Law reform role of judges - prospective overrulling

Prospective overruling is not to declare the law as it has always been, but to change it for the future
Prospective overruling	In a speech in 1987 Lord Mackay LC discussed the possibility of allowing prospective overruling, whereby the court might uphold the existing precedent in the instant case but declare it overruled for the future. Most litigants are prepared to accept defeat if the judge decides the law is against them, but to be told that they had won their case only for future litigants, not for themselves, would seem ludicrous. But this view has changed in National Westminster Bank v Spectrum [2005] HL.
The effect of National Westminster Bank v Spectrum [2005] HL	Lord Nicholls giving the lead judgment of the Committee gave a clear explanation of how judicial precedent is to be viewed. There are he said, four basic “features”. Feature 1 Courts are adjudicative, they decide the legal consequences of past happenings Feature 2 Hierarchical principles of 'stare decisis'. Feature 3 Change does not always involve departing from or overruling a previous court decision Feature 4 The fourth feature is a consequence of the second and third features. A court ruling which changes the law from what it was previously thought to be operates retrospectively as well as prospectively. The ruling will have a retrospective effect so far as the parties to the particular dispute are concerned. Because of the doctrine of precedent the rights and obligations of everyone else whose case thereafter came before a court would be decided according to the law as enunciated by court even though the relevant events occurred before that decision was given.
Prospective Overruling	This 'retrospective' effect of a change in the law of this nature can have disruptive and seemingly unfair consequences. Lord Nicholls went on to describe “Prospective Overruling”, which has never happened in the UK but has been often considered. It has had some success in the USA and India, and in the European Court but not elsewhere in the world. 'Prospective overruling', sometimes described as 'non-retroactive overruling', is a judicial tool fashioned to mitigate the adverse consequences. It is a shorthand description for court rulings on points of law which, to greater or lesser extent, are designed not to have the normal retrospective effect of judicial decisions.
Pure Prospective Overruling, criminal cases	This is most marked in criminal cases, where 'pure' prospective overruling would leave a successful defendant languishing in prison.
Selective Prospective Overruling, criminal cases	'Selective' prospective overruling avoids this consequence but it could see a successful defendant freed while others in like case stayed in prison.
Pure Prospective Overruling, civil cases	In civil cases 'pure' prospective overruling would hinder the development of the law by discouraging claimants from challenging a prevailing view of the law. In its simplest form prospective overruling involves a court giving a ruling of the character sought by the bank in the present case. Overruling of this simple or 'pure' type has the effect that the court ruling has an exclusively prospective effect. The ruling applies only to transactions or happenings occurring after the date of the court decision. All transactions entered into, or events occurring, before that date continue to be governed by the law as it was conceived to be before the court gave its ruling. Other forms of prospective overruling are more limited and 'selective' in their departure from the normal effect of court decisions.
Selective Prospective Overruling, civil cases	'Selective' overruling, if only the successful claimant benefits from the change, is likely to mean that persons in like case are treated differently. Further, it would introduce an arbitrary element into the law. The ability to obtain an effective remedy could depend upon which of several challenges reaches the House of Lords first. Even if everyone who had already commenced proceedings was given the benefit of the court ruling there would still be scope for discrimination: there would be discrimination between those who knew they might have a claim and started proceeding post-haste and those, lacking proper advice, who were unaware they might have a claim.
Prospective Overruling with retrospective effect	The ruling in its operation may be prospective and, additionally, retrospective in its effect as between the parties to the case in which the ruling is given. Or the ruling may be prospective and, additionally, retrospective as between the parties in the case in which the ruling was given and also as between the parties in any other cases already pending before the courts. There are other variations on the same theme.
Prospective Overruling with temporal limitation	Recently Advocate General Jacobs suggested an even more radical form of prospective overruling. He suggested that the retrospective and prospective effect of a ruling of the European Court of Justice might be subject to a temporal limitation that the ruling should not take effect until a future date, namely, when the State had had a reasonable opportunity to introduce new legislation: *Banco Popolare di Cremona v Agenzia Entrate Uffficio Cremona* (Case C-475/03, 17 March 2005), paras 72-88.
…'declaratory' theory of Sir William Blackstone has long been discarded. It is at odds with reality, he said.	Comment: This judgment hits 10 on the scale of important decisions in recent years. The whole basis of precedent has been potentially altered. All sides in the debate about judicial creativity and the judiciary’s role in law making will now to be re-argue their case. The effect of this case is that many insolvencies over the past 25 years may have been wrongly decided and could, in theory, be challenged. The main beneficiaries will be Revenue & Customs, but a Crown statement three years ago indicated that they would not seek to unpick earlier decisions. Over 500 other cases have been awaiting this judgment and can now be sorted out; the sums involved may costs banks hundreds of millions of pounds. The House of Lords held that it had jurisdiction in certain exceptional circumstances to depart from the normal principles relating to the retrospective effect of court decisions, the present case was not within that exceptional category of case in which a declaration that the overruling was to have prospective effect only would be appropriate. The bank argued that if the HoL was going to overrule *Siebe Gorman, it should do so only for the future and Siebe Gorman* should continue to apply to all transactions entered into before the instant case.
Prospective overruling outside judicial power	The essence of the argument against prospective overruling was that in this country prospective overruling was outside the constitutional limits of the judicial function and would amount to the judicial usurpation of the legislative function. That argument raised the issue: Would a decision by the House of Lords on a point of law having only prospective effect be so substantial a departure from established judicial procedure that it should be regarded as outside the function discharged by the judiciary under this country’s constitution? In this country, the established practice of judicial precedent derived from the common law. Constitutionally the judges had power to modify that practice. There could be circumstances in this country where prospective overruling would be necessary to serve the underlying objective of the courts of this country: to administer justice fairly and in accordance with the law. There could be cases where a decision on an issue of law, whether common law or statute law, was unavoidable but the decision would have such gravely unfair and disruptive consequences for past transactions or happenings that their Lordships' House would be compelled to depart from the normal principles relating to the retrospective and prospective effect of court decisions. If, altogether exceptionally, the House of Lords, as the country’s supreme court were to follow that course their Lordships would not regard it as trespassing outside the functions properly to be discharged by the judiciary under this country’s constitution.
The final word on National Westminster Bank v Spectrum [2005] HL	However, the present case was miles away from the exceptional category in which alone prospective overruling would be legitimate.