Edith Cowan University

2011

LEGAL FRAMEWORK I

LECTURE NOTES

Note to reader: these lecture notes are compiled for the purposes of the unit LAW1100 Legal Framework I and are selective in nature and scope. The notes are for academic purposes only.

Lecture 2

An Introduction to Law: Sources of Law, and Interpretation of Statutes

INTRODUCTIONIn the first lecture, we noted that the law can be classified, amongst other ways, according to source under two headings - Statute Law and Case Law. Statute Law is the law enacted by Parliament, and covers not only Acts of Parliament but also delegated legislation in the form of rules and regulations made by subordinate bodies. Case Law is also known as judge made law and represents the principles of law which have evolved over time from court decisions. This lecture will consider the two sources of law in greater detail, and then examine how these laws develop and are interpreted by the Courts.

On successful completion of this lecture, you should (within the scope of the course) be able to:

discuss the differences between statute law and case law have a basic understanding of case citation describe the doctrine of precedent or stare decisis and the importance of the hierarchy

of the courts in its operation describe the legal concepts of ratio decidendi and obiter dictum describe ‘distinguishing’ as a means of avoiding precedent identify the statutory aids to interpretation of statutes identify and describe the common law rules for statutory interpretation, and the rules

concerning words

THE SOURCES OF LAW

Statute LawThere are a number of key differences between Statute Law and Case Law:

1. Statute Law can be created immediately whereas case law is dependent on the public engaging in litigation.

2. A Statute generally has immediate universal application whereas a Court decision only initially applies to the parties and will be much slower in gaining wider acceptance.

3. While a Statute may be given retrospective effect, case law never can. 4. In the event of a conflict between the two, Statute Law prevails.

Case LawThe development of Case Law depends on the formal reporting of cases and the notion of precedent. Accordingly, the following discussion considers the key themes of the naming of cases, the Doctrine of Precedent, the concepts of ratio decidendi and obiter dictum, and the notion of distinguishing.

Citation of CasesA way to determine the type of 'law' in terms of criminal and civil cases is to look at the parties involved. As civil cases involve individuals, the naming convention for cases being heard the first time is to use the Plaintiff’s name followed by a ‘v.’ and then the Defendant’s name. Similarly, in appeal cases, the name of the party making the appeal (the appellant) is

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placed before the ‘v.’ and the party responding (the respondent) is placed after the ‘v’. Thus, in the celebrated case of Donoghue v. Stevenson, Donoghue was the plaintiff (and later was also the appellant when the case went to appeal) and Stevenson was the defendant (and later the respondent). The ‘v.’ between the names stands for versus and means against, but in civil cases is pronounced ‘and’. Therefore, we speak of the case Donoghue and Stevenson.

In criminal cases, the parties are usually the Crown and the defendant. The naming convention for cases being heard the first time is to use the Crown as prosecutor first followed by the name of the defendant. Thus, in the case R. v. Smith, R is an abbreviation for Rex (King) or Regina (Queen). The small v is pronounced as ‘against’ in criminal cases. Therefore, we speak of the case as the Queen (or King, depending on the reigning monarch at the time of the case) against Smith or simply ‘the Crown against Smith’. Interestingly, the pronunciation of ‘v.’ in many American jurisdictions is ‘versus’ (or ‘vee’), regardless of whether the case is civil or criminal.

You will notice that the case name is also given further identifying features, such as the year in which the case is heard, the volume of the case report, the name of the case reporting organisation and the page number of the first page of the report. Consider for example, Donoghue v. Stevenson [1932] AC 562. The exact detail of these additional identifying features is not examinable in this unit.

Doctrine of PrecedentThe Doctrine of Precedent (Latin - stare decisis, ‘stare’ pronounced as ‘starry’) holds that ‘like cases should be decided in a like manner”. That is, cases must be decided the same way when their material facts are similar. The Doctrine is given effect through the hierarchy of the courts. In other words, every Court is bound by the decisions of the Courts above it in the same legal system. For example, the WA District Court is bound by a decision of the WA Supreme Court but is not bound by a decision of a Supreme Court in a different state. Generally, individual judges at the same level are not bound by each other's decisions, and usually Courts are not bound by their own past decisions (although judges will generally follow a conservative path and follow past decisions at the same level).

