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Retrospective legislation against the rule of law

By Legal Eagle

Retrospective legislation and the rule of law

F A Hayek neatly summarises the rule of law as follows:

Stripped of all technicalities [the rule of law] means the government in all its actions is bound by rules fixed and announced beforehand — rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances, and to plan one’s affairs on the basis of this knowledge. (Road to Serfdom, 1944)

Fundamentally, people must know what the law is so they can abide by it. It is for this reason that Joseph Raz says that the first principle of the rule of law is that “All laws should be prospective, open and clear” (‘The Rule of Law and its Virtue’ (1977) 93 LQR 195 at 198). A person cannot be guided by a law which did not exist at the time when the action occurred. It is fundamentally unfair to hold a person to be in contravention of the law when that law did not exist when the alleged contravention occurred. It is also worth noting that Raz’s principle number three of the rule of law is that “The making of particular laws (particular legal orders) should be guided by open, stable, clear and general rules.”

The Australian legal perspective on retrospective legislative enactments

There is no provision prohibiting the enactment of retrospective legislation in the Australian Constitution. By contrast, the US Constitution provides that both the Federal government and the State governments are prohibited from passing ex post facto laws (Article I, section 9 and section 10 respectively).

The Australian Parliament’s Legislation Handbook, which provides recommendations for legislative procedure, suggests the following with regard to retrospective legislation at [6.18]:

Provisions that have a retrospective operation adversely affecting rights or imposing liabilities are to be included only in exceptional circumstances and on explicit policy authority (see sub-paragraphs 4.7(g) and 4.17(c), and paragraph 8.19). (See also paragraphs 4.24 to 4.27 concerning announcement of legislation to operate from the date of announcement.)

Previously the Federal government has enacted retrospective taxation laws, including the ‘bottom of the harbour tax laws‘ passed in 1982. Ken Parish has also reminded me that the High Court upheld retrospective war crimes legislation in Polyukhovich v Commonwealth (1991) 172 CLR 501.

Two recent retrospective legislative enactments by the Federal government

There have been two recent instances where the Australian Federal government has enacted or attempted to enact retrospective legislation. Not only has the government enacted or attempted to enact retrospective legislation in these instances, it has done so while cases involving the very issues dealt with in the legislation were being heard before the courts and the Government was a party to those cases.

The Poniatowska case

Recently, a South Australian woman named Malgorzata Poniatowska was convicted of welfare fraud, and while she pleaded guilty, she challenged the validity of the conviction in court. As Adelaide Now reports here:

In 2009 she was convicted of defrauding Centrelink, after pleading guilty to receiving more than $20,000 in sole parent benefits that she was not entitled to while receiving commissions from Hickinbotham. She received a 21-month jail sentence, suspended, on condition she enter a two-year bond.

She appealed against her sentence – first to the Supreme Court, which upheld it, then to the Full Court of the Supreme Court, which last year set aside her conviction.

It ruled her “omission” to report the benefits while receiving commission payments from Hickinbotham was not a crime.

On 26 October 2011, a majority of the High Court of Australia upheld the decision of the Full Court in Commonwealth Director of Public Prosecutions v Poniatowska [2011] HCA 43 on the basis that the relevant offence could not be committed by an omission to act (i.e. the failure of Poniatowska to update Centrelink as to her circumstances).

But it was too late. On 4 August 2011, after the hearing of the case, and prior to the High Court handing down its decision, the Federal Government amended the Social Security (Administration) Act 1999 (Cth) to insert a new s 66A. Section 66A provides that there is a general positive requirement to inform Centrelink of changes in circumstance. The Act introducing the new provision, the Social Security and Other Legislation Amendement (Miscellaneous Measures Act 2001 (Cth) makes it clear in Schedule 1, item 3 that the provision is to act retrospectively and applies to a change in circumstance which occurs on or after 20 March 2000. Consequently, Ms Poniatowska’s victory was a Pyrrhic one.

