Looking to the future – The Doctrine of Prospective Overruling

People generally conduct their affairs on the basis of what they understand the law to be. This ‘retrospective’ effect of a change in the law of this nature can have disruptive and seemingly unfair consequences. ‘Prospective overruling’, sometimes described as ‘non-retroactive overruling’, is a judicial tool fashioned to mitigate these adverse consequences. It isa 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.

– Lord Nicholls |Re Spectrum Plus Ltd [2005] UKHL 41

The Doctrine of Prospectivity

The Blackstonian principle dictates that common law courts must adhere to past precedents, even if doing so (the rule of stare decisis) would lead to a significant miscarriage of justice in certain circumstances.[1] The doctrine of prospective overruling is viewed to be a departure from the long-standing rule of stare decisis. Judges essentially went from cautiously following binding precedents to performing legislative functions.[2]

The concept of prospective overruling arose from the brilliance of Justice Cardozo in Great Northern Railway v Sunburst Oil and Refining Co [3] and later again by the US Supreme Court in Linkletter v Walker.[4] Essentially, the principle allows courts to be free to express its judicial activism by overruling previously upheld “bad” law whilst safeguarding past transactions and preventing harm to parties that have relied on such laws in good faith. The rationale behind the doctrine is not to enlarge the powers of the judiciary in so far that it bleeds into legislative functions, but rather to support judicial discretion in bringing out the true essence of a particular law, as it has always existed unrestrained by time.[5]

Prospectively overruling aims to maintain the peace of the past whilst correcting current and future injustices.

Retrospectivity against Prospectivity

To better understand the concept of prospective ruling, it is essential to compare its principles with those of retrospective application. The House of Lords deliberations in Re Spectrum[6] is the leading authority on retrospectivity with Lord Nicholls providing illuminating insight into the principles of prospective overruling by comparing it with retrospectivity.

Lord Nicholls pondered several themes when deciding between retrospective and prospective effects. The concern was that the prospective effect had a high degree of tendency to cause unfairness and discrimination.[7] Subsequently, the power of the courts to decide that a ruling shall have prospective effect could lead to encroachment on the legislative function, thus, blurring the boundaries between judicial and legislative powers. A court’s function is to decide on past events that have occurred between disputing parties and deliver decisions based on the law that is currently in operation. It is argued that retrospectivity does not offend the rule of law in the sense that it falls squarely within judicial functions and powers.[8]

Although Lord Nicholls and the majority of the House acknowledge the benefits of prospective overruling, a pure prospective overruling should solely apply when a retrospective operation of the “new” law would cause a disastrous injury, prejudice and unfairness to those who have relied in, good faith, on the operation of the previously “bad law”. In this particular House of Lords case, the facts and issues in dispute fell far away from any exceptional category or circumstance that necessitated a pure prospective approach to the newly overruled law.

The decision in Re Spectrum, has been highly influential and caused many courts to embrace the philosophy of its reasonings in their own cases. In Alvin Leong Wai Kuan & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan and other appeals,[9] the High Court decided that the declaration in Ang Ming Lee should be applied retrospectively. The court laid out two deciding factors namely (i) that the Federal Court failed to expressly state whether the declaration shall only have a prospective effect and (ii) that there are no exceptional circumstances in existence for the doctrine of prospective overruling to apply. The court went further and found that it is well within the interests of homebuyers, thus, within the spirit of the Housing Development (Control and Licensing) Act 1966 to apply the declaration retrospectively.[10]

Although, the tension between retrospectivity and prospective overruling is high, the majority trend by Malaysian courts is to embrace prospective overruling.