The Doctrine of Precedent was facilitated by the development of accurate law reporting, which dates back to the thirteenth century in England. The early reports were not always regarded as reliable, and it was not until the eighteenth century that judges and lawyers had authoritative accounts of cases upon which to reference their decisions and arguments. In 1865, the English Council of Law Reporting was established and had the responsibility for issuing official law reports, such as from the Appeal Cases (AC), the King’s (or Queen’s) Bench (KB or QB) and Chancery (Ch). These reports, along with the All England Reports, are available in the reference section of the Edith Cowan University Law Library, as are the official law reports in Australia, such as the Commonwealth Law Reports (CLR), NSW Law Reports (NSWLR) and the Western Australian Law Reports (WAR). Through the process of recording judgements, the notion that a judge was influenced by previous decisions changed to the more rigid criterion that a judge became bound by previous decisions even if the judge did not agree.

The Doctrine of Precedent has a number of advantages and disadvantages. On the plus side, the doctrine promotes consistency, continuity, confidence and certainty in the Law. It is clearly important for parties to an action to know that decisions are not arrived at by whim or guess-work. On the downside, the doctrine can result in the Law being rigid and slow to

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change, where lower Courts are bound by outdated decisions of higher courts (in the same legal system). Indeed, at times, Parliaments have to step in and overcome the rigidity through legislation.

Ratio decidendiThe ratio decidendi (the reason for deciding) is the part of a Court's decision that is binding (at least upon lower courts in the same court system). It is comprised of the principle of law and essential facts upon which the decision is based. Every court judgement will have a ratio, though it is sometimes difficult to identify, especially in appeal decisions involving a number of separate judgements.

An important case in the law of negligence, Donoghue v. Stevenson [1932] AC 562, provides an example of what a ratio decidendi looks like. As a ratio is reflected by the material facts of the case and the legal principle on which the decision rests, we must look for both. In this case, the House of Lords held that a duty of care was owed by a manufacturer of ginger beer to a consumer who suffered injury and shock by drinking from a bottle of the product which, due to the negligence of the manufacturer, also contained a decomposed snail. The ratio of the case provided the foundations for the transformation of the law of negligence far beyond the narrow confines of bottled soft drink and deceased gastropods. Lord Atkin discussed the material facts in broader terms when considering the issue of duty of care (Latimer, 1998, p. 37):

. . . a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care.

The general principle of law that provided the basis for liability in negligence, the neighbour principle, was also stated by Lord Atkin in his judgement (Latimer, 1998, pp. 36-37):

The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, ‘who is my neighbour?’ receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who then in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called into question.

Obiter dictumAn obiter dictum (a saying by the way) is a statement of legal principle by a judge which is not binding on any court. It is a statement or opinion as to what the Law is on a particular matter which is not essential to the decision reached. Whilst an obiter is not binding, it can be of persuasive value in later court decisions, depending on a number of factors including the importance and prestige of the Court stating it. Indeed, sometimes a Court in a subsequent case might apply obiter dictum as part of its ratio decidendi and make new law. Hedley Byrne and Co v. Heller & Partners [1964] AC 465 provides an example of what an obiter dictum can look like and how an obiter dictum in one case may then be applied as part of the ratio decidendi in later cases.

Case Summary reading – Understanding Business Law (2008) text, page 728Hedley Byrne and Co Ltd v. Heller & Partners Ltd [1964] AC 465

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Clearly, the Hedley Byrne case turned on the presence of the disclaimer. However, the Court observed that the law in the area of giving advice was uncertain and then proceeded to consider in what circumstances a person would be liable for negligent advice assuming that a disclaimer had not been given. Hence, the discussion of these principles of negligent advice which clearly had no bearing on the case before the court can be considered as obiter. However, in later cases which did not involve disclaimer notices, the obiter in Hedley, though not binding, proved very persuasive, and was applied as part of the ratio decidendi to make new principles on negligent advice.

DistinguishingThere are a number of ways in which precedent can be avoided, one of which is by way of ‘distinguishing’. ‘Distinguishing’ is a legal argument that the material facts of a binding precedent case are so different from those of the case before the Court that the precedent case can be distinguished and therefore not be followed. Essentially, distinguishing is the logical inversion of the Doctrine of Precedent: if like cases need to be decided in a like manner, then it follows that unlike cases do not have to be decided in a like manner.

