The Insurability of Quasi-Criminal Fines and Civil Penalties in Aotearoa New Zealand

Abstract

The law in Aotearoa New Zealand is clear that criminal penalties cannot be insured. Exclusions in statutory liability insurance policies available here reinforce that position. Whether non-criminal fines and penalties can be insured, is less certain. There are legislative prohibitions and limitations on insurance for certain penalties of a quasi-criminal nature, meaning that they are not ‘true’ criminal offences but fall into a separate regulatory category of offending. For example, under environmental or building legislation. However, the rationale for these limitations on insurability is unclear and does not appear to be applied consistently. Additionally, there is very little guidance on the insurability of civil penalties. Questions have been raised by the judiciary in Aotearoa New Zealand and Australia about whether certain quasi-criminal fines, such as those under the Resource Management Act can lawfully be insured against. The purpose of this thesis is to undertake an examination of the existing legislation and case law in Aotearoa New Zealand and other comparable jurisdictions to see if evidence can be drawn on the insurability of quasi-criminal fines and civil penalties. The research in the thesis shows that the law on this topic is unclear everywhere, not just in Aotearoa New Zealand. Case law suggests that an insurance policy may be unenforceable based on the principle of ex turpi causa non oritur actio, meaning that someone cannot expect to have a claim enforced that has arisen due to their own illegal conduct. Public policy also plays a large part in the debate, with those people against the availability of insurance arguing that allowing fines and penalties to be insured will remove the deterrent and punitive effect of a penalty. The findings in the thesis are that regardless of the public policy arguments, there must be certainty and consistency in the law. For that reason, the thesis reaches the conclusion that Parliament ought to legislate to prohibit the payment of any type of criminal or quasi-criminal fine, or civil penalty, by an insurance policy.