Chapter 11: Retrospective without Authority: SO 327(2)(g)

I Introduction

It is generally accepted that legislation should be forward-looking in its effect. If the legal status of past conduct is altered, there can be no certainty as to the legal status of current conduct. Furthermore, there is an inherent unfairness in changing the law after the event, as people cannot alter past actions to meet the requirements of a new law. Nevertheless, Parliament can, and does, pass laws that have retrospective effect. All the same, the practice is generally considered to be undesirable for the reasons outlined.

Standing Order ground 327(2)(g) acts as a restraint on the creation of retrospective delegated legislation. Given the concerns regarding retrospective legislation, a regulation should only be retrospective if expressly authorised by Parliament.³⁰⁰ This ground has two elements, namely is the regulation retrospective in effect, and, if so, is that retrospectivity authorised by the empowering Act? Both elements will be examined in turn.

II Retrospectivity

The Committee’s investigation into the Accident Rehabilitation and Compensation Insurance (Social Rehabilitation) Regulations 1992 provides an example of a regulation found to have been retrospective.³⁰¹ The regulations set new levels of payments to ACC claimants. While the regulations were promulgated between 17 September and 8 October 1992, they affected any application received on or after 1 July 1992. Thus, those claimants who had made an application in between this 3-4 month period found that a new set of regulations applied that did not exist at the time they lodged their applications. The Committee found the regulations to have a clear retrospective effect.

A second example of the Committee finding a regulation had retrospective effect is in its report on the Complaint Regarding Notice of Scopes of Practice and Related Qualifications Prescribed by the Nursing Council of New Zealand.³⁰² The notice split the title of second- level nurses so that those who qualified before 2000 would retain the title of “enrolled nurse” whereas those qualifying after this time would have the title of “nurse assistant”. People enrolled in second-level nursing programmes after 2000 but prior to the notice becoming effective in September 2004, were informed by the polytechnics training them that their graduation would result in their recognition by the Nursing Council as “enrolled nurses”. People enrolled as “enrolled nurses” during this period subsequently had their title changed to “nurse assistant”. The Committee found the notice had unauthorised retrospective effect and recommended it be amended to remove this effect. Interestingly, the Committee noted that although there had been a number of retrospective changes to titles in the nursing profession, in this instance the change was unacceptable because, in contrast to other title changes within the profession, it mattered to the affected second-level nurses. To remedy this retrospective effect, clause 4 of the Notice, dealing with the scope of practice of enrolled nurses, was subsequently revoked and substituted by resolution of the House of Representatives pursuant to the procedure contained, at that stage, in section 9(1) of the Regulations (Disallowance) Act 1989, and now in section 46 of the Legislation Act 2012.³⁰³

In its report on the Marine and Coastal Area (Takutai Moana) Reclamation Fees Regulations 2012, the Committee considered that the regulations concerned were only indirectly retrospective.³⁰⁴ Section 41 of the Marine and Coastal Area (Takutai Moana) Act 2011 allowed applicants seeking interests in reclaimed land to turn pre-existing claims under the Resource Management Act 1991 into claims under section 35 of the 2011 Act. The 2012 Regulations had the effect of forcing applicants who had already chosen to undergo this process to pay a fee in order to continue their applications, even though no fee had been payable at the time the Act was passed. The regulations’ general effect was to retrospectively force applicants to pay a fee that had not been set at the time it became payable. The Committee found, though, that the regulations’ “confirmation procedure” had altered the timing of the fee payment in an effort to avoid retrospectivity: the applicants were notified of the fee before becoming liable to pay it and were able to discontinue their applications if they chose not to pay the fee. For this reason, the Committee was not prepared to label the regulations directly retrospective. It was, however, willing to note that the regulations were indirectly retrospective to the extent that retrospectivity was only prevented by a provision that breached other Standing Order grounds.³⁰⁵ In its response to this report, the government obliquely agreed with the Committee. The government accepted that the applicants did not know what the fees would be when they lodged applications, but stated that as the applicants were informed of the fee before becoming liable to pay it, the fees were not retrospective and were intra vires the relevant legislation.³⁰⁶

On at least four other occasions the Committee has concluded that regulations were entirely not retrospective. The first was the inquiry into the Accident Compensation Corporation (Accident Experience) Regulations 1992.³⁰⁷ Section 40 of the Accident Compensation Act 1992 provided that the Accident Compensation Corporation could impose a penalty on an employer, or allow a rebate, based on the accident history of that employer. The complainant argued that the regulations operated retrospectively by taking into account previous claims. The Committee rejected the retrospective argument. It noted that while the accident history of an employer was relevant, any penalty imposed or rebate given was for the current year only and was not retrospective in effect.

Similar issues arose in the Committee’s investigation into the Civil Aviation Regulations 1953, Amendment No 30.³⁰⁸ The regulations increased licence fees for airline pilots. The Minister of Transport had stated that current holders of airline pilot licences should be required to contribute to the costs incurred by current student pilots. This was on the basis that the airline pilots had received heavy taxpayer subsidies when they were themselves student pilots. The complainants argued that seeking to recoup money from pilots in this way for costs incurred while studying amounted to a retrospective action. The Civil Aviation Authority responded by stating that the fees payable for a licence affected only applications for licences after the regulations came into force. The Authority argued that the minister’s comments simply indicated a more equitable regime, and the Committee found no retrospectivity in the regulations.