Distinguishing is a process by which barristers and courts can avoid the application of a particular (perhaps unsatisfactory) precedent. Typically, barristers tend to ‘read down’ the ratio of a case (i.e. especially by reading the material facts in narrow terms) which is adverse to their client’s interests. One the other hand, if an earlier case exists which contains a ratio favourable to his or her client’s interest, but which does not appear to contain similar facts, the barrister may read the decision in wider terms.

THE INTERPRETATION OF STATUTES

AIDS TO INTEPRETATIONThe law provides certain tools or keys for reading and interpreting legal documents. These are predetermined ground rules to avoid allegations that the interpretation was made on the grounds of chance, prejudice, whim or arbitrariness. Additionally, such rules are used by the Courts to overcome difficulties created by poorly worded or ambiguous documents or statutes. The rules governing statutory interpretation are also applicable for interpreting other documents, such as statutory regulations, by-laws, written contracts, deeds and industrial awards and agreements. There are three broad sources of rules or principles governing the interpretation of statutes:

1. Interpretation Acts at state and federal level2. the definitions provided in the definitions section of a particular statute3. the Common Law rules for statutory interpretation

Interpretation Acts There are Interpretation Acts at Commonwealth and states and territory level in Australia. For Commonwealth legislation, the Acts Interpretation Act 1901-84 (Cmth) applies. For legislation in Western Australia, the Interpretation Act 1918-84 (WA) applies. The Interpretation Acts contain definitions of words commonly used in statutes or other documents. Definitions of words or terms are usually introduced with the words ‘unless the context otherwise requires’ or ‘unless otherwise stated.’. Each Interpretation Act effectively gives an ‘official’ or ‘standard’ meaning for often used terms like ‘Minister’ or ‘Court of Summary jurisdiction’. Along with the definitions of key words and concepts, the Interpretation Acts also specify how time is to be calculated. This is often of crucial

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importance, when for example, a provision of a piece of legislation requires certain action “within 21 days after the document is served” or that at least 14 days notice is to be given for a particular event. How are the 21 day and 14 day periods to be calculated? Do the periods include weekends? Does a day run from midnight to midnight? The Interpretation Acts also give guidance to the Courts in establishing the purpose of legislation in order to ensure an interpretation consistent with Parliament’s intentions (see Purpose Rule below).

Definitions in ActEach statute will have a definition or interpretation section defining words appearing the statute with particular meanings. The definitions can be exhaustive or inclusive.

Exhaustive DefinitionExhaustive definitions are often introduced by the word “means”. For example, a definition in a particular statute might state: "Motor vehicle means a motor car or motorcycle." Hence, only motor cars and motorcycles fall within the definition relevant to the particular statute and, for example, trucks and buses would not.

Inclusive or un-exhaustive definitionInclusive definitions will be introduced by the word “includes”. For example, an Act may state that “motor vehicle includes a motor car or motor cycle”. Here, the use of the word ‘includes’ indicates that the definition is inclusive. Thus, a truck, bus and other forms of motor vehicles may also come within the definition. Further, a definition in a particular statute might state: “Parent includes guardian and every person who is liable to maintain or has the actual custody of any child”. Thus, not only are the natural parents of a child covered under the particular statute but also a broader range of custodians including guardians.

COMMON LAW RULES FOR STATUTORY INTERPRETATIONThere are four major rules developed by Common Law for statutory interpretation: the Literal Rule, Golden Rule; Mischief Rule and Purpose Rule; additionally, rules concerning words are also discussed.

The Literal Rule The Literal Rule is referred to as the starting point for statutory interpretation. The rule essentially provides that (i) meaning of the words is determined by reference only to language of the Statute itself (this is justified by the notion that it is not the function of the courts to second guess the Parliament by filling in the gaps or fixing drafting mistakes) and (ii) the words are to be given their natural or ordinary, dictionary meaning, in the absence of any statutory definition (the ordinary meaning of Australian statutes is achieved by recourse to an Australian dictionary (e.g. Macquarie) rather than from an overseas dictionary).