The common law experience – Prospectivity in other jurisdictions

India

The very first account of the adoption of prospective overruling was observed in the locus classicus of Golak Nath v State of Punjab.[11]The Supreme Court delivered a powerful commitment to prevent injustices brought by retrospectivity, by holding that the courts should never be restricted from overruling a previous wrong or “bad” law. Despite many objections to prospective overruling, courts should not be hindered from dispensing justice and fairness even if it deviates from tradition as “stability in the law does not mean that injustice shall be perpetuated”.[12]

However, the position in Golak Nath was exclusive to constitutional matters under the Indian Constitution. The Supreme Court laid down specific guidelines to the application of prospective overruling, namely:

1. to only apply to matters arising under the Indian Constitution;
2. to be applied solely by the highest court of the country; and
3. the doctrine shall be applied by the discretion of the Supreme Court and be moulded in accordance with the justice of each matter.[13]

The position expounded in Golak Nath is significant as it recognizes the doctrine of prospective overruling, while simultaneously allowing the courts to exercise the flexibility in applying the doctrine judiciously, in accordance with the facts of each case.[14]

Again, in M/S Somaiya Organics (India) Ltd v State of Uttar Pradesh,[15]the Supreme Court of India held that prospective overruling is merely a principle recognizing the court’s discretion to shape reliefs claimed to meet the justice of the case. It represents justice in its “equitable sense”.[16]Thus, allowing flexibility to stretch its limbs to suit each particular fact and circumstance so as to determine the most just course of action. The Supreme Court made further reference to Art. 142 of the Indian Constitution which empowers the judiciary to make any order necessary to complete justice in any cause or matter pending before the court.

It is obvious that the Indian experience offers the judiciary wide discretion to determine the applicability of the prospective doctrine. The Supreme Court has likened the doctrine of prospective overruling to be almost synonymous to the principle of equity, in such a manner that both jurisprudential concepts have an inherent flexibility in reaching justice. The Indian courts are strict in applying the doctrine only when it is necessary to meet the ends of justice and rather than a general rule for cases presented before them.

Another notable case is Patil Automation Private Limited and Others v Rakheja Engineers Private Limited,[17] where the Supreme Court had to deliberate on whether section 12A of the Indian Commercial Courts Act 2015, as amended by the 2018 Amendment Act, is mandatory. A plea was raised to suggest that if the court determines the provision to be mandatory, then the application of the declaration should be made prospectively. In response, the Supreme Court clarified that the doctrine of prospective overruling is not confined to matters that involve either an overruling of a previous decision by a Court or where the Court has pronounced a law that shall cause transactions to be void. The doctrine can be applied in circumstance where a new law or decision can affect cases that have already been settled.

It can be said that that India’s approach to prospective overruling can be characterized by its liberal and flexible nature. The pivotal factor to consider is whether the pronouncement of the law would disrupt past transactions and/or settled disputes.

Australia

The position in Australia stands as a stark contrast against the Indian and Malaysian experience. In Babaniaris v Lutony Fashions Pty Ltd,[18] Mason J opined that the doctrine of prospective overruling is merely a wolf in sheep’s clothing. It converts the judiciary into the legislative thus, usurping legislative functions. Furthermore, in Torrens Aloha Pty Ltd v Citibank NA,[19] the Australian Federal Court opined that in the absence of prospective overruling, declarations made by the court are not attached to events occurring after the date of the said declaration.

Even with respect to changes to common law in criminal matters, the Australian courts stated that such changes should affect events that have already occurred rather than future events.[20] [VM5] The Australian Supreme Court in R v P, GA[21]held the concept of a prospective overruling has yet to be accepted by the courts in Australia.

More recently, the High Court of Australia considered arguments raised on the effect of prospective overruling. The court in Bell Lawyers Pty Ltd v Pentelow [22] maintained the longstanding position that judicial decision should only apply retrospectively,

Singapore

The jurisprudence on prospective overruling in Singapore is slightly more regimented than other jurisdictions that have embraced the precepts of prospectivity within their respective laws. The very first recognition of acceptance by the Singapore courts was noted in PP v Manogaran s/o R Ramu [23] where the Court of Appeal referred to Art. 11(1) of the Constitution of the Republic of Singapore and also to the Latin maxim of “nullum crimennulla poena sine lege” which means “conduct cannot be punished as criminal unless some rule of law has already declared conduct of that kind to be criminal and punishable as such”.[24] Another rendition of early adoption of prospective overruling in Singapore is found in Abdul Nasir bin Amer Hamsah v PP [25] where the same considerations were made by the Court of Appeal.

