Insurance & Reinsurance
Government liability in negligence is a vexed issue in Australia. At common law, special rules have hindered the success of negligence claims against public authorities. The matter is complicated further when more recently devised statutory provisions are considered.
The traditional approach was established by the High Court of Australia in Sullivan v Moody(1) where the Court identified the types of relevant considerations for or against the imposition of a duty of care. This approach was adhered to in Graham Barclay Oysters Pty Ltd v Ryan(2) in the context of a statutory authority. Gummow and Hayne JJ (Gaudron agreeing) said of a claim against a statutory authority:
An evaluation of whether a relationship between a statutory authority and a class of persons imports a common law duty of care is necessarily a multifaceted inquiry. Each of the salient features of the relationship must be considered. The focus of analysis is the relevant legislation and the positions occupied by the parties on the facts as found at trial. It ordinarily will be necessary to consider the degree and nature of control exercised by the authority over the risk of harm that eventuated; the degree of vulnerability of those who depend on the proper exercise by the authority of its powers; and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute. In particular categories of cases, some features will be of increased significance.(3)
Gleeson CJ cautioned that although tortious liability of governments is to be assimilated to that of citizens, 'there are limits to the extent to which that is possible' in that the nature and responsibilities of governments are not the same as those of individuals.(4) Assessing the reasonableness or unreasonableness of government policy decisions would be an inappropriate subject for judicial consideration in establishing tortious liability of governments.(5)
The Ipp Review(6) in 2002 looked at how public authority liability in negligence should be treated, relevant especially in the context of concerns by local councils of the appearance of increasing potential liability at common law. It suggested a so-called 'policy defence' to a negligence claim brought against a public authority where:
… any claim for damages for personal injury or death arising out of negligent performance or non-performance of a public function, a policy decision (that is, a decision based substantially on financial, economic, political or social factors or constraints) cannot be used to support a finding that the defendant was negligent unless it was so unreasonable that no reasonable public functionary in the defendant’s position could have made it.(7)
This proposed defence lowers the standard of care required, making it harder for plaintiffs to establish liability but without rendering policy decisions of public authorities completely non-justiciable. All Australian jurisdictions, except South Australia and the Northern Territory, implemented legislation intending to give effect to the Ipp Review's recommendations. The legislation varies across jurisdictions however.
Although as a matter of legal principle, governmental immunity in negligence ought to be limited to 'core policy making functions',(8) the imposition of a duty of care can still theoretically be imposed on a public authority at common law by applying the salient features criteria to establish a novel duty.(9) Further, although a public authority would not be in breach of a common law duty by failing to exercise a discretionary power that is vested in it for the benefit of the general public, if such an authority has otherwise used its powers to intervene in a field of activity and increased the risk of harm to persons, it will ordinarily come under a duty of care.(10)
Recently in Roo Roofing Pty Ltd & Anor v The Commonwealth of Australia  VSC 331, the plaintiffs claimed damages for losses said to arise out of one aspect of the fiscal stimulus program implemented by the defendant early in 2009 in its response to the GFC, namely the Home Insulation Program. This program was terminated suddenly and prematurely. It was alleged that this caused the plaintiffs to suffer economic loss. The plaintiffs sought to establish a novel duty of care where, in the exercise of executive power in the sense identified in Pape v Commissioner of Taxation(11) (i.e. a non-statutory "nationhood" power), the defendant owed a duty of care to a class of persons within the community or a section of the community. Thus claims in negligence and negligent misrepresentation were among the causes of action in this case. Both of these failed.(12) There was no attempt to appeal.
In summary, it remains difficult to persuade a court to impose a duty of care on a government for the policy decisions it makes.
Traditionally, the requisite standard of care at common law entails considering the factors outlined by Mason J in Wyong Shire Council v Shirt. Such factors include the magnitude of the risk and the degree of probability of its occurrence, the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which a defendant may have.(13) The ultimate question is: what would have been a reasonable response to a foreseeable risk?
In the context of the COVID-19 pandemic and government liability in negligence, considerations might include the risk of harm to health and the economic loss incurred as consequence of putting in place systems to curtail the contagion. Considerations might also include the extent to which governments should have been prepared for the risks of a global pandemic and whether the government's response to the virus was excessive or inadequate when the pandemic eventually came about. Any assessment of the reasonableness of a government's response to the risks posed by a pandemic would not entail a retrospective assessment as to what could have been done to avoid the harm but what was reasonable at that time looking forward.(14)
Apart from any common law considerations is any relevant civil liability legislation. In Australia, state and territory legislation affect the operation of the common law by limiting circumstances in which damages are recoverable.(15) For example, there is public health emergency legislation in Western Australia providing that officers acting within the specific powers authorised by the legislation will not be liable for these actions.(16)
If such an action against a government is framed as a breach of a statutory duty, then a close analysis of the words of the statute would determine whether that duty has been breached, and in that, what standard of care was required. Such a cause of action would be a separate and distinct tort from that of common law negligence. In the context of the COVID-19 pandemic, the relevant legislation in Australia would likely include the Biosecurity Act 2015 (Cth) and the various public health and emergency statutes across the states and territories.
