10.	Public Authorities
Term of Reference
3	In conducting this inquiry, the Panel must:
(a)	address the principles applied in negligence to limit the liability of public authorities.
The problem addressed
10.1	The problem to which this Chapter is primarily addressed can be illustrated by reference to two types of cases.
Allocating resources
10.2	The first type of case is where, for instance, a public authority (such as a highway or national park authority) is the target of a claim for personal injury or death based on alleged failure to take care to make a place, over which the authority has control, reasonably safe for users (such as motorists or picnickers).
10.3	The problem arises from the fact that the authority will have a limited budget at its disposal for the performance of its functions, and will have various calls on that budget. For this reason, it may want to argue, in answer to a negligence claim, that it made conscious, carefully considered decisions about the allocation of the budget between its various functions, and that without allocating more to the function in question, it could not have made the relevant place any safer than it was. On the basis of our consultations, the Panel understands that there is a widespread view amongst local councils (in particular) that the law of negligence is being applied in such a way as to allow decisions, made in good faith, about the allocation of scarce resources between competing activities, to provide the basis for findings of liability against public authorities; and that this is having a detrimental impact on the ability of public authorities to perform their functions in the public interest.
10.4	There is evidence to suggest that this problem has become particularly acute since the decision of the High Court in Brodie v Singleton Shire Council where the High Court abolished the rule that a highway authority is not liable for injury or damage resulting from ‘non‑feasance’ (as opposed to ‘misfeasance’) in the performance of its functions as a highway authority. 
10.5	Submissions have been made to the Panel to the effect that the decision in Brodie should be reversed and the non‑feasance rule restored. The Panel, however, is not persuaded that this should be done. The judgments of the majority in Brodie provide compelling justification for the abolition of the non‑feasance rule. In particular, the rule was subject to many qualifications which were difficult to apply or to justify in a principled way. 
10.6	The Panel, however, is satisfied that the decision in Brodie has given rise to some undesirable consequences that need to be addressed.  According to Brodie, where the state of a highway poses a foreseeable risk of harm to road users, the public authority with power to remove the danger is obliged to take reasonable steps to do so. The duty to take care arises not only when the authority knows of the danger but also when, if it had taken reasonable care to inspect the highway, it would have known of the danger.
10.7	In determining whether the public authority took reasonable steps to remove the risk, regard must be had to ‘competing or conflicting responsibilities or commitments of the authority’. The result — particularly in some jurisdictions and, potentially, in all — has been that increasing amounts of time are spent in the course of trials considering whether the authority’s conduct in relation to the risk in question was reasonable given the other demands on the resources available to the authority. 
10.8	For example, a court may be called upon to decide whether it was reasonable for the defendant authority to allocate its resources in such a way that it could not afford to put in place a programme of highway inspection that would have brought the risk in question to its attention. In some instances, individual councillors may be called to testify why they voted for a budget that allocated funds in such a way — why, for instance, more was not voted for roads at the expense of nursery schools. 

Making social policy
10.9	An example of the second type of case, that illustrates the problem to which this Chapter is primarily addressed is based on the decision of the English House of Lords in Home Office v Dorset Yacht Co. Suppose a prisoner escapes from an open, low‑security prison and, in the course of the escape, causes damage to nearby property. Suppose further that the property owner sues the prison authority for negligence on the basis that the authority’s practice of building and maintaining open facilities was negligent. In answer to that claim, the prison authority might want to argue that its open‑prison programme was based on the demands of political and social policy, and was the result of a conscious and good‑faith weighing by the authority of the competing interests of the various groups affected by the programme.
10.10	Or suppose that an inner‑city resident sues an air‑traffic control authority, alleging that as a result of its negligent decision about the location of an airport approach flight‑path, she suffered hearing impairment caused by aircraft noise. The authority might want to argue that its decision about where to locate the flight‑path was based on social and political considerations, and on a conscious and good‑faith assessment of the competing interests of the various groups affected by the decision.
