The Policy Defence - Excessive in Implementation? Prior to the Ipp report, the insurance industry in Australia was in the midst of a crisis[1]. Increasing numbers of claims and claims costs caused insurers to suffer increasing losses[2], translating

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Timothy Tan 30684884                Law 152 Assignment

The Policy Defence -  Excessive in Implementation?

Prior to the Ipp report, the insurance industry in Australia was in the midst of a crisis. Increasing numbers of claims and claims costs caused insurers to suffer increasing losses, translating to higher insurance premiums. Of the many parties affected, local governments were among those most severely affected. The crisis accentuated the public’s mistrust of the law of negligence. Confidence was further eroded with judgments that ran contrary to the public’s sense of moral justice. Thus, the Ipp Report was commissioned with an aim to re-instil public confidence in the law of negligence as well as to improve the affordability of public liability insurance. Given the deadlines and the limited terms of reference, it was unlikely to be a complete guide for reforms in the area of negligence. It would thus be unfair to brand the report, and the changes effected as a result, a failure. Therefore, while certain changes will inevitably attract criticism, credit should be given where due.

Recommendations regarding negligence-based claims on statutory authorities and their respective implementations in the Civil Liability Acts of various states have been heavily criticized. Thus, the relevant recommendations and their implementation in the Civil Liability Act 2002 of Western Australia (“CLA”) will form the focal point of this discussion. An evaluation of their validity will be made with the aid of both critical and supportive comments. The CLAs of other States will only be mentioned where necessary.

Overview of considerations

In the Panel’s review of public authorities’ liability arising from negligence, two distinct categories were identified [10.1] . Resource allocation was the central theme for both categories. The first was of allocations made in performance of the authority’s function [10.2]. The second were of decisions made based on political demands and social policy [10.9].  

The Panel recognised that statutory authorities have a limited budget with which to deal with a large range of challenging problems. Thus, it was worrying for such authorities to have decisions made in good faith regarding the allocation of scarce resources being used against them [10.3, 10.7-8]. The abolition of immunity from injury or damages resulting from nonfeasance greatly increased the difficulty for such authorities to perform their functions [10.3-10.4].  

There was also the recognition that certain decisions resulted from the consideration of the competing interests of various parties. The Panel appreciated that political or social policy may influence such considerations [10.9-10]. It was then acknowledged that the courts were unsuited to adjudicate on such matters [10.11].  

It was further noted that decisions made by public authorities for wider public interests might occasionally result in unfavourable repercussions for individuals and groups [10.15].

Moreover, the Panel acknowledged that statutory authorities were unable to reduce their exposure to liability claims as they were legally bound to perform their duties and functions for public service [10.17-18].

The Panel concluded that a policy defence on the basis of these considerations was warranted in certain situations [10.19].

Recommendations: Formulation of the policy defence

The Panel believed that public authorities should have equal liability for responsibilities common to all [10.20-21]. It did, however, recommend that the defence be made available for the authorities in cases of alleged negligence relating to performance or non-performance of statutory functions [10.22]. It justified the recommendation by suggesting that the defence will not apply in cases where the maintenance of a mandatory level of safety is required [10.20].

The definition of ‘public function’ was expressly left for the common law in hopes of preserving the dynamism of law [10.23-24].

The Panel expressly states that blanket immunity should not be conferred on public authorities through an implementation of the policy defence. Rather, liability should only be imposed if the decision regarding the allocation of resources is judged to be unreasonable based on the actions of a reasonable authority [10.26]. The Panel states that the test follows the ‘Wednesbury unreasonableness’ test invented by Lord Greene MR in that case. The Panel further qualifies the test by stating that it does not grant immunity to the authority, but allows greater freedom in the performance of its function [10.27].

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This principle is embodied in Recommendation 39. The Panel explains that the policy defence should be available only when a conscious decision regarding the performance or non-performance of the function is made [10.28].

 

The Panel expressly restates that the policy defence does not confer immunity. It serves to restrict the ambit of disputes about policy, thereby reducing the number of claims [10.30].

Implementation of the policy defence

Such a defence is not new, it was rejected by the High Court in Brodie. Thus, the States were reintroducing the defence through legislation. This allowed the statutory ...

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