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Anderson, Stuart --- "'Grave injustice', 'despotic privilege': the insecure foundations of crown liability for torts in New Zealand" [2009] OtaLawRw 1; (2009) 12 Otago Law Review 1

Last Updated: 25 February 2012

^{F.W . Guest Memorial Lecture: August 6th, 2008}

‘Grave injustice’, ‘despotic privilege’: the insecure foundations of crown liability for torts in New Zealand

Stuart Anderson*

This lecture originated from a conversation with a lawyer about a case argued in the New Zealand Supreme Court in April 2007. It showed that there is an aspect of crown liability for torts that is not well understood and which may still cause injustice. The Supreme Court’s long-delayed decision, in June of this year, suggests a reasonably satisfactory solution, but only by ignoring the statute that is the cause of the problem and then not analysing the basis of the solution itself. The rule concerned is an English import into the New Zealand statute book. I hope to demonstrate its adventitious nature as part of an argument that it should be repealed.

For non-lawyers I need just to say that the law of torts is the law of liability for injury, including injury to person, property or reputation, and that it includes the law of negligence. When suing a large enterprise the claimant may aim to make it liable for its own negligence – say for releasing untested drugs on to the market. Sometimes lawyers call that

‘direct liability’. I shall call it institutional liability. Alternatively the claimant may say that a particular employee was legally responsible for her loss – say for careless driving of a company delivery vehicle. In that case the employer is liable simply because it is the employer (exceptions aside). That is called vicarious liability. Of course, the claimant’s lawyers may not know until the trial how the facts will work out, so they may make both claims. At least, that is what the law says if the defendant is a private person, including a company.

1 Mr Henry’s dilemma

We begin in the Supreme Court in Mrs Couch’s case. She is the sole survivor from a group of co-workers attacked by William Bell at the premises of the RSA in Panmure in December 2001. Three died; and Mrs Couch was left for dead. She is now suing the Crown, more precisely the Attorney-General, because at the time of the attack William Bell was a convicted prisoner out on parole. She claims that he was able to make the attack only because of culpably lax supervision by the Probation Service. The Crown concedes that there were shortcomings. William

^* Faculty of Law, University of Otago. This paper is a slightly expanded version of the address given as the F. W. Guest Memorial Lecture at the University of Otago on 6 August 2008. The title quotations are from the Evening Post, 18 May and 23 November 1910. I have accessed the New Zealand newspapers used in this paper through the National Library’s searchable digital collection: http://paperspast.natlib.govt.nz/cgi-bin/ paperspast.

Bell’s probation officer was inexperienced – she was just 10 months into the job – and she was probably overworked. The Crown is very concerned to shield her, since the experience has been traumatic for her too, so she is known merely as Ms X.

One serious obstacle for Mrs Couch is that in New Zealand the main vehicle for compensation for personal injuries is the ACC scheme. Court actions for negligence will succeed only if the negligence was so culpable as to warrant an award of exemplary damages to punish the wrongdoer. The Court of Appeal thought the prospect of Mrs Couch succeeding so remote that it struck her action out – not allowing it to go to trial.¹ Mrs Couch appealed to the Supreme Court, where she has succeeded in reinstating her claim.²

In April 2007 the Supreme Court heard argument against the striking out.³ A lawyer who was present found it perplexing that Mr Henry, Mrs Couch’s lawyer, appeared not to be taking hints about whose liability he should be asserting: the department’s rather than Miss X’s. In my terms, he should be claiming institutional liability rather than vicarious liability. The transcript runs to nearly twenty pages on or around this point, but the following edited extract is representative:

Blanchard J Well it doesn’t cure the whole problem because if the matter is only being approached via Ms X, there is this question of whether Ms X is a suitable candidate for exemplary damages, whereas if the damages are being approached via a systemic attack, or via an attack on the Crown’s systemic failings, the Crown’s position on its own liability, not Ms X’s liability, for exemplary damages may be quite different.

Henry I understand that Sir and this is why we’re saying we need to be let go on to trial because it may well turn out exactly what Your Honour says. She’s ten months, she’s inexperienced, she goes to her boss and says what do I do and that Officer then becomes where we should be appropriately focused....

Blanchard J But even if you don’t get evidence that she goes to her boss, the mere fact that an inexperienced person was put in this overworked position might be sufficient.

Henry I don’t know who the person is who made those decisions. I don’t have any access to documents to show us who.

Blanchard J Well does it matter?

Henry Well we’ll have to identify a person. There must be a person to identify.

Elias CJ Well.

¹ Hobson v Attorney-General [2006] NZCA 409; [2007] 1 NZLR 374 (Hammond J, diss.).

^{2 Couch v Attorney-General [2008] NZSC 45 (13 June 2008).}

^{3 SC 49/2006. All that follows about the oral argument in this case is taken}

^{from the transcript available at http://www.courtsofnz.govt.nz/from/}

^{transcripts/supreme.html (last accessed 5 June 2008).}

Elias CJ It does strike me Mr Henry that your indication that you’re not proceeding against the Attorney-General on behalf of the Department for Corrections is one that you need to reconsider.

Blanchard J You’ve got to carefully distinguish between the two. Vicarious liability is liability for the sins of an agent in these circumstances, of an employee of the Department, but there could be theoretically at least direct liability for the Department’s own sins in not having a proper structure in place. In having an inadequate system which in itself has created a breach of duty of care on the part of the Department itself.

We can see three things: Mr Henry has chosen to sue the crown vicariously for the culpable negligence of Ms X; Elias CJ and Blanchard J thought he would be better suing the Department of Corrections for institutional liability; and they encouraged him to do that.

Nobody mentions the problem for Mr Henry. Section 6 of the Crown Proceedings Act 1950 mandates that the only way to sue the crown for a tort is vicariously – exceptions aside, once again:

6 Liability of the Crown in tort

1. Subject to the provisions of this Act and any other Act, the Crown shall be subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject–

(a) In respect of torts committed by its servants or agents; (b) [Breach of duty to employees]; and

(c) [Breach of duties flowing from occupation of property]:

Provided that no proceedings shall lie against the Crown by virtue of paragraph (a) of this subsection in respect of any act or omission of a servant or agent of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or agent or his estate.

Elsewhere the Act makes it clear that section 6 is the only route to tort liability, within which section 6(1) is the usual case, though there are a few exceptions.⁴ There is nothing like this obstacle for a claimant suing any defendant other than the crown, and, as you can see from the exchange above, it is severely limiting. Without having had their attention drawn to section 6, Elias CJ and Blanchard J thought the obvious route was to sue the department for institutional liability. The form of argument differs considerably, and ancillary issues like the scope of discovery of documents will differ too.

The true state of the law may conceivably be worse for claimants. Section 6 of the Crown Proceedings Act says that when suing the crown for a tort the claimant must show that a crown servant is personally liable – exceptions aside. But section 86 of the State Sector Act 1988 may

⁴ Crown Proceedings Act 1950 s 3(2)(b). See generally P. W. Hogg and P.