Interestingly, Heydon J, who dissents in DPP v Poniatowska notes acidly at [45]:

It is common for the decisions of courts to be reversed by the legislature after they have been delivered. It is less common for this to take place even before they have been delivered. Yet the legislature has got its retaliation in first in relation to this appeal. In those circumstances it is desirable that this dissenting judgment be as brief as possible.

Do you suspect that he considers that the legislation is an instance of poor form by the Federal Government?

The Payara case

An Indonesian man, Jeky Payara, was charged with aggravated people smuggling pursuant to s 233C of the Migration Act 1958 (Cth) after he was accused of carrying 49 asylum seekers to Christmas Island in September 2010. In August this year, Payara sought to challenge the law on the basis that be argued was he was legally entitled to assist genuine refugees to reach Australia. He pleaded not guilty, and has not yet been convicted of any offence. The matter was referred to the Victorian Court of Appeal.

However, on 1 November 2011, the Federal Government hastily passed the Deterring People Smuggling Bill 2011 through the House of Representatives, with the support of the Federal Opposition (bipartisan support is a rare sight in these days). As with the previous Act, this Bill is intended to operate retrospectively (the new s 228B is to operate from 16 December 1999). Consequently the Age reports that Victorian Legal Aid, who was acting for Mr Payara, were forced to adjourn the proceedings before the Victorian Court of Appeal to await to see whether the legislation will successfully pass the Senate. With bipartisan support in the House of Representatives, it is difficult to see any obstacles to the legislation passing through the Senate.

Conclusion

I am concerned by this recent tendency to attempt retrospective legislation, particularly when the disputes governed by the legislation are still being determined by the courts , and where the government is a party to the actions before the courts. I am deeply disappointed by the Federal government in so many ways.

Regardless of what one thinks of the individual merits of Ms Poniatowska’s or Mr Payara’s cases, surely it can be seen that in principle, retrospective legislation is generally inappropriate in a country which seeks to uphold the rule of law, and should be avoided in all but the most serious circumstances.

There is a real argument in any case that the government is picking on “easy victims”  – by construing the legislation as a victory against ‘welfare cheats’ and ‘people smugglers’, it is as if the government is saying, “Ah, but it is okay to be retrospective against those kind of people.” As this article by Popple notes, even the Nuremberg trials were controversial on the basis of their retrospective operation, and the wrongdoing in those trials were surely of an infinitely greater magnitude than these.

Consequently, I believe that principled individuals on all sides of politics should be wary of legislation such as the instruments described in this post. We do not want to make a habit of such legislation every time a badly drafted statute leaves a loophole.

Update

Please do look at this post by Ken Parish which outlines the complexities of Polyukhovich and possible ways of challenging the constitutionality of the  Deterring People Smugglers Act if it is passed. I concur with Ken’s view of prosecuting people smugglers in these circumstances – Payara, for example, is a 20 year old Indonesian fisherman who crewed the boat; he’s not a people smuggling king pin. And it appears that the sentence for “aggravated people smuggling” is mandatory. Bad stuff: dare I suggest they’re prosecuting people like Payara just to look like they are doing something to “stop the boats”?

42 Comments

  1. Patrick
    Posted November 3, 2011 at 12:35 pm | Permalink

    Well, LE, you will be cheered to know that our courageous Federal Government is not picking on easy victims only!! As of today it has:
    1. introduced retrospective amendments to the Petroleum Resource Rent Taxation Act, to be effective as of the introduction of that 21 years ago, to affirm a Federal Court decision currently under appeal to the Full Federal Court;
    2. announced its intention to retrospectively replace the transfer pricing provisions in the tax law (Div 13 of the Income Tax Assessment Act 1936) as from 2004 with substantially different effect (possibly resulting in different outcomes for two court cases and numerous settlements); and
    3. indicated (no announcement) its likely intention to retrospectively repeal the ‘consolidations’ changes introduced only last year as refinements to the original (2002) income tax consolidation rules.

    The common theme is a desperation, unheard of in my lifetime, to protect the revenue.

