business law tutorial 02

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TUTORIAL 2

THE COURTS AND THE CASE LAW

1. Discuss in detail the application of the Doctrine of Precedent to the

Australian courts.

The practice of having due regard to the previous decisions of courts is the

binding law of precedent under common law. Applying this doctrine in

Australia means considering both the state and federal court hierarchies of the

courts, including the High Court, and exactly when a particular court is bound

by the precedent of another court.

All courts determine disputes but only those which are relevant to their

jurisdiction. The exception occurs where cross-vesting legislation enables

certain courts to exercise authority in courts of another jurisdiction, when this

is more practical. For example, Family Court (federal hierarchy) matters are

also considered by the State courts.

Generally, courts are not bound by their own previous decisions, however

such a decision will be seriously considered in reaching a determination.

Courts are bound by the previous decision of the full court within their own

jurisdiction, and by superior courts.

Courts may depart from a previous decision depending upon the individual

circumstances. The Full Court of the High Court is not so specific it has

not enunciated a definite rule as to the circumstances in which it will do so.

Alternately, in the Supreme Court of Victoria, as suggested by the High Court,

should only depart from its earlier decision when compelled to the conclusion

that the earlier decision is wrong, and that occasion for this are infrequent

and exceptional ....

Courts are not bound by those decisions which are decided by courts from

outside their particular hierarchy. Although courts may follow the decisions

of superior courts in other jurisdictions, if applicable, for the purposes ofuniformity and certainty. It follows that precedents set in the courts of other

common law countries may also be considered as persuasive. An example can

be found in the decisions of the Privy Council. Whilst these decisions are no

longer binding upon courts in Australia (Australia Act 1986[Cwlth]), they are

considered to be highly persuasive by the High Court.

On occasion when courts are divided, a number of ways are adopted to

achieve a decision. Whilst there are specific differences to this practice in

each jurisdiction, the rules generally applicable are:

If an appeal, the decision of the court from which the appeal was madeprevails.


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Otherwise the opinion of the Chief Justice or the most senior justice

prevails.

The application of the Doctrine of Precedent relies upon the hierarchical

structure of the courts. This ranking of courts is straight forward, yet the

rules guiding the courts on how to apply precedent are more detailed, andtherefore complex. In trying to achieve certainty in determining a decision,

Australian courts may consider the previous decisions found in other

jurisdictions. Overall, the process provides the necessary checks and balances

in making law but it is not an example in simplicity.

2. Please read the paper articommon lawe Making law is what the

judges of the High Court doby C. Merritt (Financial Review, 7

March 1994). Summarise the article and comment about its

applicability to the present legal system of Australia.

Summary:

In 1994, Australias Chief Justice, Sir Anthony Mason declared that judges

make law. It was considered to be a bold step as the High Court has been

criticised for doing so. Law making, however, is a natural function of the

High Court, although it is a different activity to that which occurs in

parliaments.

Law making is a large part of our society. Common law is entrenched, more

so than that of parliaments. Yet, parliamentary supremacy maintains its

function of repeal over any part of common law. This rarely occurs butpoliticians accept the convention. Common law, or judge made law is a

function of the constitution, and this is a contentious issue in some areas.

It appears that there some problems with common law, as follows:

Some aspects do not reflect current times, which could be updated to

complement the constitution and the parliament.

The courts lack open and free communication. A trait of the

community of law makers, in that they keep to themselves, thinking that

they only apply the law, preferring to be silent about matters of the court,

even when common law is growing. The crux of the problem is that decisions on cases based upon rules,

which are now obsolete or unsound, result in injustices and inordinate

waiting time for statutes to be enacted.

There are mechanisms which constrain courts in making law, as follows:

An expectation to act justly and equitably, basing decisions on sound

reasons, not outdated precedent, as long as it is constrained by statute.

A requirement to produce just outcomes. They must keep pace with

current trends, as opposed to persisting with unsound and unjust doctrine.

If courts were subject to reform and judicial activism then this would help


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to reinforce societal expectations and gain public confidence of certain

freedoms.

Common law has its own doctrine or rules, which guide the making of

law. Decisions are be based upon the circumstances applicable to a case,

and not on broad concepts. If unable to reach a decision, constitutional

issues should then be acknowledged. Not all judges can make law in the same way. Appellate judges have

more scope than primary or trial judges who are confined to the facts as

they are found.

Comment:

The article is extremely applicable to our present legal system. Even though

the article was written in 1994, common law was established and since

practised, about a thousand years ago. The practice of common law, and its

relation to the parliament, still exists today. The problems with it are relevant

to every sector of society trying to remain current, stamp out obsolescence,

and the need to break free from stereotypical assumptions so often associated

with exclusive cliques (in this instance judges). A move for open and free

communication is ever present and will perhaps make the courts accountable

to the people for the benefit of improving common law. The constraints

imposed are equally applicable. The overriding concept of having checks and

balances ensures that everyone is treated justly and safeguarded against the

possibility of corruption.

3. Explain the terms Obita Dicta andRatio Decidendi. What relevancecan you find in these terms for an understanding of the law?

Theratiodecidendiis the principle underlying reason, the central element,

which is applied to the legal material facts of a case in determining the final

decision. It is the ratio which will be binding on subsequent courts.