^{J. Monahan, The Liability of the Crown (Ontario, 3rd ed, 2000) 108-57.}

^{perhaps remove personal liability in all cases except those of bad faith:}

86 Protection from liability

No chief executive, or ... employee, shall be personally liable for any liability of the Department, or for any act done or omitted by the Department or by the chief executive or any ... employee of the Department or of the chief executive in good faith in pursuance or intended pursuance of the functions or powers of the Department or of the chief executive.

There have been at least two cases where counsel have argued that this was indeed the meaning of section 6.⁵ If so, the negation of personal liability would normally remove the employer ’s vicarious liability too.⁶

In both cases, however, the judge has indicated that the more likely reading of section 86 was that it protected individual public servants from vicarious liability for their underlings, hence that their personal liability would be untouched. One case was before Gallen J in 1996, the other was the Cottle case from here in Dunedin, which was before Judge Joyce. That would be the least harmful reading of section 86, doing no more than repeating what the common law would anyway provide. It also makes reasonable grammatical sense of the section, though the section’s implication that the immunity it gives depends upon the putative defendant having acted in good faith sits awkwardly. Even that reading is not quite the end of the difficulty, however, because there is a subsection in the Crown Proceedings Act that says that if a statute gives a crown employee an immunity the crown can use it to limit or negate its own vicarious liability too.⁷ The Law Commission has suggested that by negating individual vicarious liability section 86 may also remove the crown’s vicarious liability.⁸ There are ways out of this reasoning, and we could perhaps support them by reference to the Bill of Rights Act, which rather optimistically proclaims that we can all sue the crown, but the law ought not to be this complex.⁹

Even if we get over the obstacle of section 86, we are still left with the Crown Proceedings Act, which says as clearly as it is possible to say that the crown is liable for a tort only if one of its servants is also liable. Unlike everyone else, the crown is immune from institutional liability.

⁵ B v Attorney General [1996] NZHC 787; (1996) 15 FRNZ 173; Cottle v Attorney-General

^{(consolidated with McBride Street Cars v Rapana), District Court Dunedin,}

^{14 December 2005 (I thank Len Andersen for a copy of this judgment; the}

^{appeal, reported as McBride Street Cars v Rapana [2006] NZHC 909; [2006] NZAR 697, did}

^{not concern this issue).}

^{6 Commonwealth of Australia v Griffiths [2007] NSWCA 370 is the clearest}

^{recent exposition.}

^{7 Crown Proceedings Act 1950 s 6(4).}

^{8 NZLC r37, Crown Liability and Judicial Immunity (1997) 40.}

^{9 Hill v British Columbia (1997) 148 DLR (4th) 337, Dorman Timber v British}

^{Columbia (1997) 152 DLR (4th) 271; New Zealand Bill of Rights Act 1990 s}

^{27(3). In B v A-G (note 5 above) Gallen J described section 86 as a ‘difficult}

^{and possibly an ambiguous section.’}

^{2 How have we got into this situation?}

The rule is English, so it is there we must start; and a long time ago. These were the rules at, say, the start of the nineteenth century:

1. The King could not be sued. This principle had two sub-parts: (a) the King can do no wrong: this is a rule of substantive law;

(b) the King cannot be sued in his own courts; this is a rule of procedure. It was relaxed for the so-called petition of right, which was used in contractual disputes. But that operated only by concession: the King had voluntarily to confer jurisdiction on his courts each time someone wanted it. Throughout the nineteenth century English judges refused to extend this process to torts.

2. A King’s servant could be sued individually for his own torts.¹⁰

^{This was a crucially important part of the English rule of law.}

^{Royal command was no defence. An individual crown office}

^{holder could be sued for a deliberate tort, such as assault or false}

^{imprisonment, or for what we would now call negligence. There}

^{were some exceptions.}

3. The third rule was not a rule about the King or his servants as such.

^{This is important. It was a rule about all public office holders,}

^{whether they held office under the king or under a charter or a}

^{statute, including a local statute, or even under what we would}

^{now call a deed of charitable trust. It was that holders of public}

^{office were not vicariously liable for the torts of their employees.11}

^{At this time employers generally were subject to a broad principle}

^{of vicarious liability, broader than it later became, so this was a}

^{very big exception. It rested on three propositions:}

1. by hypothesis they were not morally at fault themselves nor

^{were they running a profit-making concern; but}

2. if they were made vicariously liable they would have to pay from their own pocket;

3. that would deter good men from seeking public office.

Therefore, while they should be liable for their own wrongs, they should not be liable for someone else’s. In England this rule was the only one of the three to change its shape between 1800 and 1947.

The infrastructure supporting growth of towns and cities in England always had been provided by local initiative, not by central government. Sometimes this was capitalist development – as with the canals, toll roads, and, later, railways. Often, though, it would be not-for-profit organization, perhaps funded initially through loans or by levying a rate,

¹⁰ Money v Leach [1765] EngR 11; (1765) 3 Burr. 1742; Mostyn v Fabrigas [1774] EngR 104; (1774) 1 Cowp. 161;

^{Glynn v Houston (1841) 2 Man. & G. 337; Cobbett v Grey (1849) 4 Ex. 729.}

^{11 Whitfield v Lord Despencer [1778] EngR 78; (1778) 2 Cowp. 754; Nicholson v Mouncey (1812)}

^{[1812] EngR 206; 15 East 384; Harris v Baker [1815] EngR 626; (1815) 4 M. & S. 27; Sutton v Clark (1815) 6 Taunt.}

^{30; Hall v Smith (1824) 2 Bing. 155.}

later by user-pays charges to meet running costs: water, gas, docks and harbours were common examples. It is only a short step from those to charity schools and hospitals. In the early nineteenth century the usual legal vehicle for establishing a local enterprise such as these, whether capitalist or not-for-profit, was the local statute – passed through the two houses of Parliament but applying only to the locality. Typically it would establish a local board or a commission, often elected. In law the commissioners would not be a corporation, but would instead be joint holders of public office, and hence immune from vicarious liability.¹²

When local boards of health were created in the mid-century they took that form too.

It was this that changed, as a result of a rather delicate dialogue between judges and legislature. There were three elements to the shift:

1. the statutes usually said that legal process need not be served on the commissioners individually but could be received on their behalf by a secretary. In the 1820s judges said that this was merely a procedural convenience.¹³ But on into the 1850s they became more willing to see such formulae as creating something like a corporation.

2. statutes establishing boards and commissions began to say that individual commissioners could not be sued for acts done in good faith. I do not know when this started, but it became common from 1848.¹⁴ It caused a major rethink by the judges, because individual liability was a mainstay of their conception of the rule of law. The requirement of good faith would rule out most tort actions, leaving claimants without a remedy.