10.11	In the view of the Panel, the canvassing in a negligence action of the sorts of issues raised in these examples is undesirable in at least three respects. First, courts are not well qualified, either in terms of expertise or procedure, to adjudicate upon the reasonableness of decisions that are essentially political in nature. Secondly, courts are inappropriate bodies to consider the reasonableness of such decisions because they are neither politically representative nor politically responsible. Thirdly, proper consideration of the reasonableness of such decisions may be very expensive and time‑consuming.
A policy defence
10.12	As a general rule, it is no answer to a negligence claim for a defendant to say that its failure to remove the risk in question was based on ‘financial, economic, political or social factors or constraints’. If, on the basis of the negligence calculus (see paragraph 7.8), it can be said that the defendant ought to have taken precautions to avoid the materialisation of the risk, it is no answer for the defendant to say that financial, economic, political or social considerations justified its decision not to do so.
10.13	The question that arises in the types of case illustrated by our examples is whether and when a defendant should be allowed to answer a negligence claim by pleading that although it failed to take reasonable care, this was the result of a conscious and considered decision, made in good faith, on the basis of financial, economic, political or social considerations. (In this Chapter we will refer to such a plea as ‘the policy defence’.)
10.14	This question raises three issues. First, are there arguments of principle that could justify a rule allowing a defendant to plead the policy defence? If so, (secondly), when should such a defence be available? And thirdly, what effect should such a defence have on the liability of the defendant? 
An argument of principle for the policy defence
10.15	Pursuing the illustration discussed in paragraphs 10.2‑10.8, an argument for allowing a highway or park authority to plead the policy defence could be based on the proposition that while the authority owes a duty of care to users of public roads and parks, in performing that duty it has to balance the interests of individual road users against the interests of the wider public to whom, as a public authority, it is politically responsible. In addition to weighing the interests of individuals against those of the public, the authority may also have to weigh various interests of individuals and groups in deciding how to spend its budget. For instance, an authority may be responsible not only for the safety of road users, but also for aspects of the health and education of the residents of its area. In deciding how much to spend on road safety, health services and education respectively, the authority must necessarily make decisions that may have adverse consequences for individuals and groups, even though they may seem perfectly justifiable when viewed from a wider public‑interest perspective.
10.16	As noted in 10.12, it is generally no answer to a negligence claim to plead lack of resources (for instance). There are two recognised exceptions to this principle. One is where a trespasser makes a negligence claim against an occupier of land, and the other is where a claim is made in respect of alleged failure by an occupier of land to take care to prevent a natural hazard on the land causing harm to visitors or neighbours. The factor that these two types of case share is the fact that in an important sense, the landowner is not responsible for the dangerous situation — in the former case because the trespasser (by definition) enters the land without the consent of the occupier, and in the second case because the hazard (in the nature of the case) was not created by the occupier. In all other cases, however, although the cost of precautions is relevant to determining whether the defendant ought to have taken them, the defendant’s ability to pay that cost is not. These rules, allowing resources to be taken into account, operate for the benefit of occupiers of land who are public authorities as much as for the benefit of ordinary citizens.
10.17	This discussion supports the case for the policy defence because there is an important sense in which a public highway or park authority is not free to abandon its functions. Although it may, for instance, be permissible and feasible for a highway authority to close a section of road for a period, and it may be possible for a park authority temporarily or indefinitely to bar access to certain areas under its control, such authorities are not (in practice, at least) in a position to protect themselves from incurring liability for harm by withdrawing entirely from the activity of highway provision or park management. This is because such authorities have a responsibility to the public to perform the functions they have been given.
10.18	The same can be said of the other type of case we have considered. For instance, although a prison authority might be free to decide not to locate a prison in a particular place, or to adopt one prison design rather than another, or even to close or build no more prisons, the authority would not be free to avoid the risk that prisoners might escape and cause harm by withdrawing entirely from ‘the prison business’. Similarly, an air‑traffic control authority may have a great deal of discretion about how to exercise its regulatory functions; but it is certainly not free to avoid the risks attendant on the performance of those functions by refusing entirely to perform them.
10.19	In the Panel’s view, such arguments provide a sound basis for allowing the policy defence to be pleaded in certain situations in which it is not, and should not be, normally available in answer to a negligence claim.
When should the policy defence be available?
