Kyle Jordaan: Damages against the Administrative State – The South African and Indian Experience
The design of appropriate remedies to cure harm occasioned by the administrative process has shown to be a perennial plague for the South African judiciary. Of the hurdles experienced includes the broader dilemma of whether private law or public law is to regulate a matter and thereafter provide redress. In particular, courts have displayed a general and widespread reluctance to entertain pleas for compensation or damages as appropriate relief to make good any or all harm suffered by the applicant through administrative wrongdoing. In which circumstances and to what extent should the State be saddled with liability to provide monetary relief to an applicant for harm suffered as a result of irregular administrative action?
Whether delictual liability of the state will lie for harm suffered through irregular administrative action has in many cases been decided in the negative; the reason mostly proffered as justification being that administrative officials hardly owe individual applicants – but rather the public at large – a legal duty to prevent harm. Applicants may also seek monetary relief through an award of constitutional damages, a remedy aimed at the respect for and enforcement of human rights and also the deterrence of similar violations in future. Yet in the administrative-law review paradigm constitutional damages are granted only where the breach of administrative justice, itself a constitutional right, is accompanied by the violation of a second, ‘substantive’ right of the applicant.
The Indian experience is similarly not without hindrance. Although the administration may be held liable for the tortious acts of its servants, the extent of such liability is confusingly determined with reference to legislation from the 19th century which regulated this area vis-à-vis the East India Company under the previous dispensation. The matter is then further complicated by a distinction between sovereign and non-sovereign functions, drawn at times inconsistently by courts to take into account the sovereign immunity enjoyed in so-called ‘acts of State’. Added to this is the emergence of what has been termed ‘Constitutional torts’, whereby violations of fundamental rights conferred in Part III of the Indian Constitution have been remedied with compensation as a ‘palliative’ for the harm suffered. There is however uncertainty regarding the extent of violation or breach required for the applicant to be entitled to compensation within this calculus.
In the absence of legislation regulating this isolated genus of damages claims in either jurisdiction, applicants in both South Africa and India have sought to recover their losses in various ways, not least through the common law of delict/tort, and through direct reliance on the Constitution (s 38 of the South African Constitution – see Fose v Minister of Safety and Security 1997 3 SA 786 (CC) at para 60; and s 300 of the Indian Constitution – see Rudul Sah v State of Bihar 1983 4 SCC 141 (“Rudul Sah“)). Closer scrutiny of these attempts does not, however, reveal a judicial resolve; the judgments seem often to have compounded the confusion.
Are there nevertheless points to be extracted from the decisions of South African and Indian courts which could aid the development of a more suitable compensatory regime for this area of liability? While the reasons proffered for recognising or refusing claims for damages under the delictual/tortious and constitutional rubrics are often different in South African and Indian courts respectively, the concerns alluded to by each nevertheless point broadly to the same intractable questions arising at the various stages of inquiry. I consider three of these here, after discussing the basis for monetary relief in cases of administrative injustice, in the process of laying down some contours to a suitable damages model which may contribute to the conceptual panoramic of this debate.
Damages (or compensation) is essentially an award aimed at correcting or reversing or altering the position of an aggrieved person who has suffered harm due to the conduct of another. Two theories have been distinguished as underlying the purpose of such an award, a distinction drawn apparently since the work of Aristotle (Nicomachean Ethics, Book V, 2-5, 1130al4-1133b28): ‘corrective’ justice, whereby the wrongdoer is held responsible to rectify the transaction by making good any or all harm suffered by the victim; and ‘distributive’ justice, in terms of which losses are divided appropriately among the parties involved according to each’s respective needs. While both have been argued to be the true basis of the loss-shifting exercise to do justice, the two theories are generally not mutually exclusive and in my view would both underlie an appropriate damages model in this context. There are examples from both the Indian and South African judiciaries to illustrate this. In Rudul Sah, the Supreme Court awarded an amount of compensation as a ‘palliative’ for the petitioner; the State responsible to ‘repair’ his loss. The loss-shifting exercise was plainly corrective in rectifying the imbalance caused by wrongful conduct. Similar treatment is displayed in MEC for the Department of Welfare, Eastern Cape v Kate 2006 4 SA 478 (SCA) for a South African equivalent on this point. Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery (Pty) Ltd 2004 6 SA 40 (SCA) (“Modderfontein Squatters“) demonstrates more clearly the underpinnings of distributive justice. Here the award of constitutional damages not only corrected an imbalance between applicant and respondent, in typical private-law format, but had the additional advantage of ameliorating a broader human rights issue of collateral relevance, so that all three sets of interests were accounted for (at para 43). Ordering the state to pay damages to a victim under this rubric also means that the amount is then absorbed by the country’s taxpayers, who are theoretically in a better position to do so. For one, they collectively form the ‘public’ in whose interests the administration was purportedly acting when the losses were incurred by an individual applicant; secondly, the damages award, however large, is then many times divided; and three, the availability of such an award means that individual applicants who have suffered considerable losses are not without a remedy to cure or at least improve an otherwise perhaps inevitable demise (see e.g. the dissenting judgment of Langa CJ and O’Regan J in Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 3 SA 121 (CC) at para 82.) Damages against the administrative state would thus in some cases advance corrective justice, in other cases distributive, and yet in some others serve both a rectification as well as redistributive function.