The Golden RuleThe Golden Rule essentially provides that where the natural meaning (via the use of the Literal Rule) leads to some absurdity or inconsistency then this may be modified to avoid the same, but no more than this. The Golden Rule provides a ‘safety net’ under the Literal Rule, but will only apply when there is absurdity or inconsistency in the literal meaning. For example, say an Act required the driver of a car to stop after an accident. A defendant driver might argue (under the Literal Rule) that the requirement was satisfied if they had halted for a short while after an accident. However, this may lead to an inconsistent situation. Using the Golden Rule, it could be argued that the statutory stipulation to stop meant that a driver had to

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stop and remain for an appropriate amount of time in the situation for the necessary enquiries required by the legislation to be made by the attending authorities.

The Mischief RuleA largely historic rule originating several centuries ago, the Mischief Rule represented the first attempt by the courts to ‘step outside’ the legislation before the court and seek the underlying intention of the Parliament in creating the law to be interpreted. The rule essentially provides that, to assist in resolving doubt or ambiguity, the courts can look at any defects (mischief) in the previous law which the Statute was intended to overcome . In so doing, the courts examine the relevant Law in existence prior to the present legislation to be interpreted and identify if possible the defect or inconsistency (mischief) in the Law which the legislation was intended to remedy. Once the ‘mischief’ has been determined, the courts can interpret the legislation with a mind to advancing the intended remedy or cure for it. Under the Mischief Rule, the courts limit themselves to a comparison between the old and new law, and as a result no extrinsic material (record of Parliamentary debates, explanatory notes to the Act and so on) can be used to aid the interpretation.

The Purpose Rule (or purposive approach, as it is both a Common Law rule and encouraged through legislation)The Purpose Rule essentially allows the Courts to look at the purpose of Act and adopt interpretation consistent with that purpose. The rule focuses more on the broader underlying purpose of the legislation rather than a pre-existing problem (as in the Mischief Rule) that the legislation sought to remedy. The High Court in 1981 sought to consider the intention of Parliament in an important tax evasion case rather than using a strict literal reading of the statute. This approach was given Parliamentary support later that year by an amendment to the Acts Interpretation Act 1901 (Cmth) through the addition of s.15AA(1) which states:

In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.

Provisions similar to s.15AA have been inserted into the Interpretation Acts in the various states of Australia (for WA, s.18 of Interpretation Act 1984 (WA)). Under the state and federal Interpretation Acts, the Courts may examine a wide range of sources from which the purpose of the wording of a particular piece of legislation may be determined, including:

matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer

reports to Parliament from relevant Parliamentary Committees, Royal Commissions, Law Reform Commissions and Committees of Inquiry

International agreements and treaties, explanatory memoranda, second reading speeches and Hansard (the Parliamentary record)

Rules concerning wordsThere are a number of rules concerning words and aids to construction, two of which are listed and explained as follows. First, words in a statute are to be given their modern or current meaning unless the original meaning was different in kind. For example, if the Court is required to interpret a nineteenth century statute, it need not consider a nineteenth century dictionary unless the context requires it.

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Second, ejusdem generis (which is Latin for ‘the same kind or nature’) states that if a number of specific words are followed by a general word, then, if the specific words belong to one class or genus, there is a presumption that the general word is limited and refers only to items of the same class or genus. For example, if the words of a piece of legislation specified “. . . house, office room or any other place”, the general term “any other place” needs to be interpreted. By ejusdem generis, the meaning of ‘any other place’ is limited by the specific words house, office and room, which are all ‘species’ of the genus, ‘building’ (to use the biological terminology). Hence, a court could rule that the words do not include an area which is fenced off but unroofed.

Further, if an Act stated that a ferry was allowed to carry 'horses, cows, sheep, and other animals’, could it carry a circus elephant? Again, by ejusdem generis, the general words 'other animals' are interpreted in context of the special words. Therefore, the answer is no because horses, cows and sheep are all domestic animals and 'other animals' would be interpreted to refer to domestic animals only.

Reading for this lecture from the Understanding Business Law (2008) textRe-read Chapter 1, especially sections 1.1 through 1.13

Self test exercises – Lecture 2

Multiple choice questions

1. Which of the following is not true of Statute Law and/or Case Law?a) Case Law is dependent on the public engaging in litigationb) in the event of a conflict between the two, Case Law will prevailc) Statute Law can be given retrospective effect d) Case law is the body of principles of law developed by the Courtse) When first created, a Case Law rule will only apply to the parties to the case.

