LAC Guidelines Chapter 11: Remedies

Introduction

Part 1: If remedies are required, which of the range of remedies is appropriate?

Part 2: Should an existing civil remedy be applied?

Part 3: Should new remedies or processes be established?

Part 4: Should a special limitation period be established?

Background

The question of how, or even whether, legislation is to be enforced is often central to the design of the legislation. Different methods of enforcing compliance with legal rules will be appropriate in different contexts, and it may be desirable to create new institutions or agencies to take part in or oversee that role. Examples of the use of different mechanisms for enforcement through subject specific institutions include family law, employment law and environmental law.

As part of the policy development process, policy advisers need to consider whether there needs to be any regulatory regime in order to achieve a desired policy objective, or only a limited regulatory regime. In some contexts there will be other alternatives to the creation of enforceable legal rules which achieve similar or better results in attaining desired policy objectives.

Choosing an appropriate method of enforcing a particular piece of legislation will not of itself ensure the success of the legislation. Voluntary compliance with the requirements of the legislation by those to whom it applies is the preferred outcome. Important factors in achieving a high level of voluntary compliance include the following:

• adequate prior consultation with affected persons:
• compliance of the legislation with important legal principles:
• ensuring that the legislation is fair and reasonable by commonly accepted standards:
• ensuring that the legislation is technically sound and able to be understood (undue complexity and inaccessibility present an obstacle to intelligent compliance with the law):
• well-targeted public education about the legislation.

Issues discussed

The following issues are discussed in this chapter:

Part 1: If remedies are required, which of the range of remedies is appropriate?

Part 2: Should an existing civil remedy be applied?

Part 3: Should new remedies or processes be established?

Part 4: Should a special limitation period be established?

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This Part discusses some issues to be considered in determining what remedies are to be invoked. This includes consideration of some prior questions such as whether enforceable legal rules are needed, whether the State has any role in the enforcement of the legislation, and if so what.

A range of mechanisms are available to achieve desired policy outcomes (see Chapter 1). New Zealand policymakers have traditionally concentrated on the use of legislation to enforce specific legal rules or standards, backed by the use of the criminal law or civil law remedies to ensure compliance. This model is sometimes described as "command control" regulation. There are a number of other regulatory instruments that can be used to achieve desired policy outcomes. These include—

• allowing self-regulation by occupations or trades (with or without legislative intervention);

• encouraging voluntary compliance by the public or specific groups with the desired standards of behaviour;

• public education programmes;

• information standards (eg, corporate reporting, product certification and information standards);

• provision for arbitration of disputes; and

• economic instruments (eg, the creation of property rights in some resources, charging systems, performance bonds, systems requiring deposits and refunds, and the removal of inappropriate economic incentives for misbehaviour).

Different forms of regulatory instruments have different strengths and weaknesses. For example, self-regulation or voluntary compliance regimes work best if it is in the self-interest of those subject to those regimes to comply.

Other important questions to be addressed are—

• does the State have any role to play in the enforcement of legal rules; and

• can the enforcement of the rules be left to the individual concerned?

Some areas of law involve a mixture of private and public enforcement of the relevant legal rules. For example—

• Employment law, where the parties to an employment contract are generally responsible themselves for enforcement, but the State labour inspectorate has certain responsibilities in relation to the enforcement of the Holidays Act 1981, the payment of minimum wages, and other compliance issues;

• trade practices law and securities law, where civil and criminal remedies are both available.

As a generalisation, the criminal law has little role to play if the enforcement of legal rules is to be left to the parties themselves. The primary question in these circumstances is whether existing civil law remedies are adequate, or whether new remedies or processes are needed.

Very careful attention should be given to the aptness of the particular remedy to the substantive rules being stated. The statute book presents a great variety of processes and remedies in which the following elements figure:

• The compulsory availability of the process: usually the parties have no choice but to be subject to the process if one of them initiates it; but, sometimes, as for instance with some arbitration, the parties might agree to the process.

• Third party involvement: usually there is third party involvement, but the statute may provide for, or require, negotiation between the parties.

