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Lecture 5: Case Law & Precedent (Live)
Dr Fady Aoun
w/ thanks to Professor Barbara Mc of Law – JD 2022
SYDNEY LAW SCHOOL

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Precedent in the common law
What we will look at in this lecture:
– Justifications for the doctrine of precedent
– The context for the doctrine: the hierarchy of the courts in Australia
– The rules of precedent themselves
– Finding the “ratio”: in single judge decisions; in appellate decisions.
– Distinguishing binding “ratio” from non-binding “obiter”
– Judicial reasoning in developing the law: new precedents for novel situations
› What value in obiter dictum/dicta? Some examples below
› Overruling previous decisions
› Distinguishing previous decisions
› Limiting or reformulating the ratio of previous decisions
› Practical skills

Other complications for appellate courts
› When judges disagree, the decision of the majority prevails. › Sec 23 of the Judiciary Act 1903 (Cth):
– in the event of an equally divided court, the opinion of the CJ will prevail for that case
But such a “statutory majority” decision is not a binding precedent

A narrow and a wide ratio
› Donoghue v Stevenson, 1932, House of Lords (an extract is on Canvas for this lecture under “Additional material” in Modules):
› Mrs Donoghue drank some ginger beer from an opaque glass bottle bought for her by a friend. It contained a decomposed snail… she became ill.
› Could she sue the manufacturer? In contract? In “tort”?
› Did manufacturer owe Mrs D a legal duty of care?
› set out the principles of law which allowed her to sue the manufacturer- he began with broad principles on the duty of care to a “neighbour” in a legal sense generally and then applied this principle narrowly to manufacturers vis-a-vis consumers.
› The case has become a precedent for both the broad and the narrow principle.

Reasoning methods behind the development of legal principles
› Donoghue v Stevenson and the history of negligence law is a perfect example of the way judges develop the law by induction and deduction
› induction: drawing a general principle from particular instances : this is what did when he set out his “neighbour principle”
› deduction: using a general principle to apply to particular instances: once he had worked out the neighbour principle, he applied it to manufacturers.
› Another method – analogy: B:C is analogous in key respects to Y:Z
› Incremental approach of the common law and judicial reasoning: eg Home Office v Dorset Yacht Co [1970] AC 1004 at 1058-1060 Cases on Torts p 154

An example of a very persuasive obiter dicta
› v Heller, 1964, House of Lords- P claimed that Ds had made a negligent mis-statement. Was there a legal duty of care in respect of negligent words causing economic loss? Donoghue v Stevenson had been about acts, not words.
› HL said not in this case because Ds had answered “off the cuff” and had included a disclaimer with their information: “no liability on our part”
› Yet case is treated as the foundation case of when a duty of care does arise in respect of information and advice: the court set out the circumstances of when there would be a “special relationship” giving rise to a duty of care in giving advice or information.

Other persuasive/ ‘authoritative’ obiter?
› Farah v Say Dee, 2007, HCA: extensive obiter dicta about the liability of third parties who assist a breach of trust.
› High Court said that “the NSW Court of Appeal should not have departed from the seriously considered dicta of the High Court in Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373.”
› Very controversial (see next slide)
› Contrast what Heydon J said in Tabet v Gett (2010) 240 CLR 537 [97]-[98] ( a case about loss of chance in medical negligence cases) on the dangers of obiter dicta:
› when a question has ceased to become live between the parties, it becomes “purely abstract and academic” and the parties and judges have ceased to have a consciousness that the issue matters.

obiter dicta
, a Federal Court judge:
“i]t would be wrong for a [lower] court to defer simply to dicta, however seriously considered, even in the High Court, in substitution for its own view of the decisive question to be determined in the case before it where the matter has been the subject of full argument and consideration. That is because the dicta do not lay down rules of law, and cannot have that function. The High Court cannot issue advisory opinions.”
• Justice , ‘The Role of the Intermediate Appellate Court after ’ , speech given at 2008 Judges conference.

Some review
https://www.menti.com/foj76az9pd

Some Review: Doctrine of Precedent
https://www.menti.com/2zpvju95hk

Stone’s “perennial mystery”
› Poor, indeed, must be the common lawyer who has not paused to ask, with , how the “perpetual process of change” in the body of common law “can be reconciled with the principles of authority and the rule of stare decisis?”…. [The common lawyer] is challenged to ask what magic at the heart of the system of stare decisis can transform a symbol of immobility into a vehicle of change?
– , “The Ratio of the Ratio Decidendi” (1959) Modern Law Review 597, 597.

