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Acts Binding the Crown: Procedures for Cabinet Decision

CO (02) 4

13 March 2002

Acts Binding the Crown: Procedures for Cabinet Decision

Summary of key points

1Cabinet has agreed that it will make explicit decisions on whether draft Bills should include a provision stating that the Act will bind the Crown. This decision will be made at the policy development stage. The practical effect of this decision is that:

1.1preliminary consideration needs to be given to this issue at the time that a priority is sought on the legislation programme;

1.2papers submitted to Cabinet committees on the policy for the legislation need to address in detail the matter of whether the legislation should bind the Crown;

1.3Bills being considered by the Cabinet Legislation Committee for approval for introduction need to indicate whether the Bill states that the Act will bind the Crown.

2This circular provides guidance for departments in implementing this Cabinet decision.

3The general principle is that the Crown should be bound by Acts unless the application of a particular Act to the Crown would impair the efficient functioning of the Government.

4The requirements in this circular come into effect from 1 April 2002, with a transitional period for Bills implementing policy decisions taken before the issuing of this circular [paragraph 36 refers].

Background

5Section 27 of the Interpretation Act 1999 provides that -
"No enactment binds the Crown unless the enactment expressly provides that the Crown is bound by the enacment."

6In July 2001 Cabinet agreed that all Cabinet papers seeking policy approval for proposals that will result in Government Bills, must address the issue of whether the proposed Act is to bind the Crown.

7This decision followed consideration of a report from the Ministry of Justice on whether the presumption quoted in paragraph 5 above should be reversed. The report concluded that it would not be desirable for the law to be changed so that all enactments bind the Crown unless provided otherwise. It recommended instead that Cabinet processes be amended to require that all Cabinet papers seeking policy approval for matters that will result in Government Bills must address the issue and recommend to Cabinet whether the legislation should bind the Crown. This was also the conclusion of a Law Commission report of December 2000, To Bind Their Kings in Chains - An Advisory Report to the Ministry of Justice.

Seeking a Cabinet decision

8Whether a draft Bill should include a provision that the Act should bind the Crown, is a decision that should be made explicitly by Cabinet. At the same time that policy decisions on the content of a Bill are being made by a Cabinet committee, a decision must be made on whether the Bill will state that the Crown will be bound by the proposed Act. All policy papers dealing with proposed legislation must therefore address this issue and contain an appropriate recommendation.

9It is the responsibility of the department leading the policy development to assess whether it would be appropriate for the Crown to be bound by a proposed Act.

10In carrying out this assessment, the lead department should consult other interested departments, including the department that will be responsible for administering the Act (in cases where this is a different organisation). Advice can also be sought from the Ministry of Justice [paragraph 38 refers].

11Paragraphs 12-25 below provide some guidance to help with the assessment.

Guidance on whether an Act should bind the Crown

Types of Act

12For the purposes of determining whether new or substantially revised Acts should bind the Crown, most Acts may be grouped into three general categories:

12.1Acts which set out powers and obligations of the Crown(eg the Police Act 1958, the Public Finance Act 1989 and the Crown Proceedings Act 1950). Such Acts clearly bind the Crown. Their purpose would be defeated if they did not.

12.2Acts which contain provisions which might relate to the Crown in the same way as any other party, such as where the Crown engages in conduct as an employer, land owner, litigant, provider or recipient of goods (eg the Resource Management Act 1991). This is the category to which the most careful consideration will need to be made as to whether or not the Act should bind the Crown.

12.3Acts which apply to natural persons(eg the Property (Relationships) Act 1976 and Marriage Act 1955). Generally, such Acts should bind the Crown - failure to apply such Acts to the Crown may lead to unintended consequences on third parties.

Amendments to existing legislation

13Bills that are amending existing Acts will generally follow the position of the principal Act on whether the Act is binding on the Crown.

14However, if the proposed amendments are of a significant or substantive nature, officials should consider whether a review of the binding nature of the principal Act is warranted. If so, the requirements of this circular should be followed when the policy decisions for the amending Bill are being sought from Cabinet.

Factors to be taken into consideration

15Given the range and complexity of legislative matters that may directly or indirectly affect the Crown, it is not possible to create definitive rules as to when an Act should or should not bind the Crown. These are therefore intended for general guidance only.

16The general principle is that the Crown should be bound by Acts unless the application of a particular Act to the Crown would impair the efficient functioning of Government.

17In assessing whether the Crown should or should not be bound by Acts, it will be necessary to assess the following factors. Where factors exist favouring both including and excluding the Crown from the application of the Act, an overall assessment will need to be made, in the context of the above general principle.

18Factors favouring application of an Act to the Crown will include:

18.1the desirability of the Crown's being subject to the same rules and liabilities as general citizens;

18.2the possibility that excluding the Crown from the application of an Act will create unfair benefit to the Crown and/or adversely affect third parties.