• The independent character of the third party: usually the third party is independent of the parties, but that is not always so, for instance in the usual case of arbitration in New Zealand the parties choose the tribunal; or in respect of two of the members of certain three-member tribunals where the legislation enables the parties to appoint or nominate those members.

• The binding character of the process: the third party will often have a power of decision, for instance in the usual case of courts, tribunals, and arbitrators, while conciliators, mediators, and the Ombudsmen and in very limited circumstances courts and tribunals may be able only to recommend.

• The procedural character of the process: to be contrasted with the formality and adversary character of, say, a jury trial in a criminal matter is the relative informality of the Family Court and even more the investigatory processes of the Ombudsmen.

• The criteria for decision: they can vary from precise rules of law to very broad standards (such as the public interest or the welfare of the child).

Legislation relating to family matters, employment law, the Ombudsmen, discrimination, small claims, the Treaty of Waitangi, arbitration, resource management, fisheries, mining and other environmental matters all provide material for consideration.

When considering how to obtain a desired policy outcome, consider the full range of regulatory instruments available (usually the best outcomes will be achieved by using a mixture of regulatory instruments).

Consider the nature of the process required for enforcement, and in particular whether, and to what extent, the State has a role in enforcement of the legal rules established by the legislation.

Consider whether any specialist institution or agency needs to be created to oversee or assist in the enforcement of the legislation.

Consider the criteria set out in chapter 12.2.3 (which concern the use of criminal sanctions). If those criteria indicate that a criminal sanction is not necessary, consider what civil remedies are appropriate.

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This Part discusses the criteria to be applied in determining whether a specific civil remedy should be established.

The key question to be addressed under this heading is whether applicable civil remedies of general application under the common law or statute law are sufficient to ensure that the legal rules contained in the particular legislation can be adequately enforced. Are those remedies sufficient, or do they require some modification for the purposes of the legislation, or is it necessary to create entirely new processes or remedies? The latter possibility is addressed in Part 3.

In order to answer this question, the policy adviser should consider the various civil remedies of general application available under the common law and the general statute law that are available to either the State or individual parties, and assess their adequacy. An example of a modification to an existing civil remedy is contained in section 81 of the Commerce Act 1986, which specifies a range of circumstances in which the High Court may grant an injunction to restrain certain behaviour. The section enlarges the range of circumstances in which the existing remedy would be available under the common law, and clarifies the application of the remedy.

In summary, it may be necessary to deal specifically with the issue of civil remedies in legislation if there is uncertainty as to whether a particular remedy is available, or it is thought necessary to vary some element of the remedy to make it effective in the particular context.

Consider whether existing civil remedies available under the common law or the statute law are applicable, and if so, whether they are adequate and appropriate for the purposes of enforcement.

If there is some uncertainty as to application of an existing remedy or a specific modification is needed to make the remedy more effective, specific legislative provision is desirable.

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This Part discusses when it may be appropriate to create new particular remedies or processes.

A decision to create a new remedy or process may arise from one or more of the following circumstances—

• the demonstrated inadequacy of existing civil remedies in achieving the desired policy objective:

• difficulties in modifying existing remedies to improve their utility:

• a desire to experiment with new processes in order to reduce costs, achieve better compliance, or achieve better co-operation with industry etc:

• a perception that new institutions would be better able to manage matters requiring resolution under the substantive law because of—
  • the need for specialist knowledge
  • the desirability of less formality in proceedings than is the practice of the ordinary courts
  • the desirability of different fact finding procedures or other procedures such as mediation which may not be available through the ordinary courts
  • other reasons.

If policy advisers are considering a new remedy or process, it is wise to—

Policy makers should not copy provisions from other New Zealand or overseas legislation, without considering whether the precedent is workable or desirable.

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This Part summarises the law relating to limitation in civil proceedings, outlines some of the competing considerations involved in setting appropriate limitation periods, and discusses when it may be appropriate to create special rules governing limitation periods.

The present law on limitation is complex. It relies not only on the provisions of the Limitation Act 1950 but also on specific limitation periods in other statutes and the relevant common law and procedural rules. The position is discussed in the 1988 Report of the New Zealand Law Commission, Limitation Defences in Civil Proceedings (NZLC R6), and also updated in the discussion paper (Preliminary Paper 39) Limitation of Civil Actions (NZPP 39), issued by the Commission in February 2000.