A significant case in the area of government liability in Australia is the Queensland Floods Class Action. The recent 2019 decision of the Supreme Court of New South Wales found the Queensland state government vicariously liable as the employer of a negligent flood engineer. Notably, the Queensland government was still found liable despite being effectively absolved by an earlier inquiry into the Government's handling of the floods.(17) This case is of particular relevance to some of the current proceedings underway in Victoria in response to the state government's alleged negligence in relation to the hotel quarantine program which caused a second wave of COVID-19 infections and deaths in that state.
A consumer rights group in Austria, the Consumer Protection Association (VSV), is suing the Austrian government on behalf of individuals who say they caught COVID-19 at a ski resort. Civil lawsuits were filed just recently on 23 September 2020. It is argued that the authorities reacted too slowly, mishandled the response and possibly gave in to pressure from the tourism sector not to act initially. The authorities in the province of Tyrol say they responded appropriately given what was known at the time. While the decision of any Austrian court will not be binding on an Australian court, the outcome will contribute to the growing body of judicial commentary on whether governments around the world are liable for the consequences of their policy decisions in response to the COVID-19 pandemic. The first case against the Austrian government on point is scheduled to commence on 17 September 2021.
There is academic literature from The Netherlands suggesting that the Dutch government's tardy response to the COVID-19 pandemic might make it liable under Dutch tort law.(18) By way of context in this particular jurisdiction, the Urgenda Climate Case against the Dutch Government in 2019 saw the Supreme Court of the Netherlands uphold a landmark decision which found the Dutch government liable for inaction to address the threat of climate change. The basis of the claim was that by failing to act the Dutch government is endangering the human rights of Dutch citizens set out by Dutch and EU law. It is yet to be seen what impact this decision will have in other jurisdictions in relation to government liability for inaction on issues such a climate change and other such existential threats.
As mentioned earlier, a number of lawsuits have been brought against the State of Victoria. In particular, in 5 Boroughs NY Pty Ltd v State of Victoria & Ors it is claimed that Ministers and Secretaries breached the duty of care they owed to the plaintiff and group members by failing to ensure that the departments for which they were responsible took all reasonable steps to ensure that the hotel quarantine guards were provided with appropriate personal protection equipment and were adequately trained in infection control techniques and protocols. The lawsuit claims that the breach of duty by each of the Ministers and Secretaries was a necessary condition of, or materially contributed to, the second wave and related restrictions. This will again test the concept of the availability of ministerial and governmental immunity and the standard of care required of governments for the decisions they make affecting members of the community in response to the COVID-19 pandemic.
(1) (2001) 207 CLR 562.
(2) (2002) 211 CLR 540.
(3) Ibid 597-598 .
(4) Ibid 556 .
(5) Ibid 557 .
(6) Panel of Eminent Persons, Review of the Law of Negligence: Final Report (2002).
(7) Ibid 159 [10.27] (recommendation 39). European Journal of Risk Regulation 2 April 2020 pages 1-7-,
(8) Crimmins v Stevedoring Industry Finance Committee (1999) 2000 CLR 1, 37 .
(9) Caltex Refineries (QLD) Pty Ltd v Stavar (2009) 75 NSWLR 649.
(10) Graham Barclay Oysters Pty Ltd v Ryan (2001) 207 CLR 562.
(11) (2009) 238 CLR 1.
(12) Roo Roofing Pty Ltd & Anor v The Commonwealth of Australia  VSC 331 .
(13) Wyong Shire Council v Shirt (1980) 146 CLR 30, 4748.
(14) New South Wales v Fahy (2007) 232 CLR 486, .
(15) See Civil Law (Wrongs) Act 2002 (ACT), Pt 4.2; Civil Liability Act 2002 (NSW), Pt 1A Div 2; Civil Liability Act 2003 (Qld), Ch 2; Civil Liability Act 1936 (SA), Pt 6 Div 3; Civil Liability Act 2002 (Tas), Pt 6; Wrongs Act 1958 (Vic), Pt X; Civil Liability Act 2002 (WA), ss 5A – 5P. The Personal Injuries (Liabilities and Damages) Act 2003 (NT) does not discuss duty of care or obvious risks.
(16) See, e.g. Public Health Act 2016 (WA) (Part 12 Public health emergencies).
(17) See Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 22)  NSWSC 1657.
(18) Lucas Bergkamp, 'State Liability for Failure to Control the COVID-19 Epidemic: International and Dutch Law' (2020) European Journal of Risk Regulation 1.