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Retrospective effect

It is a general expectation and requirement of the rule of law that legislation should only apply prospectively. Retrospective provisions should only be enacted if they can be fully justified.

The prime concern regarding retrospective legislation is that it can take away rights or defences or make unlawful those things that were lawful when they were done. For example, the most egregious example of retrospective legislation is the retrospective creation of criminal offences making conduct unlawful that was lawful at the time it was undertaken. The concerns about the retrospective creation of offences are expressed in the prohibition on retrospective offences contained in section 26(1) of the New Zealand Bill of Rights Act 1990.[33]

The most important element in justifying a retrospective provision is to identify the extent (if any) to which people will be adversely affected. This information will determine whether or not the provision can be justified.

This principle of not legislating retrospectively is supported by the interpretative principle in section 7 of the Interpretation Act 1999 that enactments do not have retrospective effect.[34] More specific provisions to similar effect exist in section 10A of the Crimes Act 1961, section 4 of the Criminal Justice Act 1985, section 6 of the Sentencing Act 2002, and section 25(g) of the New Zealand Bill of Rights Act 1990.

Question 4.3

4.3.  Does this Bill affect rights, freedoms, or impose obligations, retrospectively? [YES/NO]

What matters are covered by the question?

There are a number of different types of retrospective legislation and some of the more common examples to which Question 4.3 applies are noted below.

Note that the terms “retrospective” and “retroactive” are often used interchangeably as their ordinary meanings are identical and mean “taking effect from a date in the past”. Retroactive is sometimes used to describe a subset of retrospective effects when existing rights or obligations are altered'retroactively' or from the date those rights or obligations arose. This guidance simply uses the term retrospective and no distinction is sought to be made between those situations that are retrospective and those that may be retroactive.

Retrospective application from an earlier date

An Act may state “this Act is deemed to have come into [X date]” being a date that precedes the date the Act is passed. The Act then applies to matters that have already occurred and potentially alters the rights or obligations of actions those matters that have already occurred.

Retrospective application to events that have already occurred

Legislation can also be made retrospective by applying to things already done. For example, section 10 of the Illegal Contracts Act 1970 provides that it “shall apply to contracts that were made before or after the commencement of this Act”. In this way the Act applies retrospectively to contracts entered into before the Act was passed.

Validating legislation

Actions carried out without lawful authority and situations where there may be doubt about whether an action is lawful are frequently validated using retrospective legislation. The retrospective aspect of the validation is likely to be obvious as the provision will state that certain actions that have already taken place “are hereby validated and deemed to have been lawfully done”. The validation may occur in situations where everyone was acting under the same mistaken assumption that what they were doing was lawful or there may have been some doubt as to the lawfulness of their actions. For example, in 2006 the Auditor-General reported to Parliament that appropriations for Parliamentary services for members of Parliament had been used for election purposes and these were outside the scope of the appropriation. Parliament validated this expenditure in the Appropriation (Parliamentary Expenditure Validation) Act 2006.

Reversing the effects of a court decision

Legislation sometimes reverses the effects of a court decision, although this is usually controversial as it is contrary to the principle that legislation should not deprive individuals of the right to benefit from the judgments they obtain in proceedings brought under earlier law. See for example, section 8 of the Biosecurity Amendment Act (No 2) 2008 that reversed the Court of Appeal's decision in National Beekeepers' Association of NZ v Chief Executive of the Ministry of Agriculture and Forestry [2008] NZCA 1.[35]

Legislation that applies prospectively may appear to have a retrospective effect but is not retrospective for the purposes of Question 4.3

Legislation that applies prospectively, but applies to existing situations requires particular care to ensure it clearly sets out which procedures will be affected by the new provisions. This will usually be done by way of carefully drafted savings and transitional provisions. For example:

  • prospective changes to procedures can have a retrospective appearance because the change to the procedures will apply to persons who are already part way through the process and thus can be seen to affect expectations based on the rules that existed at the time the person commenced the process; or
  • a new tax that applies prospectively will still change people's expectations of decisions they have already made, based on the fact that no tax existed at that time they made those decisions.

These types of prospective amendment to existing procedures are not retrospective, even though they may appear to have a retrospective effect, and so are not covered by this Question 4.3.

What is the nature of the further information sought?

If the answer is YES, please:

  • identify the clause(s) that provide for retrospective application, and the matters to which this relates;
  • explain why the retrospective provision is necessary; and
  • identify and explain the nature of any features that will mitigate the potential adverse effects of the retrospective provision.

When explaining why a retrospective provision is necessary you will need to first describe the conduct or situations the retrospective provision will apply to, identify whether any persons will be adversely affected and, if so, how many people will be affected and for how long.

It is this retrospective impact on people's rights and obligations that is the most important aspect of a retrospective provision. Some retrospective provisions are beneficial and therefore desirable as remedial provisions, while some will be so unfair that they will constitute a breach of the New Zealand Bill of Rights Act 1990. There are many types of retrospective provision that sit somewhere between these two extremes and the extent of the unfairness to the rights and obligations of people will determine whether the provision can be justified or not.

Types of retrospective legislation that are beneficial and hence not objectionable

It is important to identify whether people will be adversely affected by retrospective legislation because some types of retrospective legislation can be beneficial and these are generally not objectionable, for example:

  • sometimes it may be justifiable for Parliament to reverse the effects of a court decision that interprets and applies a provision in a statute, particularly where the court decision does not reflect what Parliament intended when it enacted the provision. However, it is important that the legislation reversing the court decision allow the person who brought the legal proceedings to keep the benefits of their litigation, for example, a damages award, or a right granted or confirmed by the court that some decision or action was unlawful. Ideally, legislation reversing the effects of a court decision will only need to apply prospectively;[36]
  • Parliament also sometimes clarifies the application of the law prior to legal proceedings being commenced as this can be a more efficient way of providing certainty than leaving the matter to be resolved by court proceedings;
  • a retrospective tax exemption, rebate, reduction in tax rate or backdating of monetary entitlement will not be seen as unfair by the people to whom it applies;
  • tax changes and other forms of budget legislation are often retrospective to the date the proposed change was publicly announced, as this prevents people changing their financial affairs to take advantage of an announced tax change before it is enacted;
  • decriminalising conduct should apply retrospectively, see for example, the retrospective effect of the Homosexual Law Reform Act 1986, which provides that a person cannot be prosecuted for conduct that at the time it occurred was illegal, but is no longer illegal; or
  • the Illegal Contracts Act example noted above was beneficial for those it applied to even though it was retrospective because it provided new more flexible remedies for persons who had already entered contracts that were illegal.

When identifying and explaining any mitigating features of the retrospective provision, consider the following:

  • does the retrospective provision apply as narrowly as possible to achieve its object?
  • does the retrospective provision apply fairly between those subject to the provision and those not subject to the retrospective provision?
  • is the retrospective provision imposed for a particular purpose or for a limited period of time?
  • has the retrospective provision been widely discussed with, or expected by, those who will be subject to it?

If the answer is NO, no further information is required.

 

Notes

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