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Hodder, Jack SC --- "Capitalism, revolutions and our rule of law" [2012] OtaLawRw 1; (2012) 12 Otago LR 627

Last Updated: 16 April 2014

F W Guest Memorial Lecture: 10 August 2011

Capitalism, Revolutions and Our Rule of Law

Jack Hodder SC* I Introduction

It is a very great privilege to be invited to deliver this Lecture. Although I have had no direct connection with Professor Guest, I have a long held admiration for the calibre of the Otago Law School and of this series of lectures.

In that context, I wish to pay brief tribute to one of this university’s finest legal alumni, and the 1970 F W Guest memorial lecturer. Dr George Barton QC died recently in Wellington. For those of us who studied law at the Victoria University of Wellington in the 1970s, when he was professor and dean, and worked with him later, he was truly a model lawyer. He exemplified both the necessary connection between the practice of law and the study of law, and the courteous pursuit of excellence in each of those spheres.

I emphasise that link between the practice of law and the study of law. The practice of law takes many forms. Some seem remote from the work of professors or judges or legislators. However, my own experience in private and public litigation reminds me almost daily that I remain a student of law. More particularly, I mean a student of substantive laws, of legal theories and of legal processes and institutions.

The challenge attached to the invitation to deliver this lecture is to say something that is worth saying on such an occasion. That challenge is compounded when the invitee is, in most respects, a private practitioner rather than an academic; a generalist rather than a specialist; and, oversimplifying, a conservative rather than a radical. All of which may explain the breadth of what follows.

Your Dean, Professor Henaghan, was unhelpfully generous in indicating that my choice of topics was essentially unconstrained. I indicated that they might include “property rights” and “the rule of law”. As it has developed, this lecture will address aspects of those topics. But there is a much wider context.

As it happens, Professor Guest’s inaugural lecture, entitled “Freedom and Status”, has provided something of a springboard. Speaking 50 years ago, he warned:1

Some claims to freedoms made today will seem as absurd 50 years hence, as some nineteenth century claims seem to us today. Amongst claims made today, many people give high priority to the exercise of the rights of

* Partner and Chair of National Board, Chapman Tripp, Barristers and


1 FW Guest “Freedom and Status” [1968] OtaLawRw 1; (1965-1968) 1 Otago LR 265 at 274.

private property, in spite of the fact that the law has already been forced to limit these rights. Yet there are people who are so certain that the light of reason reveals to them timeless truths that they are prepared to crystallise in a written constitution a concept which obtains its meaning and value and justification from its context in a changing environment.

Professor Guest was engaged in a pragmatic puncturing of a contemporary suggestion – that “property rights” be enshrined in a written constitution. That is not a suggestion I advance, but I infer that he would have disagreed with some significant parts of this lecture.

For reasons I will come to, I have recently spent some time considering the question of whether property interests require some form of legal reinforcement in New Zealand. In general, the protection of property interests might seem to be at the heart of conservative thinking. However, my interest has been engaged by the counter-intuitive idea that “property” lies at the heart of our revolutionary historical heritage.

History provides a useful reminder about humility. Most lawyers do not lack confidence. We are required to be articulate and to marshal arguments in favour of a particular result. We are critical of the work of legislators, judges, academics, and those who present another view. We persuade ourselves that our argument is more logical or better policy or simply commonsense when compared with the other arguments. As for non-lawyers, we assume that they fail to understand the breadth and beauties of the legal system and thus are intellectually impoverished.

Such thinking perhaps provides some explanation of the ancient and continuing phenomenon of anti-lawyer sentiment. I am not aware that this law school offers a course in anti-lawyer jokes. I am aware that that topic has been the subject of a serious study by Professor Marc Galanter of the University of Wisconsin Law School.2 However, he is better known to some of us for his study of law firms. In particular, he developed and refined the metaphor of the “tournament” to explain career progression in large US law firms.3

I will get to the topic of law firms shortly. My immediate point is that lawyers are prone to a humility deficit disorder. And a subplot to this lecture is that legal processes and the lawyers involved in them have much to be humble about.

In particular, this lecture proceeds on the premise that the legal system is a mere subset of the political system, and that the political system is the product of historical forces in which the law and lawyers were usually peripheral.

So history matters. My favourite authority in support of that

  1. Marc Galanter Lowering the Bar: Lawyer Jokes and Legal Culture (University of Wisconsin Press, Madison (Wis), 2006).

3 Most recently, Marc Galanter and William Henderson “The Elastic

Tournament: A Second Transformation of the Big Law Firm” (2008) 60

Stan L Rev 1867.

proposition is George Santayana’s dictum:4

Those who cannot remember the past are condemned to repeat it.

Less well known, but equally eloquent on the same point, just two sentences later, Santayana wrote:

This is the condition of children and barbarians in whom instinct has learned nothing from experience.