3. to make the transition complete judges had to take a broader view of the permissible use of a board’s funds and of its ability to levy rates. This is harder to explain to a modern audience. The best way is to imagine a charitable trust. Its trustees hold funds on trust for a charitable purpose, say to relieve sickness. Trustees must not take a private benefit from that. If a trustee commits a wrong and has to pay recompense for it, then to allow the trustee to charge that recompense on the fund is both to allow the trustee a private benefit and to divert the fund from its legal purpose. This was common thinking in eighteenth and early nineteenth

¹² Municipal corporations did not usually engage in the sorts of activity that might generate liability for negligence until the mid-century, so the cases establishing their liability were decided at much the same time as those for boards and commissions: Scott v Mayor of Manchester (1856) 1

^{H. & N. 59.}

^{13 Hall v Smith (1824) 2 Bing. 155.}

^{14 Public Health Act 11 & 12 Vict. c. 63 s. 140, Metropolitan Commissioners}

^{of Sewers Act 11 & 12 Vict. c. 112 s. 128; contrast the rather less explicit}

^{Commissioners Clauses Act 1847, 10 & 11 Vict. c. 16 s. 60. The explicit}

^{section in the Dartford & Crayford Navigation Act 1840, 3 & 4 Vict. c. lv,}

^{was litigated in Allen v Hayward [1845] EngR 1; (1845) 7 QB 960.}

century courts, and it had something of an afterlife in some North American jurisdictions.¹⁵ It had a parallel too in rate-levying bodies: rates were for a statutory purpose, and a statutory purpose only.¹⁶ Giving up this principle was hard. Judges yielded only under the combined effect of the first two elements of change.

Where these three new elements combined together a claimant could sue a local board or commission for the wrongs of its employees, such that the costs and damages would fall on the board or commission’s funds, recoverable through its rates or charges.¹⁷ From this new platform of case law the courts in the 1860s swept away the old principle that public officers were immune from vicarious liability.¹⁸ Their focus was on these statutory boards and commissions, because they were the norm, but the new principle applied equally to charitable trusts, which were treated as a sort of footnote to be dealt with briefly. The result was that the extensive network of local government entities became liable for torts to the same extent as a private person.¹⁹ One might think that the new liability was institutional, that the courts had recognized a new sort of legal person that was neither a natural person nor a company, and that is certainly how the liability functioned in practice. But the removal of immunity from charities suggests otherwise, and so does the new explanation for the continuing immunity of crown servants from vicarious liability. If local authority liability were seen as institutional,

¹⁵ Duncan v Findlater [1839] EngR 1005; (1839) 6 Cl. & Fin. 894; Feoffees of Heriot’s Hospital v Ross [1846] EngR 489; (1846) 12 Cl. & Fin. 507, D. R. Wingfield, ‘The short life and long after life of charitable immunity in the common law’, (2003) 82 Can. BR 315-57. In Canada immunity was finally rejected only in Blackwater v Plint [2005] SC 58 after the earlier ruling in Bazley v Curry 1999 Can LII 692 (SCC); [1999] 2 SCR 534 had been almost immediately upset by Jacobi v Griffiths [1999] 2 SCR 570.

¹⁶ A related, and somewhat shadowy, principle held that a rate could be levied only to meet current expenditure, not historic: because to levy a rate now for expenditure in the past would be to subject today’s ratepayers to burdens which they could not have controlled. This principle disappeared as a result of Harrison v Stickney [1848] EngR 834; (1848) 2 HLC 108.

¹⁷ Ward v Lee [1857] EngR 309; (1857) 7 El. & Bl. 426; Ruck v Williams [1858] EngR 658; (1858) 3 H. & N. 308; Southampton & Itchen Floating Bridge Co. v Southampton Local Board of Health (1858) 8 El. & Bl. 801.

^{18 Mersey Docks and Harbour Board v Gibbs and Penhallow (1865-6) 11 HLC}

^{686. The judges swept away also another legal privilege public officers}

^{had had; immunity from paying local poor rates on lands they occupied}

^{for the purposes of their office. The two changes had been running hand}

^{in hand for two or three decades, and are part of the same dismantling}

^{of the concept of public officer in English law. Mersey Docks and Harbour}

^{Board v Cameron and Jones [1865] EngR 610; (1864-5) 11 HLC 443 was the final case in the}

^line.

^{19 Foreman v Mayor of Canterbury (1871) LR 6 QB 214, holding the decision of}

^{the Common Pleas in Holliday v Vestry of St Leonard, Shoreditch (1861) 11}

^{CBNS 192 to have been overruled. Legal form tended to lag behind, but}

^{by the 1890s all local government units had been given corporate status:}

^{see for example Local Government Act 1888 s 79, Local Government Act}

^{1894 s 27(4).}

then no new explanation would be needed. Instead, however, crown servant’s immunity from vicarious liability was now explained on the basis that one crown servant never employs another, no matter how much it may look that way. Instead both are Her Majesty’s servants; the senior is merely a manager, not an employer.²⁰

That at once raises a question: why were the departments of central government not treated in the same corporate or quasi-corporate way that the organs of local administration were? If they had been, the old rules about not suing the crown and immunizing one crown servant from the liabilities of another would have been by-passed by treating each department as an institution responsible in its own right. It could have happened. Many nineteenth-century English departments had statutes of their own, some of which could have been interpreted as the statutes of local bodies were. There is a hint in an important case in 1843 that this was a way to go. It arose because in 1834 workmen employed by the Commissioners of Woods and Forests – the central government’s department of public works – had been detailed to clear out a store of medieval wooden tallies from a cellar under the Palace of Westminster. They carelessly crammed too many into the stove, which overheated and burned down the Houses of Parliament. The fire destroyed the apartments occupied by the Speaker of the House of Commons and with them his furniture and private library. His insurance company refused to pay out, the Treasury refused to step in, and so, all other avenues blocked, he sued Her Majesty for the negligence of her servants.²¹ The action was doomed, of course. There were four reasons for his failure, just one of them relevant here: in no real sense were these workmen royal servants, said the Lord Chancellor; they were under the control of the Commissioners of Woods and Forests. So here we see a glimpse of the modern: perhaps they should be liable.

Their statutes could have been read as making that possible, and there is one other agency of central government whose statute certainly could have been, though to my knowledge it was never litigated.²² But this

²⁰ Mersey Docks and Harbour Board v Gibbs and Penhallow (1865-6) 11 HLC

^{686; Auckland Unemployed Workers’ Rights Centre Inc v A-G [1994] 3 NZLR}

^720.

^{21 Report and Evidence of Select Committee on Losses of late Speaker and}

^{Officers of House by Fire of Houses of Parliament HCP 1837 xiii 71;}

^{Attorney General v Viscount Canterbury (1843) 1 Ph. 306.}

^{22 They had many statutes; see for example 10 Geo. IV c. 50 (1829), 15 & 16}

^{Vict. c. 28 (1852), 37 & 38 Vict. c. 84 (1874). They were once held liable for}

^{collapsing an adjoining building: Dalton v Angus (1881) 6 App. Cas. 740,}

^{where the point seems not to have been taken at any level. Curiously}

^{the case, which was important in several respects, seems not to have}

^{been cited on this point in subsequent litigation. The other agency was}

^{the Emigration Commissioners: Passengers Acts 1852, 15 & 16 Vict. c.}

^{44, and 1855, 18 & 19 Vict. c. 119. For them see O. MacDonagh, A Pattern}

^{of Government Growth 1800-1860 (London, 1961) 249-51; Report of Select}

^{Committee on Emigrant Ships, HCP 1854 xiii 1, 19, 29.}

legal form was exceptional. The statutes of major departments whose contact with the public would have justified some provisions about litigation seem purposely couched to cover contractual matters only

– Admiralty, defence establishments and the Post Office all fall into this category.²³ It might not have been impossible for judges to read these statutes broadly, but it would have been a stretch.