    This spills over far further – for example there are several tax law changes which are critical to a sensibly functioning tax system but which cannot be passed as they may, possibly, cost a few dollars to the revenue. The replacement controlled foreign companies legislation is a prime example.

    Yes, this government rocks.

  2. Posted November 3, 2011 at 1:03 pm | Permalink

    The German Constitution also bans (Article 103) retrospective legislation in criminal matters. (I am particularly kindly towards the German Basic Law since Article 14 bans the sort of official discretion over planning that has been so pernicious in the UK, the land of Oz and elsewhere.)

    Generally not much of one for constitutional amendments, but banning retrospective legislation (particularly in criminal matters) works for me. (An amendment banning the use of official discretions to control property on the German model would work for me too.)

  3. derrida derider
    Posted November 3, 2011 at 1:50 pm | Permalink

    The reason you deprecate retrospective legislation is because it makes people uncertain how to comply. But in the transfer pricing case everyone was already highly uncertain – a product of the complexity of the transactions at issue and the vague generality of the anti-avoidance provisions (a generality made necessary, BTW, by the famously taxman-hostile Barwick High Court and its strained interpretations of more specific provisions) . Accordingly, the plaintiffs must have been aware of the risk – nay, likelihood – of retrospective legislation to cover their actions, as well as the risk of the court holding the same view as the government of the meaning of the existing legislation. One way or another this transfer pricing scheme was always going to be taxed and they should have framed their actions accordingly.

    I won’t try and defend the other retrospective laws, though – yes, they’re pretty outrageous.

    On a related theme, if your objection to retrospectivity is only founded in the injustice of people not knowing what the law is, then you ought not to object to “legislation by press release” – ie a law which is retrospective to the time when the government made clear its intentions. Am I right?

  4. Posted November 3, 2011 at 2:06 pm | Permalink

    DD@3 One of the problems with “legislation by press release” (apart from Parliament-as–rubber-stamp-for-Executive) is that a press release states intention rather than elaborate a law as it turns out (see comment about Parliament as rubber stamp).

  5. Posted November 3, 2011 at 2:08 pm | Permalink

    dd, if it’s an argument based on injustice there’s also a potential for the ‘justness’ effect of the retroactive legislation to outweigh the general injustice of applying the law retrospectively. I think the fact that some cases were clearly unjust (within the related legal context) at the time means the retrospective legislation can be reasonable.

  6. kvd
    Posted November 3, 2011 at 2:19 pm | Permalink

    VERY good and timely post LE. I hope it gets very wide distribution. (insert here emoticon for thumbs up)

    On dd’s point re government announcement, I have no problem with that provided that the announcement is specific as to intention, and restricted to implementing that intention. And I would NOT include Tax Office ‘draft rulings’ in that umbrella.

    Then there’s the whole other field of law/regulation surrounding the SGC, where people are forced to contribute a significant percentage of their earnings under rules constantly changing, and subject to political whim.

    But I digress. Good post LE.

  7. Patrick
    Posted November 3, 2011 at 2:41 pm | Permalink

    Hi DD – your take on TP is a bit of a stretch, did you swallow an ATO press release for breakfast perchance?

    The post-Barwick anti-avoidance rule you are referring to is presumably Pt IVA, not Div 13, although Div 13 was introduced only a year or so later. Pt IVA has not been argued in any of the litigated TP cases and is only relevant to a fragment of them.

    I don’t think, more fundamentally, that there has been such substantial uncertainty as to the operation of the TP rules, they are relatively clearly drafted as the Courts have applied them, and inconsistently with how the Commissioner has attempted to apply them.

    As for legislation by press release, I do acknowledge that it plays a useful part in tax especially. However it is not clearly desirable, for example, the consolidation amendments which are now apparently likely to be repealed retrospectively were legislation by press release that took 6 years to enact!

  8. Patrick
    Posted November 3, 2011 at 5:17 pm | Permalink

    KVD, fear not, ATO rulings are never counted as legislation by press release.

