RETROSPECTIVE LEGISLATION
Introduction Part II of the Finance Bill (No. 4) 1995 Validation of certain Crown forestry licences Interference with existing Court proceedings Further issues and questions Other examples of retrosopectivity New clause 29B: Application of the principal Act to superannuation Schemes providing benefits on account of marital status A general comment on retrospective legislation
Introduction
In Issues of Principle LAC Report No 8 the Committee reported that it had expressed concern to the select committee considering the Patents Amendment Bill 1992 that a proposed amendment to the Patents Act 1953 would have retrospective effect and that it would terminate legal proceedings then in progress in which the applicants, for the purposes of transitional arrangements at least, had accrued rights. The amendment was enacted as the Patents Amendment Act 1992 and terminated those proceedings.
In the Committee's view this amendment was contrary to the general principle explicitly recognised by Parliament in section 20(e) of the Acts Interpretation Act 1924, which enacted general provisions relating to the repeal of Acts, namely:
(e)The repeal of any Act ... shall not affect ...
(ii)Any existing status or capacity; or
(iii)Any right, interest, or title already acquired, accrued or established ...
Legislation that overrides judgments given, or proceedings already begun, presents two arguments of principle:
(a) Legislation should, in general, have prospective effect only; in particular it should not interfere with accrued rights and duties, nor should it create offences retrospectively; and
(b) Legislation should not, in general, deprive individuals of their right to benefit from the judgments they obtain in proceedings brought under earlier law, or to continue proceedings asserting rights and duties under that law.
During the present reporting period there have been further instances of legislation overriding proceedings or judgments. Those specific instances are discussed below.
In addition, attached as Appendix 1, there is a memorandum on Legislation Overriding Judgments and Legal Proceedings that was prepared in May 1995 at the request of the Finance and Expenditure Select Committee which, at that time, was considering provisions that were later enacted as the Crown Assets Amendment Act 1995.
Part II of the Finance Bill (No. 4) 1995
Validation of certain Crown forestry licences
Clause 6(1) of the Finance Bill (No. 4) 1995 provided that "for the avoidance of doubt" every Crown forestry licence granted under section 14 of the Crown Forest Assets Act 1989 before the commencement of clause 6 shall be deemed to comply, and to have always complied, with new sections 29 and 29A of the Act, as substituted by clause 5 of the Bill.(25 new sections 29 and 29A provided, respectively, that the annual licence fee shall be a market rate agreed by the Crown and the Licensee or determined in a manner agreed by them and specified in the licence, and for other rights and obligations concerning a Crown forestry licence.) Clause 6(2) provided, again "for the avoidance of doubt", that in every existing Crown forestry licence granted before the commencement of clause 6 the terms "drainage works" and "erosion works" shall be deemed to have, and always to have had, the meanings that those terms have in new section 2(1) of the 1989 Act, as amended by clause 4 of the Bill.
The LAC's submission stated that it is a general principle of jurisprudence that the law should have prospective effect only. The Committee observed that the Explanatory Note to the Bill suggested a justification for the retrospective operation of clauses 4 and 5; namely, that these provisions declared the law as it was always understood and proceeded upon, and that the provisions were to operate retrospectively to give effect to a received understanding of the law. The LAC recommended that the select committee needed to satisfy itself that the retrospective operation of these provisions was justified because of their declaratory nature (ie, to ensure that there really was satisfactory evidence of a received understanding of the law that the Bill merely gave effect to). Such an understanding, if established, can justify retrospective legislation: ie, if it is truly declaratory of original understanding.
Interference with existing Court proceedings
Clause 6(3) of the Bill provided that clause 6 would operate retrospectively by having effect:
. . . notwithstanding any judgment or determination or order of any Court given before or after the commencement of this section in any proceedings commenced before the commencement of this section.
The Explanatory Note to the Bill indicated that an existing licensee had commenced proceedings in the High Court and was making submissions in reliance on the terms of existing section 29 of the Act.(26 Refer p. ii of the Explanatory Note.) The licensee's proceedings were, therefore, ongoing and would be "cut off" by the Bill before they had run their course.
The Committee pointed out that, as a general legal principle, new legislation does not affect existing rights and existing proceedings, and that it does not matter that the judgment is not given until after the new law is enacted.(27 Refer A new Interpretation Act: To Avoid "Prolixity and Tautology" (NZLC R17, December 1990), Ch. V.) The principle that the particular effects of court judgments should rarely be overridden reinforces this general principle. Indeed, the retrospective denial of a remedy to a licensee who may have grounds to dispute a decision about a licence may conflict with the right in section 27(2) of the New Zealand Bill of Rights Act 1990 of persons aggrieved by administrative action to have the action reviewed. The Committee, therefore, recommended that the select committee should enquire into why it was necessary that the Bill offend against the principle that existing proceedings are not affected by new legislation.
