Crown immune from liability for Psa outbreak
/ Attorney-General v Strathboss Kiwifruit Limited [2020] NZCA 98
Introduction
In this recent decision, the Court of Appeal found that the Crown was immune from liability to kiwifruit growers and post-harvest operators in negligence for granting an import permit for a consignment of kiwifruit pollen from China and for not inspecting those goods when they arrived in New Zealand. Further, even if the immunity had not been made out, the Court found no duty of care in any event.
Background
Psa3 bacteria is a virulent strain of plant disease that destroys kiwifruit plants – in particular, gold kiwifruit. The bacteria first became a problem in New Zealand when it was discovered in October 2010 at orchards in the Bay of Plenty. MAF imposed biosecurity restrictions and intense hygiene regimes, however, within a matter of months, it became clear that the spread of the disease could not be contained. It took several years for the industry to recover.
The bacteria is believed to have arrived in New Zealand with imports of kiwifruit pollen from China during 2009. A significant class action was brought by kiwifruit growers and packhouses (funded by litigation funders) against the Crown. The claim alleged that the Crown was liable to kiwifruit growers and post-harvest operators (PHOs) in negligence for granting the import permit allowing the consignment of kiwifruit pollen to be imported from China and for not inspecting the import when it arrived in New Zealand.
In 2018, the High Court released its decision that the Crown was liable to Strathboss, the representative grower, in relation to the grant of the import permit. However, the Crown was found not liable to the PHOs.
Both parties appealed.
The Court of Appeal’s decision
Turning first to the statutory immunity question, the Court of Appeal found that the Crown has a statutory immunity. In summary, the reasoning was as follows:
The Crown cannot be directly liable in tort by reason of the Crown Proceedings Act 1950. If liability were to be established, it would have to be vicarious liability for individual servants or agents of the Crown.
Section 163 of the Biosecurity Act 1993 provides an immunity in respect of the acts or omissions of the Crown’s personnel. This meant that the individuals said to have been in breach of a duty of care to the respondents were immune against civil and criminal liability. Given that no cause of action could lie against the individual personnel responsible, the Crown could not be held vicariously liable.
Next, the Court of Appeal considered the question of whether there was a duty of care, if the Crown immunity had not been made out.
In relation to both the first cause of action, the Crown’s granting of the import permits, and the second cause of action, the failure to inspect the goods at the border, the Court would have found that no duty of care was owed in either case. Whilst the Court found that there was sufficient proximity for a duty of care to exist, policy factors meant it would not be fair, just and reasonable to impose a duty of care in the circumstances.
The policy factor which the Court found particularly persuasive was that a duty of care in these circumstances would expose the Crown to liability of an indeterminate amount, to an indeterminate class, and for an indeterminate time.[1] The loss of profit claimed by Strathboss for the last four years was $2.47 billion. If a duty applied in relation to the consideration of import permit applications for kiwifruit pollen, it would follow that a similar duty would apply to prospective importations of all risk goods. The potential losses which might be claimed for breach of such a duty could be immense.
The Court disagreed with the High Court that the concerns about indeterminacy and disproportionate liability were outweighed by the interest to displace the corrective justice in this case. The implications of indeterminate liability were said to be of such a scale and significance that even the Crown ought not to be cast in the role of indemnifier.
Comment (Philippa Fee)
Philippa Fee says that it is pleasing to see the Court take very seriously the macro-economic impact of indeterminate liability and deny liability largely based upon it. While this is a policy factor which has long been cited as a relevant criteria, all too often it gives way to the (understandable) desire to compensate victims. But the scale of the losses claimed in this litigation and the ‘floodgates’ which could potentially open to other even larger claims, was a ‘bridge too far’ for the Court. Liability insurers should be grateful for that.
Philippa Fee is a Partner at Fee Langstone
[1] The Court affirmed and applied the oft-quoted dicta of Cardozo CJ in Ultramares Corp v Touche 174 NE 441 (NY Ct App 1931).