II Capitalism (and large law firms)

The references to “capitalism” and “revolutions” in the title of this lecture may seem grandiose or obscure (or both). So I start with a profoundly practical topic: the New Zealand law firm.

Law firms represent the central tradition of the New Zealand legal profession. The geographical dispersal of our 19th century population meant that a fused profession – rather than a division between solicitors and barristers – was inevitable. The partnership mechanism was available, flexible and practical, and has remained so. Adding a partner created the opportunity for an expansion of the firm’s intellectual capital, new and different personalities and skills, a form of additional peer review, and a degree of security and future proofing – all denied to the sole practitioner. That remains so.

In the case of our firm, Martin Chapman commenced practice on his own account in 1875 at the advanced age of 29. He had abandoned Dunedin for Wellington, apparently (in part) on account of the weather.5

His first partner joined him in 1882 but died in 1888. Leonard Tripp joined him in partnership in 1889.6 This year Chapman Tripp has a headcount in excess of 350, including at least 50 partners and 130 other lawyers.

That headcount represents a large number of households depending on the firm for income. And a significant number of young lawyers gaining skills and experience. So those of us with governance and management responsibilities make no apologies for dwelling on the continuing commercial success of the firm. For the most part, that is based on striving to recruit and utilise the best quality of lawyers to provide the best quality of legal services to major clients. Those clients are well able to choose among providers.

But there are always other factors to consider. To confirm that at least some lengthy articles from the USA’s law schools may have practical relevance here, I mention one of several that I have read and discussed within our firm.

4 George Santayana The Life of Reason (Scribner, New York, 1905) vol 1 at


5 Peter Spiller The Chapman Legal Family (Victoria University Press,

Wellington, 1992) at 127.

6 Ross Gore Chapman Tripp & Co: The First 100 Years (Chapman Tripp,

Wellington, 1975) at 47.

The article is entitled “The Death of Big Law”, by Associate Professor Larry Ribstein, published in the 2010 Wisconsin Law Review.7 By “Big Law”, Ribstein was referring to the largest US law firms. His primary thesis was that, after 50 years of rapid growth, the 21st century has seen low growth, downsizing and even some rapid disappearances within the ranks of “Big Law” firms.

Ribstein’s analysis included the following points (that no one mentioned to me in law school):

1. large businesses need skilled and trustworthy lawyers to minimise legal risks to their operations and aspirations;

2. given the lack of transparency in relation to actual legal quality, such businesses purchase legal services on the basis of long-term reputation;

3. the large law firm’s need to preserve its long term reputation causes it to monitor and support the work of lawyers within the firm of whom the client (at the outset) knows little or nothing;

4. large law firms have also provided an answer to a client’s “peak load

problem” in resourcing major dispute or transaction processes;

5. in other words, large law firms have provided reputational capital and

“capacity insurance” to clients who are subject to information asymmetry;

6. the large law firm must maintain a firm-focussed culture of trust and

cooperation to achieve those roles; but

7. only a limited class of clients and transactions require the large firm’s “capacity insurance”, and these are concentrating in (and across) global financial centres; and

8. there is difficulty in maintaining the necessary culture in a geographically dispersed firm across “different economic environments with different risks”.

Ribstein predicted that uncontrollable forces – ratcheted client demands, increased competition between providers, international regulatory competition – are “likely to be the end of the major role large law firms have played in the delivery of legal services”.8

He went on to predict that the “death of Big Law has significant implications for legal education”. Those implications included reduced salaries for new lawyers hired by large law firms, and less “on the job” training being provided.9

From a different perspective, and as an example of contemporary trends, there have been recent reports of a “strategic alliance” being discussed between one of the Australia’s leading law firms, and a leading Chinese law firm.10 Those are very large firms: each is said to have

7 Lary E Ribstein “The Death of Big Law” [2010] Wis L Rev 749.

8 At 813.

9 At 813-814.

10 For example, Alex Boxsell “Mallesons Thinks Globally” The Australian

Financial Review (Australia, 22 July 2011).

around 1,000 lawyers. The discussions are said to reflect the growing integration of the Australian and Chinese economies, two of the success stories of contemporary capitalism.

Irrespective of the outcome of those or similar discussions, such news is received by large law firms here in the context of other very recent developments. Those include: the growth of English-speaking legal support services providers in India; the arrival of leading English law firm brands in Australia; and the impetus for a “single commercial market” between Australia and New Zealand.

With such developments, modern capitalism offers us the prospect of “interesting times”. However, I should misquote Mark Twain here, and emphatically: any rumour of the death of the large New Zealand law firm is greatly exaggerated.

The developments I have mentioned are of course part of the phenomenon of “globalisation”: the modern, internationally connected and highly mobile form of capitalism.