Further issues and questions
At the time of its submission, the Committee did not have enough information to express an unqualified opinion on the application of the relevant principles (although some of the provisions had caused it some concern). However, in a subsequent letter to the select committee, the LAC suggested a number of further issues and questions that needed to be asked, and answered, in relation to each of the issues, including :
(a) In relation to clauses 6(1) and 6(2) of the Bill:
(i) Whether the retrospective character of the legislation could be justified, and what was the understanding of the legal position?
(ii) Was the law generally presumed to be as it was now being proposed?
(iii) Did the various parties rely on that understanding (as the form of the licences perhaps suggests); and
(iv) On the other side, what was to be made of the character of the interests in issue - were they essentially contractual and bilateral, not involving wider public interests?
In that context, it was recommended that the select committee should consider as well the principle of equality in section 27(3) of the New Zealand Bill of Rights Act 1990 (28 Section 27(3) provides that "Every person has the right to bring civil proceedings against, and to defend civil proceedings brought by, the Crown, and to have those proceedings heard, according to law, in the same way as civil proceedings between individuals".) and, against that, the advantage that the Crown, as one of the parties, has in influencing the legislative process.
(b) If the retrospective character of the legislation could be justified, a second issue, critical for clause 6(3), was whether the saving of judgments and pending proceedings under the old law would, in whole or substantial part, nullify the justified retrospectivity. Whether the saving would have that effect depended on the answer to three questions:
(i) What is the actual effect of the judgment ?
(ii) More particularly, how long will the judgment have effect (a matter which may be related to the term of the licences); and
(iii) How extensive is the membership of the class that may be successful in the litigation?
The select committee sought further advice from the LAC on the issue of legislation overriding judgments and pending proceedings. The memorandum prepared for that purpose is included in this report as Appendix 1.
The legislation was enacted unchanged. The position was taken that the Act needed to be aligned with the licences; it was the 1989 Act that was at fault. Any saving of the judgment would have defeated that purpose.
Other examples of retrospectivity
Supplementary Order Paper No. 36 proposed to insert new clauses 29A to 29E into the Finance Bill (No. 2) 1994 amending the Human Rights Act 1993 in respect of the application of the principal Act to superannuation schemes providing benefits on account of martial status (new clause 29B), application of the principal Act to superannuation schemes providing benefits for children (new clause 29C), savings in respect of certain superannuation schemes (new clause 29D), and the application of the Human Rights Commission Act 1977 to superannuation schemes (new clause 29E).
These amendments to the Human Rights Act 1993 were made because the effect of a decision in the High Court in Coburn v Human Rights Commission (29 [1994] 3 NZLR 323.) was that a superannuation scheme that provides benefits for spouses of members without also providing equivalent benefits to members without spouses contravenes the Act's prohibition against discrimination on the grounds of martial status. The application of the judgment was limited to benefits derived from contributions made on or after 1 February 1994, being the date on which the 1993 Act came into force.
The Committee commented on all of the above clauses, but the discussion here will be limited to just one of the SOP's provisions; namely, new clause 29B.
New clause 29B: Application of the principal Act to superannuation schemes providing benefits on account of marital status
The heading to the new clause referred to providing benefits on account of marital status, but the text of the clause was silent about the scope of the exception being made to the general prohibition against discrimination on the 13 grounds set out in section 21 of the 1993 Act.
The LAC did not suggest that new clause 29B(1) would lead to benefits being provided in a completely random way, although that was not precluded (the equitable duty of even handedness owed by trustees to beneficiaries of course constrains arbitrary decisions by trustees but it may not constrain choices made in designing a scheme or drafting a trust deed). It was suggested that the more likely scenario would be that benefits might be provided to subgroups of spouses such as those under or over a certain age or those not in paid employment. There was nothing in the text of the new clause itself that prevented distinctions being made on any of the grounds generally prohibited; any argument that new clause 29B be read as creating a more narrow exception rested on the clause heading alone.
The Committee suggested that the select committee consider specifying the scope of the intended exception in the text; that is, which of the 13 "prohibitions" (ie, on the grounds of sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origins, disability, age, political opinion, employment status, family status, or sexual orientation) do not apply in this case.
Clauses 29B(1)(a) and 29B(1)(b) did not clearly address the question of whether a scheme which provides benefits to the people described (ie, to "the spouse of that member"; or "a person with whom that member was living in the nature of a marriage") must provide benefits to the de facto partner of a member where the member and the partner are of the same sex. The Committee asked for clarification of whether a same sex partner can be a "spouse" and whether he or she can be described as living in a relationship in the nature of marriage with a member? The case law in Canada demonstrates a divergence of answers to these questions. It is worth noting Justice Thorp's comment in Coburn:(30 Ibid, at page 358.)