Doctrine of Precedent
›Judges in lower courts are bound by the decisions of courts higher in the hierarchy. This is referred to as a ‘binding’ precedent
›Normally, courts at the same level should follow their own decisions unless convinced that the previous decision was clearly wrong
›Decisions of other courts are persuasive ›Applies to both statutes and common law

Duty to Avoid Conflict
“As fiduciaries, directors must not place themselves in a position in which there is a conflict between their duties to the company and their personal interests or duties to others. Good faith must not only be done but must manifestly be seen to be done, and the law will not allow a fiduciary to place himself in a position in which his judgement is likely to be biased and then to escape liability by denying that in fact it was biased… the “no conflict” rule is probably the most important of the director’s fiduciary duties”.
– . Davies, Gower and Davies’ Principles of Modern Company Law (7th Edition) Sweet & Maxwell 2003 at 391-392 (citations omitted)

Consider: The law on secret profits and ‘corporate opportunities’
› General law
– Cook v Deeks [1916] 1 AC 554
– Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 (HL)
– Peso Silver Mines Ltd v Cropper (1966) 58 DLR (2d) 1 – IDC Ltd v Cooley [1972] 1 WLR 443

How To “Avoid” Precedent: Techniques within Legal Method
› Distinguishing a precedent (usually on the facts)
› Statement of law is too wide
› Statement of law is obiter dictum
› Changed social conditions?
› Precedent is considered unsatisfactory
› Precedent is wrongly decided (per incuriam rule)
– See generally LDL Chapter 8, [8.11]-[8.17]

How to avoid or get around an inconvenient precedent?
› 1. “Distinguish” the facts in the previous case and your case: perhaps your facts have an additional factor or have a necessary factor missing, so you argue that the precedent case is not binding.
› A +B+C= a particular result in law.
› A+B+C+D=??
› 2. Over-rule or not follow the previous decision- but only if court has the power to do so.
› See further Laying Down the Law
› Even the High Court is reluctant to overrule a previous decision? Why?

Factors leading to HCA over-ruling its previous decision: John v FCT (1989)
› Assumes: that current court thinks or a party argues that a previous decision was wrong. Grounds for overruling by the HCA:
› 1. Previous decision not based on carefully or long- worked-out principle;
› 2. Difference in reasoning of majority in previous decision;
› 3. Previous decision had achieved no useful result but had created
inconvenience;
› 4. Previous decision not acted upon since.
An example: Cook v Cook (1986) HCA, overruled by Imbree v McNielly [2008]

Some examples of overruling
› In 1966 the High Court decided Beaudesert Shire Council v Smith:
› Council trespassed on river bed and took gravel. Changed waterflow. Smith, down-river irrigator, could not get as much water for crops. Smith sued council. He recovered damages on a principle, newly formulated by 3 judges of the HCA, in general terms from old cases:
› “There is therefore a solid body of authority that defendant may be liable for the inevitable damage caused by his unlawful, intentional and positive act”
› NT v Mengel, 1992, 7 judges of High Court overruled Beaudesert SC v Smith. Why?

Other examples of the HCA changing its mind
› Implied constitutional freedom of speech as a defence to defamation: in Theophanous -narrowed soon in Lange v ABC.
› Liability for nervous shock or psychiatric illness of relative of victim: Chester v Waverley (1939)— Jaensch (1987)- –Annetts v Australian Stations (2003). See also now Civil Liability Act 2002 (NSW) s 32 and s 30.
› Brodie v : narrow majority overturned long standing immunity of road authorities (dating back to an English case in 1788) for failing to repair the road.
› Immunity now partly restored by statute in the Civil Liability Act NSW 2002: only applies where the authority has no knowledge of the defect.

Inconvenient precedents (continued)
Narrow the ratio of the previous decision:
v Lumley, 1807: for over 100 years it was regarded as authority that a payment made under a mistake of law could not be recovered.
v Commonwealth Bank, HCA, 1992: a payment made to settle a claim, including one made due to a mistake of law, could not be recovered. This is a much narrower principle.

Inconvenient precedents (continued)
› Argue that the precedent is inconsistent with other over-riding developments in the law that have happened since: argue that it cannot survive, that it is impliedly overruled by later decision(s):
› Eg the immunity of landlords towards tenants and third parties for negligence: affirmed by the House of Lords in 1908 Cavalier v Pope.
› Could such a rule survive Donoghue v of Lords, 1932, and the development of negligence law ever since?
› No: conceded by parties in Harris v Northern Sandblasting, affirmed by High Court in Jones v Common Law system v Civil Law systems
The “Common Law” contrasted with Civil Law systems in European-based jurisdictions, is
– Judge made law
– Yet supplemented by and subject to statute (within legislature’s constitutional
– Precise, i.e. targeted to and dependant on facts of the case
– ‘Open’ to development, growth and change? Or hamstrung by history?
› While the Civil Law
– Has more direct origins in Roman law
– Is focussed on legal principles, of wide application
– Yet the codes are concise
– ‘Closed’? Less potential for development by judges? Or open to modern interpretation?

Ratio & Obiter Review
› https://www.menti.com/416ukadiob

The Importance of Getting Your Hands Dirty
‘The life of the Law has not been logic, it has been experience’.
Holmes, Jr., The Common Law (1881), 1 Source: http://www.britannica.com/EBchecked/topic/269514/Oliver-Wendell-Holmes-Jr/3268/The-Common-Law

Why Do We Do This to You?
› Two main reasons:
1. The Historical Reason
2. The Practical Reason

How to Read a Case
› Some examples: – Plenty v Dillon
– Hart v Rankin
– Cohen v Sellar
– Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v (2009) 239 CLR 420; [2009] HCA 48 (10 November 2009)

What We Want
› The material facts & procedural history
› Appreciate the legal issues in dispute
› Appreciate the arguments advanced by either side
› Identify the ratio(nes) and obiter
– Understand the reasoning of the majority and appreciate its significance – Understand any concurring and/or dissenting judgments
› The result
› See generally (F)IRAC in TEXT and Reading Guide.

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