In using the term “capitalism”, I am generally following the description in Joseph A Schumpeter ’s classic text, Capitalism, Socialism and Democracy, first published in the 1940s. Writing from a critical perspective, Schumpeter did not describe capitalism as a “system”. He saw it was “a method of economic change” that never is and never can be stationary.11 Ultimately, he thought, capitalism would be killed by its economic successes. These would create an anti-capitalist social and political climate: an “atmosphere of almost universal hostility to its own social order”.

The principal legacy of Schumpeter ’s text is the phrase “Creative Destruction”. The ceaseless opening up of new markets, and deployment of organisational developments, amounted to a process of “industrial mutation”. A process, he wrote:12

that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.

Thus, law firms can be thought of as, among other things, providers of services to the capitalist “revolutionaries”. Being even-handed, law firms also provide services to those resisting the revolutionaries or embarking on some counter-revolution. The takeover battles of recent decades illustrate this. Yet the law firms themselves must work to survive within the process of creative destruction, mindful of the matters mentioned by Ribstein.

More importantly, “the law” itself provides a fundamental service

11 Joseph A Schumpeter Capitalism, Socialism and Democracy (5th ed, George

Allen and Unwin, London, 1976) at 82.

12 At 83.

for capitalism. The protection of property interests, the recognition of voluntary transactions, the ability to incorporate (especially with limited liability), the orderly disposition of what remains on insolvency, and the impartial and uncorrupt administration of each of these, account for much of the legal system. All of this provides an essential framework for capitalism, and for the work of the large law firms.

Idealists or cynics may consider that all of this reinforces their prejudices, and that the “Big Law” firms are obsessed with the accumulation of wealth – by their clients, and by themselves. They would be wrong. The inhabitants of our large law firms take their professional values as seriously as anyone. Such values are a necessary foundation of the reputation of the firms and their lawyers. Those lawyers are more likely to be independent of commercial pressures on such values than small firms or sole practitioners.

More broadly, the lawyers in large law firms are able to, and do, make a difference in their communities. And their corporate clients (usually comprising talented and thoughtful people) are sufficiently well resourced to defend – and help define – the boundary between legitimate and overreaching exercises of public power.

I accept that a sceptic could think “well, he would say that, wouldn’t he?” Nevertheless, I mention those matters because large law firms are an important but opaque part of our legal landscape. And because there are examples, overseas at least, of mischievous myth-making about law firms by other lawyers.13

The usual form of this is to portray the separate bar as having a monopoly on fearless and selfless values, in stark contrast to mercenary but craven law firms. This myth ought to be able to be ignored, but some echo of it appears to underpin the current Bill before Parliament to rename, and re-restrict eligibility for, the rank of Senior Counsel/ Queen’s Counsel.14 A minor counter-revolution, perhaps.

III Revolutions (and property rights)

If we remember history, we should remember that laws and lawyers are peripheral to the central contests of politics. Those contests in turn reflect economics, philosophies and geography – and perhaps technology. This is the field of revolutions – of great reversals of conditions and fundamental reconstructions.

Of course the results of those political contests are often recorded in a legal form. Such is the role of the legislative process, and the logic of parliamentary sovereignty, in our political system.

If we remember British history, we find that the foundations of not

only parliamentary sovereignty but also modern capitalism owe much

13 For example, James Allsop “Professionalism and Commercialism: Conflict

or Harmony in Modern Legal Practice?” (2010) 84 ALJ 765.

14 Lawyers and Conveyancers Amendment Bill 2010 (120-2).

to a bloody revolution.

The revolution is that of 1688. It is reflected in the continuation in our own statute book of the Bill of Rights Act 1688.15 This includes the “politically incorrect” provisions for primogeniture, and against Catholics, in relation to our Head of State.

T he “Glorious Revolution” was not lim ited to establis hing parliamentary sovereignty. It involved a transformation to capitalism. This was achieved by the reining in of Crown privileges and arbitrary interventions and expropriations. It was entrenched by serious bloodshed, as explained by the Yale history professor, Steve Pincus, in his book, 1688: The First Modern Revolution.16

In particular, the 1688 revolution involved the defeat of those interests with a natural law (and land-based) perception of property. Those interests were suspicious of trade as an international zero sum game, and considered monopolies the most effective way to advance the national interest – and their own. Hence James II’s protection of the East India Company and the Royal African Company.17

However, this Tory view of property and commerce was at odds with the Whigs’ much wider (and labour-based) conception of property interests. Hence the English merchant classes were significant funders of William of Orange’s invasion and regime.18

This is the context in which we may read John Locke’s second Treatise on Civil Government from the late 17th-century and Sir William Blackstone’s Commentaries on the Laws of England in the mid-18th century.

Blackstone explained the essence of the common law, and the civil liberties of the English, as comprising three important rights:19

... the right of personal security, the right of personal liberty; and the right of private property: because, as there is no other known method of compulsion, or of abridging man’s natural free will, but by an infringement or diminution of one or other of these important rights, the preservation of these, inviolate, may justly be said to include the preservation of our civil immunities in their largest and most extensive sense.

