Chapter 19
Crown and State sector defendants


Are there impediments to imposing liability for pecuniary penalties on the Crown and State sector?

19.6The Law Commission has considered issues of Crown liability in a number of reports and papers over the years. As we note in our recent Issues Paper A New Crown Civil Proceedings Act for New Zealand, the Crown Proceedings Act 1950 went a considerable distance towards abolishing the privileged position that the Crown previously enjoyed at common law in civil litigation, by allowing private citizens to sue the Crown in the courts.537
19.7On the question of criminal liability, the position at common law was that the Crown could not be subject to criminal prosecution, on the basis of the maxim “the King could do no wrong”.538 However, legislative measures and judicial determinations have clarified that the Crown may be subject to criminal liability if the statute expressly so provides. The Commission has previously concluded that no constitutional law changes are required to impose criminal liability on the Crown,539 but that certain issues need to be addressed to effectively do so (such as defining what is meant by “the Crown,” in the particular context, and which acts and omissions are to be treated as acts of the Crown). It also concluded that it would be sensible to address various issues relating to procedure and penalties that are likely to arise.540
19.8The Crown Organisations (Criminal Liability) Act 2002541 was a further significant development, removing the Crown’s exemption from prosecution for offences under the Building Act 1991 and the Health and Safety in Employment Act 1992. According to the Ministry of Justice, this marked a significant change in the long-standing principle that the Crown is indivisible and immune from criminal prosecution, and establishes a precedent for criminal liability.542 Amendments to the Crown Organisations (Criminal Liability) Act are currently being considered by Parliament in relation to the Health and Safety Reform Bill.543
19.9Another development of note, following a Commission recommendation544 endorsed by the Ministry of Justice,545 was the introduction of a Cabinet mandated process to require departmental analysis of the impact of new Bills on the criminal liability of the Crown.546 At the end of this chapter, we recommend that consideration be given to supplementing this procedure to include the potential impacts of pecuniary penalty statutes on Crown liability.

Should the Crown and State sector be liable under the regulatory scheme?Top

19.10The initial policy question is the necessity of including the Crown and State sector bodies within the coverage of a particular pecuniary penalty regime. The Federal Court of Australia has explained the inclusion of the Crown in the coverage of pecuniary penalty regimes in the following terms:547

A wide range of statutory schemes exist in Australia which are designed to protect public welfare across a range of subject matters from occupational health and safety to the protection of the environment to fair trade and competition. It is commonly the case that these schemes bind the Crown in relation at least to their commercial, industrial and developmental endeavours. It is commonly the case that civil sanctions are utilised to enforce compliance. That Parliament would seek to impose effective statutory sanctions to deter wrongdoing and thereby prevent further wrongdoing by all persons whose activities are regulated, is unsurprising. That motivation suggests an intent that the Crown be treated the same as any other person who is the subject of the regulation. Such an intent is supported by the principle of equality before the law.

19.11A sampling of the Australian pecuniary penalty regimes indicates a case-by-case approach to the issue of Crown liability for pecuniary penalties. While there is coverage in the sense that each statute expressly binds the Crown, the liability implications vary. We have identified examples of each of the following approaches:

(a) express exclusion of Crown liability for pecuniary penalties and offences;548
(b) general exclusion of Crown liability but with express exceptions for certain statutory Crown authorities;549
(c) exclusion of Crown liability for offences, but no express exclusion of liability for pecuniary penalties;550
(d) express provision for Crown liability for pecuniary penalties (but not offences);551 and
(e) express provision for Crown liability for both pecuniary penalties and offences.552
19.12The Commission’s view is that a case-by-case approach to the question of Crown liability for pecuniary penalties is also the desirable approach in New Zealand. However, where the Crown or the State sector participates in a market or activity that is to be regulated by way of a pecuniary penalty regime, the presumption should be that those public bodies are included within the regime’s scope (subject to what we say below about whether or not pecuniary penalties themselves are the most appropriate form of penalty).553 Not including market participants on the basis of their Crown or public status effectively grants a form of exemption from regulation that may undermine the objectives of the regime.
19.13Whether or not the presumption should apply will require a policy exercise in each case to analyse the requirements of the particular regime and assess the competing considerations. Policymakers will need to consider relevant aspects of the Legislation Advisory Committee Guidelines, including the fundamental common law principles such as the rule of law.554 Generic factors such as transparency, accountability and equality will be relevant considerations, as will be specific consideration of the regulatory objectives of the particular regime.
19.14Excluding particular participants from the coverage of a regime may have an impact on both regulatory integrity and market performance, as there may be a risk of market distortions if different participants are subject to different rules or penalty consequences. It may affect the extent to which regulation provides a level playing field in the particular market and raise fairness issues among market participants:555

A level playing field or “competitive neutrality” requires that private enterprises have the same benefits and be subject to the same restrictions as other sectors. It is in this area that the privilege afforded to the Crown, and particularly its instrumentalities, is least defensible.