  9. Posted November 3, 2011 at 9:00 pm | Permalink

    Well, that’s an eye opener. I had no idea it was possible to make retrospective legislation in Oz. Not a comforting thought. Even if I doubt any of the current lot will really abuse that power sooner or later someone will.

  10. Posted November 3, 2011 at 9:33 pm | Permalink

    I’m comfortable with enforcing the death penalty for any politician who votes for retrospective legislation.

  11. Posted November 4, 2011 at 7:49 am | Permalink

    LE I see a solution to that which does not involve retrospective legislation.

    It is called “suck it up cops”. Why should a bunch of cops get off making a mistake. I know I don’t, if I, or my lawyer, make a procedural error, it is my tough luck, all the way to bankruptcy if need be.

    Or should we change the law after the fact to cover my mistakes also?

  12. Posted November 4, 2011 at 8:31 am | Permalink

    PARLIAMENT CANNOT SUSPEND RULE OF LAW

    The existence of a court presupposes the rule of law and therefore precludes the court from entertaining any proposition incompatible with the rule of law. The existence of a constitution presupposes the rule of law and therefore renders unconstitutional any attempt to subvert the rule of law. That constitutional impediment cannot be circumvented by legislation, because the legislative power is limited to the making of law, which by definition must be consistent with the rule of law; legislation incompatible with the rule of law is not law and is therefore beyond the legislative power.

    If it’s contrary to the rule of law, it’s not on. The courts don’t need to decide whether that statement is true or false. They only need to decide whether they have the guts to admit it.

    Among the minimum requirements of the rule of law is that the law be knowable.

    Therefore, if a retrospective law is to be valid, it must be knowable even before it has been passed. A law against murdering people because of their ethnicity meets that requirement. A law requiring you to inform Big Brother of a change in your circumstances does not. Neither does a law relating to taxation, given that the whole tax system is simply the current score in a never-ending contest between special-interest groups, each of which tries to portray its own interest as someone else’s interest or the national interest or a matter of principle.

  13. Posted November 4, 2011 at 8:50 am | Permalink

    SATP,

    It’s not the cops who will have to suck it up, it’s the rest of society who will be at the mercy of criminals. I think it’s open to the parliament to decide that a widespread failure of policing would be more detrimental than whatever marginal rights were lost through police officers signing rather than affirming their affidavits.

    Agreed, if you’re upholding the law, you should follow the law.

    That depends on how you define what the ‘law’ is. It’s not just the police who made the mistake, presumably the magistrates also made mistakes in providing the warrants. Retrospectively changing the written legislation to match a common pre-existing judicial interpretation of the law doesn’t seem all that unreasonable. A sudden judicial driven change in the law is just as unfairly retrospective as legislatively driven change.

  14. Posted November 4, 2011 at 9:00 am | Permalink

    Gavin,

    Parliament and the constitution exist within a common law framework. The common law is not a strict rule-of-law system. In fact it’s all about incremental changes to the law, applied retrospectively whenever particular cases highlights the need.

  15. Posted November 4, 2011 at 9:23 am | Permalink

    desipis,

    You seem to be confusing legislative change, which is prospective, with a judicial finding of law, which is retrospective to the last relevant legislative change.

    Note the implication that retrospective legislation is a breach of the separation of powers.

  16. Adrien
    Posted November 4, 2011 at 9:50 am | Permalink

    Yes, this government rocks.

    It’s not just this government Patrick, it goes back to the early 80s. What appear to be the case here is that the governments of our country have completely lost sight of the rules by which law is made and believe simply in a zero sum game in which they will win.

    If, according to the courts, they lose, they simply rewrite the law so they win.

  17. Posted November 4, 2011 at 9:52 am | Permalink

    Gavin,

    Every bit of common law that isn’t directly derived from statues is also technically a breach of the separation of powers. Parliamentary systems derived from the English system have never had strict separation of powers. Parliament only crosses the line into judicial territory when it seeks to impact an already decided case.

    Applying the law as it is at the time the court examines the case rather than the law as it was at the time of the examined act doesn’t necessarily undermine the separation of powers to any great extent. Clearly it has a significant potential to impact it (or other things such as rule of law, natural justice, etc), however it’s not always going to be the case.