In other words, civil liberties or freedoms are comprehensively encompassed by the “rights” of personal security, of personal liberty and of private property. That is the common law tradition, including at least suspicion of new laws (and thus, of legislation) which might erode those rights. It remains so for personal security and liberty, but why was “property” regarded as so significant?

15 By the Imperial Laws Application Act 1988.

16 Steve Pincus 1688: The First Modern Revolution (Yale University Press,

New Haven (Conn), 2009).

17 At 373-375.

18 At 381-383.

19 William Blackstone Commentaries on the Laws of England (Dawsons,

London, 1966, a reprint of the 1st ed, Clarendon, 1765) vol 1 at 125.

Blackstone elaborated on what property meant:20

The third absolute right, inherent in every Englishman, is that of property: which consists in the free use, enjoyment, and disposal of all acquisitions, without any control or diminution, save only by the laws of the land. The original of private property is probably sounded in nature

... but certainly the modifications under which we at present find it, the method of conserving it in the present owner, and of translating it from man to man, are entirely derived for society; and are some of those civil advantages, in exchange for which every individual has resigned as part of his natural liberty. The laws of England are therefore, in point of honour and justice, extremely watchful in ascertaining and protecting this right.

On this foundation of such “absolute rights”, together with “auxiliary subordinate rights” such as access to the courts of justice, we find the essence of the Victorian rule of law, restated by Dicey and Bagehot, and imported into New Zealand by British immigrants: liberty under law.

Indeed, the late Lord Bingham has described the significance of 1688

as follows:21

The Britain which emerged from the Glorious Revolution was one where the rule of law, imperfectly and incompletely, held sway.

Having identified the 1688 Revolution as a source of much that we take for granted in contemporary New Zealand, it is necessary to mention that rather closer revolution in New Zealand in the 1840s.

In particular, I refer to the analysis of the 1840 revolution by Professor F M Brookfield, not least in his book, Waitangi and Indigenous Rights: Revolution, Law and Legitimation.

His conclusion was that:22

The Queen on the advice of her ministers had asserted her sovereignty over the whole of New Zealand by acts of state that were revolutionary at least in relation both to the hapu of non-signatory chiefs and (on our consideration of the matter) those of the signatory chiefs also insofar as the absolute sovereignty claimed went beyond what they respectively had ceded. And, as with all revolutions, whatever ideological justification the revolutionaries may claim, the revolution must rest finally upon its success, upon what is ‘done’, rather than what is just or moral or legal (since the revolution is by definition illegal, in this case in relation to the customary legal orders of Maori.


[B]oth Maori autonomy and property rights suffered in the Crown’s revolutionary seizure of a power greater than that ceded by the Treaty. The successive New Zealand legal orders at least historically based on that revolution (begun in 1840) have been deficient in legitimacy as a result,

20 At 134-135.

21 Tom Bingham The Rule of Law (Allen Lane, London, 2010) at 25.

22 FM Brookfield Waitangi and Indigenous Rights: Revolution, Law and

Legitimation (Auckland University Press, Auckland, 1999) at 35 and 171.

a deficiency only partly remedied, prescriptively by the passage of time, and by certain benefits of Crown rule (as in the ending of slavery and in the rule of law as a means of limiting arbitrary power) that followed the revolutionary seizure.

I endorse the conclusion that the assumption of British sovereignty here was essentially “revolutionary”. I understand the political desirability of a less brutal analysis, and the consequent attractions of some vague but ahistorical sense of collegiality in a Treaty “partnership”.

As an aside, Brookfield does not rate the events in Britain of 1688 as a revolution, “merely a coup d’etat within the monarchy”.23 I prefer Pincus’ view that the English revolutionaries created a new kind of state; and a structural and ideological break from the previous regime.24

As mentioned, Brookfield observes that Māori “property rights” were adversely affected by the 1840 revolution. There is an interesting echo of that in the Waitangi Tribunal’s recent “WAI 262” report, Ko Aotearoa Tēnei.25 The Tribunal used the concepts of “Kupe’s people” and “Cook’s people” to describe with great eloquence the two waves of settlers of our islands, perhaps 500 years apart.26 In those terms, Cook’s people brought with them their revolutionary heritage (from 1688), and imposed another (in 1840).

The Tribunal prefaced its first chapter, on taonga works and intellectual

property, with a quotation from John Locke:27

The great and chief end, therefore, of men’s uniting into common-wealths, and putting themselves under government, is the preservation of their property.

On the preceding page, the Tribunal featured that part of the preamble to the Treaty of Waitangi recording Queen Victoria as being

anxious to protect [the tribes’] just Rights and Property.

