Public Authority Liability in the Wake of Ipp – Confusion Confounded

Public authority liability for negligence has long been a vexed question in tort law. Following the Ipp Review of 2002, it has been further complicated by the introduction in most Australian states of a form of ‘policy defence’, designed to reduce authorities’ exposure to liability through lowered standards of care modelled on public law concepts. This article analyses the disparate provisions in the light of their recent judicial interpretation, highlighting the problems and uncertainties they create, their wide variation in form and their infidelity to the original proposals on which they are based. It advocates a return to the drawing board and canvases two potential solutions that now merit more detailed consideration – either a wholesale reversion to the common law; or the enactment in Uniform Legislation of a single, cautiously deferential approach to liability for discretionary public body decisions, which mimics the approach to other types of specialised, expert decision in private law.

I. INTRODUCTION Public authority liability for negligence has long been a complex area of the common law, but its convolution has been further exacerbated in recent years by the raft of statutory provisions enacted in Australia in the wake of the Ipp Review of 2002.1 The Review itself was commissioned by Commonwealth, State and Territory governments as a reaction to the spiraling cost of liability insurance – a phenomenon that was itself (not uncontroversially)2 attributed to the unpredictability of negligence law. The Review Panel was tasked with finding ways to curtail the problem by ‘developing consistent national approaches’3 to negligence liability as a whole. Within this remit, one of its more specific terms of reference was to ‘address the principles applied in negligence to limit the liability of public authorities’.4 The Panel’s ultimate recommendation was for the introduction of a so-called statutory ‘policy defence’ 5 for public authorities throughout all Australian jurisdictions. The proposed ‘defence’ was not intended to provide complete immunity against civil liability, but instead to lower the standard of care required of authorities in respect of certain types of ‘policy’ decision; that is, conscious decisions based substantially on ‘financial, economic, political or social factors’, made in the performance or non-performance of their public functions. The standard proposed borrowed its terminology from the public law concept of Wednesbury unreasonableness,6 so that liability for a policy decision would arise only if the decision was so unreasonable that no reasonable public authority could have made it.7 This recommendation proved to be the catalyst for a subsequent wave of uncoordinated and inconsistent law reform across Australia, much of which has showed little fidelity to the spirit or detail of the Panel’s original proposals. The result is that not only is there now no single approach to the question of public body negligence liability in Australia, but such legislative provisions as have been introduced bear little resemblance to the proposals on which they were apparently based. In some jurisdictions (South Australia and the Northern Territory), no special policy defence has been enacted at all and the negligence liability of public authorities continues to be regulated exclusively8 by common law principles. The result is an unpalatable farrago of disparate norms. Some might regard this hodgepodge of rules as understandable in a federal system, but it is clearly not in accord with the proclaimed preferences of governments in the run-up to the Ipp Review. At best, the random result can be regarded as a pragmatic sacrifice of original preferences to the exigencies of the time and to the perceived need for governments to make swift, unilateral, visible, public responses to ‘crisis.’ At worst, however, it is irrational for governments to emphasise the importance of national consistency on the one hand, and then to legislate multilaterally, without regard to this aim, on the other. In our view, it is also undesirable as a matter of moral principle that the private interests of Australian citizens which are as basic as the integrity of their person, property and economic welfare should receive radically different protection in negligence law from State to State. It is not, however, strictly necessary to take this view for one to react sceptically to the recent wave of reforms, as we intend to show. Sadly, they contain sufficient deficiencies and interpretive difficulties to justify independent criticism in their own right. In this article, we explore the problems inherent in the various statutory provisions now governing public body liability in Australia and recommend a return to the drawing-board. We argue that, whilst the negligence liability of public bodies was certainly never straightforward at common law, the recent reforms have further confused, convoluted and fragmented matters to an unacceptable degree – to such an extent, indeed, that we should now seriously consider either discarding them entirely; or re-engaging with the field in a concerted way