Historically, judges subscribed to the declaratory theory which stated that judges do not make law, but merely declare what it has always been. Today, judges freely admit they make and change the law. But they also say that their decisions apply retroactively, which effectively amounts to the application of the declaratory theory (ie the law has always been thus). So judges reject the declaratory theory in word but accept it in deed. This inconsistency is the problem the article seeks to solve.

Looking at tort and unjust enrichment cases where retroactive effect was critical to the outcome, I defend the declaratory theory, arguing it is a necessary and benign legal fiction. I also expand and somewhat modify the declaratory theory into what I call ‘the Dual Model of Law’ to reconcile it with judicial law-making. Thus the paradox of legal change is resolved.