Judgments - Wilson and others v. Secretary of State for Trade and Industry (Appellant)

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    178. First County did not appeal, but the Secretary of State appealed, on a number of grounds, against the Court of Appeal's order making the declaration of incompatibility. I respectfully agree with Lord Nicholls of Birkenhead as to the disposal of all these grounds of appeal and, in particular, with what my noble and learned friend, Lord Hobhouse of Woodborough, has said on the use of Hansard. I confine my observations accordingly to the one matter, "retrospectivity". At the outset, it may be useful to recall some general features of the 1998 Act.

General features of the 1998 Act

    179. The 1998 Act is beautifully drafted. Its structure is tight and elegant, being marred only by the obvious interpolation of sections 12 and 13 as a result of amendments made while the Bill was passing through Parliament. The presence or absence of particular features in the Act is therefore unlikely to be due to oversight.

    180. Although the Act is not entrenched, the Convention rights that it confers have a peculiar potency. Enforcing them may require a court to modify the common law. So far as possible, a court must read and give effect to statutory provisions in a way that is compatible with them. Rights that can produce such results are clearly of a higher order than the rights which people enjoy at common law or under most other statutes.

    181. It is well recognised, however, that Convention rights are to be seen as an expression of fundamental principles rather than as a set of mere rules. In applying the principles the courts must balance competing interests. So much was made clear, for example, by my noble and learned friend, Lord Hope of Craighead, in R v DPP, Ex p Kebilene [2000] 2 AC 326, 384B - C. Therefore, when deciding whether the order sought by one private party would infringe a Convention right of the other, a court must balance the interests of both parties. If the court finds that the order would infringe the Convention right of the party against whom it would be made, this can only be because the court has concluded that his interests are to be preferred to any competing interests of the party seeking the order. In particular, the court must have concluded that the Convention right of the party resisting the order is to be preferred to the other party's common law or statutory right to obtain it.

    182. The 1998 Act is unusual - perhaps unique - in its range. While most statutes apply to one particular topic or area of law, the 1998 Act works as a catalyst across the board, wherever a Convention right is engaged. It may affect matters of substance in such areas as the law of property, the law of marriage and the law of torts. Or else it may affect civil and criminal procedure, or the procedure of administrative tribunals.

    183. Unlike some statutes, the 1998 Act did not arrive on the scene unheralded. The Bill embodied a flagship policy of the government and the date for the commencement of the Act was announced well in advance. During the long period between Royal Assent and commencement, not only the legal profession but public authorities also could prepare for the day when people would enjoy Convention rights within the three domestic legal systems and when public authorities would have to respond to that new situation.

    184. When the 1998 Act did eventually come into force, inevitably it was in a world where events and transactions had been taking place and legal proceedings of various kinds were in progress. Naturally, questions arose as to how the new Act fitted into this world. For all but two of these questions, the draftsman has, deliberately, left it to the courts to supply the answers. Although counsel confined their argument to sections 3 and 4, for reasons which will become apparent, I consider that the issues relating to the application of these sections are best considered in the context of the 1998 Act as a whole.

    185. In dealing with the more general aspects of the difficult topic of "retrospectivity", I have derived particular benefit from studying P-A Côté, The Interpretation of Legislation in Canada, 3rd ed (2000), Chapter 2, section 1, and the literature cited there.

The presumption against the retroactive operation of legislation

    186. At common law there is a presumption that a statute does not have "retrospective" effect. The statement in Maxwell on The Interpretation of Statutes, 12th ed (1969), p 215 is frequently quoted:

    "Upon the presumption that the legislature does not intend what is unjust rests the leaning against giving certain statutes a retrospective operation. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication."

    The very generality of this statement rather obscures the fact that it uses the term "retrospective" to describe a range of different effects, some more and some less extreme. It is therefore important to identify what it is about any particular provision that is said to be "retrospective".

    187. So far as matters of substance are concerned, the essence of the core common law rule is conveniently stated by Sir Owen Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261, 267:

    "The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events."

