3.4Chapter 3 of the Issues Paper discussed three interrelated issues concerning the Crown’s liability in tort, which are:
(a) whether or not the Crown should be potentially liable in tort in its own right (directly liable);
(b) how the imposition of direct liability should affect the range of existing statutory provisions that effectively immunise the Crown by immunising individual employees from liability in tort; and
(c) whether the Crown’s liability in tort should be limited by statute or left to the courts to determine.
3.5In the Issues Paper, the Commission expressed preliminary views on these issues. The Commission took the view that the proposed new Crown Civil Proceedings Act should allow for the Crown to be potentially directly liable in tort in its own right as a consequence of placing the Crown in the same litigation position as others. We took the view also that, as part of the reform, existing statutory provisions that effectively prevent liability being found against the Crown, by immunising individual employees from liability in tort, might be redrafted to directly immunise the Crown where appropriate. Alternatively, the Bill could explicitly provide that all existing immunities give the Crown immunity. We also proposed that the Crown’s liability in tort should not be limited by statute, but should be left to the courts to determine.
3.6Here, we briefly recap on these issues and discuss the points made in submissions in response. Despite some concern expressed in submissions, we think there are advantages in continuing with the approach to direct liability as proposed in the Issues Paper and leaving the limitation of the Crown’s liability in tort to the courts. We have revised our thinking in respect of existing immunities and have concluded that they should be listed in a schedule to the Bill and should continue to immunise the Crown from liability in respect of the actions of a Crown employee. We have also made some changes to the original draft provisions included in the Issues Paper in order to address concerns raised in submissions.
3.8The Crown Proceedings Act effectively establishes a bar against suing the Crown directly in tort with the exception of the very limited classes of claims available under sections 6(1)(b), 6(1)(c) and 6(2). This bar is felt most sharply in the case of negligence claims but applies equally to other torts. The Crown can only be held vicariously liable in tort for the acts and omissions of Crown employees. Consequently, in order to sue the Crown in negligence, a potential claimant must identify a particular Crown employee and allege that he or she has committed a tort. However, if no particular Crown employee has committed a tort or it is alleged that the government department as a whole has failed or it is claimed that a number of government departments have collectively failed, a person harmed (in circumstances where there would otherwise be legal redress) may be left without any redress against the Crown.
3.9Currently, the vicarious nature of the Crown’s liability and the lack of direct liability for tort claims mean that statutory provisions that give immunity to Crown employees and other officers also immunise the Crown. Some statutes may have been drafted with the intention of immunising the Crown in this way, while for others the intention may have only been to immunise the employee. Immunity for the Crown may not be justified where it leaves a person who has been harmed no remedy in tort.
3.10As we discuss later in this chapter, section 86(1) of the State Sector Act 1988 gives Crown employees an immunity for actions undertaken in good faith in performance of their work. At the same time, section 6(4A) was inserted into the Crown Proceedings Act preserving the ability of those who had suffered harm to continue to pursue the claim against the Crown despite the Crown servant’s immunity in section 86 of the State Sector Act. However, this did not confer direct liability on the Crown, so a claim against the Crown must still be based on the vicarious liability of a Crown employee. Furthermore, section 6(4A) only applies to prevent the Crown taking the benefit of immunity under section 86 of the State Sector Act. It does not apply to other immunities given elsewhere on the statute book to Crown employees.
3.11Questions of immunity and liability are intertwined. The effect of some existing immunity provisions would change if claims could be brought directly against the Crown. Where vicarious liability is the only avenue of challenge available to a claimant, a provision that immunises a Crown employee will also protect the Crown from vicarious liability because the Crown enjoys the benefit of its employee’s immunity. The immunity will not apply if the Crown is directly liable unless these provisions are amended so that the Crown is also protected by a statutory immunity given to its employees.
3.12Section 6 of the Crown Proceedings Act excludes tort claims against the Crown except to the extent that they are permitted by the provisions of the Act. If section 6 was repealed, the situation would be the inverse. As long as they had a cause of action, a person could bring any claim against the Crown except where such a claim was prohibited by legislation (or other legal rule). Therefore, any limitation on the Crown’s liability in tort will need to be expressly provided for if section 6 is repealed.
3.13There are good reasons for allowing the courts to recognise that, in appropriate cases, the Crown could be held directly liable in tort:
(a) Direct liability is conceptually cleaner and more consistent with the way in which the Crown is held accountable for its conduct (including the conduct of employees).
(b) Proceedings against the Crown will be simplified, as the Crown would be in the same position as other corporate entities that might potentially be sued directly.
(c) Direct liability might remove the potential for injustice that might arise where no one Crown servant can be said to have committed a tort as long as the court would otherwise find that the Crown would be legally liable.
3.17Potential claimants will no longer be forced to attempt to frame legitimate tort claims, sometimes artificially, around whether an individual public servant has committed a tort. Rather, the focus will be, as it ought to be, on whether the Crown ought to be responsible in damages for breaching its obligations. We emphasise that this change would not require a court to find the Crown liable; that will be left for the underlying law to determine. The change will simply make clear that direct liability is not precluded. For example, a claim in negligence would still require the court to consider whether a duty of care exists and whether it was breached. The advantage of the change is that the court will not be diverted to questions of vicarious liability or arguing about who is the proper respondent. We expect that there would continue to be the same judicial scepticism in recognising the existence of a duty of care in negligence for regulatory or administrative decision-making that currently exists.