However, as the Tribunal’s presiding officer, Justice Joseph Williams, noted recently, Locke’s concept of property rights involved an original labour component: a transforming of a natural resource. This did not readily recognise as “property” those things of value in a collective culture which largely co-existed with the surrounding natural resources.28

23 At 85.

24 Pincus, above n 16, at 1 and 31.

25 Waitangi Tribunal Ko Aotearoa Tēnei: A report into claims concerning New

Zealand law and policy affecting Māori culture and identity (Wai 262, 2011).

26 At 1-17.

27 At 26.

28 Joseph Williams “Property or Interest, Private or Public?” (paper

presented to New Zealand Law Society Administrative Law seminar,

Wellington, 25 February 2011). My lecture is not a defence of Locke, but

is concerned with the political and judicial significance of “property”.

For a detailed analysis of philosophies of property, see JW Harris Property

and Justice (Oxford University Press, Oxford, 1996).

The Tribunal went on to explain that:29

There are two basic promises made to Māori in article 2 of the Treaty. In the English text, the promise is to protect Māori in the exclusive and undisturbed possession of their properties. In the Māori text, the guarantee is of ‘teo tino rangatira o ratou taonga katoa’ – Māori authority and control over all of their treasured things.

In one sense, although far from completely, the ongoing grievances of Māori derive from a failure of government – since 1840 – to protect their property interests. According to Locke, writing over 300 years ago, that is a recipe for civil unrest:30

The end of government is the good of mankind; and which is best for mankind, that the people should be always exposed to the boundless will of tyranny, or that the rulers should be sometimes liable to be opposed when they grow exorbitant in the use of their power, and employ it for the destruction, and not the preservation, of the properties of their people?

Yet, as mentioned at the outset, but only 50 years ago, Professor Guest thought that rights of private property were overstated, possibly absurdly so.

Much more recently, another distinguished New Zealand legal academic has observed that:31

the strength of the protection [of property rights] has undoubtedly waned in the course of the 20th century.

Professor Mike Taggart was writing in relation to his identification of a “rainbow” of judicial review, with less of a “hard look” at “non-rights” case, including those involving property interests.

Mention of judicial review is perhaps a key to this apparent relegation of property interests in our legal order. Judicial review is a modern response to the enormous growth in government activities and powers since, say, 1840. The interests of the public, as perceived through the political system and the legislature, have tended to prevail over earlier assumptions of inviolable private rights, especially “property rights”.

Among other things, the 20th century also saw the development of planning laws. It was those which attracted attention in Professor Guest’s inaugural lecture as undermining any claims of priority for the exercise of rights of private property.

More recently, we have experienced a judicial focus on the New Zealand Bill of Rights Act 1990, and concepts of “human rights”. The NZBORA has no explicit mention of property rights, and it seems to have been this omission which, in our public law, has led to a downgrading of the value of protection of property interests.

29 Waitangi Tribunal, above n 25, at 43.

30 John Locke Second Treatise on Government (1690) at [229].

31 Michael Taggart “Proportionality, Deference, Wednesbury” [2008] NZ L

Rev 423 at 469.

Curiously, as Professor Taggart noted, such waning of property interests protection had occurred without any real debate:32

the reason for cleaving rights and wrongs is in fact to ensure that in the borderland lawyers argue and judges articulate a clear and clearly reasoned position. If children’s rights have now achieved fundamentality, or if property rights have slipped out of that charmed status, let the judges clearly say so and tell us why.

It is not surprising that some of us are asking “when” and “why” and “by whom” did it come to pass that, in Blackstone’s language, the law ceased to be, in point of honour and justice, extremely watchful in ascertaining and protecting rights of property.

However, the protection of property interests has attracted some recent attention. It is a feature of the Regulatory Standards Bill which currently stands referred to a select committee. The Bill is almost unchanged from the draft included in the September 2009 report of the Regulatory Responsibility Taskforce.33 I was one of the seven person (unanimous) Taskforce. Each of us operated in the private sector, and none of us had any difficulty in concluding that there was a case for improving the protection of property interests. In subsequent debates on the Taskforce’s work and the Bill, it has been notable that the critics operate in the public sector or academia.

In any event, clause 7 of the Bill includes as one of the “principles of responsible regulation” a requirement that, subject to any incompatibility which is reasonably and demonstrably justifiable in a free and democratic society, legislation

should not take or impair, or authorise the taking or impairment of, property without the consent of the owner unless

i) the taking or impairment is necessary in the public interest; and

ii) full compensation for the taking or impairment is provided to the owner; and

iii) that compensation is provided, to the extent practicable, by or on

behalf of the persons who obtain the benefit of taking or impairment.

This is intended to be a constraint on expropriation. Remembering English history again, it reflects a concern articulated by Oliver Cromwell that a majority of “have nots” may legislate to dispossess the “haves”. Forty years before the 1688 revolution, Cromwell is reported to have expressed his concern that:34

If they that have no goods and chattels make the laws equally with them that hath, they will make laws to take away the property of them that hath.