Essentially, the Singaporean experience was to accept prospective overruling within the criminal ambit on the rationale of legitimate expectation. To declare an act or conduct to be criminal where many have relied on it as lawful constitutes an unjust, unfair and prejudicial declaration of the law. The aforementioned Latin maxim is the basis of the adoption of prospective overruling by Singaporean courts in criminal matters. The application of prospective overruling is not limited to criminal laws. It has also been extended to non-criminal matters. In light of this, the Singaporean courts have created a framework[26] as a guide on the application of prospective overruling aiming to balance the tensions against retrospectivity.

In PP v Hue An Li, the Singapore High Court elucidated that the general proposition is for all declarations of law to be retroactive  in nature. However, the appellate courts are given the judicial discretion to effect judicial pronouncements prospectively, provided that they are guided by a factors-based test.

The limbs to be considered are:

1. the extent to which the law concerned is entrenched;
2.  the extent of the change in the law;
3. the extent to which the change to the law is foreseeable; and
4.  the extent of reliance on the law concerned.[27]

The Court of Appeal in Adri Anton Kalangie v PP[28] crystallised the position in Singapore on the effect of prospectivity. This has become the touchstone decision on the use and application of the doctrine of prospective overruling. Here, the court referred to the pronouncement effect of a sentencing rule in Suventher Shanmugam.[29] Given that the Court in Suventher failed to state whether the declaration shall have a pure prospective effect only, it cannot be applied in such a way.

In this case the Court of Appeal marked a significant departure from the traditional understanding that the rule of prospectivity applied only to protect legitimate public interests. Instead, the court expanded the rule of exceptionality to allow appellate courts the discretion to apply the doctrine of prospectivity in exceptional cases, such as where prospectivity is necessary to curb “serious and demonstrable injustice to parties at hand or to the administration of justice”. The Court in establishing this rule referred to the framework of the factors-based test expounded in Hue An Li.

The position in Singapore appears to strike a balance between the more liberal approach in India versus the Australia’s restrictive stance. Unlike India, the approach taken by the Singapore judiciary is far more structured as there is an established framework offered to the appellate courts so as to ensure that its discretion is wielded judiciously and only in circumstances that necessitate a prospective effect to pronouncements of law.

Obata-Ambak Sdn Bhd v Prema Bonanza Sdn Bhd  - Revisiting prospectivity

The Malaysian experience seems to be following in the same path as carved out in Singapore. The very first adoption of the doctrine can be seen in the Supreme Courts case Public Prosecutor v Dato’ Yap Peng.[30]

Here, the Supreme Court took judicial notice of the fact that any retrospective pronouncement of the newly invalidated section 418A of the Criminal Procedure Code would cause chaos and disruption. This is as the provision had been relied upon and utilized to conduct trials and other proceedings at the High Court while the case was being deliberated. To declare the provision to be invalid at this time would be an injustice and thus, shall be overruled with a prospective effect.

Following this, the Federal Court in PP v Mohd Radzi Abu Bakar [31] referred to the decision in Dato’ Yap Peng where Abdul Malek Ahmad FCJ opined that retrospectivity should be the general rule while prospective ruling should only be applied in exceptional cases where appropriate. The court’s position was that the appropriate approach for decisions invalidating past law should apply to only pending and future cases, not for cases that has already been resolved. However, there were contentions that the opinion by Abdul Malek Ahmad FCJ was merely an obiter and was unsupported by authority.[32] Thus, no pronouncement on an established position was made.