  18. Posted November 4, 2011 at 10:11 am | Permalink

    desipis,

    “Every bit of common law that isn’t directly derived from statues is also technically a breach of the separation of powers…”

    Or a pre-separation relic, which Parliament could have changed but has not seen fit to change.

    But a judicial finding of law with only prospective effect would certainly breach the separation of powers because it would be, quite literally, “judicial legislation”.

  19. Posted November 4, 2011 at 1:16 pm | Permalink

    D@22 How Montesquieu found separation of powers by studying an English constitution which included the Lord Chancellor (member of Cabinet, presiding officer of the House of Lords and head of the Judiciary) is one of the mysteries of the Enlightenment. I suppose it helped to be French.

  20. Patrick
    Posted November 4, 2011 at 1:17 pm | Permalink

    You have a point about the broader context, Adrien, and the Hawke-Keating migration reforms (which most people think were introduced by Howard!) are a great example, but this government really is worse.

    They basically seem to have reached a position earlier this year that retrospective legislation is a suitable means of dealing with the complexity of tax law.

  21. kvd
    Posted November 4, 2011 at 1:45 pm | Permalink

    Not trying to teach anyone to suck eggs here, but there’s a difference between the type of retrospectivity noted by LE – where legislation is introduced to ‘defeat the effect’ of prior law, and the fairly normal expectation that any change to law might/will have an effect upon prior decision making.

    Taxation law, mentioned several times, is a good example of this latter process: where past investment decisions, and even ownership choices, can be severely affected by changes to law. I suppose this is why is it now fairly normal see a raft of ‘transition provisions’ attached to any even slightly radical taxation amendment.

    But I’m assuming here that LE is more concerned with the former process: that of legislation designed to change what was ‘the law’ into what it ‘should have been’ to defeat an unforseen or undesirable outcome – from the government’s perspective. On this, I totally agree that this is a worrying trend which should be subject to close attention.

  22. Patrick
    Posted November 4, 2011 at 1:46 pm | Permalink

    D@22, that’s a bit simplistic, since Parliament itself stood as a court for quite some time in its own right, without even counting the role of the House of Lords.

    Unless I’ve gone nuts, one of the reasons for habeas corpus was people being imprisoned by Parliament.

  23. thefrollickingmole
    Posted November 4, 2011 at 3:00 pm | Permalink

    Fair suck of the sausage though, if you let loose a swarm of lawyers on any department for long enough youi end up with monsters like immigration or the tax department.

    Constant appeals require only a couple of successes to stuff a reasonably clear statute up.

    Having said that, retrospective lawmaking is wrong.

  24. Posted November 5, 2011 at 8:37 am | Permalink

    P@27 Habeas corpus dates back (in earliest forms) to Henry II, so well before Parliament imprisoned anyone. I believe you are thinking more of its evolution than its origins.

    FM@28 Complexity begets complexity. Politicians insist on using the tax laws to pay off all sorts of distinct constituencies. That complexity gives the lawyers lots to work with.

    Immigration policy has some of the same issues.

    Plenty of lawyers swarm all over the ordinary criminal law, but it does not have the same issues.

  25. Adrien
    Posted November 5, 2011 at 9:52 am | Permalink

    this government really is worse.

    I’m not arguing there.

    They basically seem to have reached a position earlier this year that retrospective legislation is a suitable means of dealing with the complexity of tax law.

    I don’t think that respect for the traditions of good governance is high on this mob’s priorities.

    They appear to be rolling out pork and beefing up the power of the institutions that support them. How conscious they are of the potential consequences of such degradation they are I wouldn’t know. Their political manual is entitled: Get The Numbers..

    I reckon they reckon they might be able to pass the line next election is they can hit their enemies hard enough and bribe their natural constituency. If they can’t they’re determined to leave Tony Abbott a lot of tangled wire, some of it barbed.

    Thing is this technocratic amorality and loss of traditional restraint is a problem on the right as well.