32 At 470.

33 Regulatory Responsibility Taskforce Report of the Regulatory Responsibility

Taskforce (prepared for the Minister of Finance, 2009).

34 As cited in Michael Foot Aneurin Bevan 1899-1945 (Granada, London,

1975) at 99.

I will not address here the arguments about the merits of the Bill.35

I will explore why it is that property interests have become a candidate

for reinforcement.

In my lifetime and in this country, the protection of property interests has largely been taken for granted. There have been excitements at some of the margins such as police powers of entry, expansion (or not) of copyright, and specific legislative or executive decisions (on native forests or enforced access to telecommunications infrastructure, for example). There is also a much larger and longer story about the seabed and foreshore. But nothing has occurred to remind us that protection of property interests is a revolutionary inheritance.

I suspect that some contemporary relative neglect of property as an important legal value is attributable to two factors. First, a somewhat elitist distaste for commerce and capitalism, as anticipated by Schumpeter. Second, an uncritical embracing of the NZBORA’s list as the truly important “rights” in the academy and the judiciary.

The first of those suspicions is inevitably impressionistic. It is indicated in part by the absence of any recent judicial articulation of the importance of property interests. Thus I have no recollection of any recent appellate statement in general support of such interests in New Zealand, nor of recent endorsement here of any interpretative presumption against interference with vested property rights.

Recent decisions of the High Court of Australia and the UK Supreme Court provide modern support for Bennion’s interpretative presumption against doubtful penalisation and his sub-presumption against statutory interference with property or other economic interests.36

In New Zealand, this presumption is treated as all but neutered. In Burrows and Carter ’s text on statutory interpretation,37 we do not find any clear statement that the exercise of property rights is a “fundamental” matter engaging any interpretative or judicial review protection.

This is especially curious when the protection of property interests of foreign investors in New Zealand is a matter of explicit importance in a number of bilateral investment treaties. The result is that, in some circumstances, overseas investors will have greater protection against expropriation of property in New Zealand than locals.38

35 I have addressed these elsewhere. See Jack Hodder SC “Public Law, Public Rights and Principles for Legislative Quality” (paper for New Zealand Law Society Administrative Law seminar, Wellington, 25 February 2011).

36 See Fazzolari Pty Ltd v Paramatta City Council [2009] HCA 12 at [40]- [43], cited with approval in R (on the application of Sainsbury Supermarkets Limited) v Wolverhampton City Council [2010] UKSC 20 at [11]. See also FAR Bennion Bennion on Statutory Interpretation: A Code (5th ed, LexisNexis, Wellington, 2002) at part XVII.

37 JF Burrows and RI Carter Statute Law in New Zealand (4th ed, LexisNexis, Wellington, 2009).

38 See, for example, the New Zealand China Free Trade Agreement

2008, Chapter 11 (Investment), not least Article 145 (compensation for

As a further aside, it might be said that “the law”, and our modern judges, are not conspicuously solicitous of the needs of capitalism. Thus, for example, in relation to the essential role of the company and of limited liability, there has been a stream of cases ratcheting up the expectations of directors, and rather draining the “safe harbour” of reliance on external advisers and senior employees.39 Yet there are important wider questions. What does this do for recruitment of company directors? Or the encouragement of entrepreneurs?

In terms of the long title of the Companies Act 1993, does this recognise the value of the company as a means of, among other things, “the spreading of economic risk; and the taking of business risks”?

In a different area, the recognition of voluntary transactions, it is difficult to praise the work of appellate courts. In the fundamental area of interpretation of contracts, for example, we continue to reap the rather incoherent consequences of the opening of Pandora’s box involved in purposive interpretation and the use of pre- and post-contractual materials.40

My second suspect in the erosion of property protection is the uncritical elevation of the NZBORA list of rights to some sort of quasi-constitutional or Premier League status, with the rest (including property) in the Second Division. This appears to be confirmed by much recent commentary on public law and the “rainbow” of judicial review. It is troubling for various reasons.

First, it involves a fairly blunt judicial rejection of political and legislative history. The NZBORA was pruned from its original “supreme law” aspirations in the absence of any political support for that (beyond a few in the ranks of the judiciary and academia). It was enacted as explicitly “declaratory” of some existing “rights”, and thus non-exhaustive.

Second, there is a mythology surrounding “human rights” which tends to obscure the political interests involved. As a Columbia history professor, Samuel Moyn, has recently explained, the concept of human rights only took off on an international scale in the late 1970s; and it is not, and was not developed as, the only answer of a post-World War 2 world to a repetition of the Nazi Holocaust.

In The Last Utopia: Human Rights in History, Professor Moyn explains that there is a confusion between two supposed and incompatible goals: catastrophe prevention, through minimalist norms; and building utopia, through maximalist political vision. In each case, the idea is that human rights transcend ordinary politics. However, as Moyn concludes, human


39 Most recently, R v Moses and others HC Auckland CIV-2009-004-1388, 8

July 2011.

