Is the Pearson Airport Legislation Unconstitutional?: The Rule of Law as a Limit on Contract Repudiation by Government

It has long been assumed that Parliament has unlimited power to enact legislation cancelling valid contracts and denying compensation to any persons affected. This paper challenges that conventional wisdom. The author argues that the principle of the rule of law requires that governments be accountable in the ordinary courts for wrongful actions of government officials. This principle is undermined if government is absolved from any liability for breach of a fairly bargained and valid contract. Thus, legislation purporting to abrogate contracts and deny compensation is invalid, since it violates the implied limits on legislative authority associated with the rule of law. The author also explains how protecting contractual expectations in the manner suggested does not unduly limit Parliamentary sovereignty, and will not result in a wholesale constitutional entrenchment of property rights.