Years later, in Aminah bt Ahmad v The Government of Malaysia& Anor,[33] the Court of Appeal strengthened Malaysia’s approach and reinstated the position in Dato’ Yap Peng. The court clarified that “prospective overruling” is merely the exception to the general rule that a declaration by the court should have retrospective effect. It was further clarified that it is well within adjudicative jurisprudence that all decisions must have a retrospective effect, thus staying within the judicial function in administering the law instead of making it.

However, a shift can be seen in the recent Busing Jali &Ors v Kerajaan Negeri Sarawak & Anor and other appeals.[34]It is important to note that this particular case concerned amendments to the Sarawak Land Code and whether such amendments should be applied retrospectively or prospectively. Unlike the case laws cited above, the issue of prospective overruling did not involve a prior declaration to invalidate previous operation of law by a court. The Federal Court held that the general principle is that all legislative changes shall always apply prospectively, unless contrary intention is expressed in “unmistakable terms”.[35]  

However, it is important to note that Busing Jali did not concern judicial pronouncement and/or invalidation of legislative law. Therefore, the position of prospective overruling with respect to judicial declarations of changes in the law was still left in a lacuna.

Obata-Ambak Sdn Bhd v Prema Bonanza

To cure this gap, the Federal Court recently reviewed the doctrine of prospective overruling against retrospectivity in Obata-Ambak Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals.[36] The case deals with payment of Liquidated Ascertained Damages (LAD) and the declaration in Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals [37] that Regulation 11(3) of the Housing Development (Control and Licensing) Regulations is ultra vires (hereinafter referred to as “HDR”)to its Parent Act.

In discussing the doctrine, the Federal Court reviewed previous case laws. Amongst the cases reviewed, the Court considered the approach provided in Re Spectrum Plus Ltd [38] as well as Busing Jali &Ors v Kerajaan Negeri Sarawak & Anor and other appeals.[39] In these cases, the approach was that any legislative changes to a statute shall always apply prospectively unless there is a clear and unmistakable term indicating that the new law is to be applied retroactively.[40]

The Federal Court took judicial notice that the declaration made in Ang Ming Lee was devoid of any guidance and direction. It then begs the question, should the declaration pertaining to Regulation 11(3) of the HDR apply retrospectively or overrule prospectively. Justice Hasnah Mohammed Hashim opined, on behalf of the Federal Court, that applying the declaration retrospectively would cause grave injustices to the parties involved. The court highlighted that at the time the application for extension of time was granted, Regulation 11(3) of the HDR remained valid and reliable. Furthermore, the terms and conditions expressed within the Sales and Purchase Agreement relied on the activity of such regulation.

The test applied by the Federal Court, couched as the reliance test, was to consider whether the declaration would have “serious ramifications and implications on those who would have relied on its validity in the past”. [41] It was further deliberated that unless there is an exceptional public interest requirement, any order invalidating legislation or provisions to a piece of legislation shall always apply prospectively. This is as the potential ruckus of retrospective effect would be disastrous to the housing industry and administration.[42]

To reiterate, the doctrine of prospective overruling is not a tool intended to extend judicial functions, rather it is to be wielded in the face of wrong or unfair operation of law. When a court finds that a legislative law has been operating in contradiction to the spirit of a superior body of law, the courts should take judicial action to right whatever wrongs that have occurred. Further, altering the results of past cases that were based on invalidated legislative law would lead to complications and further injustices for the parties involved.

Other issues of limitation and resjudicata may become important factors to consider as previous litigants maybe barred from exercising a possible right to have their case re-litigated. Prospective overruling aims to right the injustices of the past and to bring the true essence of the law to light.