In Wainwright v Home Office [2002] QB 1334, 1345F, at para 27, Lord Woolf LCJ referred succinctly to:

    "the general presumption that legislation should not be treated as changing the substantive law in relation to events taking place prior to legislation coming into force."

Since statutes which change the substantive law in relation to events in the past can obviously cause serious injustice, the presumption against a statute being intended to have such an effect is powerful - so powerful indeed that any statutory provision, such as section 1 of the War Damage Act 1965, which is intended to apply in this way can be expected to say so expressly. Because such provisions do actually affect the position before the legislation came into force, they can conveniently be described as "retroactive".

Statutes making prospective changes to existing rights

    188. Retroactive provisions alter the existing rights and duties of those whom they affect. But not all provisions which alter existing rights and duties are retroactive. The statute book contains many statutes which are not retroactive but alter existing rights and duties - only prospectively, with effect from the date of commencement. Although such provisions are often referred to as "retrospective", Viscount Simonds rightly cast doubt on that description in Attorney General v Vernazza [1960] AC 965, 975.

    189. The distinction between the two kinds of provision, and the need to have regard to that distinction, were spelled out by the Court of Appeal long ago in West v Gwynne [1911] 2 Ch 1. In that case the plaintiffs were assignees of a lease dating from 1874. The lease contained a covenant by the lessees against underletting the premises or any part thereof without the consent in writing of the landlord. Section 3 of the Conveyancing and Law of Property Act 1892 provided that

    "In all leases containing a covenant … against … underletting … the land or property leased without licence or consent, such covenant … shall, unless the lease contains an expressed provision to the contrary, be deemed to be subject to a proviso to the effect that no fine or sum of money in the nature of a fine shall be payable for or in respect of such licence or consent…."

In 1909 the plaintiffs applied to the defendant landlord for his consent to a proposed underlease of part of the premises but he replied that he was prepared to grant a licence only on condition that he should receive for himself half of the sum by which the rent of the underlease exceeded the rent payable under the lease. The plaintiffs sought a declaration that the defendant was not entitled to impose the condition. The question was whether section 3 of the 1892 Act applied to a lease executed before the commencement of the Act. The Court of Appeal held that it did.

    190. Cozens-Hardy MR said this, [1911] 2 Ch 1, 11:

    "It was forcibly argued by Mr Hughes that a statute is presumed not to have a retrospective operation unless the contrary appears by express language or by necessary implication. I assent to this general proposition, but I fail to appreciate its application to the present case. 'Retrospective operation' is an inaccurate term. Almost every statute affects rights which would have been in existence but for the statute. Section 46 of the Settled Estates Act 1877 … is a good example of this. Section 3 does not annul or make void any existing contract; it only provides that in the future, unless there is found an express provision authorizing it, there shall be no right to exact a fine. I doubt whether the power to refuse consent to an assignment except upon the terms of paying a fine can fairly be called a vested right or interest. Upon the whole I think section 3 is a general enactment based on grounds of public policy, and I decline to construe it in such a way as to render it inoperative for many years wherever leases for 99 years, or it may be for 999 years, are in existence."

Buckley LJ observed, [1911] 2 Ch 1, 11 - 12:

    "During the argument the words 'retrospective' and 'retroactive' have been repeatedly used, and the question has been stated to be whether section 3 of the Conveyancing Act 1892, is retrospective. To my mind the word 'retrospective' is inappropriate, and the question is not whether the section is retrospective.

    Retrospective operation is one matter. Interference with existing rights is another. If an Act provides that as at a past date the law shall be taken to have been that which it was not, that Act I understand to be retrospective. That is not this case. The question here is whether a certain provision as to the contents of leases is addressed to the case of all leases or only of some, namely, leases executed after the passing of the Act. The question is as to the ambit and scope of the Act, and not as to the date as from which the new law, as enacted by the Act, is to be taken to have been the law.