2. The rule that ‘like cases are decided in a like manner’ is best described as the a) Doctrine of Statuteb) Doctrine of Ratioc) Doctrine of Precedent d) Doctrine of Lawe) Doctrine of Interpretation

3. The ratio decidendi of a casea) is of persuasive value only to lower courts in the same hierarchyb) is reflected by the material facts of case and the legal principle on which the decision

restsc) is a ‘saying by the way’ by the judge of a courtd) must be followed by every court in a given court system e) all of the above

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4. Which one of the following rules reflects the following: where the natural meaning of the words in a statute leads to some absurdity, then the meaning of the words may be modified to avoid same, but no more than this?a) Literal ruleb) Purpose rule c) Mischief ruled) Golden rulee) none of the above

5. If an Act specified ‘any passenger sedan, station wagon or other motor vehicle’, by ejusdem generis, which of the following would probably not be covered by the Act?a) a formula one racing carb) a commercial transport aircraftc) a truckd) an armoured personnel carriere) all of the above

6. Which of the following pairs of statements best reflects the Doctrine of Precedent or ‘stare decisis’?

a) the legal reasoning for the decision; legal principles as precedents must always be followed

b) precedent law developed by the Courts must be followed; laws are interpreted using the natural meaning of the words of the written law

c) like cases are to be decided in a like manner; lower courts are bound by the decisions of the higher courts in the same court system

d) precedents are created by the Parliaments; rules developed by the law makers must be founded on justice

e) the right to hear a type of case or dispute; appeals of court decisions are to be made to the next higher court in the court hierarchy

7. An argument that the material facts of a binding precedent case are so different from those of the case before the Court that the precedent need not be followed is known as

a) distinctivenessb) differentiationc) discretiond) disapprovale) none of the above

8. Which of the following common law rules which allows the courts to modify the literal meaning of the words in a statute to avoid absurdity?

a) Golden ruleb) Mischief rulec) Purpose rule d) Literal rulee) none of the above

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9. Which one of the rules below best reflects the following: the courts are to look to the purpose of the legislation and adopt an interpretation consistent with that purpose?

a) Legislative ruleb) Mischief rulec) Purpose rule d) Parliamentary rulee) Consistent rule

10. If an Act specified ‘any personal computer, television, radio or any other electronic device, by ejusdem generis, which one of the following would probably not be covered by the Act?

a) an air conditionerb) an electric heater c) an electric motor card) a solar hot water system e) all of the above

11. Assume a definition in a statute provides that “motor vessels” means “steamships,

motor boats and motor powered yachts”. Such a definition is best described as an:(a) exhaustive definition (b) exaggerated definition (c) extant definition (d) extraneous definition (e) none of the above

12. Assume that a still effective statute passed in 1835 provides for the access of “any vehicles” on a road. Would a motor car probably now be covered by the statute, and why? (given: there is no statutory guidance provided for the meaning of ‘vehicles’ and that motor cars are relevant to the context of the legislation)

a) yes, because the Court will use the current meaning of the word ‘vehicles’, which would now include motor cars

b) no, because motor cars would not have been contemplated by the Parliament in passing the law - they had not been invented when the law was passed

c) yes, because the Court will always use the Golden Rule first, and it is absurd not to allow cars on roads

d) no, because the Court will always interpret first by using the purpose rule, and the purpose of the Parliament could not possibly have been to allow access to motor cars

e) no, because the premise of the question is clearly wrong - there are no Acts of Parliament from the Nineteenth Century or earlier which are effective now

Short answer questions

Question 1 What are the two main sources of the law and what are the key differences between them? In event of a conflict, which prevails?

Question 2To what extent does the ratio decidendi or an obiter dictum in one case influence a Court’s decision in a later case?

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Question 3What is the Doctrine of Precedent and how is it incorporated into the Australian legal system? What are some of the advantages and disadvantages in using the Doctrine?

Question 4What is meant by the legal expression ‘distinguishing’? Give an example to illustrate your answer.

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