So why did statute stop short where central departments were concerned, rather than taking the extra step or two that enabled judges to corporatize liability for local entities? I think the answer lies in the absence of that third criterion I listed when looking at local entities: the ability to throw satisfaction of the liability on to a corporate fund. One of the most important constitutional principles of nineteenth-century England was that the government was dependant for its money on finance votes in the House of Commons. The practice was extremely important: estimates were annual and detailed; line-by-line scrutiny by MPs was the norm. Control over individual items was real. From the late

1840s onwards the Commons insisted that revenue-earning departments could not keep what they brought in, nor set off expenditure against it. Instead it must be paid into the consolidated fund, and permission to spend money must be sought in the ordinary way through the Parliamentary estimates and budgetary procedures.²⁴ In 1873 it was discovered that the Second Secretary at the Post Office had been using its ordinary revenue to complete the nationalization of the telegraphs – a task he had instructions to complete, but insufficient money. This was so scandalous that the Postmaster General had to resign.²⁵ Combined with this very tight anticipatory control over expenditure there was an ever-increasing drive towards centralized internal control by the Treasury. It had as its ethos a concept of a unitary civil service, in which departments were merely convenient administrative divisions. Before these drives became apparent there were hints that judges might order units of central government to make a monetary payment, but they were almost immediately disavowed.²⁶

²³ For example Admiralty Lands and Works Act 1864, 27 & 28 Vict. c. 57, esp. ss. 11, 25. Its precursors were similar; according to Maule J they did not confer corporate capacity but instead a ‘collective capacity’: Williams v Lords Commissioners of Admiralty (1851) 20 LJCP 245, 249, 16 Jur. 42, 43. The report at [1851] EngR 620; 11 CB 420 does not contain that phrase.

^{24 17 & 18 Vict. c. 94, 29 & 30 Vict. c. 91; Sir N. Chester, The English}

^{Administrative System 1780-1879 (Oxford 1981) 140, 180-81, and compare}

^191-7.

^{25 M. J. Daunton, Royal Mail: the Post Office since 1840 (London, 1985) 318-21;}

^{C. R. Perry, The Victorian Post Office: the growth of a bureaucracy (London,}

^{1992) 125-32. The culprit himself was deemed indispensable.}

^{26 R v Lords Commissioners of the Treasury [1835] EngR 1004; (1835) 4 Ad. & E. 286, 5 N. & M. 589;}

^{distinguished and disavowed in R v Lords Commissioners of the Treasury}

^{[1836] EngR 687; (1836) 4 Ad. & E. 976; R v Lords Commissioners of the Treasury (1836) 4 Ad.}

^{& E. 984, Ex p Ricketts [1836] EngR 693; (1836) 4 Ad. & E. 999; Ex p. Napier (1852) 18 QB}

^692.

There is an exception that proves the rule. It concerns an English statute and a judge who was English, though his decision was given in the supreme court at Calcutta in 1861. This was just three years after the Government of India Act, a statute of the United Kingdom, which had vested sovereign powers to rule India in the Secretary of State in Council. It empowered him (or it, or them) to enter contracts, and to sue and be sued as a body corporate, its members free from personal liability.²⁷ Significantly, the act also provided that liabilities be met from the revenues of India. Further, those revenues went directly to the Secretary of State in Council without need for a parliamentary vote.²⁸

Barnes Peacock CJ had no difficulty ruling that this statutory structure empowered him to hold the Secretary of State in Council liable for a street accident caused by the negligence of employees at a government dockyard, though the Act said nothing about tortious liability.²⁹ This was quasi corporate liability exactly similar to that of local entities, and Peacock CJ’s reasoning is the same too.

In England, however, the corporatizing of liability that had opened the way to tortious liability of local government entities did not befall central departments.³⁰ They continued to enjoy the crown’s ancient immunities. This meant that, save in the rare cases where an individual crown servant was able to pay personally, redress for central government wrongs was political, not legal.

3 The colonies did it better

The colonies of Australia and New Zealand generally took a different approach to crown liability. In 1887 the Privy Council in London heard an appeal from the Supreme Court of New South Wales. It was an action for torts, effectively against the government of New South Wales.³¹ There was a count in trespass, for having entered the claimant’s land, and a count for negligently allowing fire to spread from government land on to the claimant’s. The plaintiff’s ability to sue the government turned on construction of a New South Wales statute passed in 1876. It said that persons with claims against the government should bring them against a nominal defendant – in this case the secretary for lands – and that if successful they could enforce their judgment against the property of the colonial government though not, very carefully, against the property of

²⁷ 21 & 22 Vict. c. 106 ss. 39, 40, 65, 68, amended by 22 & 23 Vict. c. 41.

^{28 Chester, English Administrative System 241-4.}

^{29 Peninsular and Oriental Steam Navigation Co v Secretary of State for India,}

^{Supreme Court of Calcutta (1861) 5 Bombay High Court Reports,}

^{appendix A; and see Secretary of State for India v Moment (1912) LR 40 IA}

^48.

^{30 The point was not seriously tested until after consolidation of the civil}

^{service: Raleigh v Goschen [1897] UKLawRpCh 136; [1898] 1 Ch 73, Bainbridge v Postmaster General}

^{[1906] 1 QB 178; Roper v Commissioners of Works and Public Buildings [1915]}

^{1 KB 45; see also Grant v Secretary of State for India in Council (1877) 2 CPD}

^445.

^{31 Farnell v Bowman (1887) 12 App Cas 649.}

the imperial government. The Act did not say anything about which claims could be brought. The question, then, was whether it should be read broadly as a statute that created new substantive law allowing torts claims to be brought where previously they could not, or narrowly as just creating a new procedure for cases where the existing law already allowed claims, essentially for claims in contract. The Privy Council took the broad view. Its opinion was given by Sir Barnes Peacock, the same judge who had given the Indian decision I outlined just now.

“It must be borne in mind,” he said, “ that the local Governments in the Colonies, as pioneers of improvements, are frequently obliged to embark in undertakings which in other countries are left to private enterprise, such, for instance, as the construction of railways, canals, and other works for the construction of which it is necessary to employ many inferior officers and workmen. If, therefore, the maxim that ‘the king can do no wrong’ were applied to Colonial Governments in the way now contended for by the appellants, it would work much greater hardship than it does in England.”

