Law & Society: Retroactive laws, real-time consequences
The courts and judges have come in for criticism of late. Roger Partridge of the New Zealand Initiative was critical late last year of recent decisions of the Supreme Court in a lengthy paper entitled 'Who makes the law?' – the obvious answer being Parliament.
New Zealand First MP Shane Jones, likewise was personally critical of a High Court judge last year and 'had words' with the Attorney-General Judith Collins about his comments. Last month at a Law Association lunch, Jones criticised what he called the 'Americanisation' of the judiciary and of judicial activism, arguing it is Parliament that is sovereign.
But what happens when Parliament itself travels outside its lane? What remedies are there for legislative overreach when Parliament is sovereign?
An amendment to the Credit Contracts and Consumer Finance Act has been introduced. The act prescribes a number of circumstances where financiers have a duty of disclosure to customers. If disclosure rules are breached, the lender forfeits interest rates and fees on the transaction.
Two banks, ANZ and ASB, failed to make proper disclosure and are subject to claims on behalf of 173,000 customers – a sizable cohort. Court proceedings are well under way.
The amendment is retrospective in that it is designed to minimise the liability of the banks for actions that were unlawful at the time. So Parliament retrospectively cures their unlawful acts and the 173,000 potential claimants lose out.
Parliament can do anything it likes, according to Jones. The only problem is there are rules about retrospective legislation. Section 12 of the Legislation Act 2019 states very simply: 'Legislation does not have retrospective effect.'
The New Zealand Bill of Rights Act 1990 also makes it clear there should be no retroactive penalties, though that rule is more applicable to criminal cases.
The issue of whether laws have provided retroactive penalties have troubled judges, academics and law students in examinations for some years.
One of the core principles of the rule of law is that individuals must be able to know in advance what conduct is legal or illegal. Retrospective laws can punish people for actions that were legal when committed, which violates this predictability.
In the case of the Credit Contracts and Consumer Finance's Act, the retrospective law deprives 173,000 people of a remedy they would have had.
Similarly, the retrospective changes to the pay equity process have halted 33 pay equity claims affecting many thousands of workers.
Citizens lose confidence in the fairness and integrity of the legal system when laws can be changed after the fact to alter rights and obligations. This can foster fear and uncertainty.
Some argue retrospective laws violate fundamental human rights and democratic principles, as they remove the ability of individuals to make informed choices based on existing laws.
Although retrospective laws are generally discouraged, there are rare cases where they are justified – such as when correcting legal loopholes or addressing past injustices. However, they remain controversial and should be used with extreme caution.
Is there a remedy for this overreach? No, other than by way of the ballot box. We have no overriding constitution. We have no court that can say Parliament is in breach of the rules and challenging a fundamental premise of the rule of law and that changes such as those to the credit act and pay equity regime are 'unconstitutional'.
But perhaps the problem is deeper. Perhaps we rely on Parliament too much to solve our problems. When a problem comes up it seems the government is the first port of call. Perhaps if there was less reliance on Parliament 'fixing' things, the risk of retrospective laws would be much smaller.
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