The Court is bound to proceed on the basis that the legislation was intended to have effect in its terms. It is, however, not improper to comment that the material before the Court suggests that that assumption may in this case be no more than a legal fiction, and that the principal issue for my determination may be one which was not recognised as likely to arise from the legislation. If that is the case then clearly the situation deserves consideration by Parliament.
It is possible, of course, that Parliament may decide to leave some or all of these questions to the courts, but it should be a conscious choice.
The LAC also suggested that clauses 29B(1)(a) and 29B(1)(b) could also be improved to make clear whether, in order to take advantage of the exception made by the clause, the scheme or the trustees would have to provide a benefit both to spouses of members and to persons with whom members were living in a relationship in the nature of marriage, or whether the exception would apply if the scheme simply provided to benefits to spouses and no more. Were proposed sections 29B(1)(a) and 29B(1)(b) parts of a single rule about payments to legal and de facto spouses or was it possible for schemes to provide for paragraphs (a) or (b) or for both?
New clause 29B created an exception from the general provisions of the Human Rights Act 1993 prohibiting discrimination, notwithstanding section 70 of that Act. But section 70 is itself a list of exceptions to the general provisions; it permits rules within superannuation schemes that might otherwise be prohibited. It therefore seemed unnecessary to state that new clause 29B holds notwithstanding section 70.
Proposed clause 29B(3) (and also in new clauses 29C(3) and 29E(2)) reinforced the declaratory (and therefore retrospective) character of the substantive provisions in each of the proposed sections by adding:
This section applies notwithstanding any judgment, decision, or order of any Court or tribunal given or made before or after the commencement of this Part of this Act.
The LAC questioned whether this provision was necessary. Had not Parliament had already made it clear in the Act's substantive provisions that the law is now to be considered always to have been as it is stated in the new provisions? Would they not override any judgment based on the old law?
It was the Committee's view that if new clause 29B(3) was to be retained in any way it should be related to section 153 of the principal Act which refers to the impact of the Act on legal proceedings.
In summary, the LAC questioned whether new clause 29B(3) (and new clauses 29C(3) and 29E(2)), which was retrospective in character, were necessary. The Committee also noted that the issues that these amendments sought to address had been raised in "test" litigation by the superannuation industry, no doubt at considerable cost. There was therefore a question about whether a more extensive review of the principal legislation was not required to fairly serve those who would be affected by it but who were not part of a strong collective group able to take action such as that taken by the trustees of the superannuation fund of BHP NZ Steel Ltd (Coburn v Human Rights Commission).
A general comment on retrospective legislation
Broad categories of legislation that responds to court judgments and proceedings would be:
(a) Legislation that changes the law for the future but leaves rights, duties, judgments and proceedings under earlier law unaffected;
(b) Legislation that does apply to past situations by being retrospective, validating or declaratory, but which saves the effect of judgments and proceedings given or brought by reference to the earlier law; and
(c) Legislation that, as in category (b), applies to past situations but which, by contrast, overrides judgments and proceeding given or begun.
Generally, it is legislation in categories (b) and (c) above that is of concern. There are two possible arguments of principle:
(a) Legislation should, in general, have prospective effect only. In particular it should neither interfere with accrued rights and duties, nor should it create offences retrospectively; and
(b) Legislation should, in general, neither deprive individuals of their right to benefit from judgments obtained in proceedings brought under earlier law, nor to continue proceedings asserting rights and duties under that law.
The principle of non-retrospectivity is reflected for criminal offences and penalties in section 26(1) of the New Zealand Bill of Rights Act 1990, section 10A of the Crimes Act 1961, and section 4 of Criminal Justice Act 1985; and, more generally, in section 20 of the Acts Interpretation Act 1924 and related common law rules.
The LAC notes that the Law Commission has discussed matters that should be weighed in a decision to give legislation retrospective effect in its report, A New Interpretation Act.(31 See A New Interpretation Act, NZLC 17, 1990, paras. 213 to 221. See also Burows Statute Law in New Zealand (1992), Chapter 8; and, for a study of legislative practice, Palmer and Sampford "Retrospective Legislation in Australia" (1994) 22 Fed C R217.) The Commission considered in turn the effectiveness of the law, justice, reasonable expectations, responsibility for government, and effective administration.
In addition, attached as Appendix 1, there is a memorandum on Legislation Overriding Judgements and Legal Proceedings that was prepared in May 1995 at the request of the Finance and Expenditure Committee Select Committee which, at that time, was considering provisions which were later enacted as the Crown Assets Amendment Act 1995.