The second point similar to both jurisdictions relates to a foundational question that arises in the context of delictual/tortious liability of the respective states for the acts of their servants: Which types of harm-causing conduct can or should be susceptible to judicial scrutiny, which may in turn result in the award of damages? In South Africa the question is encountered when a court is to determine the element of wrongfulness, ie whether an administrator was unreasonable in failing to prevent harm to the applicant – sometimes approached by asking whether the administrator owed the applicant a legal duty to prevent harm – which involves a value judgment by the court based on the objective and normative standards of boni mores and the legal convictions of the community. It is here that a court may limit the extent of delictual liability by deciding whether it would be reasonable for the applicant’s harm to instead be absorbed by the state, based on the particular act or omission of the administrator that caused it (see e.g. Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng 2014 ZACC 28 para 20).
In India the concern is addressed by distinguishing between sovereign and non-sovereign functions, in terms of which courts are not entitled to extend liability for the tortious acts of public servants in relation to, or ultimately based on, the sovereign powers of the State. Liability of the state for the tortious acts of its servants is therefore similarly limited according to the type of harm-causing conduct being considered. While both jurisdictions have ways of delineating the ambit of harm-causing conduct which may be agitated on review and redressed with an award of damages, the approach has not always been consistent. The Indian Supreme Court’s reinterpretation of its previous judgment in Kasturilal, on the dividing lines between sovereign and non-sovereign powers, is evidence of this. In South Africa the point is illustrated in the Steenkamp matter, where the majority of the Constitutional Court denied the delictual claim of the applicant based on a Supreme Court of Appeal finding in a separate matter and for a completely different claim. Damages against the administrative state would therefore require some gatekeeping device to determine, perhaps not exhaustively but at least in principle, the scope of harm-causing conduct that may be redressed with such an award.
A further question is observed in relation to the appropriateness of constitutional damages (in South Africa) and compensation for constitutional torts (in India): Are there particular circumstances extrinsic to the type of harm-causing conduct that must in addition be present for monetary relief to be considered under this rubric? Both South African and Indian courts have made the point that damages are not available as of right – rather, it is only in the absence of adequate alternatives that damages under the respective constitutions will be considered. This is however not entirely settled in South Africa. Indeed, in Kate the Supreme Court of Appeal noted the availability of alternative remedies as a factor to be considered, but thereafter remarked that constitutional damages are not ‘to be looked at only when there is no [other] means of asserting and vindicating constitutional rights’ (at para 27). Nevertheless, from two other judgments by the same court – Olitzki and Modderfontein Squatters – it would seem that damages under the constitution are available only as a last resort. This is also the position in India, as stated by the Supreme Court in Nilabati Behra v State of Orissa AIR 1993 AIR SC 1960 at para 13: “doing complete justice … enables the award of monetary compensation … where that is the only mode of redress available.”
Apart from the slight differences in judicial zeal of the respective South African and Indian courts in entertaining and awarding claims for damages against the administrative state lies a common lacuna: the absence of guidelines – legislative or otherwise – for a reviewing court to rely on in considering the same. Though the complexities inherent in applying private-law principles to disputes materially of a public law nature were recognised and sought to be assuaged through Indian legislation regulating the liability of government in tort, these legislative intentions were unfortunately not nurtured beyond rudimentary stage. Navigating the award of a traditionally conceived private-law remedy within a review paradigm delimited for action of a public nature presents a whole host of difficulties, as is illustrated here. The fragmentary picture of monetary relief to redress cases of administrative injustice underlines the necessity of extensive legislative reform in both jurisdictions. The regulatory framework of a suitable damages model should include, as discussed, a gatekeeping provision to define in principle the scope of harm-causing conduct which may be redressed with an award of damages. It should in addition include the circumstances extrinsic to the harm-causing conduct that must be present before a court would be willing to entertain a plea for damages against the administrative state. Minor differences in the legal and judicial frameworks aside, what also emerges is that monetary relief is indeed required – in some shape or form – as part of the remedies available to a court of review. There are no doubt cases of unlawful administrative action which cannot be appropriately redressed by awarding any of the remedies usually associated with administrative-law adjudication, such as orders invalidating or setting aside the impugned conduct. Monetary relief could conceivably supplement the present remedies regime and provide for these kinds of matters. However, fraught with uncertainty, these claims should be entertained according to a statutory framework designed specifically for this purpose – not according to a particular court’s perception of fairness, or the extent to which the applicant’s interests have been affected.