Consequences of Obata-Ambak– impact on interested parties

The decision in Obata-Ambak leaves a blazing trail with respect to the application of prospective overruling in Malaysia. The implications of the case can be summarized as follows:

• declaration that Regulation 11(3) of the HDR to be null and void shall only apply to interested parties from the date of pronouncement of the decision in Ang Ming Lee, and not before;
• the doctrine of prospectivity shall be determined based on the reliance test, in that, only when there is “serious ramifications and implications on those who would have relied on its validity in the past” shall the doctrine apply;[43]
• the conflict between retrospectivity and prospectivity has been resolved and precedent established to address any or all ongoing divergence of judicial opinions; and
• the position established by the Federal Court demonstrates strong judicial independence. The judiciary’s main role is to uphold the rule of law and to be proactive in protecting the interests of the public and the law of the land. As per the words of The Right Honourable Chief Justice, “public confidence in the Judiciary is the measure and tool by which judges remain transparent and accountable to the public”.[44]

An interesting illustration of the implications of the decision in Obata-Ambak can be observed in the recent passing of the Constitution (Amendment) Bill 2024. One of the most notable amendments is that children of either a male or female Malaysian citizen born outside of Malaysia are now entitled by operation of law to be awarded Malaysian citizenship.[45] Currently, only male Malaysian citizens can pass their citizenship to their children. This particular amendment has brought on positive reactions as it bridges the gender equality gap among female and male Malaysian citizens who have birthed children outside the Federation.  

One of the principal considerations is whether such amendments should take a retrospective effect or not. Pursuant to Clause 12 of the Amendment Bill 2024,[46] the above mentioned amendment shall only affect those applying for citizenship after the date the Amendment Bill 2024 comes into force. Thus, it can be seen that previous and existing cases before the coming into operation of the amendments would not be allowed to enjoy the benefits from the change in the law.

This position has been highly criticized by many stakeholders. The Human Rights Commission of Malaysia(SUHAKAM), in their recent press statement [47] urged Parliament to ensure that the right to citizenship of individuals born from either male or female Malaysian citizens should take a retrospective effect, so as to cure the wrongdoings and injustices caused by the previous law.[48]

The position of the Amendment Bill 2024 can be considered through the lens of the decision in Obata-Ambak as well. The main distinguishing feature is that in Obata-Ambak, the Federal Court was deciding on the effect of change of law pronounced in a previous Federal Court case. Moreover, in Ang Ming Lee, there was noexpress proclamation on whether the striking out of Regulation 11(3) of theHDR should be applied retrospectively or prospectively. Thus, the Federal Court in Obata-Ambak could exercise its judicial discretion to decide what would be just and fair.

However, in the instance where itis a Parliamentary amendment of the Constitution, there already is an express declaration that the amendments shall only apply prospectively. In these circumstances, we are encouraged to lean on the Federal Court’s decision in Loh Kooi Choon v Government of Malaysia[49]where Raja Azlan Shah FJ (as His Royal Highness then was) expounded the following:

“In so far as an Act of Parliament is concerned, the rule of construction is that in order to determine whether it is retrospective in its operation, the language of the Act itself must be looked into bearing in mind that an Act is not to be construed retrospectively unless it is clear that such was the intention of Parliament. If such was the intention that the Act was to be given retrospective effect even in respect of substantive right or pending proceeding, the courts have no alternative but to give effect to the Act even though the consequences might appear harsh and unjust.”

Therefore, although the new position of citizenship would in fact cause for better justice if applied retrospectively, Parliament has already displayed lucid intention that the effect of the change shall only exclusively apply to prospective cases regardless of the consequences. There is no want of express instructions as to the effect of these Constitutional amendments, therefore, the decision in Obata-Ambak has no place in this matter. Further, following the line of thought established in Loh Kooi Choon, the court’s hands are tied in circumstances as above. The courts are religious in their duty to uphold Parliamentary intention above all else.

The doctrine of prospective overruling serves as a crucial judicial tool to mitigate the adverse effects of retrospective changes in the law. It allows courts to invalidate previously upheld "bad" laws while safeguarding past transactions. The doctrine ensures that justice is served without causing undue harm to those who have relied on the previous laws in good faith. Nonetheless, from the cases discussed, a balanced approach should be applied when applying the doctrine, ensuring that judicial decisions are fair and just.