10.20	The next question concerns when the policy defence should be available. One possibility would be to provide that it should be available in any case in which the defendant to a claim for negligently‑caused personal injury or death is a ‘public authority’. The Panel does not support this option. Cases can easily be imagined in which the arguments developed in the previous section, in favour of the policy defence, would not apply to such a claim. For example, there seems no good reason why public authorities should not be responsible for taking care that motor vehicles owned by them are safe, in precisely the same way and to precisely the same extent as a private individual would be. It should not be open to a public authority — any more than it would be open to a private individual — to say that it should not be held negligent because its failure to maintain its vehicles in a safe condition was the result of a conscious decision based on financial, economic, political or social considerations. 
10.21	Much the same objection would apply to a provision that the policy defence should be available in answer to any claim ‘for negligence in the performance of a statutory function’. Suppose, for example, that an employee of a public authority causes a road accident by driving negligently in the course of performing some statutory function of the authority. The mere fact that the accident occurred in the course of the performance of a statutory function should not displace the operation of the ordinary rules of liability and allow the policy defence to be pleaded.
10.22	The argument in paragraphs 10.20‑10.21 suggests that the cases in which the policy defence should be available are those in which the alleged negligence consisted of the performance or non‑performance of a ‘public function’ — that is, a function that required the defendant to balance the interests of individuals against a wider public interest, or to take account of competing demands on its resources. It is extremely important to understand that whether any particular function is ‘public’ in this sense is not a matter of fact or observation but a value judgment which ultimately a court must make. In other words, functions are not public or non‑public by their very nature, but because they are treated as such. So, for instance, although it would be possible for a public authority to decide to neglect the maintenance of its fleet of motor vehicles in order to free up resources for some other activity, or for some other political or social reason, maintenance of motor vehicles would not be considered an appropriate activity to be treated in this way. It would, therefore, normally not be appropriate to treat maintenance of a public authority’s vehicle fleet as a public function. 
10.23	Because the decision whether a function is public or not involves a value‑judgment, the Panel considers that it would not be appropriate for it to propose any definition of ‘public function’. This should be left for common law development. 
10.24	An important corollary of adopting performance of a ‘public function’ as the criterion for the availability of the policy defence is that a defendant may be able to plead the defence even if it is not a public authority, provided that the alleged negligence arose out of the performance or non‑performance of a public function. This is an important point in the context of the corporatisation and outsourcing of the performance of governmental functions, and of regimes of industry and professional self‑regulation. A result of such practices is that bodies other than public authorities, as this term is generally understood, may perform public functions.
The effect of the policy defence
10.25	Our proposal is, then, that in a claim for negligently‑caused personal injury or death where the alleged negligence arises out of the exercise or non‑exercise of a public function, the functionary (that is, the person or body performing the public function) should be able to plead the policy defence. This raises the question of what the effect of that defence would be.
10.26	It has sometimes been suggested that certain policy decisions (such as ‘quasi‑legislative’ or ‘regulatory’ decisions) are ‘non‑justiciable’. This means that the decision cannot be challenged in a court or provide the basis for legal liability. The Panel’s firm view is that the policy defence should not operate in this way to give immunity from liability. Rather, we think that Australian law should follow the lead of English law in this respect (see Stovin v Wise) by providing that in a claim for negligently‑caused personal injury or death against a public functionary, where the alleged negligence consists of the exercise or non‑exercise of a public function, and the public functionary pleads that the failure to take precautions to avoid the relevant risk was the result of a decision about the allocation of scarce resources or was based on some other political or social consideration, liability can be imposed only if the decision was so unreasonable that no reasonable authority in the defendant’s position could have made it.
10.27	This test of ‘unreasonableness’ is taken from public law where it is known as the test of ‘Wednesbury unreasonableness’ after the case in which Lord Greene MR invented it. The effect of the test is to lower the standard of care. It does not provide the defendant with an immunity against liability, but it does give the defendant more leeway for choice in deciding how to exercise its functions than would the normal definition of negligence (in terms of reasonable care).
Recommendation 39  	
The Proposed Act should embody the following principle:
In 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. 