19Factors favouring exclusion of the Crown from the application of an Act include:

19.1whether any operations or activities relating to the special functions of the Government would be hindered by making the Crown subject to the Act (such activities may be differentiated from those in which the Government operates in the same way as a private person);

19.2whether applying the Act to the Crown would, in light of the special role of the Crown, create burdens on the Crown over and above those on private persons;

19.3the financial costs of making the Crown subject to the Act.

Partial binding of the Crown

20It is possible for an Act to bind the Crown only in part or only for limited and specified circumstances. If it does not seem appropriate for the entire Act to bind the Crown, consideration should be given to whether it is necessary for the Crown to be excluded from the Act in its entirety, or whether the exclusion can be confined to particular areas of Crown operations, and/or particular parts of the Act.

21There are areas where particular consideration may need to be given as to whether or not to exclude the Crown or part of the Crown from the application of certain Acts or parts of Acts. Some examples are listed below. These are examples only. A general assessment of the relative advantages and disadvantages of applying the Act to the Crown needs to be made in respect of each individual Bill. The examples given of existing Acts should be used for general guidance only, bearing in mind that there has to date been no standard process governing whether or not to apply legislation to the Crown:

21.1Armed forces or enforcement officers:where application of an Act to the armed forces or other enforcement officers would unreasonably interfere with the operations of those officers. Such exclusions would ensure that the operations of the armed forces and enforcement officers are not impeded by the relevant statutory regimes, and recognise the overriding importance of those functions. The relevant statutory regimes would often be regulatory in nature.

For example, the Hazardous Substances and New Organisms Act 1996 excludes from the operation of the Act, hazardous substances controlled by the Minister of Defence; the Dog Control Act 1996 excludes from the operation of the Act, dogs kept by, among other agencies, the Police, Customs, and the Ministry of Defence or Defence Force; the Arms Act 1983 excludes from the laws regulating the use of firearms, the Police and armed forces.

21.2National security:where the application of the Act to the Crown would impede its functions in respect of national security. For example, the Building Act 1991 does not apply to Crown buildings where the building is necessary for reasons of national security. Similarly, the restrictions on use of land in the Resource Management Act 1991 do not apply if the use of land is necessary for national security.

21.3Taxation:in certain circumstances it may be appropriate to exempt the Crown from taxation laws. For example, the Crown is not subject to the Income Tax Act 1994 in its entirety, and Crown land is generally exempt from the payment of rates under the Rating Powers Act 1988. Note though that the Crown is subject to the Goods and Services Tax Act 1985 and a number of the minor Inland Revenue Acts.

21.4Crown Land:as the Crown is in a special position as the biggest landowner in the country, and its landholdings and buildings often have special functions, particular consideration may need to be given to Acts affecting Crown land. For example, the Fencing Act 1978 does not apply to certain types of Crown lands; and the restrictions on the use of land in the Resource Management Act 1991 do not apply to certain land administered under the Conservation Act 1987.

21.5Crown as litigant:there may be cause in the public interest to exempt the Crown from the application of certain Acts where it acts as a party to litigation. For example, the Limitation Act 1950 does not apply to the Crown for certain proceedings, including for the recovery of tax.

Crown criminal liability

22Historically, the Crown has not been liable to criminal prosecution. For the Crown to be criminally liable, the courts have held that it is necessary for the Act to include very clear wording to that effect. It is not enough for the Act to be generally stated as binding the Crown.

23A general assessment will need to be made as to whether it is in the public interest for the Crown to be criminally liable under the proposed Act. Factors that would weigh in such a decision would include:

23.1whether the criminal act is the type of act that could be committed by the Crown;

23.2the effect criminal liability would have on the accountability of the Crown;

23.3whether fear of criminal liability would have negative consequences to the operations of particular Crown agencies;

23.4whether criminal liability is necessary to deter the Crown from acting criminally or whether there other incentives that may be used to make the Crown comply with the law;

23.5whether there are alternatives to prosecution that may be more appropriate (such as censure in Parliament, and declaration of illegality by the High Court);

23.6fiscal implications of Crown criminal liability (noting that fines will ultimately be met by the tax payer).

24If it is recommended to Cabinet that the Crown should be criminally liable under a proposed Act, the following matters will need to be addressed in the Cabinet paper:

24.1who is the Crown for the purposes of the prosecution;

24.2who should defend and prosecute the Crown;

24.3what procedures should apply;

24.4what penalties should be imposed on the Crown upon successful conviction and whether they would need to differ from general penalties in the Act.

25The Crown Organisations (Criminal Liability) Bill is currently before Parliament. Once it becomes law, officials should consider it when proposing whether the Crown should be criminally liable under a particular Act. This Bill, as currently drafted, imposes criminal liability on the Crown under the Building Act 1991 and Health and Safety in Employment Act 1992, and provides an example of how the relevant issues may be addressed.