40 Most recently, David McLauchlan “Contract Interpretation in the Supreme

Court: Easy Case, Hard Law?” (2010) 16 NZBLQ 229.

rights cannot be all things to all people.41

IV Our rule of law (and praise of an unwritten constitution)

The idea that “human rights” may somehow trump decisions emerging from the messy worlds of politics is understandable but dangerous. There is a rhetorical ring to “rights” which has a long history. Yet the lesson of history is that it is the messy worlds of politics that matter.

That is not to abandon the idea of constraints on politics and government. My contention is that the “rule of law”, not “rights talk”, is the most useful concept for consideration and support of such constraints. But the rule of law will reflect aspects of the particular political system. Hence the reference in my lecture’s title to “our rule of law”.

In recent times, the phrase “the rule of law” has featured in two significant statutes. The Supreme Court Act 2003 established a new court of final appeal, and ended New Zealand appeals to the Judicial Committee of the Privy Council. Section 3(2) provides that:

Nothing in this Act affects New Zealand’s continuing commitment to the

rule of law and the sovereignty of Parliament.

More recently, section 4 of the Lawyers and Conveyancers Act 2006 requires that every lawyer providing legal services

must, in the course of his or her practice, comply with the following fundamental obligations:

a) the obligation to uphold the rule of law and to facilitate the administration of justice in New Zealand ...

This obligation is the distinguishing feature of lawyers as against conveyancing practitioners (who are also tasked with obligations of independence, fiduciary and care duties, and protecting clients’ interests).

In neither statute is there any elaboration of what is meant by “the rule of law”. That is not surprising. In his valuable book, On the Rule of Law: History, Politics, Law, Professor Brian Z Tamanaha of St John’s University Law School noted that almost all countries today assert support for the rule of law.42 He included citations from political leaders of modern Russia, China, Zimbabwe, Indonesia, Iran and Mexico. And he observed that “no other single political ideal has ever achieved global endorsement”. (Note the phrase “political ideal” – not “legal concept”.)

Professor Tamanaha went on to explain that the price of such universal endorsement is a “rampant divergence of understandings”. In the end, he offered three themes: government limited by law; formal legality; and rule of law, not man.43 Inevitably, much depends on context.

  1. Samuel Moyn The Last Utopia: Human Rights and History (Belknap Press, Cambridge (Mass), 2010) at 227.

42 Brian Z Tamanaha On the Rule of Law: History, Politics, Law (Cambridge

University Press, Cambridge (UK), 2004) at 2-3.

43 At ch 9.

In our context, New Zealand in the early-21st century, I offer my own

elaboration of key aspects of our rule of law:

1. A fundamental feature of our rule of law is the concept that rules which are enforceable through public agencies (in particular, the courts) must be accessible in advance so as to enable those expected to comply with such rules to shape their conduct accordingly.

2. A second fundamental feature of our rule of law is that the primary institutions engaged in changing publicly enforceable rules are the legislature; those who prepare and promote new or amending legislation; and those exercising delegated legislative powers to make secondary legislation. In various ways, those institutions are politically accountable.

3. A third fundamental feature of our rule of law is the independence of the judiciary from political pressures. This is reflected in a practical and traditional absence of political accountability of the courts for their performance in exercising judicial powers and an absence of overt political considerations in judicial appointments.

4. In the context of those features, the judicial role is that of maintaining and applying the rule of law in deciding cases which fall for determination. In so doing the judiciary maintains the political legitimacy of legal rules and of the exercise of judicial power.

5. While there are substantial areas of judge-made rules, and amendment of those by way of clarification and rational restatement is expected and legitimate, the judicial law-making role is necessarily modest. This precautionary approach is reinforced by the fact that any judicial law-making may be expected to have a range of consequences for a variety of persons not parties to the immediate dispute, by the necessarily narrow focus of the adversarial process; and by the related limits on the information available to judges.44

This elaboration owes much to my earlier but rather lengthy life as a producer of The Capital Letter, the weekly review of administration, legislation and law. My self-inflicted reading of tens of thousands of judgments, along with parliamentary bills, Hansards, regulations and Ministerial speeches, as well as legal and political analyses, was exhausting but informative. In particular, it left me with an appreciation of the virtues (in most instances) of the parliamentary process, and the limits (in most cases) of the judicial process, in changing legal rules.

As may be obvious, my view of our rule of law traverses the role of lawmakers. To use the language which irritates many judges, it asserts the case for “judicial restraint” and against “judicial activism”.

It may be less obvious but my elaboration avoids any use of the word

44 In the interests of full disclosure, if not plagiarism, this formulation is based on propositions I first advanced in “Employment Contracts, Implied Terms and Judicial Law-Making” in David Carter and Matthew Palmer (eds) Roles and Prospectives in the Law: Essays in Honour of Sir Ivor Richardson (2002) 33 VUWLR 895 at 898.