10.28	It should be noted that under Recommendation 39, the policy defence is available only in cases where a public functionary has made a (policy) decision about the performance or non‑performance of a public function. The defence would not be available in a case where the functionary did not consider whether or not to perform the function. 
10.29	For the sake of clarity, it should be stated that the term ‘public functionary’ covers both corporate bodies and natural persons.
Recommendation 40  	
In the Proposed Act, the term ‘public functionary’ should be defined to cover both corporate bodies and natural persons.
10.30	As noted in 10.28, the effect of the provision in Recommendation 39 would not be to withdraw the issue of policy entirely from the court’s consideration. It would still be open for the court to adjudicate upon whether the policy decision was so unreasonable that no reasonable functionary could have made it. But it will significantly restrict the ambit of disputes about policy issues because the court will not be required to express a view as to whether a particular decision was negligent in the sense in which this word is normally used in negligence law. The question will merely be whether the decision was one that could not have been made by any reasonable public authority in the position of the defendant. In principle at least, this is a far more stringent test for the plaintiff to satisfy. 
10.31	An example will illustrate the way the principles contained in Recommendation 39 are intended to operate. Assume that a public authority is sued for negligently failing to repair a pothole that caused a motor accident in which the plaintiff was injured. Assume that the authority leads evidence to the effect that:
(a)	it did not know about the pothole, and hence did not repair it;
(b)	it maintains 10,000 kilometres of roads, and inspects its roads on a six‑monthly cycle;
(c)	given the budget allocation for roads, approved by a resolution of councillors, it could not afford a more frequent inspection cycle; and 
(d)	the pothole developed after the last inspection.
10.32	On these facts, it would not be open to the court to find that the budget decision constituted negligent conduct on the part of the defendant, unless the decision was one that no reasonable public authority in the position of the defendant could have made. The inquiry into this issue is likely to be relatively brief. If the court decided that the decision in question was not so unreasonable that no reasonable public functionary could have made it, the plaintiff’s claim would probably fail.
10.33	Assume, however, that the plaintiff establishes that three months before the accident, the defendant was informed that the pothole was dangerous and should be repaired. Assume, further, that the defendant decided to do nothing, or inspected the pothole and wrongly decided that it was not dangerous. In such circumstances, a court would be unlikely to hold that the non‑repair was the result of a decision based on financial, economic, political or social factors or constraints. The defendant would then not be able to rely on the policy defence, and the plaintiff’s claim would be decided according to ordinary principles of negligence. The question would be whether, in failing to repair the pothole, the defendant had exercised due care according to the law of negligence. On the posited facts, the plaintiff would be likely to succeed. In addition, the plaintiff would be likely to succeed on the alternative ground that the defendant’s conduct in ignoring a known danger was unreasonable in the strong Wednesbury sense because, in the case posited, the cost of taking precautions would be relatively very small.
Compatibility
10.34	Most public functions are conferred by statute. It follows that in most cases where the policy defence will be available, the alleged negligence will consist of the performance or non‑performance of a statutory function. 
10.35	In such cases in English law, the Wednesbury‑unreasonableness approach is used in combination with a rule that an action for damages for negligence in the performance or non‑performance of a statutory function will be available only if, in the opinion of the court, allowing such an action would be compatible with the provisions and policy of the statute.
10.36	This idea — that an action for breach of a common law duty of care committed in the performance or non‑performance of a statutory function will be available only if allowing such an action would be compatible with the provisions and policy of the statute — also played an important part in the reasoning in the recent High Court decisions of Sullivan v Moody & Ors and Tame v New South Wales. In the former case, for instance, it was held that imposing a common law duty on a school authority to take care in conducting a disciplinary investigation about the conduct of a head teacher would be incompatible with the authority’s statutory obligations in conducting the inquiry. 
10.37	The Panel recommends that the Proposed Act should contain an express statement of the compatibility principle. 
Recommendation 41  	
The Proposed Act should embody the following principle:
A public functionary can be liable for damages for personal injury or death caused by the negligent exercise or non‑exercise of a statutory public function only if the provisions and policy of the relevant statute are compatible with the existence of such liability.