  26. Davo
    Posted November 6, 2011 at 12:23 am | Permalink

    “retrospective law” ?? have to be joking. next thing is Copernicus ceases to exist.

  27. Davo
    Posted November 6, 2011 at 12:34 am | Permalink

    .. or Galileo .. hey, let’s go Taliban – or Vatican ..

  28. kvd
    Posted November 6, 2011 at 12:18 pm | Permalink

    Not to hijack this thread, but just wanted to record extreme sadness at the passing of Sarah Watt. One half of a couple of fine Australians who I’ve admired for many years. Same age as my wife, same dreadful cause, same senseless outcome.

    It’s inappropriate that this article is filed under ‘entertainment’; they should have a section marked ‘uplifting’ for people such as her.

    One fine lady – RIP

  29. Patrick
    Posted November 6, 2011 at 1:46 pm | Permalink

    My condolences for your wife kvd!

  30. Movius
    Posted November 6, 2011 at 10:53 pm | Permalink

    That is sad news. Look Both Ways is one of my favourite films.

  31. kvd
    Posted November 7, 2011 at 7:46 am | Permalink

    That’s an interesting post by Mr Parrish, and it mentions a couple of sort of related thoughts I was having over the weekend.

    I don’t want to get too much into the distaste I feel for 60 Minutes chequebook journalism, but on reading about the possibility of ‘proceeds of crime’ legislation maybe applying to the fee paid to that family, it made me think about David Hicks; yet another bit of (non-Australian) retrospective legislation with the punchline back here that his book proceeds may have been subject to proceeds of crime. What a tangled web it all is.

    Thank you Patrick. Sorry for diversion.

  32. Posted November 8, 2011 at 6:52 am | Permalink

    “Consequently, Ms Poniatowska’s victory was a Pyrrhic one.”

    Maybe, the issue is before the High Court as we speak, see AEU case.

    Generally retrospective lego has had an easy run in Australia. Heydon J is an interesting dissenter in this area, see also the recent decision (about 2 mths ago) regarding the retrospective legislation to reimpose penalties imposed by the Ch III infringing military court.

    The US principle is that the courts will prevent the reopening/redeciding of a finalised case, see Plaut v Spendthrift. However cases where timelines for appeal are still open, or stayed cases, may be effectively decided by legislation. The principle may get more respect there as there is some interesting history around the period between effective independence and the Constitution where localised legislatures were sitting as final courts of appeal, something the drafters of the separation of powers had firmly in mind.

    Not that I’ve been trying to read up on Ch III stuff lately!

  33. Posted November 8, 2011 at 7:06 am | Permalink

    Hither:
    http://www.austlii.edu.au/au/cases/cth/HCA/2011/28.html

    I note for the record I have expressed no opinion whatsoever in these paragraphs…

  34. Mary brown
    Posted February 27, 2012 at 11:14 pm | Permalink

    1. How will the government enact retrospective legislation to fix the existing de facto orders? 2. Will the retrospective legislation need to go through both houses of parliament and senate committees? 3. Can the retrospective legislation be commented on like normal bills? 4. Will there be any way to challenge the legislation in court?
    My point being if lawyers make a mistake in agreements they can be challenged in court . Now if the government makes a mistake they can just make everything right again with no further challenges?

  35. Gavin R Putland
    Posted May 15, 2013 at 9:37 pm | Permalink

    How the High Court didn’t decide whether retrospective laws breach the separation of powers: http://t.co/ZZ5KK9qpxV .

2 Trackbacks

  1. [...] Katy Barnett’s recent post on the seemingly increasing tendency of Australian parliaments to enact retrospective criminal laws provoked my interest. Arguably a Bill concerning “people smugglers” currently before Federal Parliament is the most troubling of these instances. As Barnett explains: [...]

  2. [...] CDUlawschoolCDU Law School 1/2 Retrospective legislation against the rule of law (Katy Barnett) tiny.cc/347v1 > 3 Nov CDUlawschoolCDU Law School Professor Bunyip reheats a perennial conspiracist [...]

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