that is likely to produce a more uniform, rational solution. Part II of the article describes the common law background against which the Ipp proposals and subsequent statutory reforms are set. The purpose here is to identify some of the difficulties, but also some of the sophistications of the original, common law approach to public body liability. This serves as a backdrop to our discussion of the Ipp Review’s proposed ‘policy defence’ in Part III. Part IV then critically appraises the various legislative responses to the Review in the light of their recent judicial interpretation. It details the extent of the legislation’s inconsistencies, interpretive difficulties and infidelities to the Ipp vision and illustrates the problematic state of the current law when viewed from either the microscopic, or macroscopic point of view. Part V advocates a return to the drawing-board. Our aim in this, final, concluding part is not to set out a fully-developed proposal for reform, but to state clearly the reasons why there is a need for change, and to canvas two possible solutions that now merit further, serious consideration. Without a proper dénouement of the problems of the field as it stands, there is little prospect of governments making any change, not least because their own interests are captured. The first option for reform involves a more concerted and careful process of uniform legislation that would endorse a single, cautiously deferential approach to negligence liability for discretionary public decisions, mimicking the approach that courts currently take toward other types of specialised, expert decision in private law. This approach assumes a Diceyan view of the relationship between citizen and State and therefore sits comfortably with the traditions of Australian private law.9 It also, however, assumes the possibility of national consensus between governments on matters of liability that affect their budgets and behaviour, which is a weaker premise. The second, more pragmatic solution is to completely abolish all existing versions of the ‘policy defence’ and return the question of public body liability for negligence entirely to the wardship of the common law. This may seem an extreme and startling suggestion – one that returns us, full-circle, to our starting point – but it is one that may well be warranted, we suggest, by the difficulties that the legislation currently presents. II. PUBLIC AUTHORITY NEGLIGENCE – THE COMMON LAW BACKGROUND Prior to the Ipp Review, the negligence liability of public authorities10 in Australia was regulated almost entirely by the common law. This remains the case in South Australia and the Northern Territory.11 Furthermore, the common law remains relevant even in those jurisdictions where statutory reform has occurred, because the reforms do not codify the law, but merely supplement and modify the common law approach. One point that does not seem to have been fully appreciated by the governments that commissioned the Review is that public authority liability for negligence has always been limited to a significant degree by the traditional requirements that a plaintiff prove the existence and breach of a duty of care. In fact, courts’ willingness to impose legal duties of care on public authorities has historically been constrained by a number of serious judicial concerns attending an authority’s status and functions. These relate to: (i) the ‘justiciability’ of certain types of discretionary public policy decision involving the allocation of resources between competing social ends; (ii) the fact that a body’s failure may consist in a ‘pure omission’ to prevent harm more immediately caused by a third party or natural hazard; (iii) the potential incompatibility of any duty of care with the intentions and purposes of a statute under which the public body acts; (iv) the apprehension that the duty may induce ‘defensive practices’, or place decision-makers in impossible positions of legal or ethical conflict between competing responsibilities; (v) worries that ‘indeterminate’ or ‘massive’ liabilities might result from a single, wrong decision; (vi) the need to ensure that negligence law develops coherently with other legal principles (including other principles of private law, but also public law processes for the review of decisions through statutory appeals and judicial review); and (vii) a concern – increasingly strongly voiced by the High Court in recent years – that an appropriate balance is struck between the responsibility of public agencies to protect individuals and the latters’ duty 12 to look out for themselves.13 Limiting public body liabilities so as coherently to incorporate respect for all of these concerns has admittedly not been without its difficulties. The appropriateness of some of them has been questioned14 and their influence upon courts’ reasoning on duty questions can produce law with soft edges. The concerns about the ‘justiciability’ of public decisions and the ‘consistency’ of a duty of care with a body’s statutory purposes have proven especially difficult to meet with bright-line rules.15 In part, this is because the justiciability question itself has two, distinct aspects in