And, of course, he made out that the statute was really very clear, as judges are inclined to do. But there was an element of dissembling in that opinion; the statute only becomes clear if one wants it to. The Privy Council thought that immunity from ordinary liability was unjust, and that a fair reading of the statute acknowledged that. But the New South Wales Supreme Court had divided on the question.³² The Chief Justice had dissented from his colleagues; in his opinion the statute was merely procedural. Windeyer J was of the opposite opinion, but he agreed with his Chief Justice that the statute could have been more explicit. If instead of the New South Wales statute it had been the equivalent New Zealand statute, he said, then it would have been beyond doubt. It may also be that Sir Barnes Peacock’s contextual justification for these colonial statutes was based on his recent experience hearing an appeal from New Zealand, because that did concern government owned and operated public works, whereas the New South Wales appeal did not.³³

The majority and Privy Council opinion became a settled part of Australian law in all states except Victoria, and remains so today. Governments can be sued as though they are private citizens, or, at least, as nearly as can be.³⁴ That is, in my context, they can be sued for institutional liability in tort, without having to go through the contortions of first finding an individual government employee personally liable and only then holding the state liable vicariously. In the 1880s these judges regarded that as also being the law in New Zealand though, unlike Australia, it has not remained so.

³² Bowman v Farnell (1886) 7 NSWLR 1. See also Wakely v Lackey (1880) 1

^{NSWLR 274, Numba v Lackey (1880) 1 NSWLR 299.}

^{33 Williams v The Queen (1884) 12 App Cas 418; see also Attorney-General of}

^{Straits Settlement v Wemyss [1888] UKLawRpAC 3; (1888) 13 App Cas 192.}

^{34 S. Kneebone, Tort liability of public authorities (North Ryde, NSW, 1998)}

^284-9.

The seed of that contraction of crown liability in New Zealand had been sown even before these judges spoke, though nobody, I think, realized it. The first New Zealand statute, Crown Redress Act 1971, looks procedural only – it supplied a more efficient process for suing the Crown in contract. The second, Crown Redress Act 1877, further streamlined the procedure. But its definition of what was to count as a claim against the crown could be taken very broadly:

Nothing shall be deemed a claim or demand within the meaning of this Act unless the same shall be founded on or arise out of some contract, act, deed, matter, or thing done, executed, or entered into by or under the authority express or implied of Her Majesty’s local Government in New Zealand, or for which the said local Government would be responsible if they were private subjects of Her Majesty in New Zealand. [emphasis added]

To a modern eye it is that final ‘or ’ that does it. In 1881 the Court of Appeal took the broad view, but its reasons were not reported. Two years later Johnston J referred to that case this way: speaking of the statutes he said ‘language was introduced which enabled us to say that acts which would give rise to an action for wrong between subject and subject was [sic] now the subject of action against the crown’.³⁵ This suggests that the statutory words were not conclusive, and that the court was consciously making a choice.

The plaintiffs in that case in 1881 were Andrew and Jessie Mercer, who had a place at Broad Bay on Otago Peninsula. One Saturday morning in August 1880 they set off by buggy to go into town. “They were driving up the Portobello beach road, when, near Vauxhall, a telegraph wire which had been blown down caused the upsetting of the buggy over the bank. Mrs Mercer suffered a dislocation of the hip, and Mr Mercer had a couple of his ribs broken. Both are in a fair way towards recovery,” reported the Otago Witness the following week.³⁶ That, however, turned out not to be the case. Before long the Mercers were suing Her Majesty for £2000 for negligently failing to maintain the telegraph in proper order, whereby their horse had taken fright etc etc. The Government demurred, that is, it took the point of law that it could not be liable on those facts. It must have lost in the Supreme Court in Dunedin, because on 13 May

1881 the Court of Appeal in Wellington heard the crown’s appeal.³⁷ The list of grounds argued for the crown is very thorough indeed; its lawyers took every point imaginable. Their two most general were that there was no legal process for suing Her Majesty for negligence and that the Acts of 1871 and 1877 did not cover the situation – in effect that both were confined to contract. Argument began on the Friday afternoon, continued into Saturday, but a fortnight later the court announced that it had dismissed the demurrer.³⁸ A fortnight after that a new Crown

³⁵ Williams v The Queen (1883) NZLR 1 CA 222.

^{36 Otago Witness 28 August 1880.}

^{37 Evening Post 13 May 1881, from which the claim and details of the}

^{demurrer are taken, continued on 14 May 1881.}

^{38 Evening Post 3 June 1881.}

^{Suits bill was introduced into the Legislative Council and duly enacted}

^{– I think that that was probably a coincidence rather than a response,}

^{though without having been into the archives I cannot be sure. But it}

^{may be why the Court of Appeal’s reasons were not reported. Still, the}

^{general principle from the Mercer case was accepted as binding by judges}

^{even after passage of the new Act, and clearly influenced some of them}

^{through into the early twentieth century.39}

Before we get to the 1881 Act, however, I want to tell you about a second unreported case from Dunedin, also from the early 1880s. It is important for showing the breadth of crown liability that New Zealand colonial legislation had initiated, particularly the point with which I started this address. It is possible that Mercer v The Queen might have turned out to be a case of vicarious liability if the crown had elected to go to trial rather than taking its chance on a demurrer. But that is not so with my second case, Dawson v The Queen, which must be an example of institutional liability.

On 1st March 1883 Mr Dawson’s sawmill at One Tree Point near Invercargill burned down.⁴⁰ According to the Southland Times it was an almost new structure built on the most recent plans. The whole building was destroyed, along with machinery and stacked timber. The newspaper recorded the probable cause as sparks from passing railway engines. Since the railway engines belonged to, and were operated by, the Government Railways, Mr Dawson sued Her Majesty for their negligent management. The trial came on before Williams J and a jury of four in Dunedin in October that same year.⁴¹ The crux of the matter was that whoever was buying the coal for this part of the government railway system had shifted from the more expensive Newcastle, West Coast and Kaitangata coals to cheaper coal from Nightcaps. Several witnesses testified that this coal gave more sparks. Dr Black, professor of chemistry at Otago University, an accomplished mineralogist, testified that it was not a bituminous coal, but in fact rather resinous, which he held responsible for this tendency. Attention then shifted to the adequacy of the spark arrester fitted to the J-class engine concerned. Much evidence was given about how it was constructed, what alternatives there were and what difference they might have made. In due course Williams J directed the jury that for the Government to buy cheap brown coal was not in itself negligent, providing that in using it they took such precautions that made it no more risky than bituminous coal. The jury awarded Mr Dawson £1650, returning a verdict that the deflector was not effective to overcome the danger from brown coal.

The Otago Witness reported that the crown was likely to appeal,

³⁹ Williams v The Queen (1883) NZLR 1 CA 222; Hankins v The Queen (1906)

^{25 NZLR 787.}

^{40 Southland Times 2 March 1883.}

^{41 The trial, lasting two days (October 23 and 24), was reported in}

^{considerable detail in the Otago Witness 27 October 1883. The following}

^{account is from that source.}

but I have found no trace of further proceedings in its pages, or the Southland Times or Evening Post’s, nor is there anything in the law reports. Something may lurk in court records, of course. We do know, however, from a royal commissioner appointed in 1899 that the managers of state railways had internalized the Dawson decision. He reported that they accepted negligence liability for fire losses, they had made internal regulations for keeping track-sides clear, and the construction of their spark arresters was as good as any in the world.⁴² If we add this acceptance to the principles that judges said emanated from the Mercer decision, reiterated from time to time in case law through into the early

1900s, we might conclude that in New Zealand as in New South Wales the job had been done: the crown had been levelled to the position of a subject; it had the same liability for torts, and that included institutional liability as well as vicarious.