If you have any questions or require any additional information, please contact Jeyakuhan S K Jeyasingam or the partner you usually deal with at Zaid Ibrahim & Co. This article was prepared with the assistance of Vaishali Murali, a Trainee Associate in Zaid Ibrahim & Co.

This article is for general information only and is not a substitute for legal advice

[1] A. Sarkar and A. Ramesh, ‘The Doctrine of Prospective Overruling: Legislative Analysis of Its Evolution & Application in India’ (2023)6 (2) International Journal of Law Management & Humanities.

[2] Ibid.

[3] Great Northern Railway v Sunburst Oil and Refining Co. 287 U.S. 358 (1932).

[4] Linkletter v Walker 381 US 618(1965). 

[5] PP v Hue An Li [2014] SGHC 171 [100].

[6] [2005] 4 All ER 209.

[7] Ibid.

[8] Samuel Beswick, ‘Prospective overruling offends the Rule of Law’ [2021] NZLJ 261.

[9] [2020] 6 CLJ 55.

[10] Ibid.

[11] [1967] AIR 1643 (SC). See Patil Automation Private Limited and Others v Rakheja Engineers Private Limited [2022]7 MLJ 139 SC [73].

[12] Ibid.

[13] Ibid.

[14] A. Sarkar and A. Ramesh, ‘The Doctrine of Prospective Overruling: Legislative Analysis of Its Evolution & Application in India’ (2023)6 (2) International Journal of Law Management & Humanities.

[15] AIR 2001 SC 1723.

[16] Ibid.

[17] [2022] 7 MLJ 139.

[18] [1987] 163 CLR 1, per Mason J.

[19] (1997) 144 ALR 89.

[20] R v P, GA [2010] SASCFC 81.

[21] [2010] SASCFC 81.

[22] (2019) 269 CLR 333.

[23] [1996] 3 SLR(R) 390.

[24] Ibid.

[25] [1997] 2 SLR(R) 842.

[26] PP v Hue An Li [2014] SGHC 171.

[27] Ibid.

[28] Adri Anton Kalangie v PP [2018] SGCA 40.

[29]Adri Anton Kalangie v PP [2018] SGCA 40. The High Court referred to the sentencing rule pronounced in Suventher Shanmugam v Public Prosecutor [2017] 2 SLR 115 where the Court of Appeal laid down the sentencing rule however, failed to specify whether the rule would have either a retrospective or prospective effect.

[30] [1987] 2 MLJ 311.

[31] [2005] 2 MLRA 590.

[32]  Ibid.

[33] [2022] MLRA 623.

[34] [2022] 3 CLJ 1.

[35] Ibid.

[36] [2024] MLJU 1902.

[37] [2020] 1 MLJ 281.

[38] [2005] 4 All ER 209.

[39] [2022] 3 CLJ 1.

[40] Ibid.

[41] Obata-Ambak Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] MLJU 1902 [156] per Hasnah Hashim FCJ.

[42] Obata-Ambak Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] MLJU 1902.

[43] Obata-Ambak Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] MLJU 1902 [165].

[44] The Right Honourable The Chief Justice of Malaysia, Tun Tengku Maimun binti Tuan Mat, ‘Judicial Independence’ January [2024]JMJ 558 4 (available at https://www.jac.gov.my/spk/images/stories/4_penerbitan/journal_malaysian_judiciary/januari2024.pdf).

[45] Constitution (Amendment) Bill 2024, Amendment of Second Schedule, Part II, clause11(a)(B).

[46] Ibid.

[47] SUHAKAM, ‘Press Statement on Constitutional (Amendment) Bill 2024 – 2.0’ (15 October 2024) <https://suhakam.org.my/ms/2024/10/press-statement-no-25-2024_press-statement-on-constitutional-amendment-bill-2024-2-0/>

[48] Supra, at 46

[49] [1977] 2 MLJ 187.