    Numerous authorities have been cited to us. I shall not travel through them. To my mind they have but little bearing upon this case. Suppose that by contract between A and B there is in an event to arise a debt from B to A, and suppose that an Act is passed which provides that in respect of such a contract no debt shall arise. As an illustration take the case of a contract to pay money upon the event of a wager, or the case of an insurance against a risk which an Act subsequently declares to be one in respect of which the assured shall not have an insurable interest. In such a case, if the event has happened before the Act is passed, so that at the moment when the Act comes into operation a debt exists, an investigation whether the transaction is struck at by the Act involves an investigation whether the Act is retrospective. Such was the point which arose in Moon v Durden (1848) 2 Ex 22 and in Knight v Lee [1893] 1 QB 41. But if at the date of the passing of the Act the event has not happened, then the operation of the Act in forbidding the subsequent coming into existence of a debt is not a retrospective operation, but is an interference with existing rights in that it destroys A's right in an event to become a creditor of B. As matter of principle an Act of Parliament is not without sufficient reason taken to be retrospective. There is, so to speak, a presumption that it speaks only as to the future. But there is no like presumption that an Act is not intended to interfere with existing rights. Most Acts of Parliament, in fact, do interfere with existing rights. To construe this section I have simply to read it, and, looking at the Act in which it is contained, to say what is its fair meaning."

    191. Similarly - simplifying the complexities - in Gustavson Drilling (1964) Ltd v Minister of National Revenue [1977] 1 SCR 271 an oil exploration company was entitled to deduct certain drilling and exploration expenses when computing its income for tax purposes, but it did not do so. In 1962 the legislation was changed to disallow such deductions. Subsequently, a successor company none the less sought to deduct those accumulated expenses and invoked the presumption against legislation having retrospective effect. The majority of the Supreme Court of Canada rejected the argument. Dickson J said, at pp 279 - 280:

    "The general rule is that statutes are not to be construed as having retrospective operation unless such a construction is expressly or by necessary implication required by the language of the Act. An amending enactment may provide that it shall be deemed to have come into force on a date prior to its enactment or it may provide that it is to be operative with respect to transactions occurring prior to its enactment. In those instances the statute operates retrospectively. Superficially the present case may seem akin to the second instance but I think the true view to be that the repealing enactment in the present case, although undoubtedly affecting past transactions, does not operate retrospectively in the sense that it alters rights as of a past time. The section as amended by the repeal does not purport to deal with taxation years prior to the date of the amendment; it does not reach into the past and declare that the law or the rights of parties as of an earlier date shall be taken to be something other than they were as of that earlier date. The effect, so far as the appellant is concerned, is to deny for the future a right to deduct enjoyed in the past but the right is not affected as of a time prior to enactment of the amending statute."

    192. Since provisions which affect existing rights prospectively are not retroactive, the presumption against retroactivity does not apply. Nor is there any general presumption that legislation does not alter the existing legal situation or existing rights: the very purpose of Acts of Parliament is to alter the existing legal situation and this will often involve altering existing rights for the future. So, as Dickson J went on to point out in Gustavson Drilling [1977] 1 SCR 271, 282 - 283, with special reference to tax legislation:

    "No one has a vested right to continuance of the law as it stood in the past; in tax law it is imperative that legislation conform to changing social needs and governmental policy. A taxpayer may plan his financial affairs in reliance on the tax laws remaining the same; he takes the risk that the legislation may be changed."

As the sparks fly upward, individuals and businesses run the risk that Parliament may change the law governing their affairs.

Presumption against interference with vested rights

    193. Often, however, a sudden change in existing rights would be so unfair to certain individuals or businesses in their particular predicament that it is to be presumed that Parliament did not intend the new legislation to affect them in that respect. If undue weight is not given to his use of the term "retrospective", Wright J gives a strong statement of the presumption in In re Athlumney [1898] 2 QB 547, 551-552:

    "Perhaps no rule of construction is more firmly established than this - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment."