It was not so simple, however. The operative statute was no longer the 1877 Crown Redress Act with its broad statement of principle, but instead was the 1881 Crown Suits Act. In 1883, in what became New Zealand’s leading case, Johnston J proclaimed that the new act retained the rights conferred by its predecessor.⁴³ One would expect him to know. The new act emanated from the Statutes Revision Committee, and was announced simply as a consolidation act. Johnston J was one half of that committee.⁴⁴ I have to say, though, that the section about crown liability for torts seems to me to have been written with much more caution than the1877 equivalent litigated in Mercer v The Queen.⁴⁵

^{It allowed claims for any:}

wrong or damage, independent of contract, done or suffered by or under an such authority as aforesaid, in, upon, or in connection with a public work ...

⁴² Report of a Commission on Sparks from Railway Engines, Appendix to the Journal of the House of Representatives (1900) H-2. It arose out of fierce attacks on the government law officers for supposedly blocking access to courts, a charge that turned out to be mistaken: Report of Railways Committee, Appendix to the Journal of the House of Representatives (1899) I-6; Wanganui Herald 5 August 1899; 107 NZPD 459-63; 108 NZPD

390 112 NZPD 247; 431-2, 113 NZPD 637; 114 NZPD 192-3. In its latter stages the debate became one about strict liability and insurance.

⁴³ Williams v The Queen (1883) NZLR 1 CA 222, upheld on appeal to the Privy Council, where the court included Lord Blackburn (who had led the shift to quasi-corporate liability for local government entities in England) and Sir Barnes Peacock: Williams v The Queen (1884) 12 App Cas 418.

^{44 Appendix to the Journal of the House of Representatives (1881) A-7.}

^{The other half was W. S. Reid. Their work for the year consolidated 83}

^{statutes. There was controversy about the bill as it passed through the}

^{parliament, but that was about a Government amendment to exclude}

^{liability on contracts for the sale of crown land. Local crown agents}

^{were so dispersed as to be practically beyond government control, the}

^{Government said, making it unreasonable to hold the Crown to their}

^{contracts. The amendment failed: 39 NZPD 188-9, 40 NZPD 478-80.}

^{45 Cf A. E. Currie, Crown and Subject (Wellington, 1953) 4.}

^{which meant}

... any railway, tramway, road, bridge, electric telegraph, or other work of a like nature used by the Government of the colony or constructed by such Government out of moneys appropriated by the General Assembly, and the revenues derived from which form part of the general revenue of the colony.⁴⁶

The final general words of the section in the 1877 Act are missing from

^{the 1881 Act.}

This new formulation was carried over into a further consolidation act, the Crown Suits Act 1908, with trifling changes as to style but none as to substance. Then the fat hit the fire. There were two cases, both concerning State coal. In the first, the New Zealand Farmers’ Co- operative Distributing Company sought redress for nuisance caused by coal dust emanating from a depot belonging to State coal. The crown submitted to £205 damages, but would not submit to the injunction against continuance of the nuisance that would have issued if the coal depot had belonged to anyone else.⁴⁷ The company circulated its case to newspapers, drawing attention to the injustice it was suffering. The second case concerned a man called Frank Barton, who had been seriously injured by a coal-delivery truck negligently driven by an employee of State coal. Denniston J ruled that a coal truck was not itself a ‘public work’ within the meaning of the act, and though a coal-mine could be called a public work it was not ‘of a like nature’ with those described.⁴⁸ So Mr Barton lost. Within days the Evening Post, a Wellington newspaper, was calling for the law to be changed.⁴⁹

When the parliament met in the summer of 1909 the Opposition pitched into the Government with a five-hour debate on crown liability as part of the motion for supply.⁵⁰ Sir Joseph Ward, the prime minister, attempted to shrug the whole thing off as a plot by the lawyers to open a goldmine of litigation. There would be hundreds of cases, he said, and ‘unlimited license’ for litigation if the government could be sued like any private person; juries would always support a weak individual against the power of the Government. He was not wholly supported by his own ranks however, for in December that year the Liberal member, W.H. Fields, won a surprise majority on a motion to reduce the salary of the General Manager of State Coal-mines unless he came up with fair redress for the New Zealand Farmers’ Co-operative Distributing Company in its dispute over straying coal dust.⁵¹ Outside the parliament the Farmers’

⁴⁶ Crown Suits Act 1881 s 37.

^{47 Otago Witness 19 May 1909.}

^{48 Evening Post 22, 23 April 1909; Barton v The King [1909] NZGazLawRp 54; (1909) 28 NZLR 629.}

^{49 Evening Post 23 April 1909.}

^{50 148 NZPD 242-65. See also Report of Public Petitions A to L Committee}

^{on petition of Frank Barton, Appendix to Journal of the House of}

^{Representatives (1909) I-1A, and the ensuing (largely factual) debate at}

^{148 NZPD 1575-85.}

^{51 148 NZPD 1252. The annual report of the NZ Farmers’ Co-operative}

Union took up the issue as part of its complaint that the Liberals were pushing the country into government by bureaucracy.⁵² It was a time of considerable government expansion, hence the worry that state immunity from tort liability would privilege it in relation to private competitors and prejudice ordinary citizens. The Evening Post contributed crusading articles condemning the Government’s attitude as ‘flagrant injustice’,

^{‘tyranny’, ‘iniquity’, ‘despotic privilege’, and ‘Russian despotism’.53}

^{‘The ultimate test of tyranny’, it wrote, ‘is whether the Executive has to}

^{submit like everybody else to the rule of law’.54}

The Government buckled, reluctantly and with bad grace.⁵⁵ In 1910 it amended the 1908 Act in a way that began by restoring the general words from the 1877 Act: the crown once again becomes liable for

‘any wrong or injury which is independent of contract and for which an action for damages would lie if the defendant was a subject of His Majesty’.⁵⁶ But turn the page of the statute book and there the exceptions are listed. There can be no action against His Majesty for assault or false imprisonment, malicious prosecution, erroneous judicial process, libel, slander, or any cause of action requiring a malicious motive.⁵⁷ Damages for death or personal injury are limited to £2,000 – a rule generalized from the Government Railways Acts.⁵⁸ There is immunity for the acts of judicial and military personnel too. It was only at the last minute that the Government had second thoughts about immunizing itself from jury trial and withdrew a clause providing that suits against the crown were to be tried by a judge alone.⁵⁹ These were significant subtractions but, importantly for my theme, the general principle of liability first enacted in 1877 is restored and the exceptions from it can be justified on principle, save for the pragmatic cap on damages for death or injury. In fact once one takes into account the subtractions in the 1910 act it seems clear that it is essentially an act making the Government liable for negligence, whether that be institutional or vicarious liability – which fits the act’s origins in the coal dust and Barton episodes.