Inclusion in a Cabinet committee policy paper

26As indicated above, a decision on whether a draft Bill should include a provision that the Act will bind the Crown should be made by Cabinet at the time policy decisions are made.

27Cabinet committee papers seeking policy decisions relating to a proposed Bill must include in the section Legislative Implications, a proposal on whether the Act should or should not bind the Crown, and provide enough information to support that proposal.

28If it is considered that there are no good reasons why the Crown should not be bound by the Act, the paper should state this, and the paper should recommend that the Act bind the Crown. If this will have potential implications, including financial implications, for the Crown or particular departments, these should be discussed. The details of any financial implications should be set out under the financial implications heading in the paper in the usual way. The usual departmental consultation must occur, and departmental comment should be included, if applicable.

29If it is recommended that the Act or part of the Act not be binding, then the paper must give reasons and any implications this will have for the Government. The usual departmental consultation must occur, and departmental comment should be included, if applicable.

30In both cases, as for all proposals, there must be enough information for the Cabinet committee to make an informed decision.

Inclusion in the recommendations

31An explicit decision is required by Cabinet, and therefore this issue must be included in the recommendations to the Cabinet committee. The recommendations should seek a decision, and it may also be appropriate to have the committee note the reasons for the decision, and its implications.

32Sample wording for the recommendations is:

  1. note that it is/is not appropriate for the [name of Act] to be binding on the Crown because [refer to the reasons];
  2. agree that the [name of Bill] should/should not include a provision stating that the Act will bind the Crown;
  3. note that the implications for government departments of the Act binding the Crown will be [this may cover such things as financial liability, criminal liability etc. If significant, other decisions may be required as well].

Inclusion in the Bill

33The Interpretation Act 1999 provides that no Act binds the Crown unless the Act expressly provides that the Crown is bound by the Act. Therefore, if the Cabinet decides that it is appropriate for the proposed Act to be binding on the Crown, this must be reflected in the drafting of the Bill.

Seeking a priority in the legislation programme

34This issue should also be canvassed when a priority is sought for the Bill in the annual legislation programme. Preliminary consideration must be given at that stage to whether the Act should bind the Crown. Accordingly, the standard format for papers seeking a priority has been revised to include this section. [See paragraph 7.4of the Step by Step Guide.]

Seeking approval for the introduction of the Bill

35When a Bill is ready for introduction to the House, it must first be approved by the Cabinet Legislation Committee (LEG). The standard format for papers seeking approval for the introduction of a Bill has been revised so that it must now state the previously made policy decision on whether the Bill should contain a provision that the Act will bind the Crown. [See https://cabguide.cabinetoffice.govt.nz/format-papers-seeking-approval-introduce-bill.]

Commencement of regime

36The requirements in this circular are to come into effect transitionally:

36.1all Cabinet papers submitted from 1 April 2002 seeking policy decisions which will be implemented by an Act, must now also seek a decision on whether the proposed Act should bind the Crown. Therefore the full requirements set out above will apply to the policy paper and the resulting Bill;

36.2LEG papers seeking approval for the introduction of Bills for which the policy was approved before 1 April 2002, should state that no Cabinet decision was made on whether the proposed Act should bind the Crown, as the policy was developed before the introduction of this requirement. The LEG paper should also state whether the Bill as drafted does/does not bind the Crown. Of course, the responsible Minister may seek a Cabinet decision on this issue at this time, if he/she wishes, although it is not a requirement.

Members' Bills

37When Cabinet is considering whether to support a Member's Bill, it may be appropriate for it to consider, if it does receive support, whether the Act should bind the Crown. Officials may wish to raise this issue with the responsible Minister if they become involved in the deliberations.

Further information

38For further advice you can contact:

38.1the Constitutional Team of the Ministry of Justice (ph 494-9700);

38.2the relevant Cabinet committee secretary in the Cabinet Office (ph 471-9743), for advice on the process for including in a policy paper the issue of whether an Act should be binding on the Crown;

38.3the Legislation Coordinator in the Cabinet Office (ph 471-9643) or the Secretary of the Cabinet Legislation Committee in the Cabinet Office (ph 471-9148), for advice on the matters covered in the two annexes.


Marie Shroff
Secretary of the Cabinet

Annex 1

Request for a Bill to be included in the legislation programme

The following format must be used for all papers to the Cabinet Legislation Committee (LEG) requesting a priority in the legislation programme. The form indicates the headings to be used. Each heading must appear in the paper. Write “not applicable” if the heading is not relevant to the proposed legislation. Details should be kept brief but should be sufficient to give readers not acquainted with the issues a clear idea of what is involved.