judicial thinking that are easily conflated – one relating to courts’ constitutional reluctance to second-guess public body decisions regarding distributive choices carrying the public mandate;16 the other relating to their practical incapacity to determine what a public body should have done, given their own lack of experience and expertise in distributive or resourcing questions, the subjective and open-textured nature of some of the discretionary standards placed at issue, the informational constraints that attend the private law system,17 and the polycentric nature of some of the decisions in question.18 Similarly, the question whether a duty of care is ‘compatible’ with a body’s statutory purposes inevitably requires the ‘intention’ of the relevant statute to be inferred, often from very general broad-brush descriptions of a body’s public functions. This process of interpretation is notoriously slippery and often unpredictable. At the breach stage, courts run into similar difficulties in determining the proper standard of care to apply to public body decisions, especially where the decision involves the balancing of competing demands on scarce resources. 19 There is also a more fundamental, destabilising question – on which views can reasonably differ – as to whether public bodies should in principle be expected to take less care than a private individual, more care, or (the Diceyan view) be treated in as nearly as possible the same way. On the one hand, it is arguable that they should be held to lower standards, because they are tasked with undertaking actions that benefit society as a whole, not particular individuals.20 Unlike most private actors, they also have little choice about whether or not to discharge their functions and so are unable to avoid the constraints of their own limited resources by abstaining from risk-bearing activity.21 On the other hand, it is sometimes suggested that they should be held to a higher, altruistic standard since, unlike most private actors, they operate for the benefit of others without regard to self-interest.22 On this view, public bodies are akin to trusted private fiduciaries, to whom stricter legal standards are applied in managing the affairs of others. A third view is that, where discretionary decision-making about resources is involved, they should be treated in the same way as highly skilled or specialised private actors, such as doctors. After all, doctors too regularly face complex decisions about competing priorities and resource-distribution, and may similarly have no practical (or ethical?) choice other than to act in one way, or another. On this view, the ‘Bolam’ standard is the logical standard to apply to public body resourcing decisions at common law, 23 as a measure of practical deference to the special knowledge of experts, the difficulties of the field and the importance of not stifling innovation, with the consequence that such decisions should be adjudged reasonable provided they comply with ‘a responsible body’ of expert opinion held by equivalent public decision-makers, for which the court is satisfied there is a rational evidential basis.24 This standard lies half-way between that applied to ‘non-expert’ tasks like driving a car, where the defendant must comply with the predominant approach of reasonable peers, and the more exacting standards required of fiduciaries, some of whose prudential management duties (such as the duty to avoid conflicts of interest) tend to be strict. Historically, these complex concerns have resulted in limited liabilities for public bodies at common law, which makes it unlikely, we suggest in the next section, that further statutory intervention was ever actually necessary to curtail over-extensive liabilities in respect of discretionary decision-making. It is, however, true to say that the difficulties of the field have left courts struggling to articulate entirely predictable rules. In the UK, judges at one time sought to accommodate ‘justiciability’ concerns at a logically distinct, separate stage of negligence proceedings, prior even to considering whether or not any duty of care was owed by an authority on the facts. This they did by adverting to a distinction between ‘policy’ decisions (presumptively non-justiciable), on the one hand, and ‘operational’ failings (presumptively justiciable), on the other. 25 They also experimented with ruling out negligence liability entirely in respect of discretionary decisions unless there had been a clear violation of public law standards. 