Distributing Company recorded that the directors had in consequence accepted a further £650 for their continuing losses from the coal dust and thanked Mr W. H. Field MP for achieving it for them.

⁵² Evening Post 12 July 1910; L. Richardson, ‘Parties and political change’ in W. H Oliver with B. R. Williams, The Oxford History of New Zealand (Oxford and Auckland, 1988 reprint) 197-225 at 206-10.

^{53 Evening Post 22, 23 November 1909; 20 December 1909; 18, 24 May 1910;}

^{11 July 1910; 23 November 1910. See also West Coast Times 6 October 1909}

^{(‘Government justice’).}

^{54 Evening Post 22 November 1909.}

^{55 149 NZPD 78, 80, 311-13; 153 NZPD 859-61, 886-7, 930-33.}

^{56 Crown Suits Amendment Act 1910 s 3.}

^{57 Crown Suits Amendment Act 1910 s 4.}

^{58 Crown Suits Amendment Act 1910 s 9; Government Railways Act 1900 s}

^{24; Earl v The King [1903] NZGazLawRp 38; (1903) 22 NZLR 735; Government Railways Act 1908}

^{s 23.}

^{59 153 NZPD 886-7.}

^{4 Denouement: New Zealand abandons its own road and follows}

^England

You will recall where we left England. A delicate dance between legislature and judiciary had resulted in local government units becoming liable for their torts. At the time, strictly, this was vicarious liability, though often it functioned almost exactly as institutional liability would. The old rules immunising the crown remained in place, as did the rule that one crown servant could not be vicariously liable for the wrong of another. Government departments were not turned into corporations.

For about a decade from 1918 some politicians and government lawyers in England struggled to draft a bill that would introduce a modern form of crown liability without upsetting powerful government departments.⁶⁰

To meet these departmental fears tort liability was reduced to vicarious liability: it would be a precondition of crown liability that an individual crown servant bore primary legal responsibility.⁶¹ Even so the bill was never launched into Parliament, largely because of Admiralty intransigence and a pervasive Whitehall fear that litigation would entail discovery of documents, an opening of the books that ran contrary to all traditions. In 1947 the new broom of the Labour government succeeded where previous attempts had failed. Departmental opposition persisted, but there was an added urgency in getting a bill passed. An interim administrative device of nominating some John Doe defendant to be sued in lieu of the Crown had been rejected by the courts.⁶² There is an English tradition of legislation that says that anything is better than nothing: it is much easier to improve something that has been got on to the books than it is to get it there in the first place.⁶³ So the bill was very largely the one that had been prepared in the 1920s as the least upsetting to the Admiralty and other defence establishments. It was slipped through a cabinet meeting without discussion. Then for quite different reasons it was raced through Parliament without serious discussion there either.⁶⁴

The resulting statute, Crown Proceedings Act 1947, made the crown liable for torts for the first in English legal history, but (exceptions aside) it was only vicarious liability – because that is what the reformers of the 1920s had thought achievable, wrongly as it turned out. And it is that section that was copied into the New Zealand Crown Proceedings Act of 1950, almost word for word.

The passing of the 1947 act in England in 1947 prompted New Zealand

60. This paragraph relies upon J. M. Jacob, ‘The debates behind an act: crown proceedings reform, 1920-1947’ [1992] PL 452-84.

^{61 Jacob, ‘Debates behind an Act’ at 483-4.}

^{62 Royster v Cavey [1947] 1 KB 204; see also Adams v Naylor [1946] AC 543,}

^550.

^{63 “Lord Thring’s aphorism ‘that Bills are made to pass, as razors are made to}

^{sell,’ expresses an important half-truth.” C. Ilbert, Legislative methods and}

^{forms (London, 1901) 241. Thring was the first person to be Parliamentary}

^{Counsel to the Treasury, that is official drafter of government bills.}

^{64 Jacob, ‘Debates behind an Act’.}

to re-examine its own Crown Suits Act. I would like to say that New Zealand’s choice to follow the new English rule restricting crown liability for torts to vicarious liability was inadvertent, but I do not think I can. The reasons for the choice will lie somewhere in the archives, which I have not opened. There had clearly been extensive consultation, however. In

1949 the New Zealand Law Journal reported that the New Zealand Law Revision Committee gave the matter long consideration and concluded that a hybrid was needed: the ‘advanced parts’ of the existing New Zealand law should be married to the superior procedural parts of the new English law.⁶⁵ In the short, rather congratulatory, debates on the bill in the House the Hon. H. Mason alluded to the different starting points of English and New Zealand law hitherto and the difficulties that had caused the drafters.⁶⁶ The choice had been made to copy the structure and much of the detail of the English act. The reason for preferring the structure of the English statute to the simpler statements in the New Zealand law seems to have been that it enabled the new English rules about procedure to be adopted too.⁶⁷ Of course, citizens made some substantive gains – some of the restrictions introduced by Sir Joseph Ward’s government in 1910 were repealed. But the consequence was that New Zealand moved from the most expansive form of crown tort liability (in 1877) to the least – the watered down liability that the English reformers had vainly hoped in 1927 would win over the Admiralty and the Defence Department. It had been a political expediency in England, not a provision based on rational principle; nobody has ever even attempted to justify the rule that vicarious liability alone is possible, to the exclusion of institutional liability.

5 Where we are now

The rule in both England and New Zealand is that the crown cannot be sued in tort for institutional liability. You may know that there is a case pending in the House of Lords brought by the Chagos Islanders for a judicial review of the decisions that expelled them from their homeland of Diego Garcia.⁶⁸ Their first shot at bringing the British Government to book was cast in tort for wrongful eviction, but was struck out on exactly that ground: nobody could be named as individually responsible and English law does not allow the state to be sued.⁶⁹ In New Zealand there are clear judicial statements to the same effect.⁷⁰

So if you cannot pin responsibility on an individual you must sue

⁶⁵ (1949) 25 NZLJ 50.

^{66 293 NZPD 4134 (10 November 1950).}

^{67 Currie, Crown and Subject 5.}

^{68 It is an appeal by the Crown from the decision in R (on the application of}

^{Bancoult) v Secretary of State for Foreign & Commonwealth Affairs [2007]}

^{EWCA Civ 498.}

^{69 Chagos Islanders v Attorney-General [2004] EWCA 997.}

^{70 The clearest general statement recently is by Cooke P in Crispin v Registrar}

^{of the District Court [1986] NZHC 836; [1986] 2 NZLR 246.}

something other than the Crown. In England the most obvious example lies in the very name of the leading case on crown liability: Dorset Yacht Co. Ltd. v The Home Office.⁷¹ There is no such entity known to the law as the Home Office; it is merely an administrative division of the crown, as the law faculty is an administrative branch of the university. But in the Dorset Yacht case the crown’s lawyers connived at the pretence that there was a legal entity that could be sued, in order to explore whether liability for its systemic errors would lie. I think the reason was that until a few years previously responsibility for prison management had been vested in the Prison Commissioners. Though they had to take orders from the Home Secretary they had their own constitutive statute, which might have been just enough to found an independent personality analogous to those nineteenth century cases I discussed.⁷² The Prison Commissioners had previously accepted legal responsibility in circumstances very similar to those in Dorset Yacht. In Dorset Yacht the initial pleadings were actually drawn against the Prison Commissioners and amended only when it was realized that the commissioners had been wound up. It would have been repellent to justice if an administrative change such as that made the issues non-justiciable.

