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Cabinet Office Circulars

CO (02) 4

13 March 2002
 

Acts Binding the Crown: Procedures for Cabinet Decision

Summary of key points

1

Cabinet 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:

1.1

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

1.2

papers 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;

1.3

Bills 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.

2

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

3

The 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.

4

The 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

5

Section 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."

6

In 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.

7

This 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

8

Whether 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.

9

It 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.

10

In 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].

11

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

Guidance on whether an Act should bind the Crown

Types of Act

12

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

12.1

Acts 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.

12.2

Acts 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.

12.3

Acts 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

13

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

14

However, 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

15

Given 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.

16

The 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.

17

In 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.

18

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

18.1

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

18.2

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

19

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

19.1

whether 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);

19.2

whether 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;

19.3

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

Partial binding of the Crown

20

It 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.

21

There 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:

21.1

Armed 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.

21.2

National 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.

21.3

Taxation: 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.

21.4

Crown 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.

21.5

Crown 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

22

Historically, 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.

23

A 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:

23.1

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

23.2

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

23.3

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

23.4

whether 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;

23.5

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

23.6

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

24

If 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:

24.1

who is the Crown for the purposes of the prosecution;

24.2

who should defend and prosecute the Crown;

24.3

what procedures should apply;

24.4

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

25

The 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

26

As 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.

27

Cabinet 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.

28

If 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.

29

If 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.

30

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

Inclusion in the recommendations

31

An 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.

32

Sample 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

33

The 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

34

This 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 7.4 of the Step by Step Guide.]

Seeking approval for the introduction of the Bill

35

When 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 paragraph 7.13 of the Step by Step Guide.]

Commencement of regime

36

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

36.1

all 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;

36.2

LEG 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

37

When 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

38

For further advice you can contact:

38.1

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

38.2

the 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;

38.3

the 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