This format supersedes that in Chapter 7 of the Cabinet Office Step by Step Guide (SBSG). Chapter 7 provides further information on the legislation programme. The CabGuide, at https://cabguide.cabinetoffice.govt.nz/format-papers-seeking-approval-introduce-bill has been updated to incorporate this change.

In Confidence

Office of the Minister of [xx]

Cabinet Legislation Committee

Government Examples Bill: Request for Priority in the 2002 Legislation Programme

Summary information

  1. Give the following details about the bid for legislation:
      1. portfolio of sponsoring Minister;
      2. department responsible (include departmental contact name and phone number);
      3. title of proposed Bill (or Bill in which these legislative changes are to be included);
      4. proposed ranking of Bill within the bids from this portfolio; and
      5. estimated number of clauses in the Bill and whether of low, medium or high complexity.
  1. The summary information is required for bids prepared in response to the annual request [see chapter 7 of the SBSG]. For papers to LEG seeking a priority outside this process, the “summary information” section should be replaced with a “proposal” section which succinctly states what Ministers are being asked to decide.

Policy

  1. Briefly summarise the policy to be implemented by the Bill. (Give references and dates of relevant Cabinet and Cabinet committee decisions.)
  2. Indicate any aspects of the Bill that are likely to be contentious.
  3. Note any policy issues that have not yet been agreed and state the dates by which these are expected to be resolved by Cabinet.

Need for legislation

  1. Why is legislative action needed to implement the policy? (Please attach or refer to legal advice.)
  2. Indicate the suggested priority. Is it essential that legislation be enacted in the period under consideration, or simply desirable? If it is essential, explain why.
  3. If the proposal is for amending legislation, has the principal Act been amended in the last year or will it be amended in the near future? If so, explain why this amendment is needed now.

Compliance

  1. Indicate whether the Bill complies with each of the following, with reasons if the Bill does not comply (list each sub-heading):
    1. principles of the Treaty of Waitangi;
    2. rights and freedoms contained in the New Zealand Bill of Rights Act 1990 or the Human Rights Act 1993;
    3. principles and guidelines set out in the Privacy Act 1993 (if the legislation raises privacy issues, indicate whether or not the Privacy Commissioner agrees that it complies with all relevant principles);
    4. relevant international standards and obligations; and
    5. LAC Guidelines: Guidelines on Process and Content of Legislation, a publication by the Legislation Advisory Committee.


Binding on the Crown

  1. At the policy development stage a decision by a Cabinet committee will be required on whether the Bill should include a provision that the Act should be binding on the Crown. Advise, if possible, what is likely to be recommended. [See Cabinet Office circular CO (02) 4 for details.]

Consultation

  1. Summarise the consultation on policy issues that has already taken place or will be needed with each of the following groups, as well as the results of any consultation that has already taken place:
      1. relevant government departments or other public bodies; and
      2. relevant private sector organisations and public consultation processes.
  1. If consultation on policy issues has not yet been completed, indicate the date by which it is expected to be completed.
  2. Summarise the consultation with government caucus(es) and other parties represented in Parliament that has already taken place or will be needed.


Associated regulations

  1. Are regulations likely to be needed within 12 months of the Bill being enacted to give effect to the provisions in the Bill? If so, summarise briefly the regulations that will be needed, their likely timing (taking into account the 28 day rule [see http://cabguide.cabinetoffice.govt.nz/context/definitions/28-day-rule]), and the likely size of the drafting task involved to develop them.


Timeline

    1. Summarise the proposed timing for the legislation in reverse chronological order, as follows. Provide Cabinet or committee references where any deadlines have been established by Cabinet or committee decision:
    2. requested enactment date;
    3. date of report back from select committee (as a rule of thumb, a minimum of four months should be allowed for the select committee process – please give reasons if a period of less than six months is proposed);
    4. requested introduction date;
    5. dates on which the Bill will be before the Cabinet Legislation Committee and before Cabinet for approval for introduction;
    6. date by which final drafting instructions will be sent to the Parliamentary Counsel Office or other drafter (the period between submission of instructions and approval for introduction provides for drafting and consultation on the draft Bill – relate your estimate for this phase to the expected length and complexity of the Bill); and
    7. date by which final policy approvals will be obtained from Cabinet.


Recommendations

  1. I recommend that the committee:
    1. note that the [title] Bill will [briefly summarise the policy to be implemented by the Bill];
    2. approve the inclusion of the [title] Bill in the [2002] legislation programme, with a priority [xx] (give priority number and brief description of priority [see http://cabguide.cabinetoffice.govt.nz/procedures/legislation/introducing-a-bill]);
    3. note that drafting instructions will be provided to the Parliamentary Counsel Office by [date];
    4. note that the Bill should be introduced no later than [date]; and
    5. note that the Bill should be passed no later than [date].

[signature of Minister]

[title of Ministers]