Top NZ judges reverse Privy Council ruling for first time

Sian Elias. Photo / Mark Mitchell

Two Supreme Court judges yesterday helped to overrule a Privy Council decision which had earlier trumped their ruling when they were judges on the Court of Appeal.

The decision marks the first time the Supreme Court has overruled the London-based council on points of New Zealand law, and pitted four Supreme Court judges against the Chief Justice, Dame Sian Elias.

Dame Sian dissented against the majority ruling.

The decision allows Susan Couch to take her case against the Department of Corrections to the High Court for exemplary damages for negligence.

Sir Peter Blanchard and Sir Andrew Tipping were both involved in the Court of Appeal decision to have stricter criteria for exemplary damages for negligence, involving a separate case.

The Privy Council then ruled on appeal that the criteria for exemplary damages should not be so strict and should focus primarily on the conduct, rather than the intention.

Yesterday, in the Couch case, the Supreme Court upheld the original view of the Court of Appeal.

Auckland University associate law professor Bill Hodge said he was "knocked back because it's such a novel concept".

"It's surprising that they did it. It looks like to me that [Blanchard and Tipping] are saying, 'You bastards "returned" us a few years ago and now we're getting our own back.'

"It's just bizarre that [former] members of the Court of Appeal now get a chance to revisit the same issue and 'return' the same people that returned them, having been vindicated by the Privy Council."

In the written decision on the Couch case, Dame Sian said the conduct outweighed the intent or conscious awareness of what was happening.

"[The conduct] may be deserving of denunciation through exemplary damages because, even though the risk to the plaintiff was not foreseen, the conduct of the defendant was outrageously high-handed or cruel or contemptuous."

To put such restrictions on when people can claim exemplary damages "saps the vitality of the exemplary principle in meeting the needs of modern New Zealand society".

But Justice Tipping strongly disagreed, arguing that the criteria should fall on the defendant being aware of the risk and potential harm of his actions.

"Outrageousness is not a satisfactory sole criterion ... It is far better to have a test which focuses objectively on the state of mind of the defendant ... [which] also helps to underline that the consequences of the defendant's conduct are not the primary question.

"This is a more principled basis than the uncertain and amorphous concept of the defendant's conduct being outrageous."

Sir Peter Blanchard, Justice Bill Wilson and Sir John McGrath agreed.

Professor Hodge said the unique decision will ring loudly throughout the Commonwealth.

"It will reverberate around the House of Lords as well as the High Courts in Australia and the Supreme Court in Canada. They will be coughing in their morning coffee."