No inherent power to require disclosure of insurance details

The issue of insurance cover has been a hot topic in Resource Management Act 1991 (RMA) sentencing over the last 12 months.  The High Court in H & S Chisholm Farms Limited v Waikato Regional Council [2018] NZHC 1885 recently clarified that the District Court has no inherent or implied power to direct a defendant to disclose insurance details for the purposes of sentencing under the RMA.

Following guilty pleas in the District Court in relation to the unlawful discharge of contaminants and the contravention of an abatement notice, Judge Harland directed that the defendant file information about its insurance cover with the Court.  The information sought was wide ranging, covering the scope of indemnities, the amount of any excess, policy exclusions and any conditions of cover relevant to the assessment of culpability for the offending.  The defendant appealed the District Court’s direction after Judge Harland “indicated that the information was necessary for the Court to meet its obligations under the Sentencing Act 2002” (Sentencing Act).

Under the Sentencing Act, section 40(1) provides that in determining the amount of a fine, a court must take into account the financial capacity of the offender.  Also, under section 41(2) of the Act, if a court considers that a fine of $100 or more may be an appropriate sentence, but is uncertain about the offender’s ability to pay, a court may direct the offender to make a declaration as to his or her financial capacity.

Justice Powell in the High Court considered that the “financial capacity of the offender” cannot be used as a general power to require further information, including information about insurance, outside of the section 41 process above.  While a court can request information about a defendant’s insurance status, this must be requested within the bounds of the Sentencing Act.

The High Court held in requesting information about a defendant’s insurance status, a court must first express uncertainty about a defendant’s ability to pay any fine that the Sentencing Act requires.  In this instance, Judge Harland had not questioned the defendant’s ability to pay, and the High Court found that the District Court’s direction was ultra vires.

The direction was set aside and the case remitted back to the District Court for it to determine whether there is uncertainty about the defendant’s ability to pay a fine, and if so, whether to request information about the defendant’s insurance cover.

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