New Zealand Law Commission
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15 To see the issues in perspective we have considered two overlapping sets of broad principles:
16 The principle of equality under the law is the focus of the Law Commission’s existing reference concerning the legal status of the Crown, under which it was asked to consider the implications of Baigent’s case:
To give fuller effect to the principle that the State is under the law and to ensure that as far as practicable legal procedures relating to and remedies against the Crown (as representing the State) are the same as those which apply to ordinary persons.
17 The Bill of Rights Act reflects the general principle that, except to the extent of legal authority, no one (whether Crown or citizen) may lawfully interfere with another’s interests of personal integrity and civil rights to which the Act refers. Baigent’s case gives weight to that principle by providing that a breach of these interests and rights should receive a remedy in law.
18 The Act develops the protection of the citizen in chapter 29 of Magna Carta 1297 (UK) which states that:
No freeman shall be taken or imprisoned, or be disseised [dispossessed] of his freehold or liberties or free customs, or be outlawed or exiled, or any otherwise destroyed; nor will we not pass upon him nor condemn him but by lawful judgment of his peers or by the law of the land ... (RS 30, 26)
19 Possession of power presents temptations to abuse it; and the disparity between the respective powers of the state and the citizen is immense.3 The general principle remains, however, that all natural and legal persons, including the Crown, are equal before the law and are subject to it.
20 In the case of the Crown, however, there are certain public functions that must be performed. The Crown must therefore have or acquire, by way of exception to the general principle, certain additional powers not enjoyed by citizens. These must also be performed according to law. Examples are the powers to tax and the powers of the police. In a modern state, the range of public functions and powers is necessarily extensive, as appears from the list contained in appendix C.
21 Our present law does not sufficiently reflect the principle of equality and its limited exception. It retains a residue of the discredited notion that the King can do no wrong, which led to Cromwell’s revolution and the original Bill of Rights 1688 (UK) (RS 30, 42) which, to a significant extent, subordinated the sovereign to the law. Subsequent legislative and political changes culminated in the Crown Proceedings Act 1950, which was a major advance. That Act, while for its time bold and principled, is now out of date, as is the presumption in the Acts Interpretation Act 1924 s 5(k) that legislation does not affect the rights of the Crown. In its report A New Interpretation Act (NZLC R17, 1990), the Commission recommended reversal of s 5(k).
22 We propose a necessity test for the exception to the principle of equality. The Crown and other public bodies should have no power or immunity beyond those of the citizen, except to the extent necessary to allow its public functions to be duly performed. Anything more would impact adversely upon the rights of the citizen; anything less would impair the efficiency of government by inhibiting public officials in the proper performance of their functions.
23 The Bill of Rights Act is a further and major step towards vindicating fundamental individual rights. Its long title describes it as:
(a) To affirm, protect, and promote human rights and fundamental freedoms in New Zealand; and
(b) To affirm New Zealand’s commitment to the International Covenant on Civil and Political Rights.
24 Its general provisions commence:
2 Rights affirmed
The rights and freedoms contained in this Bill of Rights are affirmed.
This Bill of Rights applies only to acts done
(a) by the legislative, executive, or judicial branches of the government of New Zealand, or
(b) by any person or body in the performance of any public function, power, or duty conferred or imposed on that person or body by or pursuant to law.
25 The International Covenant on Civil and Political Rights, to which the long title refers, includes the undertaking given in article 2(3) by each state party:
(a) To ensure that any person whose rights or freedoms as herein recognised are violated shall have an effective remedy, notwithstanding that the violation has been committed by persons acting in an official capacity;
(b) To ensure that any person claiming such a remedy shall have his right thereto determined by competent judicial, administrative or legislative authorities, or by any other competent authority provided for by the legal system of the State, and to develop possibilities of judicial remedy;
(c) To ensure that the competent authorities shall enforce such remedies when granted. [Emphasis added]
26 Most – but not all – of the rights in the Bill of Rights Act are recognised by the International Covenant. The rights in the Act are also, for the most part, recognised by the common law; eg, the ss 8–11 rights:
27 The Bill of Rights Act also includes rights of real importance which, at common law, were and remain qualified, eg, freedom of expression, which is subject to the controls of the Defamation Act 1992. Other rights are expressed by the Bill of Rights Act itself in qualified terms, eg, the right not to be subject to unreasonable search and seizure (s 21), and the right not to be arbitrarily arrested or detained (s 22).
28 The outstanding feature is the recognition of these rights by the New Zealand Parliament as warranting special protection.
29 The principle that the citizen should, in general, be treated equally with the Crown is seen not only in New Zealand law, but also in that of some other comparable societies. At this stage we refer to the comparative material by way of illustration only.
30 Other states have balanced the inequality between the state and the citizen by structural safeguards of various kinds. These include a judicial function of striking down legislation which infringes fundamental rights.4 In New Zealand that course, although proposed in the White Paper, A Bill of Rights for New Zealand (1985) AJHR A6, was not accepted; nevertheless Parliament recognised the need for legislation to protect the citizen against the Crown.