Another statement of the presumption is to be found in the judgment of Dickson J in Gustavson Drilling [1977] 1 SCR 271, 282:

    "The rule is that a statute should not be given a construction that would impair existing rights as regards person or property unless the language in which it is couched requires such a construction: Spooner Oils Ltd v Turner Valley Gas Conservation Board [1933] SCR 629, 638. The presumption that vested rights are not affected unless the intention of the legislature is clear applies whether the legislation is retrospective or prospective in operation. A prospective enactment may be bad if it affects vested rights and does not do so in unambiguous terms. This presumption, however, only applies where the legislation is in some way ambiguous and reasonably susceptible of two constructions."

    194. Dickson J here makes the important point that this presumption applies to all legislation which affects vested rights, whether the legislation affects them retroactively or only prospectively. The decision of the Privy Council in Zainal bin Hashim v Government of Malaysia [1980] AC 734 is an example of the presumption being considered in relation to a retroactive statute.

    195. More often, the presumption falls to be considered in relation to legislation which alters rights only for the future. Since it is more likely that Parliament intended to alter vested rights in this way than that it intended to make a retroactive change, in practice the presumption against legislation altering vested rights is regarded as weaker than the presumption against legislation having retroactive effect.

    196. The presumption is against legislation impairing rights that are described as "vested". The courts have tried, without conspicuous success, to define what is meant by "vested rights" for this purpose. Although it concerned a statutory rule resembling section 16(1)(c) of the Interpretation Act 1978, the decision of the Privy Council in Abbott v Minister for Lands [1895] AC 425 is often regarded as a starting-point for considering this point. There Lord Herschell LC indicated, at p 431, that, to convert a mere right existing in the members of the community or any class of them into an accrued or vested right to which the presumption applies, the particular beneficiary of the right must have done something to avail himself of it before the law is changed. The courts have grappled with this idea in a series of cases which Simon Brown LJ surveyed in Chief Adjudication Officer v Maguire [1999] 1 WLR 1778. It is not easy to reconcile all the decisions. This lends weight to the criticism that the reasoning in them is essentially circular: the courts have tended to attach the somewhat woolly label "vested" to those rights which they conclude should be protected from the effect of the new legislation. If that is indeed so, then it is perhaps only to be expected since, as Lord Mustill observed in L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co [1994] 1 AC 486, 525A, the basis of any presumption in this area of the law "is no more than simple fairness, which ought to be the basis of every general rule."

    197. A caveat should be entered. In Hedderwick v The Federal Commissioner of Land Tax (1913) 16 CLR 27, 37 Griffith CJ said:

    "It is hardly necessary to remark that the Crown's vested rights are to be respected as much as are the rights of private persons."

    There is no suggestion in the present case that the application of the 1998 Act would affect any vested rights of the Crown or of any other public authority. It is not therefore necessary to decide whether the observation of the Chief Justice is sound as a general proposition or whether, if it is, the presumption would prevail in the case of the 1998 Act, given its objectives.

Presumption that legislation does not affect pending proceedings

    198. The authorities refer to a further presumption, that legislation does not apply to actions which are pending at the time when it comes into force unless the language of the legislation compels the conclusion that Parliament intended that it should. A well-known statement of this rule of construction is to be found in the judgment of Sir George Jessel MR in In re Joseph Suche & Co Ltd (1875) 1 Ch D 48, 50 where he referred to:

    "a general rule that when the legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them."

In Zainal bin Hashim v Government of Malaysia [1980] AC 734, 742C the Board deliberately modified this rule and slightly reduced its force:

    "for pending actions to be affected by retrospective legislation, the language of the enactment must be such that no other conclusion is possible than that that was the intention of the legislature."

The rule applies, of course, to all legislation, not just to legislation with retroactive effect. Indeed this particular presumption is a more limited version of the general presumption that legislation is not intended to affect vested rights. Since the potential injustice of interfering with the rights of parties to actual proceedings is particularly obvious, this narrower presumption will be that much harder to displace. In Zainal bin Hashim v Government of Malaysia, however, the Privy Council held that the language of the provision in question compelled the conclusion that it was intended to apply even to pending proceedings.

