our Bill is focused on capacity to sue and be sued rather than the substantive law of whether an obligation has been breached for which there can be a tort action.

Questions

Q1 Do you agree with the approach of making it possible for the Crown to be directly liable in tort? Do you foresee any difficulties with this approach?
Q2 What is the best approach to take with existing provisions in other Acts that provide Crown employees with immunity if section 6(4) of the Crown Proceedings Act is repealed?
Q3 Would repealing section 6(2) of the Crown Proceedings Act create any problems?

28Glanville Williams Crown Proceedings (Stevens & Sons, London, 1948) at 47–48.
29Barnes, above n 21, at 391.
30The restrictive interpretation had been adopted in G v Attorney-General [1994] 1 NZLR 714 (HC) at 722; and Vickerman Fisheries Ltd v Attorney-General HC Wellington CP 1007/91, 26 August 1994 at 57, while the expansive approach has been adopted in Cashmere Pacific Ltd (in rec and in liq) v New Zealand Dairy Board [1996] 1 NZLR 218 (HC) at 13–14; and Goodship and Pranfield Holdings Ltd v Minister of Fisheries HC Wellington CIV-1997-485-13, 19 December 2006 at [179]–[185].
31See Children, Young Persons, and Their Families Act 1989, ss 7 (duty of the Chief Executive) and 17 (duty of the social worker to investigate a complaint of child abuse).
32Goodship and Pranfield Holdings Ltd v Minister of Fisheries, above n 30, at [184].
33Minister of Fisheries v Pranfield Holdings Ltd [2008] NZCA 216, [2008] 3 NZLR 649.
34Anns v Merton London Borough Council [1978] AC 728 (HL) at 754.