3.19The Crown Law Office said in their submission that the arrangement entered into by the Crown and Mrs Couch was a response to the particular personal circumstances of the probation officer and that care must be taken not to place undue weight on the arrangement in that case. While we acknowledge that point, the case still demonstrates the conceptual difficulties that arise around having to prove vicarious liability for the actions of an individual employee. Couch more importantly illustrates the reality that lies behind our approach. It is the Crown’s obligation to make sure that the probation service operates effectively, and if there is to be legal liability, it should be the Crown’s. The very narrow duty of care that the Supreme Court accepted might exist illustrates the reluctance of the courts to recognise such a duty of care.
3.20A related issue is the potential for unfairness to Crown employees. Under the current law, an individual Crown employee must be named as defendant in a tort claim. In cases where Parliament has decided to place a duty of care or liability on an individual in respect of a particular function and where an appropriate indemnity is available, this is unobjectionable. However, where Parliament has not placed responsibility on an individual employee, a claimant must still target an individual employee, despite the fact that the claim might be one of systemic failure at its core.
3.23Whatever the justice of the substantive case, it is the procedural bar on holding the Crown potentially liable that concerns us. The need to remove the potential for such an effect of the prohibition on the Crown being liable is, in itself, sufficient justification for reform. At its most basic level, the issue is one of fairness; a person harmed by the negligent action of the Crown, whether it be through a single Crown employee, multiple employees or a systemic failure, should be entitled to have that claim considered by the courts and not have the claim blocked by what is essentially a procedural matter. In New Zealand, claimants in this position would have to rely on the goodwill of the Crown and the willingness of the courts to be flexible in their approach to the restriction on direct liability. In our view, this is an insufficient response.
3.24In the Issues Paper, we asked submitters whether they agreed with the approach of making it possible for the Crown to be directly liable in tort. We asked also what, if any, difficulties they saw with the approach.
3.25The majority of submitters who responded to this question agreed with the proposal to allow direct liability in tort against the Crown. Professor Janet McLean said that the Crown can already hold land and enter contracts, so the issue was really more of a procedural one; who to serve and against which fund should judgment be awarded? Russell McVeagh considered that the presumption should be in favour of direct liability but acknowledged that there might be cases where expressly identified exceptions are justified. They said that, from the wronged person’s point of view, “the Crown is the Crown and there is no justice is foreclosing such a claim on technical grounds”. They made the important point that it would focus the argument on what the law should be rather than on whom the claim should be made against. It would also avoid the injustice that might occur where there is evidence of systemic failure that cannot be fairly attributed to Crown servants.
3.26The New Zealand Law Society (NZLS) said that allowing direct liability would clarify the law regarding the rights of people affected by decisions of the Crown. They thought the proposal would align the position of the Crown and Crown entities in tort so that people could expect clarity and consistency of treatment with respect to the tort liability of the Crown and Crown entities. The NZLS said that allowing direct liability would not affect the approach the courts would take when assessing whether or not the Crown should be liable in tort.
3.27The New Zealand Public Service Association (PSA) agreed that direct liability would be consistent with the principle that the Crown be subject to the same legal rules as private individuals and should be accountable to injured citizens for its actions. Direct liability would also prevent public servants from being unfairly targeted in order for a claim to proceed. They acknowledged that, in some cases, it might be necessary for the Crown to be immunised but that those instances should be carefully defined and limited to that which is necessary. They also highlighted the potential injustice faced by people wishing to bring claims relating to systemic failure by the Crown under the current law.
3.28Although supportive of direct liability, the NZLS did raise a concern that the proposal might open the door for the Crown to be sued for policy decisions. The Crown Law Office was also concerned that allowing direct liability would extend the scope of Crown liability in tort in ways that the Law Commission did not intend. In particular, Crown Law is concerned that the proposal might open up a wide area of new Crown liability in the regulatory field. Crown Law’s submission takes a strongly risk-averse position. This may be understandable, given their role in minimising and managing the Crown’s legal risk, however, we think it overstates the possible risk of expanding Crown liability. Too much weight should not be given to what are really remote and almost theoretical risks.
3.29Our intention is not that the Crown would suddenly be liable in respect of policy choices or in regulatory fields where liability does not currently exist. An underlying cause of action (capable of resulting in liability) must already exist because we are not proposing new causes of action against the Crown. Our proposed approach deals with the ability of the Crown to sue and be sued. The possibility of direct liability will not generate new cases. It will simply allow cases to be brought that were previously prevented by a procedural bar that has little or no justification in modern New Zealand and has the potential to lead to considerable injustice.
3.30Allowing direct liability does mean that the Crown might be sued in cases where previously it would not have been, but this does not change the substantive law of tort. The approach removes an existing procedural impediment that has prevented people from bringing a claim. Without this impediment, the common law of torts in respect of Crown liability can continue to be developed by the courts over time in the same way as other aspects of the law of tort.
