A common law principle

9.1          One element of the rule of law is that laws are capable of being known in advance so that people subject to those laws can exercise choice and order their affairs accordingly. It follows that laws should not retrospectively change legal rights and obligations, or create offences with retrospective application. The principle that a person should not be prosecuted for conduct that was not an offence at the time the conduct was committed is sometimes known as nulla crimen, nulla poena sine lege, or ‘no punishment without law’.[1]

9.2          This chapter discusses the reasons for the objection to retrospective laws and identifies some protections against statutory encroachment. It also identifies some laws with retrospective operation and considers how these encroachments have been justified.

9.3          In Retroactivity and the Common Law, Ben Juratowich writes:

Retroactive creation of a criminal offence is a particularly acute example of infraction by the state of individual liberty ... Holding a person criminally liable for doing what it was lawful to do at the time that he did it, is usually obviously wrong. The retroactive removal of an actual freedom coupled with the gravity of consequences that may accompany a breach of the criminal law mean that retroactive imposition of a criminal liability is rarely justified.[2]

9.4          The common law on the subject of retrospective law making was influenced by Roman law. It may also be reflected in cl 39 of the Magna Carta, which prohibited the imprisonment or persecution of a person ‘except by the lawful judgement of his peers and by the law of the land’.[3]

9.5          In Leviathan, Thomas Hobbes wrote that ‘harm inflicted for a fact done before there was a law that forbade it, is not punishment, but an act of hostility: for before the law, there is no transgression of the law’.[4] William Blackstone wrote in his Commentaries on the Laws of England:

Here it is impossible that the party could foresee that an action, innocent when it was done, should be afterwards converted to guilt by a subsequent law: he had therefore no cause to abstain from it; and all punishment for not abstaining must of consequence be cruel and unjust. All laws should be therefore made to commence in futuro, and be notified before their commencement.[5]

9.6          Retrospective laws are commonly considered inconsistent with the rule of law. In his book on the rule of law, Lord Bingham wrote:

Difficult questions can sometimes arise on the retrospective effect of new statutes, but on this point the law is and has long been clear: you cannot be punished for something which was not criminal when you did it, and you cannot be punished more severely than you could have been punished at the time of the offence.[6]

Certainty and predictability

9.7          Retrospective laws make the law less certain and reliable.[7] A person who makes a decision based on what the law is, may be disadvantaged if the law is changed retrospectively. It is said to be unjust because it disappoints ‘justified expectations’.[8]

9.8          In Director of Public Prosecutions (Cth) v Keating, the Australian High Court emphasised the common law principle that the criminal law ‘should be certain and its reach ascertainable by those who are subject to it’.[9] This idea is ‘fundamental to criminal responsibility’ and ‘underpins the strength of the presumption against retrospectivity in the interpretation of statutes that impose criminal liability’.[10] The Court quoted Bennion on Statutory Interpretation:

A person cannot rely on ignorance of the law and is required to obey the law. It follows that he or she should be able to trust the law and that it should be predictable. A law that is altered retrospectively cannot be predicted. If the alteration is substantive it is therefore likely to be unjust. It is presumed that Parliament does not intend to act unjustly.[11]

9.9          In Polyukhovich v Commonwealth (Polyukhovich), Toohey J said:

All these general objections to retroactively applied criminal liability have their source in a fundamental notion of justice and fairness. They refer to the desire to ensure that individuals are reasonably free to maintain control of their lives by choosing to avoid conduct which will attract criminal sanction; a choice made impossible if conduct is assessed by rules made in the future.[12]

Efficacy

9.10       Concerns about the efficacy of retrospective laws are closely related to concerns about uncertainty. If a person does not know or is uncertain about the law, it is difficult for the person to comply with it. The law does not, in this circumstance, guide or deter behaviour. As the Law Council of Australia submitted:

If such laws cannot be known ahead of time, individuals and businesses may not be able to arrange their affairs to comply with them. It potentially exposes individuals and businesses to sanctions for non-compliance and despite the high societal cost, such retrospective laws cannot guide action and so are unlikely to achieve their ‘behaviour modification’ policy objectives in any event.[13]

9.11       Similarly, the Tax Institute emphasised that laws need to be certain and prospective for the proper functioning of the tax system, particularly to allow:

(a)     taxpayers to self-regulate behaviour in order to minimise tax risk;

(b)     the fostering of voluntary and informed compliance with tax laws;

(c)     taxpayers to make investment decisions and strike commercial bargains with certainty as to the tax cost resulting from the relevant transaction;

(d)     corporate taxpayers to make informed dividend policy decisions; and

(e)     listed companies to produce timely financial statements that accurately reflect their tax expense.[14]

9.12       The Law Council observed that retrospective laws can cause a ‘number of practical difficulties for business, and the wider economy’, including: actual and reputational damage to the market (sovereign risk); disruption to business planning processes resulting in high compliance costs; and unintended consequences from increased regulatory complexity.[15]

9.13       In relation to commercial and corporate laws, the Law Council stated that it is possible for laws to be ‘effectively retrospective’. That is, where laws are introduced so abruptly that they do not give businesses sufficient time to adjust their practices; or capture activities which will occur after the law has commenced but which are the result of arrangements entered into before the law commenced.[16]

[1]           Kenneth S Gallant, The Principle of Legality in International and Comparative Criminal Law (Cambridge University Press, 2010).

[2]           Magna Carta 1297 cl 39. See further Ben Juratowich, Retroactivity and the Common Law (University of Oxford, 2007) 52. The terms ‘retrospective’ and ‘retroactive’ are sometimes used interchangeably. The High Court has noted a distinction between a statute which provides that at a past date the law should be taken to have been that which it then was not (sometimes called ‘retroactive’), and a statute which now creates further particular rights and liabilities with respect to past matters or transactions: Chang v Laidley Shire Council (2007) 234 CLR 1 [111]; [2007] HCA 37, and AEU v Fair Work Australia (2012) 246 CLR 117 [94]. In each case the High Court relied on Coleman v Shell Co of Australia Ltd 45 SR NSW 27.

[3]           Ben Juratowitch, Retroactivity and the Common Law (Bloomsbury Publishing, 2008) 28. Juratowitch notes however, that this clause is more concerned with placing limits on the exercise of executive power.

[4]           Thomas Hobbes, Leviathan (Oxford University Press 1996, 1651) 207.

[5]           William Blackstone, Commentaries on the Laws of England (15th ed, 1809) vol 1, 46.

[6]           Tom Bingham, The Rule of Law (Penguin UK, 2011).

[7]           Lord Diplock said: ‘acceptance of the rule of law as a constitutional principle requires that a citizen, before committing himself to any course of action, should be able to know in advance what are the legal consequences that will flow from it’: Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg [1975] AC 591.

[8]           HLA Hart, The Concept of Law (Clarendon Press, 2nd ed, 1994) 276. (‘retrospective law-making is unjust because it ‘disappoints the justified expectations of those who, in acting, having relied on the assumption that the legal consequences of their acts will be determined by the known state of the law established at the time of their acts’).

[9]           Director of Public Prosecutions (Cth) v Keating (2013) 248 CLR 459, 479 [48] (French CJ, Hayne, Crennan, Kiefel, Bell, Keane JJ).

[10]         Ibid [48] (French CJ, Hayne, Crennan, Kiefel, Bell, Keane JJ).

[11]         Ibid [48] (French CJ, Hayne, Crennan, Kiefel, Bell And Keane JJ).

[12]         Polyukhovich v Commonwealth (1991) 172 CLR 501, 608 (Toohey J).

[13]         Law Council of Australia, Submission 75.

[14]         The Tax Institute, Submission 68.

[15]         Law Council of Australia, Submission 75.

[16]         Ibid.