Thirdly, the Committee’s investigation into staffing orders raised the issue of retrospective validation of government actions.³⁰⁹ Prior to new staffing orders being issued, the Ministry of Education gave instructions to schools to give notice of pending change in staffing levels. As a result of the notice, some teachers chose to resign before the new orders were brought into force. Whilst making a finding that regulations should not be anticipated by either the body administering the regulations or the people affected by them, the Committee concluded that the regulations fell just short of being retrospective.

Finally, the Committee’s investigation into a complaint regarding the Overseas Investment Amendment Regulations 2008 considered regulatory intervention intended to disrupt a bid by the Canadian Pension Plan Investment Board to buy a 40 percent share in Auckland International Airport Limited.³¹⁰ A regulation-making power was used to add additional criteria to a statutory power of decision as to whether to allow overseas investment in sensitive land. In concluding the regulations were not retrospective in effect, the Committee adopted the approach of the Court of Appeal in Foodstuffs (Auckland) Ltd v Commerce Commission.³¹¹ The Committee endorsed the Court’s view that “the application of amended legislation to existing applications was acceptable as the applications were future looking and the decision did not address past transactions.”³¹²

All seven reports mentioned above are indicative of a strict approach to determining when a regulation can be considered retrospective. In the two instances in which a regulation was deemed directly retrospective, the regulation clearly altered the law as it stood prior to the regulation coming into force. The Committee has also shown willingness to declare a regulation indirectly retrospective where retrospectivity is only avoided by a breach of another Standing Order ground. The other four reports involved situations where the regulations were found to be prospective in their application.

III Expressly Authorised by the Empowering Statute

Assuming that a regulation is considered retrospective, the retrospective element of the regulation must be expressly authorised by the empowering Act. The Committee has set a high threshold for determining what constitutes express authorisation. The clearest instance of an express authorisation was contained in the Sharemilkers’ Agreements Order 2001.³¹³ The Order amended minimum terms and conditions for contracts between sharemilkers and employers contained in the Sharemilking Agreements Act 1937. The Committee found the Order was not retrospective, but concluded that even if it was, the Act authorised retrospectivity. Under section 4(4) of the Act it was possible for the Order to operate “before or after the date of the Order in Council”. Potentially this allowed the Order to change the minimum terms and conditions of a contract prior to it actually coming into force.

In the Committee’s investigation into the Accident Rehabilitation and Compensation Insurance (Social Rehabilitation) Regulations 1992, the Committee stated that:³¹⁴

In its report the Committee rejected an argument that the empowering Act implicitly authorised the regulations to have retrospective effect. The Corporation argued that the relationship between the date upon which the Act came into force and the date from which the regulations were required to cover applications was evidence of an acknowledgement by Parliament that levels of payments had to be set retrospectively. The Committee, however, required explicit authorisation that simply did not exist in the principal Act.

A similar scenario occurred regarding the Marine and Coastal Area (Takutai Moana) Reclamation Fees Regulations 2012. In its report, the Committee considered and rejected LINZ’s argument that it was theoretically possible that Parliament intended fees to be able to be set at a time after they became payable.³¹⁵ The Committee, again, required express acknowledgement that retrospectivity was possible in the text of the empowering Act, and concluded that LINZ had failed to point to statutory authority for this in the sections of the Marine and Coastal Area (Takutai Moana) Act 2011 concerned.

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300 Legislation Advisory and Design Committee, above n 135, ch 12.

301 Regulations Review Committee “Complaints Relating to the Accident Rehabilitation and Compensation Insurance (Social Rehabilitation) Regulations 1992”, above n 287.

302 Regulations Review Committee “Complaint regarding Notice of Scopes of Practice and Related Qualifications Prescribed by the Nursing Council of New Zealand” [2007] AJHR I16J.

303 “Notice of Scopes Practice and Related Qualifications Prescribed by the Nursing Council of New Zealand Amendment Notice” Hon Dr Michael Cullen (23 September 2008 SR 2008/362) 650 NZPD 19223. For further discussion of this motion see Chapter 2.

304 Regulations Review Committee “Investigation into the Marine and Coastal Area (Takutai Moana) Reclamation Fees Regulations 2012” (30 September 2013) at 8.

305 In this case, Standing Orders of the House of Representatives 2020, SO 327(2)(a) and (c).

306 Government response to Regulations Review Committee report “Investigation into the Marine and Coastal Area (Takutai Moana) Reclamation Fees Regulations 2012” (20 December 2013).

307 Regulations Review Committee “Inquiry into the Accident Compensation (Accident Experience) Regulations 1992”, above n 192.

308 Regulations Review Committee “Inquiry into the Civil Aviation Regulations 1953, Amendment No 30”, above n 244.

309 Regulations Review Committee “Report on the Complaint Relating to Staffing Orders, Promulgated under Section 91H of the Education Act 1989, Affecting Area, Primary, Intermediate, and Secondary Schools”, above n 206.

310 Regulations Review Committee “Complaint Regarding the Overseas Investment Amendment Regulations 2008”, above n 203.

311 Foodstuffs (Auckland) Ltd v Commerce Commission [2002] 1 NZLR 353.

312 Regulations Review Committee “Complaint Regarding the Overseas Investment Amendment Regulations 2008”, above n 203.

313 Regulations Review Committee “Complaint Relating to the Sharemilking Agreements Order 2001” [2001] AJHR I16G.

314  Regulations Review Committee “Complaints Relating to the Accident Rehabilitation and Compensation Insurance (Social Rehabilitation) Regulations 1992”, above n 287, at 17.

315 Regulations Review Committee “Investigation into the Marine and Coastal Area (Takutai Moana) Reclamation Fees Regulations 2012” (30 September 2013) at 9.