On 6 January 2017, the Dutch Supreme Court rendered a ruling regarding the criterion of the causal connection between a wrongful decision and the loss/harm that it may cause.
That ruling is important for administrative bodies. Does this mean a permanent change in the causation criterion leading to a heavier burden of proof for administrative bodies?
The facts and the course of the proceedings
In the case concerned, the UWV social security agency had issued a dismissal permit to a printing company so that it could dismiss an employee on account of the ending of the unique position in which he was employed at the printing works. The employee operated a specific type of press for which the supply of work had declined significantly. The UWV disregarded the employee’s argument that he was not employed in a unique position. The UWV decided that it was therefore unnecessary to check the dismissal against the representativeness principle [afspiegelingsbeginsel].
The employee submitted a complaint to the UWV and to the Ombudsman. In response to the complaint, the UWV found that it had in fact taken insufficient account of his argument regarding application of the representativeness principle.
According to the interim judgment by the Court of Appeal, the UWV acknowledged that it had acted wrongly. The Court of Appeal also found that there was a causal connection between the wrongful decision and the loss/harm caused. The Court of Appeal considered the hypothetical situation in which the UWV had taken account of the employee’s argument and, with due regard to that argument, had arrived at a decision which met the test of reasonableness. The Court of Appeal then compared that hypothetical situation with the current situation (the wrongful decision). In its judgment, the Court of Appeal concluded that, in the hypothetical situation, the UWV should have refused the dismissal in the case concerned.
In the cassation appeal, it was argued that whether there is a causal connection between a wrongful decision and loss/harm must be assessed on the basis of the criterion of whether, at the time when that decision was taken, a lawful decision could have been taken that, in terms of its nature and scope, would have led to the same loss/harm. If so, according to the UWV, then the decision did not cause any loss/harm.
The Supreme Court first explained that this was an atypical case. Normally speaking, after the setting aside, withdrawal, or revocation of the decision, a new decision would be taken. It therefore usually depends on the substance of the new decision whether the earlier wrongful decision led to loss/harm. If the new decision is lawful and produces the same legal effect as the previous legal effect, then that is not the case.
In this case, however, no objection or appeal is possible pursuant to the General Administrative Law Act [Awb]. There is therefore no new decision with which the previous wrongful decision can be compared. Consequently, the legality of the decision must be assessed by the civil court. The Supreme Court found that in this case the causal connection needed to be determined on the basis of a comparison between the situation that occurred in reality and the hypothetical situation that would have occurred if the wrongful act had not taken place. The Supreme Court stated that it is therefore incorrect that “if the administrative body, at the point when it took the wrongful decision, could have taken a lawful decision that, in terms of its nature and scope, would have led to the same loss/harm, then there is no causal connection between the wrongful decision and the loss/harm (already because of that circumstance)”. The Supreme Court therefore ruled that the ground for cassation was incorrect.
Why is this an important ruling?
Although it did not structure its ruling very clearly and the wording is somewhat vague, the Supreme Court’s ruling seems to confirm a change in the causation criterion. Previously, the Supreme Court appeared to follows the causation criterion of the Administrative Jurisdiction Division of the Council of State. The Division applied “retrospective comparison with the hypothetical lawful decision”. That meant that there was a causal connection if, at the time when the wrongful decision was taken, a lawful decision could have been taken that, in terms of its nature and scope, could have led to the same loss/harm. It did not therefore assess what decision the administrative body would in fact have taken if it had taken a lawful decision but only whether it was possible for it to take a lawful decision with the same legal effect as the wrongful decision.
In the case concerned, however, that would seem to be so. The Supreme Court appears to be making a comparison between the actual situation (the wrongful decision) and the hypothetical situation in which the administrative body had taken a lawful decision, with it being relevant what actual decision the administrative body would in all likelihood have taken. In this case, as the Court of Appeal found, the UWV would have refused to issue the dismissal permit.
The criterion applied in this ruling is similar to the causation criterion in the Supreme Court’s ruling of 3 June 2016 (ECLI:NL:HR:2016:1112). In its Ground 3.5.4, the Supreme Court states: “It follows from the above that the argument in this respect is based on an incorrect reading of the law. It is not in fact decisive whether the Board could legitimately refuse the permit but – as the Court of Appeal took as the criterion – what decision it would have taken if it had decided in accordance with the law.”
The question is whether there is indeed a (permanent) change in the causation assessment as regards wrongful administrative decisions. On the one hand, the Advocate General (A-G) referred to a (subtle) change in the causation assessment of the Administrative Jurisdiction Division and, inter alia, saw that as a reason to alter the causation criterion in this case. On the other hand, the A-G also pointed out the fact that the dismissal was an atypical decision as also being a reason for a different causation assessment. Firstly, as we have seen, no objection or appeal is possible (3.12). In addition, account also needs to be taken of the special position of the UWV, which acts more or less passively and bases its decision on what the parties assert (3.13). The A-G viewed this too as a reason to assume a different causation assessment, which may indicate that this change will not be implemented across the board.
However, we do believe that this can be seen as an alteration of the causation assessment as regards all wrongful decisions. We consider that the fact that the Supreme Court followed the conclusion of the A-G – in which the criticism is cited that can be found in the literature regarding the causation assessment (used until recently) of the Administrative Jurisdiction Division – indicates a structural change in the causation criterion. In addition, the Administrative Jurisdiction Division would appear to have definitively taken that turn, as is shown by its ruling of 28 December 2016 (ECLI:NL:RVS:2016:3462, Ground 8. 1). Timmermans agrees, as appears from the already published note on this ruling (JB 2017/17).
What does this mean in actual practice?
This means that in the case of wrongful decisions by public authorities, the burden of proof for administrative bodies is made heavier as regards demonstrating that there is no causal connection to the loss/harm. They must show that if at the time when they took the wrongful decision, they could indeed have taken a lawful decision, they had also in fact done so, and also that that decision would have led to the same loss/harm.
To be brief, this is an important development and one that you should keep track of.