31 The experience in New Zealand, both before and after the enactment of the Bill of Rights Act, shows the need for the Act to exist and be effective.5
32 The equality principle is already recognised by ss 3 and 6 of the Crown Proceedings Act 1950, which provide that the citizen has the right to sue the Crown, effectively as an equal, in claims for damages in tort and certain other causes of action. The contractual liability of public bodies is for the most part governed by the ordinary law of contract, although particular defences may be available only to public bodies. In The Power Company Ltd v Gore District Council (unreported, Court of Appeal, 4 November 1996, CA 267/95), 35, the Court of Appeal, in discussing frustration of contract, observed that “conventional frustration principles will not necessarily be applicable or fully applicable to long term supply contracts between Government agencies”.
33 There remains, however, a large sphere of activity in which the Crown and public bodies enjoy unnecessary protection. First, there are extensive statutory powers and immunities which do not satisfy the necessity test (see chapter 5). Second, there remain substantial prerogative rights, powers, and immunities. The courts have extended the common law to control abuses of such powers.6 The common law’s remedies for unlawful administrative action – including those under the Judicature Amendment Act 1972 – are, however, overdue for review.
34 New Zealand has largely adopted English constitutional principles, including the deficiencies of the common law. The strengths of English constitutional law include the Magna Carta, the 1688 Bill of Rights and the principles stated in Dicey, An Introduction to the Study of the Law and the Constitution (10th ed, MacMillan, London, 1959). Dicey saw the idea of equality before the law as an essential component of the rule of law. Equality before the law meant that no one is above the law and that everyone, regardless of their status, is subject to the ordinary law of the land and the jurisdiction of the ordinary courts. These principles remain important within the English legal system, notwithstanding the statutory and common law immunities of public bodies and the development of a body of administrative law applicable only to public bodies or persons. The strengths of the English law now include the influence of European law, eg, in M v Home Office  1 AC 377 where the House of Lords overruled the former immunity of a Minister of the Crown from liability for contempt of court.
35 French law has, by contrast, developed principles of liability for losses caused by a far wider range of governmental activity. As a basic principle, the state is liable for acts of the executive which cause loss, although some public services (such as assessment of taxation) only incur liability where loss is caused as a result of “gross” fault.7 The civil code requires public burdens to be borne equally:
The French State ... considers itself totally liable for service-connected faults of public officers and State agencies.... In effect, the droit administratif is developing in the direction of absolute liability to ensure equitable sharing among all citizens of the burden of government action.8
36 Further, the state can be held liable for loss caused by legislation if the harm is found to be sufficiently serious, and if the legislation does not explicitly ban indemnification of those who suffer as a result of it. The harm must also be limited to an individual or a small number of people: those affected by general social or economic policies cannot recover.9
37 In Europe, the rights of individuals extend to a cause of action against their national government for passing legislation inconsistent with Community law, and for failing to amend legislation which is contrary to Community law: Brasserie du Pêcheur SA v Federal Republic of Germany; Reg v Secretary of State for Transport, ex p Factortame Ltd & Ors (No 4)  QB 404. The European Court of Justice has held that, where a state has a wide legislative discretion in a field covered by Community law such as the EEC treaty, individuals are entitled to reparation where the rule of Community law breached is intended to confer rights upon them, the breach is sufficiently serious, and there is a direct causal link between the breach and the damage suffered.10 Underlying state liability in these cases is the obligation upon national legislatures to act in accordance with superior European law. The sovereignty of Parliament in New Zealand is not limited in this way. However, the Advocate General in the Brasserie case emphasised two further factors in favour of liability (453–454), which may be of greater relevance in the New Zealand context. The first is the accepted principle that the state is liable for a breach of international law, even if the legislature has committed the breach. Under this unitary conception of state liability, no distinction is drawn between breaches caused by a legislative rather than an executive act or omission.11 The second factor is that in most legal systems compensation is paid when the legislature lawfully causes loss to individuals, eg, by passing legislation expropriating land for public works. Therefore the state should – as a matter of logic and principle – compensate where loss is caused as a result of a legislative act.
38 The Federal Tort Claims Act 1946 provides that the United States may be liable for:
injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.12
39 Exceptions include any defence based upon judicial or legislative immunity which otherwise would have been available to the employee whose act or omission gave rise to the claim. The statute provides an express defence in the case of
any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved was abused ...
40 The need for careful appraisal of how far we should respond to overseas trends13 should be considered in the development of New Zealand law. While the interest in providing adequate freedom of movement for those exercising public functions is important (see for example Stovin v Wise  3 All ER 801 (HL)),14 so too is the removal of immunities that are unnecessary. As already noted, American law provides the government with a defence in the event that an official exercised due care and where the claim relates to the exercise of a discretion. It therefore appears to be far more concerned than European law to protect the governmental interest where this conflicts with the citizen’s interest in having a breach of a right remedied. European law, in extending liability to unlawful legislative as well as executive acts, may be seen as leading attempts to redress the imbalance in power between the citizen and the state.
41 These issues will be the subject of further consideration by the Commission in the context of continuing work on its Crown reference.