362 There was a need to ensure that s86 of the SSA, which provides for protection from personal liability for Public Service chief executives and employees in certain circumstances, continues to meet the purpose for which it was intended.
Protection from Liability
363 Section 86 of the SSA provided as follows.
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.
364 Section 77 provided the same type of protection from personal liability for chief executives and employees of any institution in the Education service (as that term is defined in s2).
365 Before the decision of the Supreme Court in Couch v Attorney General  NZSC 27, it was believed within the Public Service that the policy behind s86 had always been to provide Public Service chief executives and employees with immunity from civil proceedings for good-faith actions or omissions in pursuance or intended pursuance of their duties, functions, or powers. There was however a variance of views as to whether s86 had a corresponding effect of removing liability of the Crown. One view was that s86 meant that the Crown could not be liable because of the provision of s6(1) of the Crown Proceedings Act 1950 (an action in tort can only be brought against the Crown where the act or omission could give rise to an action against the Crown servant responsible for the act or omission). The alternative view was that s86 could not have been intended to remove the right to seek redress against the Crown, but any proceeding must be brought against the Crown and not its servants. In such circumstances the Crown would be vicariously liable for the acts of its servants.
366 The Court in Couch rejected the argument that s86 provided to the Crown and Public Service chief executives and employees immunity from liability. The Court held that such a major change to the liability of the Crown was inconsistent with the provision read in context and was not the purpose of the Act. The majority in Couch held that, while s86 protects chief executives and Crown employees who have acted in good faith from being sued by their department, it does not protect them from being sued by members of the public in respect of those acts. There is some uncertainty surrounding the scope of the majority approach and whether or not the judgment preserves the liability of chief executives and employees to be liable on a secondary basis.
367 It was likely that, in law, chief executives or employees of the Public Service would be entitled to be indemnified by their employer for any act or omission carried out in good faith in the course of their duties.
368 However, in the SSC's view, there are sound public policy reasons why immunity should also be provided. It provides a level of certainty that indemnity, considered on a case by case basis, does not provide. Section 86 was based on important public policy objectives:
- public servants are responsible for serving the government of the day and providing or administering a wide range of public functions and services
- these functions require public servants to undertake them without being too conservative or unduly risk-adverse, and to do so without fear or favour
- government departments must be able to attract and recruit capable employees who are able to carry out the Crown's core functions without fear of liability for their actions undertaken in good faith in the course of their employment.
369 The Supreme Court's majority interpretation meant that s86 no longer met the purpose for which it was intended. SSC considered it desirable to amend s86 so that the section does achieve its intended purpose, to protect Public Service chief executives and employees from personal liability when acting in good faith in the performance of their functions and powers. At the same time, it should be made explicit that the section does not extend a blanket protection to the Crown from liability for the acts and omissions of its servants: a proceeding should be able to be brought against the Crown as being vicariously liable for the acts of its servants.
370 The Crown Entities Act 2004 contains a provision that is intended to provide immunity from civil liability. S121(2) of the CEA provides that "An officer holder or employee is not liable to any person in respect of an excluded act or omission". An excluded act is defined in s126 as meaning "an act or omission by the member, office holder, or employee in good faith and in the performance or intended performance of the entity's functions".
371 The SSC's initial proposal was that legislation (preferably, the Crown Proceedings Act 1950, as the substantive statute dealing with claims by or against the Crown) be amended to contain:
- a provision similar to that in the CEA, ie that no departmental chief executive or employee is liable to any person in respect of an act or omission by the chief executive or employee in good faith and in the performance or intended performance of the department's powers and functions
- a specific reference such that an action against the Crown is not prevented in respect of the acts or omissions of its servants.
Recommendations to Cabinet
372 Concurrently with the development of the suite of BPS Cabinet papers, the Law Commission was commencing work to review the law relating to Crown liability and the use of immunities and indemnities. The SSC was in discussion with the Law Commission, who preferred an indemnity approach rather than immunity for public servants: the public servant would be sued personally and the Crown would meet the costs.