The ratio is relevant to understanding law because it is the ratio which

provides the absolute reason for a decision, and therefore a law of precedent,

which has been made. Understanding the ratio equates to understanding the

decision, or precedent, which enables subsequent courts to follow thatdecision.

Theobita dicta arethe peripheral issues surrounding the ratio but are not part

of it. Since they deal with matters generally and not absolutely, they are not

authoritative and therefore they are not needed to determine a case. Obitercan

have persuasive force but are not binding on subsequent courts.

The obiteris relevant as it can provide reasons for a subsequent court to depart

from a previous decision.


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4. Inferior courts are always bound to follow the decisions of the

higher courts. Discuss.

Inferior courts are bound to follow the decisions of the higher courts vide the

doctrine of binding precedent, referred to asstare decisi, but only when asimilar situation exists, and within the same hierarchy of the particular

jurisdiction.

For matters of a similar nature the doctrine of binding precedent is critical for

inferior courts to loyally accept the decisions of higher courts and has the

advantage of providing certainty and detail in a case. Decisions can thus be

made more predictably, consistently, fairly, impartially and more efficiently.

If matters have a dissimilar nature then precedent may be considered too rigid.

This will necessitate a departure from the decisions of higher courts. In effect

this ensures that there is continual development to meet the changing needs ofsociety. Also, depending upon how much detail exists, earlier decisions can

be bulky and complex.

Courts outside a particular judicial hierarchy may not be compelled to follow

higher decisions. Although these decisions are not authoritatively binding,

they can be highly persuasive.

When inferior courts make a determination they must consider the decision of

higher courts. If the court considers a case to be similar to one already

considered by a higher court, within their hierarchy, then the precedent is

binding. Effectively the decision has been made for them and the process

could be described as routine. However if these criteria are absent then courts

must make new decisions. This is a refreshing aspect of the courts in that laws

can be updated and made relevant to current times. Alternatively, there is

therefore potential for the law to be manipulated. However the avenue of

appeal from a superior court provides the judiciary an internal check and

balance mechanism.

5. When reading an extract from a court case, what information

should you look for as being important? Give your reasons.

When reading an extract it is essential to understand why the court made its

decision. The courts decision is base upon the ratio decidendi, which will

explain:

The central proposition of law, or the ratio, because this is relevant to

the courts final determination.

If a precedent exists it will have similarratio, and therefore binding.


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Therefore the ratio is the most important information. However in

understanding a court case as a whole entity, additional information which

must be understood includes:

The parties involved.

The material facts which affected the outcome. The arguments used to persuade the decision.

The decision, who won, and any remedy awarded.

The judicial reasons for the decision.

The obiter dicta - other important statement of law.

6. Discuss the impact of English decisions on Australian legal system.

Section 74 of the Australian constitution includes the Privy Council as part of

the Australian Court structure. In theory, this would make it the highest courtof appeal and therefore all courts in Australia would be bound by Privy

Council decisions.

However appeals are no longer taken from the High Court to the Privy

Council and therefore Privy Council determinations are not imperatively

binding. Thus the High Court is effectively the highest court of appeal in

Australia. Appeals to the Privy Council were totally abolished in 1986 with

the passage of a number of acts, which includes theAustralia Act 1986(UK).

The impact of English decisions are therefore negligible, having no binding

authority, although the High Court regards Privy Council decisions as highlypersuasive.

7. ReadJohn v. Federal Commissioner of Taxation (1989) 166

COMMON LAWR 417 at 438-439 and answer the following

questions:

(a)What are the four matters that justify the High Court departing

from its own previous decisions?

1. The earlier decisions did not rest upon a principle carefullywork out in a significant succession of cases.

2. A difference between the reasons of the justices constituting the

majority in one of the earlier decisions.

3. The earlier decisions achieved no useful result but on the

contrary had led to considerable inconvenience.

4. The earlier decisions had not been independently acted on in a

manner which militated against reconsideration, as had been the

case in Queensland v. The Commonwealth.


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(b)Which, if any of these factors were relevant to the consideration

inJohn v.Federal Commissioner of Taxation (1989) 166 COMMON

LAWR 417?

Factor No. 1.

(c)Explain the application of these factors inJohn v. Federal

Commissioner of Taxation (1989) 166 COMMON LAWR 417.

The factors were considered not part of the ratio decidendi in reaching

an outcome, thus enabling the High Court to depart from its own

previous decision.

8. ReadNguyen v. Nguyen 91 ALR 161 at 177-179 and answer the

following questions:

(a)In which court did the High Court believe the decision whether

a particular state Supreme Court was to be bound by its own

previous decisions ultimately lay?

The Full Court of the Supreme Court.

(b)What did the High Court observe in relation to the Supreme

Court of Victoria? Does it regard itself as bound by its own

previous decisions?

Appeal to the High Court from a decision of the Supreme Court of

Victoria is only possible with special leave of the High Court. This

effectively made the Court of Appeal the court of last resort, except in

the event of a substantial miscarriage as considered by the High Court.

Therefore it regards that it is inappropriate to be strictly bound by its

own previous decisions.

(c)On what occasions did the High Court suggest a Supreme Court

could depart from its own earlier decision?

When compelled to the conclusion that the earlier decision is wrong.

(d)Why did the High Court believe that Supreme Courts should

generally consider themselves free to depart from their own earlier

decisions?

Because cases where departure is warranted are infrequent and

exceptional and pose no real threat to the doctrine of precedent and the

predictability of law.

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