14 August 2006

Shifting goalposts

NZ Herald: "Labour shifts the goalposts" KiwiBlog: "Retropsective Legislation" NoRightTurn: "Illegal Election Spending" It's a pity the recent discussion about the Parliamentary Leaders fund has become so politicised because its an interesting legal scenario in its own right. I must say that I share the concerns expressed about the goalposts being shifted during the game. Consider the following example: - Citizen A is a supporter of freedom of speech for bloggers. - Citizen A is aware that public body B maintains a grants scheme which funds projects promoting the freedom of expression. - Citizen A inquiries about whether Public Body B's grants scheme is available for the purpose of funding a website promoting the freedom of speech for bloggers. - Public Body B assures Citizen A that it does. - Citizen A receives funding under the scheme and uses it to host the website promoting the freedom of speech for bloggers. - Subsequently, Auditor C advises Public Body B and Citizen A that the grants scheme should not be available for the purpose of promoting freedom of speech for bloggers. - Public Body B therefore requires Citizen A to repay the grant. Should Citizen A be required to repay the grant? Well, the issue is a rather controversial legal question. On the one hand, the grant is illegal and some say that any illegality must be stopped in its tracks as soon as it is seen - which includes applying restitutionary principles to recover funds illegally expended. On the other hand, there is a good argument that the change in position from the public body undermines the Rule of Law and the public body should be "estopped" from now seeking to recover the funds. The first position is relatively simply and probably represents a conservative view of the orthodox legal position. However, the second position is gaining increasing support in public law. It goes back to the fundamental principle that a person should be able to plan their life conscious of the legal consequences that flow from decisions they make. This principle is seen throughout our law, including the principle against retrospective legislation which affects vested legal rights. In this case, the change in position comes from an administrative decision, not legislation. Citizen A was assured by the Public Body B that the grants scheme was available for their desired purpose. Citizen A relied on that assurance and made certain spending decisions based on it. If Public Body B is now allowed to renege on that assurance and require the repayment of funds, then Citizen A will suffer detriment which they had no reasonable possibility to avoid. Citizen A had a (substantive) legitimate expectation, induced by Public Body B, that grants funding for the website was permissible. Further, there is no sound reason why the administrative U-turn need operate retrospectively; the change of position can apply prospectively, applying to future decisions thereby allowing citizens to make decisions in the light of that position. There is no specific third party prejudice. In the light of the analysis above, I think there is a strong case for arguing that Citizen A should not be required to repay the funds. Alternatively, it is one of those situations where retrospective validating legislation may be appropriate. The legislation does no more than amend the law to ensure that it accords with the expectations that the public body and citizens maintained at the time. In this case, this is a class of retrospective legislation which enhances, not undermines, the Rule of Law. Of course, there is a central factual assumption underscoring this analysis: Citizen A was assured by Public Body B that this grants funding was legitimate, had no reasonable reason to doubt that assurance, and no reasonably available mechanism by which to otherwise confirm that expectation. I'll let others debate whether this was actually the case. PS If you want another 75,000 words on this issue, see my LLM thesis:"Estoppel (Principles?) in Public Law: The Substantive Protection of Legitimate Expectations"

7 comments:

Bernard Darnton said...

Of course, in the pledge card debacle, "Citizen A" knew perfectly well that the spending was illegal but just assumed that she could get away with it anyway.
One thing that hasn't been noted elsewhere is that "Public Body B" is just as responsible for the illegal spending and that is why the Parliamentary Service is a defendant in Darnton v Clark.
Also worthy of note in light of your comments is that my case doesn't ask for money to be repaid, just that the spending is declared illegal. Repayment would come down to the decency of "Citizen A".

David Farrar said...

More of a problem where the person who decides for Public Body B is best friends with Citizen A.

Dean Knight said...

BD:

1. Indeed. I firmly believe that some expectations are irrational, even if induced by an assurance by a public body.
3. Quite. I have explored elsewhere (jnl article to be posted soon) though whether civil claims (such as restitutionary claims) ought to, as a matter of course, follow a finding of illegality. Personally, I think a nuanced approach is required. Although you are seeking a declaration, there remains an question of whether this remedy ought to be granted, even if the court establishes that the use of funds was illegal...

DF: Indeed. I await the OAG report to see exactly what the circumstances were. But the main point I make is that this isn't necessarily an open-and-shut illegality and refund case...

MERC said...

What about intent? Was there a prior intention to defraud (Helen)? If so, there is a case to answer, no?

Also, logically, if you follow the need to post- legislate argument (Cullen), that makes the intention "to do it, knowing it to be illegal, with the intention of post-legislating if caught."

That is why this is so insidious. There can be no other reason to post-legislate (in this instance) than to cover one's tracks (intent), rather than to improve the law (need to plug loopholes or abuse).

Rule of law is here compromised in the most venal way. (Abuse of power + reduction of law = bad).

Forgive me, I'm no lawyer, obviously.

Graeme Edgeler said...

Dean - the link to your thesis isn't working.

Dean Knight said...

GE: Hopefully now fixed.

Gooner said...

Why does Darnton say that Citizen A "knew perfectly well the spending was illegal".

Where does this fact come from? Maybe "ought to have known" but "knew perfectly well" is surely not correct. Is it?

Course Outline

Lord Justice Lawton in Maxwell v Department of Trade and Industry [1974] 2 All ER 122 said:

"From time to time ... lawyers and judges have tried to define what constitutes fairness. Like defining an elephant, it is not easy to do, although fairness in practice has the elephantine quality of being easy to recognise. As a result of these efforts a word in common usage has acquired the trappings of legalism: 'acting fairly' has become 'acting in accordance with the rules of natural justice', and on occasion has been dressed up with Latin tags. This phrase in my opinion serves no useful purpose and in recent years it has encouraged lawyers to try to put those who hold inquiries into legal straitjackets.... For the purposes of my judgment I intend to ask myself this simple question: did the [decision-maker] act fairly towards the plaintiff?"


This course examines the elephantine concept of fairness in the law, along with other contemporary legal issues.

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