In general, the following time limits (usually measured from the date of the accrual of a right of action) apply in civil proceedings:—

• 2 years in the case of an action to recover any "penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of any enactment":
• 6 years in the case of the majority of actions; including actions in contract or tort, any sum recoverable under any enactment (other than a penalty or forfeiture), and arrears of interest on a judgment debt:
• 12 years in the case of an action on a deed or a judgment, and certain other actions relating to wills, estates, land and the recovery of sums secured by a mortgage or charge.

The Limitation Act 1950 provides for the extension of limitation periods in certain circumstances, in particular—

• if the claimant is under 20 years or is mentally impaired:
• if the claimant is unable to discover the existence of a cause of action because of fraud or mistake:
• where the case relates to bodily injury, if the intended defendant consents or the court grants leave to bring the proceedings on an application.

The Limitation Act 1950 provides for no period of limitation in certain cases (for example, in the case of fraud or conversion of trust property by a trustee).

Under the Limitation Act 1950, limitation periods do not act as a bar to the bringing of proceedings, but operate as a defence that can, but need not, be invoked by defendants.

A number of actions fall outside the scope of the Limitation Act 1950; most importantly, actions for the recovery of tax, duty, or interest on tax or duty. Where no limitation period is set by statute, the defence known as laches may be invoked by a defendant, if there is undue delay on the part of the plaintiff in bringing the claim after becoming aware of the right to bring the claim. Any change of position on the part of the defendant will be considered by the Court in determining whether, in the circumstances of any particular case, the defence can be invoked.

There is a substantial body of case law on the question of what constitutes the date of accrual of a right of action. Traditionally that date has been treated as the date "when there is in existence a person who can sue and another who can be sued, and when there are present all the facts that are material to be proved to entitle the plaintiff to succeed" (28 Halsbury's Laws of England (4th ed) para 622).

However, in certain classes of case (for example, in building cases) the date of accrual of an action is the date on which the defect becomes known or with reasonable diligence is discoverable. This principle has been recently confirmed by the Privy Council and has also been extended by the New Zealand courts to certain claims based on historic sexual abuse and claims relating to negligent professional advice.

The facts to be proved differ depending on the nature of the claim involved. A claim for breach of contract accrues on the date of breach; a claim in negligence, in contrast, does not accrue until damage results from a breach of duty. A continuing series of events can give rise to a separate accrual and a separate limitation period in respect of each event.

There are a number of competing considerations when it comes to devising an appropriate limitation period for the bringing of civil proceedings. Some of the main considerations are—

• it is desirable that there be an end to litigation and that defendants not be exposed to stale claims:
• litigation should be commenced while the evidence is available and fresh. Defendants may be at a particular disadvantage because a person who feels aggrieved is more likely to recall clearly and gather evidence at an early stage:
• claimants should have a reasonable time to investigate what may be wrongful conduct, consult, and file claims. If limitation periods are too short there may be insufficient time for this to be completed or for discussions or negotiations leading to a settlement to be completed.

When applying any existing remedy or creating a new remedy enforceable by civil proceedings, consider whether there is any reason why the limitation period for the bringing of those proceedings should be shorter or longer than those applicable under the Limitation Act 1950. Relevant considerations will include the following:

• in general, the Crown should be placed in the same position as other litigants in relation to the setting of particular limitation periods (it should neither be in an advantageous or disadvantageous position). However, the Crown may be in a different position than other defendants when it comes to the question of whether to invoke a limitation defence in any particular case. There may be situations where, for reasons of public policy or in recognition of the Crown's responsibilities to the public as a whole, it is not appropriate for the Crown to invoke an available limitation defence. For this reason it is appropriate in practice for the Attorney-General to make decisions on whether to invoke a limitation defence on behalf of the Crown:
• there may also be public policy reasons for having a different period of limitation from that applicable under the Limitation Act 1950. For example, a standard limitation period of 6 years from the date of accrual of a right of action may be too long in the following cases:—