3.32We looked at the experience in countries that have direct liability to consider whether the concerns that Crown Law identified in their submission have eventuated. They have not, and we think that they are also unlikely to occur in New Zealand.
3.36The Crown is directly liable for breaches of the New Zealand Bill of Rights Act 1990 (NZBORA). We have proposed that claims of a breach of NZBORA should be brought under the new Crown Civil Proceedings Act that we are recommending. Despite liability being direct, the courts have emphasised restraint in awarding compensation for breaches of NZBORA. Although there are some important differences between public law compensation and tort claims, the experience of judicial restraint in relation to public law compensation indicates that it is not a question of whether liability is “direct” that leads to expansion or restraint of liability but rather judicial determination of what substantive liability ought to be.
3.37Crown Law said that our proposal had not fully analysed how direct liability would affect torts other than negligence. They referred to the torts of misfeasance, wrongful imprisonment, corporate defamation, corporate misfeasance and wrongful imprisonment.
3.39Crown Law also submitted that our proposal would appear to make it possible for the Crown to be sued as some sort of conglomerate of related companies – a step rarely, if ever, available in private litigation.
3.40We think that the Crown is in quite a different position to a group of related companies. The bodies that make up the Crown are not merely related, they are part of the same whole, and this should be recognised. We are not suggesting that the Crown should be liable for the actions of bodies, such as Crown entities, which have their own capacity to sue and be sued and which have quite deliberately been removed from the central Crown. However, within the Crown itself, there is only one Crown, and this should be reflected.
3.41We remain of the view that the court should be able to hold the Crown directly liable in civil proceedings, regardless of whether or not an individual Crown employee is found liable. Although the possibility of direct liability is a logical consequence of the core procedural reforms in this review, namely that the Crown has its own legal personality for the purposes of civil proceedings and may sue and be sued as an ordinary person, clause 8 of the Bill draws attention to the change:
8 Tort liability of the Crown
A court may find the Crown itself liable in tort in respect of the actions or omissions of Crown employees despite any immunity of those employees.
3.42We have also included sub-clause 3(c) (the purpose clause):
3.43As already outlined above, many existing statutory provisions effectively immunise the Crown. This is because the Crown’s liability is vicarious, and the Crown is entitled to rely on an employee’s indemnity. Where the Crown is instead potentially directly liable for a tort claim, existing statutory provisions that give Crown employees immunity will not protect the Crown. This means that many existing statutory provisions that give immunity to Crown employees and other officers will no longer immunise the Crown and will need to be redrafted in order to provide the Crown immunity against direct liability.
3.44Many of the existing immunity provisions have intentionally been drafted and then enacted on the basis that, by immunising the Crown employee, the provision does also vicariously immunise the Crown. However, that will no longer be the position unless those immunity provisions are amended or the effect of immunising the Crown is preserved in some other way.
3.45We recommend that existing immunity provisions that apply to Crown employees and that have the effect of immunising the Crown should continue to apply to immunise the Crown against liability. To address the possibility of direct liability, clause 15 of the Bill expressly applies the existing provisions to the Crown by providing:
15 Existing immunity provisions
An existing immunity provision listed in Schedule 2 immunises the Crown from liability in civil proceedings in respect of the actions or omissions of a Crown employee in the same way as it would immunise the employee.
3.46The Bill at present contains some illustrative examples of provisions of the sort that would be included in Schedule 2. Careful consideration should be given to ensuring that Schedule 2 only includes provisions that immunise the Crown where this is consistent with the purpose of existing provisions. This deserves further careful scrutiny to ensure it reflects the status quo and does not unintentionally create new immunities.
3.47We think the approach we have taken here, of seeking to maintain existing immunities, is the most consistent with the essentially procedural nature of the reforms in the Bill. In future, against the backdrop of direct liability of the Crown, Parliament will need to consider whether or not to grant immunity to the Crown or whether it should only be granted to Crown employees and how to appropriately word such new provisions.
3.48In the Issues Paper, we proposed that the Crown’s liability in tort should not be limited by statute but should be left to the courts to determine. We gave particular attention to section 6(2) of the Crown Proceedings Act. The intention of that section would seem to be to exclude liability in fields where the Crown provides a service that is not also provided by private individuals. However, as we noted, the provision has most recently been interpreted as enabling claims alleging breaches of statutory duties to be brought against the Crown.
3.50The revised Bill does not make it more or less likely that courts will extend the scope of tort liability for administrative failings, nor does it increase the likelihood that there will be a “public law of torts”. Whether a statutory duty should give rise to a tort of breach of statutory duty or a claim for breach of a common law duty of care should either be addressed in the specific Act imposing that statutory duty, or if it is not, it should be determined by the courts. It is not appropriate to seek to impose a general statutory limit on the kind of tort liability that can be found against the Crown in a new Crown Civil Proceedings Act, which is otherwise a procedural statute.
3.51We propose not replacing section 6(2) with an equivalent provision in the new Act as we do not consider it necessary.