Statutes altering matters of pure procedure

    199. So far I have been dealing with changes in substantive law. As can be seen from the statement of Wright J in In re Athlumney [1898] 2 QB 547, 552 which I quoted above, changes in matters of pure procedure have been treated differently. Wilde B stated the position most starkly in Wright v Hale (1860) 6 H & N 227, 232:

    "where the enactment deals with procedure only, unless the contrary is expressed, the enactment applies to all actions, whether commenced before or after the passing of the Act."

The justification for treating matters of pure procedure differently was stated by Mellish LJ in Republic of Costa Rica v Erlanger (1876) 3 Ch D 62, 69:

    "No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done."

    200. Although, at a general level, the distinction between matters of substance and matters of pure procedure is readily understandable, in practice it has not always proved easy to apply, especially in relation to legislation on limitation or prescription. For that reason, in Yew Bon Tew v Kenderaan Bas Mara [1983] AC 553, 558H - 559A Lord Brightman cautioned against the potential dangers lurking in the description of a measure as "procedural". In L'Office Cherifien v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486, 527G - 528C Lord Mustill went further and suggested that a single criterion of fairness should be applied to all provisions. He added, at pp 525F - H:

    "Precisely how the single question of fairness will be answered in respect of a particular statute will depend on the interaction of several factors, each of them capable of varying from case to case. Thus, the degree to which the statute has retrospective effect is not a constant. Nor is the value of the rights which the statute affects, or the extent to which that value is diminished or extinguished by the retrospective effect of the statute. Again, the unfairness of adversely affecting the rights, and hence the degree of unlikelihood that this is what Parliament intended, will vary from case to case. So also will the clarity of the language used by Parliament, and the light shed on it by consideration of the circumstances in which the legislation was enacted. All these factors must be weighed together to provide a direct answer to the question whether the consequences of reading the statute with the suggested degree of retrospectivity are so unfair that the words used by parliament cannot have been intended to mean what they might appear to say."

This is an application of the "true principle" identified by Staughton LJ in Secretary of State for Social Security v Tunnicliffe [1991] 2 All ER 712, 724f -g:

    "that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree - the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended."

    201. On Lord Mustill's approach an appropriate test might be formulated along these lines: Would the consequences of applying the statutory provision retroactively, or so as to affect vested rights or pending proceedings, be "so unfair" that Parliament could not have intended it to be applied in these ways? In answering that question, a court would rightly have regard to the way the courts have applied the criterion of fairness when embodied in the various presumptions.

    202. In these proceedings your Lordships are called on to consider the application of the 1998 Act in civil proceedings. The language of "vested rights" does not translate altogether easily into the language of the criminal law. For that reason any views that I express are confined to civil proceedings.

The operative provisions of the 1998 Act to be considered together

    203. The argument at the hearing concentrated on sections 3 and 4 of the 1998 Act and, more particularly, on whether section 3 had "retrospective" effect. In the light of the foregoing discussion even that argument requires to be broken down into two parts. The first is whether section 3 is retroactive. The second is whether section 3 applies generally or only in such a way as not to affect rights that were vested, or proceedings that were pending, on 2 October 2000. Those issues relating to section 3 cannot be resolved in isolation, however, but only by looking at the 1998 Act as a whole.

    204. A single statute may contain some provisions which are retroactive and some which affect existing rights only for the future. Similarly, some provisions may apply generally on commencement and others only without prejudice to vested rights or without affecting pending proceedings. But, having regard to the purpose and structure of the 1998 Act, and subject to any express provisions to the contrary, Parliament must have intended all the operative provisions of this particular statute to take effect in the same way in respect of any given Convention right.

    205. Section 1(1) defines the expression "the Convention rights" as the rights and fundamental freedoms set out in certain specific articles of the Convention. The Act then goes on to provide the two mechanisms by which they are to have effect in the domestic law of the United Kingdom. First, under the appropriate cross-heading, in sections 3 to 5 - later complemented by section 10 - the Act provides a mechanism for giving effect to Convention rights in relation to legislation. Secondly, again under an appropriate cross-heading, in sections 6 to 9 it contains a mechanism for giving effect to Convention rights in relation to the acts of public authorities.

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