19.15Where the Crown or State sector bodies play a very minor role in the regulated sector, that impact might be negligible. Nevertheless, where it is foreseeable or conceivable that public bodies will play a greater role in future, it may be desirable to establish a regime on a prospective basis by including the Crown or State sector bodies within coverage, reducing the need for future legislative amendments.

537Law Commission A New Crown Civil Proceedings Act for New Zealand (NZLC IP35, 2014) at [1.4]. The liability of the Crown, public bodies and their servants for breaches of the New Zealand Bill of Rights Act 1990 was considered in our 1997 report: Law Commission Crown Liability and Judicial Immunity – a response to Baigent's case and Harvey v Derrick (NZLC R37, 1997).
538See Maurice Sunkin “Crown Immunity from Criminal Liability in English Law” [2003] Public Law 716; and Anthony Gray “Options for the Doctrine of Crown Immunity in 21st century Australia” (2009) 16 AJ Admin L 200.
539Law Commission A New Interpretation Act: to Avoid “Prolixity and Tautology” (NZLC R17, 1990) at ch 4; Law Commission To Bind their Kings in Chains – an advisory report to the Ministry of Justice (NZLC SP6, 2000), at 10–12.
540Law Commission To Bind their Kings in Chains – an advisory report to the Ministry of Justice, above n 539, at [21]. See also at [22] the suggestion that a pecuniary penalty may be a better approach than the imposition of criminal liability on the Crown.
541The Act implemented the recommendations of Judge Noble’s report into the Cave Creek tragedy: Report of the Commission of Inquiry into the Collapse of a Viewing Platform at Cave Creek near Punakaiki (Department of Internal Affairs, 1995).
542Ministry of Justice Report Required by section 28 of the Interpretation Act 1999 (Report presented to the Minister of Justice, 2001) at [24].
543See also Vulnerable Children Bill 2014 (150-2).
544Law Commission To Bind their Kings in Chains – an advisory report to the Ministry of Justice, above n 539, at 9.
545Ministry of Justice, above n 542, at [46].
546Cabinet Office Circular “Acts binding the Crown: Procedures for Cabinet Decision” (13 March 2002) CO 02/4. The Circular requires an assessment of relevant factors before imposing criminal liability on the Crown and that Cabinet papers address matters such as: who is the Crown for the purposes of the prosecution; who should defend and prosecute the Crown; what procedures should apply; and what penalties should be imposed upon conviction and whether these need to differ from generally applicable penalties.
547Construction, Forestry, Mining and Energy Union v Victoria (No 2) [2013] FCA 1034 at [38].
548Resale Royalty Right for Visual Artists Act 2009 (Cth), s 4; and Personally Controlled Electronic Health Records Act 2012 (Cth), s 11. The Explanatory Note to the Bill resulting in the latter statute notes that while the Crown cannot be liable to be prosecuted for an offence, or liable for a pecuniary penalty, this does not mean that all action against the Crown is precluded. For example, the Crown may be subject to a declaration or injunction, investigated by the Information Commissioner under the Privacy Act, investigated by the Ombudsman, subject to Parliamentary scrutiny or subject to claims for breach of statutory duty.
549Spam Act 2003 (Cth), s 12.
550Fair Work Act 2009 (Cth), ss 37 and 549; Privacy Act 1988 (Cth) as amended by the Privacy Amendment (Enhancing Privacy Protection)
Act 2012 (Cth), ss 4 and 80ZC.
551Greenhouse and Energy Minimum Standards Act 2012 (Cth), s 7.
552Work Health and Safety Act 2011 (NSW), ss 10 and 246.
553See, for example, the Commerce Act 1986, ss 5 and 6.
554Legislation Advisory Committee Guidelines on Process and Content of Legislation (Wellington, 2001) [LAC Guidelines] at ch 2.
555Ray Steinwall “The Liability of the Crown and its instrumentalities under the Trade Practices Act 1974 (Cth)” (1994) 17 UNSWLJ 314 at 316. See also Gray, above n 538.