373 The SSC was concerned that the Law Commission's report was likely to be some time away and a delay would not meet the policy objective of protecting public servants while at the same time preserving the ability for the public to sue the Crown. While recognising that the Law Commission's project might result in further legislative change, BPS Cabinet paper 6 recommended that:
- s86 in the SSA be amended to incorporate the proposal outlined in the preceding paragraphs
- s77 be amended in the same way in respect of chief executives and employees in the Education service.
374 The recommendation to amend s86 included an additional proposal to extend the protection from personal liability to those acting under delegation of a chief executive. This would be consistent with the proposals to broaden a chief executive's power to delegate, as discussed in relation to part 3 of the SSA.
Legislation drafting process
375 Clause 54 in the Bill replaced s86 with a straightforward provision to make the policy clear and provide Public Service chief executives and employees with immunity from civil proceedings for good-faith actions or omissions in pursuance or intended pursuance of their duties, functions or powers.
376 Because Couch v Attorney-General concerned the relationship between SSA s86 and the Crown Proceedings Act, that Act was consequentially amended by cl57 of the Bill. New subsection (4A) was inserted into the Crown Proceedings Act to provide that a Court may find the Crown itself liable in tort in respect of the actions or omissions of Public Service chief executives and employees, despite the immunity provided for those particular Crown servants provided in new s86.
377 Including delegates within the scope of s86 was not pursued. The 'mischief' caused by the Couch decision related to Public Service chief executives and employees: this was the scope of the intended legislative solution. The extended ability of chief executives to delegate functions or powers to persons outside the Public Service, as provided for through amendments to SSA s41, would normally be implemented by way of contract with the delegate. In the case of contractors, the standard safeguard mechanism would normally be expected to continue, by way of insurance protection.
Select Committee process
378 The provision in the Bill to clarify the immunity of public servants from personal liability in civil proceedings attracted comment in some parts of the media and in a small number of submissions to FEC. Some media raised a spectre of public servants getting away scot-free, with no recourse for the public who may have been wronged.
379 The Law Commission expressed its view that an indemnity approach is the cleanest and most conceptually "pure" approach to providing protection for Public Service employees. It commented that the status of liability of Public Service employees was a key issue for the Commission's own review of the Crown Proceedings Act 1950. The Legislation Advisory Committee supported the Law Commission's submission.
380 FEC discussed in depth the difference between an immunity v. indemnity approach to Public Service liability. FEC asked advisers to provide written information on:
- an exposition of the pros and cons of an immunity protection for public servants
- details of the competing views of SSC and the Law Commission on indemnity v. immunity for public servants
- details of the arrangements for public servants in comparable jurisdictions.
381 The advisers' response is included in the document referred to in paragraph 248. Key points are that:
- the ability of people to sue the Crown will not be affected
- public servants acting in bad faith, or outside their duties, can still be sued
- indemnities create difficulties, in terms of: who gets to run the litigation; public servants being too concerned about being sued to do their jobs properly (a chilling effect, especially in exercising significant coercive powers on behalf of the Crown); the potential personal effect on the public servant
- although the indemnity approach is used elsewhere in the world, an immunity approach is more consistent with the protections that currently apply to other State servants in New Zealand
- the Law Commission will be able to continue its work in this area
- Parliament will be able to fully consider a move to an indemnity approach, if it thinks this appropriate once the Law Commission has reported its findings.
382 FEC's report to the House noted the Law Commission's work in this area, but "[To] resolve the present uncertainty, we concluded that it was preferable to retain the immunity approach taken in the bill and thus restore what was widely understood to be the status quo, in the knowledge that it would be open to Parliament to amend the provision once the Law Commission's review was concluded if there were a compelling case to do so".
383 During the initial drafting of the Bill, officials vacillated about the necessity of amending s77 in relation to the Education service. As noted in preceding paragraphs, the main point was that the amendment to s86 addressed the 'mischief' caused by the Couch decision, which related to Public Service chief executives and employees. In the end, the Departmental Report recommended that s77 be amended as initially agreed by Cabinet, providing for consistency between the respective provisions in the SSA.