During lockdown the Court of Appeal released its decision in Attorney-General v Strathboss Kiwifruit Ltd.¹ The High Court decision had opened the door to successful claims in negligence against public bodies, by reading down the scope of a statutory immunity in s 163 Biosecurity Act, and rejecting arguments that policy grounds negated the existence of a duty of care.

The Court of Appeal has now shut that door, confirming the difficulty in recovery against public bodies for negligence, except in accepted categories. Even those who are part of a discrete group (those suffering actual property damage due to clear failures) will struggle to succeed where the potential liability on public bodies is considered “indeterminate”.

The case concerns several claims made by kiwifruit growers and post-harvest operators against the Ministry of Agriculture and Fisheries (MAF) for negligence concerning the introduction of the Psa3 virus, which destroyed kiwifruit plants in the Bay of Plenty.

Psa3 was introduced into New Zealand when kiwifruit pollen was imported from China for artificial pollination. The growers and operators claimed that MAF failed to conduct an appropriate risk assessment when renewing the relevant import permit and failed to inspect the pollen upon import.

The growers were claiming losses of more than $450 million for the plants destroyed by the virus. The post-harvest operators, who ran cold storage and packing operations, claimed separately against MAF for their economic losses caused by the impact of Psa3 on their operation.

In the High Court, the growers were successful in establishing negligence in relation to the import permit, but that arising from the post-harvest operators failed.

The Court of Appeal overturned the High Court’s decision regarding the liability of MAF to the growers. The Court concluded that the Crown had a statutory immunity for the alleged negligence. In particular, it held that:

1. The Crown could not be directly liable for negligence under the Crown Proceeding Act 1950 and could only be vicariously liable for the acts of individual servants of MAF; and
2. Section 163 Biosecurity Act 1993 provides broad immunity to MAF employees. As a result, no vicarious liability could arise, as the MAF employees were not themselves liable in tort.

The High Court had held that the immunity conferred under s 163 Biosecurity Act did not extend to MAF staff in administrative and advisory roles, only those ‘specifically appointed’ or exercising powers such as inspectors.

In anticipation of a likely appeal to the Supreme Court, the Court of Appeal then went on to consider what the position would have been if there was no statutory immunity. In considering the issue of a duty of care owed to the growers or the post-harvest operators, the Court looked at questions of both proximity and policy.

The Court found that MAF owed no duty of care to the growers or the operators. The notion that MAF might have an indeterminate liability regarding almost any future cause of action was a strong policy argument militating against the imposition of a duty of care.

The Court went on to say that if a duty had been owed, then it would have found that the relevant MAF employees were negligent in their failure to properly assess the issuing of import certificates and the failure to inspect the pollen on arrival in New Zealand.

The Court of Appeal confirmed the High Court finding that the Crown cannot be directly liable in negligence – it can only be vicariously liable once direct liability has been established against its servants or agents. This means claimants will have difficulty in bringing claims against Government Departments where specific breaches by individual staff cannot be identified or where issues relate to systemic failures.

Interestingly, the position was different in New Zealand prior to implementation of the Crown Proceedings Act 1950. The seemingly unintended removal of direct Crown liability has been the subject of criticism by the New Zealand Law Commission, who say the move has no principled basis.

Ultimately, however, the Court of Appeal decided this proceeding on the interpretation of the statutory immunity. In doing so, it took a broad view of s 163, finding that it granted immunity to MAF personnel even when undertaking advisory and administrative acts on behalf of the Minister. As MAF personnel had no direct liability, there was no liability to attribute to the Crown.

However, the subsequent (obiter) analysis on the question of a novel duty of care highlights the competing considerations at the core of negligence claims against public bodies exercising powers in the broader public interest. On one side there is the fact that decisions and actions of regulatory bodies can have far-reaching consequences for private interests. The import of the pollen in question was for a single grower, but the consequences of MAF’s failure to identify the disease meant that all growers suffered significant losses.

On the other hand, there is a question about the extent to which MAF (or other public bodies) should be treated as an insurer of private interests and open to suit when undertaking a public function in good faith. The ‘chilling’ effect of potential liability on public bodies in the exercise of powers, and impact of potential liabilities on the allocation of public resources, has broad implications.

We expect the Supreme Court will want to revisit these issues, given the quantum and important questions of law involved. In the meantime, the ability of parties (including insurers, whether by subrogation or contribution) to make novel claims in negligence against public bodies continues to be limited.

1. Attorney-General v Strathboss Kiwifruit Ltd [2020] NZCA 98.

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