10.38	The effect of this principle is to enable a court to deny liability for the exercise or non‑exercise of a statutory function regardless of whether the relevant decision was negligent or even unreasonable in the Wednesbury sense. In other words, unlike the policy defence, this provision affords complete immunity from liability. It will, thus, provide significant protection to public functionaries, especially in relation to decisions that raise complex issues of social policy, and the weighing and balancing of the interests of individuals against a wider social interest, or of competing interests of various individuals or social groups. These are the sorts of decisions that courts are most unwilling to review in a negligence action, and this principle provides a basis for declining to do so. 
10.39	The combined effect of Recommendations 39 and 41 is that courts will have two ways of affording a degree of protection from liability to defendants exercising statutory public functions. Depending on the facts of the case and the provisions of the relevant statute, the court may be able either to afford the defendant complete immunity from liability under the incompatibility principle, or uphold the policy defence. 
Breach of statutory duty
10.40	A consequential issue that needs to be considered in this context concerns liability for breach of statutory duty. There are various possible approaches to liability for damages for personal injury or death resulting from breach of a statutory duty. One approach (adopted widely in United States jurisdictions) is that breach of a statutory duty constitutes ‘negligence per se’. This means that for the purposes of a negligence claim, breach of a statutory duty is conclusively treated as negligent conduct regardless of whether the statutory duty is one to take reasonable care. A second approach, adopted by Canadian law, is to treat breach of statutory duty as evidence of negligence, but never as anything more than evidence of negligence. 
10.41	A third approach is that adopted by Australian (and English) law. Under this approach, breach of statutory duty may be adduced as evidence of negligence in a claim based on breach of a non‑statutory (that is, common law) duty of care. However, breach of a statutory duty may, in certain cases, alternatively and independently give rise to a claim for damages based directly on the breach of the statute. Such a claim is not strictly a claim for negligence and so would not fall within the terms of Recommendation 2 unless (at least) the statutory duty were formulated as a duty to take reasonable care.
10.42	In principle, whether a claim for damages for personal injury or death can be based directly on the breach of a statutory duty depends on the ‘intention of the legislature’ as expressed or (necessarily) implied in the relevant statute. However, the relevant legislation typically makes no provision, either expressly or impliedly, about the availability of an action for damages for breach of its provisions. In that case, it has been accepted by courts for a very long time that the decision whether or not to allow a claim for damages to be based directly on breach of a statute is one of policy for the court to make in the light of the relevant provisions and total scheme of the statute, and of what appear to be its purposes. In effect, an independent action for breach of statutory duty will be allowed only if, in the opinion of the court, doing so would be compatible with the terms and purposes of the statute.
10.43	There are various principles of statutory interpretation that the courts use in deciding whether to allow an independent action for breach of statutory duty. But it is widely accepted that these rules and principles provide very little guidance in individual cases. This is partly because, for every principle that points in favour of allowing an action, there is typically a counter‑principle that points in the opposite direction. In practice, the only type of statutory duties that are held, with any consistency or regularity, to give rise to an independent action for damages are those concerned with occupational health and safety. 
10.44	Although the law in this area is widely considered to be in an unsatisfactory state, this is not a matter that has been specifically raised in the Panel’s Terms of Reference, and we have no reason to think that there is significant community pressure to reform the law. However, there is one consideration that leads the Panel to think that there may be a case for change. If Recommendation 39 is accepted and implemented, it may encourage plaintiffs to seek to evade its effect by making an independent claim for breach of statutory duty against a public functionary, and arguing that the claim does not fall within the scope of the provision envisaged by Recommendation 2 and, therefore, that the policy defence is not available to the public functionary. Even if such an argument would be unlikely to succeed, it seems to the Panel desirable to block this possibility for evasion of the provision in Recommendation 39.
10.45	A way of doing this would be to provide that in the absence of express provision to the contrary in the relevant statute, any claim for damages for negligently‑caused personal injury or death made in the form of a claim for breach of a statutory duty would be subject to the provisions of the Proposed Act. The Panel recommends the enactment of such a provision.
Recommendation 42  	

The Proposed Act should embody the following principle:
In the absence of express provision to the contrary in the relevant statute, any action for damages for negligently‑caused personal injury or death made in the form of a claim for breach of statutory duty is subject to the provisions of this Act.