In New Zealand there is a large class of public law agencies called crown entities. They include, for example, the Civil Aviation Authority, the Earthquakes Commission, and Housing New Zealand.⁷³ Their generic statute gives them corporate status, with the implication that they can be sued for institutional liability. But ministries of the crown are not crown entities. Their statute, in so far as they have one, is the State Sector Act, and it goes to considerable lengths to preserve the notion that central departments are part of the crown, however individually they may function in practice. So, to return to Mrs Couch’s case, there is no such legal entity as the Department of Corrections available to be sued. If there were she would not be suing the Attorney-General. The ‘Department of Corrections’ is, in law, a name added by Order to the Schedule of the State Sector Act.⁷⁴ Yet at the same time section 86 casually assumes that the department might incur liability, because it immunises officials and employees from that liability. It does not say anything about how that liability might be incurred.

Then all the judges in the Supreme Court and all the judges in the Court of Appeal talk as though the Department of Corrections can incur institutional liability.⁷⁵ In the very first paragraph of the joint

⁷¹ [1970] UKHL 2; [1970] AC 1004.

^{72 Prisons Act 1877; Prisons Act 1952. Greenwell v Prison Commissioners}

^{(1951) 101 LJ 486; D’Arcy v Prison Commissioners, The Times 15, 16, & 17}

^{November 1955; Pullin v Prison Commissioners [1957] 1 WLR 1186; but see}

^{Gorton Local Board v Prison Commissioners (1887) [1904] 2 KB 165n, which}

^{looks orthodox. The commissioners were wound up in 1963.}

^{73 Crown Entities Act 2004, Schedule 1 part 1.}

^{74 State Sector Order 1995.}

^{75 Hobson v Attorney-General [2006] NZCA 409; [2007] 1 NZLR 374 (CA); Couch v Attorney-}

opinion of herself and Anderson J, Elias CJ casts the issue as whether a duty of care is owed by ‘the Probation Service’. In the joint opinion of Blanchard, Tipping and McGrath JJ the ‘defendant’ is described as being

‘the Department of Corrections and the probation officer ’.⁷⁶ When they analyse case law from New Zealand and from other jurisdictions all the judges talk as though there is such a thing as a generic public law agency, be it a local government unit, a police force, or a central department, all of which may incur institutional liability in England, in Australia, or in New Zealand, irrespective of the structure of crown liability law. This is not some recent aberration, because very much the same thing happened in Attorney-General v Prince & Gardner and B v Attorney-General.⁷⁷ Those were actions against the crown for alleged shortcomings of social workers when recommending and monitoring adoptive parents for the applicants. They were treated as claims involving both vicarious and departmental liability.

What seems to be happening is that judges and crown lawyers are finding ways of addressing departmental liability by ignoring section 6 of the Crown Proceedings Act. The process is parallel to what happened in the English courts in the mid nineteenth century: a new type of legal entity is being conceived; one that has an existence definite enough to ground institutional liability, though it cannot be sued in its own name and execution cannot be awarded against it. That is laudable in its way, but must be a matter of crown grace rather than law, and as such it can be withdrawn at any time.⁷⁸ Further, it is not clear that the casual mentions of departmental liability in the State Sector Act are enough to carry the point. In 2002 it became expedient to make the crown criminally liable for breaches of the Building Act and the Health and Safety in Employment Act. The statute that achieved that expressly gave departments a limited legal personality for that purpose and invented a procedure for prosecuting them – which would hardly have been thought necessary if the State Sector Act had already done the job.⁷⁹

Nonetheless the drift towards some concept of departmental liability is strong. One reason for it was disclosed during argument in Mrs Couch’s case. The Crown has reasoning available to it that is almost guaranteed to win if the case is one of vicarious liability: ACC legislation confines Mrs Couch to exemplary damages but the case law establishes that employers are not liable vicariously for exemplary damages awarded against their employees.⁸⁰ But crown counsel told the Supreme Court

General [2008] NZSC 45.

^{76 Couch v Attorney-General [2008] NZSC 45, para. 82.}

^{77 [1998] 1 NZLR 262; [2004] 3 NZLR 145.}

^{78 The Law Commission’s tepid recommendation that section 6 of the}

^{Crown Proceedings Act be amended to make direct liability possible fell}

^{on predictably deaf ears: NZLRC r37,Crown Liability and Judicial Immunity}

^{(1997) 31-2; the Law Commission’s website announces that its crown}

^{liability project is now closed.}

^{79 Crown Organisations (criminal liability) Act 2002 ss 7, 8.}

^{80 S. v Attorney-General [2003] NZCA 149; [2003] 3 NZLR 450.}

that he had conceded that issue of vicarious liability, and it was not a live issue in the case. Members of the court were not best pleased about that.⁸¹ The transcript discloses that the concession is the Crown’s side of a deal. In return Mr Henry is not proceeding against Ms X personally. It is one thing to run a case on the footing that her liability must be shown, another to run it against her as a defendant personally. Psychologically she is in a state of some brittleness, counsel says. As a good employer the Crown wishes to shield her. We do not know whether Ms X’s union has had anything to do with that. The need to pursue Ms X arises only if the route to direct departmental liability is blocked. So counsel agreed to proceed as though a modified form of institutional liability were available, and the judges have taken that a further step. It looks plausible to them because departments function as though they are legal persons, the more so since the State Sector Act gave them chief executives along business lines.

There is no virtue in a statutory rule that judges and crown counsel conspire to evade, but which remains available as a trump card should the crown wish to play it. The statutory limitation of torts liability to vicarious liability is an embarrassment to our law, and a distortion of it. It has no principled justification, and never has had. It is the result of accidents of English history. It was brought into New Zealand law as a substitute for an indigenous rule that by then had its limitations, but was a rule based upon principle. There seem to be two ways to put things right. The first is to follow the judges’ instinct and give departments of state sufficient legal personality to ground institutional liability. That could be done by extending the formulae used in the 2002 statute introducing that specific criminal liability I mentioned. Alternatively, and to my mind preferably, the formula used in the 1877 act and across the Tasman should be restored. The federal Judiciary Act 1903 says it all in two sentences. Having said that a person making a claim against the Commonwealth, whether in contract or in tort, may bring it in a competent court (which it describes) it continues:

In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject.⁸²

Australian experience shows that the procedural difficulties that were put forward as an obstacle in New Zealand in 1950 are illusory, and that such a provision does not predetermine what the extent of crown liability should be – that is a matter for judges to determine on ordinary principles of tort law as they do in disputes solely between citizens. That is how it was in New Zealand for a brief time in the 1880s and should be again.

⁸¹ Transcript 2-8.

^{82 Judiciary Act 1903 (Commonwealth) s. 56, 64.}