“rights”. This reflects both the point that the concept of “rights” is generally unhelpful as an encouragement to judicialisation of what are really political debates, and the “judicial restraint” point.

To return to the concept of “creative destruction”, this is applicable to the process of social change as well as economic change. It is a useful way to think about social and political changes in modern times.

If I take 1970 as a starting point, the year I became a law student, New

Zealand has undergone quite remarkable changes.

In the area of “morality”, mention may be made of “no fault” divorce, of abortion law changes, of matrimonial property sharing, and of decriminalising homosexual conduct.

In the “society” area, we have seen “no fault” accident compensation, a dramatic expansion of shop trading hours, a greater access to alcohol, a reduced age of “majority”, and the end of compulsory unionism.

In the “government” area, we have seen “open government” requirements, the end of “first-past-the-post” voting (and single-party governments), Treaty of Waitangi reports and settlements, the “nuclear free” position, the severance of the Privy Council, and the corporatisation of many utilities and government departments.

Each of those changes could have been (and many were) described as “revolutionary”, in a non-technical sense. And each of those changes resulted from the political system, culminating in Acts of Parliament.

Cumulatively, the social changes represented by those modern enactments are spectacular. For my current purposes, their primary relevance is as a demonstration of the responsiveness of our parliamentary democracy to perceived demands for change.

It may be noted that the NZBORA is not included in that list. The principal reason for its omission is that it was not intended to be revolutionary, merely declaratory. However, the over enthusiastic embracing of NZBORA by our courts, and in our law schools, is a useful warning at a time when the topic of a written constitution remains undead.

Indeed, only last week, the government announced the membership of a Constitutional Advisory Panel which is asked to report by late 2013.45

It is to be “part of a long conversation” on that issue, along with the other usual suspects: the place of the Treaty; a Bill of Rights; and the size and length of Parliament.

In contemporary New Zealand, the idea of a written constitution is usually advanced for one of two reasons. First, that this is the way to enhance the rule of law. Second, that it is the way to properly recognise the Treaty of Waitangi.

I address the second reason only briefly. It involves a call for major

  1. Bill English and Pita Sharples “Constitutional Advisory Panel named” (press release, 5 August 2011).

political change. Our current political system is, unsurprisingly after

1840, Anglocentric. It rests on assumptions of individual autonomy and

of equality of individuals’ opportunities. Any reallocation of law-making

power on the basis of ancestry would involve a truly revolutionary

departure from those assumptions. And entrenching vagueness about

Treaty “partnership” involves an abdication of intensely political

questions to the judiciary. Further, insofar as the partnership parties are

presented as “the Crown” and “Māori”, a significant proportion of the

electorate is likely to object to a form of double counting.

In any event, I repeat my view that all of that is a political issue, and is not transcended by the label “constitutional”. If the political process yields such an outcome, so be it.

My remaining focus is on the first reason usually advanced for a written

constitution: that it enhances the rule of law.

As will be evident, my conception of our rule of law incorporates a bias in favour of our unwritten constitution. For the same reasons that I advocate restraint in use of the term “rights”, I advocate similar restraint in relation to the term “constitutional”.

I do not of course suggest a necessary incompatibility between the rule of law and a written constitution. But countries such as the USA and Australia have arrangements which illustrate that history matters a great deal, especially in a federation of partly autonomous political entities on a continental scale. Our history gives us the choice, not available to others, of preserving a flexibility in our lawmaking which is responsive to ordinary politics.

With that choice, and repeating some points I made in 2000, I suggest that the idea of a written constitution is founded on two doubtful assumptions.46 First, that we of today should presume to write down rules to bind generations to come; and, second, when difficult issues arise, our generation or later generations can be comfortable in leaving those to the wise determination of the judges of the day.

The problems inherent in the first assumption take us into the lessons of historical change, and of failed attempts to predict the future. Thus, for example, consider what might have been in a constitution written by the political elites of the day in:

• 1770 (pre-European);

• 1870 (provinces; Māori recognition denied); and

• 1970 (two-party legislature; reticent judiciary; Treaty still in eclipse).

And that brings me to at least partial agreement with Professor Guest. That is, agreement with his warning against those who are so certain of their “timeless truths” that they seek to have them crystallised in a

46 Jack Hodder “Limits to and constraints on writing down a constitution of a small society used to informality in its politics” in Colin James (ed) Building the Constitution (Institute of Policy Studies, Wellington, 2000) at


written constitution.

V Some conclusions

After so many words, and too many topics, I end with my “headline”


1. We should beware of myths about large law firms.

2. We should remember history.

3. We should not ignore our revolutionary heritage.

4. We must expect creative destruction in our economic and social environment.

5. We should be humble about lawyers’ contributions to social and political issues.

6. We should recognise the achievements of the “messy politics” of liberal democracy.

7. We should be very wary of “timeless truths” and constitutional reformers.

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