26 Both of these approaches have declined in popularity in recent years; the justiciability question is now generally viewed as simply one part of the duty of care inquiry conducted on individual sets of facts (not a prior ‘in/out’ question);27 and the distinction between ‘policy’ and ‘operation’ has been recognised as being far from watertight, with the consequence that courts now tend to ask and answer the question of justiciability directly in its own terms, rather than by mediating it through any hard and fast policy/operation ‘rule’.28 The use of public law criteria as a protective shield in negligence proceedings has also waned – a point that is significant precisely because the Ipp Review’s proposed ‘policy defence’ was, as we shall see, constructed around this type of approach. The result of these developments in the UK is that, nowadays, only a ‘narrow bank of high-level decisions are considered out of bounds’ by English courts, with the vast majority of cases being considered through the lens of ordinary negligence principles.29 To the extent that judges worry about negligence liabilities impinging unduly on discretionary ‘public’ decision-making, they prefer simply to check a duty of care’s consistency with the background ‘statutory framework’, and with apparent legislative ‘intentions’ regarding the availability of a private law cause of action.30 This may have resulted in more cases going to trial and in more detailed judicial scrutiny of public body decisions, which is no doubt unattractive to public authorities, but also consistent, we would suggest, with the basic, Diceyan conception of the rule of law. In Australia, courts have also sometimes attempted to gauge the justiciability of public body decisions by reference to the policy/operation distinction,31 but they now also

Footnotes

* Lecturer in Law and Professor of Law respectively at the TC Beirne School of Law, The University of Queensland. We are grateful to Douglas Johnson for his diligent research assistance and to the anonymous referees for some very helpful comments. 1 Ipp D et al, Review of the Law of Negligence: Final Report (September 2002) Commonwealth Treasury (‘Ipp Review’). 2 Doubts are now expressed about the extent to which the Australian insurance crisis was ever really a product of negligence liabilities as opposed to canny political lobbying See, eg, K Burns, ‘Distorting the Law: Politics, Media and the Litigation Crisis: An Australian Perspective’ (2007) 15 TLJ 195; R Davis, ‘The Tort Reform Crisis’ (2002) 25(3) UNSW Law Journal 865; H Luntz, ‘Reform of the Law of Negligence: Wrong Questions – Wrong Answers’ (2002) 25(3) UNSW Law Journal 836. Since the implementation of the reforms, public liability insurance premium rates have certainly dropped (Australian Prudential Regulation Authority, Overview of Professional Indemnity and Public and Product Liability Insurance (June 2013)), but it is unclear whether this is due to lower tort liabilities, or simply a more general recovery of insurance markets. 3 Helen Coonan, Minister for Revenue and Assistant Treasurer (2001-2004), Joint Communique Ministerial Meeting on Public Liability (30 May 2002). 4 Ipp Review, ix. 5 In jurisdictions implementing the recommendation, it has not been construed as providing a defence as such, but rather an additional statutory hurdle that must be overcome in order to establish liability: see, eg, Road and Traffic Authority of New South Wales v Refrigerated Roadways Pty Ltd [2009] NSWCA 263 at [360] per Campbell JA (McColl JA and Sackville AJA agreeing). 6 Ipp Review [10.25]-[10.29]; Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] 2 All ER 680. 7 Ibid [10.26], Rec 39. 8 In SA, there is one exception that is specific to public bodies, relating to the liability of road traffic authorities under Civil Liability Act 1936 (SA) s 42. Other statutes also affect public bodies in the same way that they affect the liability of private parties – eg the limitation acts. 9 The basic vision appears in AV Dicey, The Law of the Constitution (7th ed, 1908) esp 189-191, 198-199. For reference to some of the necessary exceptions that finesse the base principle of equality, see Hogg and Monahan, Liability of the Crown (3rd ed, 2000), [1.2]. The Diceyan view strongly underpins the form of most statutes abolishing Crown Immunities in Australia. For the history, see PD Finn, ‘Claims against the Government Legislation’ in PD Finn, Essays on Law and Government (LBC, 1996) vol 2, 25. 10 See generally, C Booth & D Squires, The Negligence Liability of Public Authorities (Oxford, OUP, 2006); H Wade, C Forsyth, Administrative Law (10th ed), (Oxford, OUP, 2009), 648-662; P Cane, Administrative Law (Oxford, Clarendon, 2011) 201-210. 11 See n 8 above. 12 Or sometimes, their liberty – see, eg, Stuart v Kirkland-Veenstra (2009) 237 CLR 215, [2009] HCA 15 at 248, [87] where a duty on the part of the police to detain a person contemplating suicide was considered inconsistent with the latter’s freedom of choice. 13 Amaca Pty Ltd v New South Wales [2004] NSWCA 124 at [156] per Ipp JA. 14 The concern about ‘defensive practice’ is one of the most persistently controversial, not least because it is based upon assumptions about behaviour that have not been empirically tested. 15 For an excellent analysis, see Booth & Squires above n 10, Ch 2. 16 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 62, [170] per Gummow J (‘imperilling legislative devolution’); Graham Barclay Oysters Pty Ltd v Ryan & Ors (2002) 211 CLR 540, [2002] HCA 54 at 553-4, [6], per Gleeson CJ. 17 Dorset Yacht Co Ltd v Home Office [1970] AC 1004, at 1067, per Lord Diplock; Crimmins above n 16 at [5] per Gleeson CJ; Brodie v Singleton Shire Council (2001) 206 CLR 512, [2001] HCA 29 at 628-629, [310]-[312] per Hayne J. On the distinction between these two forms of argument see further Booth & Squires above n 10, 33-41; M Aronson, ‘Government Liability in Negligence’ (2008) 32 Melbourne University Law Review, 44, 57. 18 On which, see L Fuller, ‘The Form and Limits of Adjudication’ (1978) Harvard Law Review 353. 19 See, eg, Refrigerated Roadways above n 5 at [274] per Campbell JA (McColl JA and Sackville AJA agreeing). Whether this difficulty goes to duty or to breach apparently depends on how generalised it is likely to be in respect of the sort of decision the authority is engaged in: see [283]. 20 K Barker, P Cane, M Lunney and F Trindade, The Law of Torts in Australia (Oxford University Press, 5th ed, 2012) 584. 21 Brodie above n 17 at 623, [295] per Hayne J. 22 P Vines, ‘Straddling the Public/Private Divide: Tortious Liability of Public Authorities’ (2010) 9(4) The Judicial Review 445, 449. 23 For vestiges of this approach in the context of a broader appeal to the standard norms of negligence law, see S Bailey and M Bowman, ‘The Policy/Operational Dichotomy – A Cuckoo in the Nest’ (1986) CLJ 430, 435-6. The test derives from McNair J’s judgment in Bolam v Friern Hospital Management Committee [1957] 1 WLR 583, at 587: a practitioner is not negligent if acting ‘in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art’. Bolam was rejected in Australia in the context of a doctor’s informational duties in Rogers v Whitaker (1992) 175 CLR 479 and in respect of treatment and diagnosis decisions in Naxakis v Western General Hospital (1999) 197 CLR 269. It has also now been rejected in the UK in respect of a doctor’s informational duties in Montgomery v Lanarkshire Health Board [2015] UKSC 11 at [85]-[88]. Note, however, that a standard analogous to Bolam now applies in relation to all professional duties (other than the duty to warn of the risk of harm) in civil liability legislation in most states: Civil Liability Act 2003 (Qld) s 22; Civil Liability Act 2002 (NSW) s 5O; Wrongs Act 1958 (Vic) s 59; Civil Liability Act 2002 (Tas) s 22. Western Australia’s provision only applies to health practitioners: Civil Liability Act 2002 (WA) s 5PB. The ACT has no provision. 24 The qualification reserves the ultimate judgement to the court: Bolitho v City and Hackney Health Authority [1998] AC 232 (HL). This is also the design of the statutory provisions listed, ibid. 25 Anns v Merton London Borough Council [1978] AC 728 (HL) at 754 per Lord Wilberforce. See also (more cautiously) X (Minors) v Bedfordshire County Council [1995] 2 AC 633 (HL) at 737-738 per Lord Browne-Wilkinson. 26 Stovin v Wise [1996] AC 923. There has since been a retreat from this approach: Barrett v Enfield London Borough Council [2001] 2 AC 550 (HL) and Phelps v Hillingdon London Borough Council [2001] 2 AC (HL). See further Booth and Squires above n 10, 49-53, 54-58. 27 Booth and Squires above n 10, 29 criticise any such change (justiciability should always be determined as a prior question). 28 Rowling v. Takaro Properties Ltd [1988] AC 473 (PC) at 501 per Lord Keith; Stovin above n 26 at 951-952 per Lord Hoffmann; 938-939 per Lord Nicholls; Barrett above n 26 at 571-572 per Lord Slynn; 583 per Lord Hutton; Phelps above n 26 at 658 per Lord Slynn; 665 per Lord Nicholls; 973-974 per Lord Clyde. For the various criticisms of the distinction and the reasons why UK courts have steered away from it in recent years under the influence of the European Court of Human Rights, see Cane above n 10, 213-218, 219-221. 29 D Nolan, ‘Governmental Liability’, Ch 17 in K Oliphant (ed) The Law of Tort (Lexis Nexis Butterworths, 2007), 893. 30 Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057, [2004] UKHL 15 (HL). See also Stovin above n 26. To the extent that Stovin suggested that the existence of a common law cause of action depends on positive legislative intention to this effect, it is dubious. The modern approach in Australia is different (and, we suggest, correct), asking instead whether a cause of action is clearly intended to be excluded by the Act: see n 44 below. 31 Council of the Shire of Sutherland v Heyman (1985) 157 CLR 424 at 442 per Gibbs CJ; 500 per Deane J (it is generally the implied intention of the statute in question to preclude liability for policy decisions); 468-9 per Mason J (distinguishing between ‘decisions which involve or are dictated by financial, economic, social or political factors or constraints…. budgetary allocations and the constraints which they entail in terms of allocation of resources’ on the one hand and ‘action or inaction that is merely the product of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness’ on the other. Cautious reference to the distinction is also made in the more recent cases: Pyrenees Shire Council v Day (1998) 192 CLR 330, [1988] HCA 3 at 358-9 [67]-[68] per Toohey J; 425-6 [253] per Kirby J (but note Gummow J’s rejection of the distinction as unhelpful at 393 [182]); Crimmins above n 16, at 50 [131] per McHugh J; at 101, [292] per Hayne J; Barclay above n 16 at 556 [12] per Gleeson CJ. By contrast with Mason J’s view in Heyman, Gummow J in Pyrenees at 394 [182]-183] preferred to isolate only ‘quasi-legislative’ decisions as non-justiciable, leaving budgetary and resource questions to be engaged at breach stage.