Speeches
4th Appellate Judges Conference of the Australasian Institute of Judicial Administration
The role of the intermediate Appellate Court after Farah Constructions
The Hon Justice Steven Rares
1. Today’s discussion merits a substantive paper in itself. Farah Constructions Pty Ltd v Say-Dee Pty Ltd raises three pertinent issues:
(a) What is the role of stare decisis and obiter dicta?
(b) What is the relationship between intermediate appellate courts in the Commonwealth of Australia?
(c) What is a precedent in the judicial hierarchy in the Commonwealth of Australia?
What is the role of stare decisis and obiter dicta?
2. The distinction between stare decisis and obiter dicta is fundamental. The former is the foundation of the
common law’s process of reasoning and elucidation of what the law actually is. The actual ground of a decision determines
the particular case and identifies the law or principle which applies not only for its resolution but for the resolution of other
cases involving the same legal factual situation or relationship. In the hierarchy of Australian courts, technically, a court
can only be bound by another court in circumstances where an appeal lies directly or indirectly from the former court’s
decision to the higher court. Obviously, the High Court is at the apex of the nation’s judiciary and its decisions bind
all Australian courts.
3. The expression of opinions not necessary to the decision in a case can provide guidance for the resolution
of other cases. However, such an opinion cannot be authoritative, in the sense of binding. In Farah the High Court referred to the concept of ‘seriously considered dicta’. What the words ‘seriously considered’ add to dicta is not explained. What criteria apply to determine that dicta were ‘seriously considered’? One would think that most things said by judges, at least in reserved decisions, were the subject of serious consideration.
However, that does not mean that they had been the subject of serious debate by the parties or that their utterance provides
an occasion for determining that these statements represent the law as a matter of precedent. For example, in Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd Callinan and Heydon JJ in dissent noted that an issue had received ‘some mention before this Court’ and then went on to express views about it which appeared to have been different from the plurality reasons.
4. The question arises to what ‘seriously considered dicta’ can do. If no full argument has been heard, dicta, however seriously considered, may have very little value and, indeed,
may be quite misleading. As Dixon CJ once said:
‘Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told.’
5. Hence, courts need to weigh all the circumstances. The actual ground of decision in any case identifies the
decisive legal principle. The application of that principle in the Court’s reasons concluded the litigation and settled
the controversy. Anything else said did not. And, context is everything. Reasons for judgment may contain a discussion of
other matters. These may or may not have been raised or elaborated in argument. Dicta, seen in isolation, may appear to convey
an importance which they did not have during the argument. Indeed, the fundamental point in Farah was that the basis on which the Court of Appeal had decided the appeal had never been argued or raised before the judgment was
published.
6. More importantly, dicta are incidental to the exercise of the judicial power to quell a controversy. Dicta,
themselves, do not quell the actual controversy before the Court. And, because they do not quell such a controversy, even if uttered
by the High Court, they can never be binding.
7. That is not to say that dicta are not useful. Indeed, depending on their source and circumstances, dicta
can often be of great assistance in resolving a general legal principle or a particular dispute. However, it would be wrong for
a 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. In In Re Judiciary and Navigation Acts as Knox CJ, Gavan-Duffy, Powers, Rich and Starke JJ said:
‘…we can find nothing in Chapter III of the Constitution to lend colour to the view that Parliament can confer power or jurisdiction upon the High Court to determine abstract questions
of law without the right or duty of any body or person being involved.’
8. Dicta do not involve the determination of any right or duty of a person or body before the Court. Rather,
they reflect comments upon a situation arising, generally, from the facts and circumstances of the dispute, but not necessary for
its determination. It would be a usurpation of the rule of law for dicta, whatever their source, to be elevated any higher than
being of persuasive force.
9. Sir Garfield Barwick extra-judicially acknowledged that judging often involves the making of a choice between
reasonably available legal solutions. He cited Cardozo J on the use of precedent. Cardozo J noted that some judges used precedents
as if they were statues. He said:
‘Their notion of their duty is to match the colors of the case at hand against the colors of many sample cases spread out
upon their desk. The sample nearest in shade supplies the applicable rule. But, of course, no system of living law can be evolved
by such a process, and no judge of a high court, worthy of his office, views the function of his place so narrowly. If that were
all there was to our calling, there would be little intellectual interest about it. The man who has the best card index of the
cases would also be the wisest judge. It is when the colors do not match, when the references in the index fail, when there
is no decisive precedent, that the serious business of the judge begins. He must then fashion law for the litigants before him.
In fashioning it for them, he will be fashioning it for others.’
10. In Cook v Cook Mason CJ, Wilson, Deane and Dawson JJ said that the precedents of other legal systems than Australia’s were not binding and
were "… useful only to the degree of persuasiveness of their reasoning’. Similar considerations apply to dicta. Speaking for the Supreme Court of Canada in R v Henry, Binnie J said:
‘All obiter do not have, and are not intended to have, the same weight. The weight decreases as one moves from the dispositive ratio decidendi to a wider circle of analysis which is obviously intended for guidance and which should be accepted as authoritative. Beyond
that, there will be commentary, examples or exposition that are intended to be helpful and may be found to be persuasive, but
are certainly not ‘binding’ in the sense the Sellars principle in its most exaggerated form would have it. The objective of the exercise is to promote certainty in the law, not to
stifle its growth and creativity. The notion that each phrase in a judgment of this Court should be treated as if enacted in
a statute is not supported by the cases and is inconsistent with the basic fundamental principle that the common law develops
by experience.’
11. Nonetheless, obiter dicta play an important role in promoting coherence and certainty in the law of Australia.
These are values for which the nation’s courts should strive and underlie the exhortations in Farah.
What is the relationship between intermediate appellate courts in the Commonwealth of Australia?
12. The High Court has sought to unify and make consistent decisions on uniform legislation and the common law throughout
the Commonwealth. However, somewhat incongruously, it has also said that where there is no uniform law, even though the same statute
in exactly the same terms exists in more than one jurisdiction, decisions in the one jurisdiction on the construction of the
identical words are not to be followed slavishly in the Courts of another jurisdiction.
13. In Farah Constructions, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said that intermediate appellate courts and trial judges in Australia should
not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation
or uniform national legislation unless they are convinced that the interpretation is ‘plainly wrong’ .
14. On the other hand, in McNamara v Consumer Trader and Tenancy Tribunal McHugh, Gummow and Heydon JJ discussed the construction of a section which had been re-enacted in the same words in new legislation.
They departed from the construction of the earlier legislation in a previous decision of the High Court and said:
‘It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another;
the judicial task in statutory construction differs from that in distilling the common law from past decision.’
15. And, earlier this year in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ applied McHugh J’s comments in Marshall v Director-General, Department of Transsport, where he said:
‘But that does not mean that the courts of Queensland, when construing the legislation of that State, should slavishly follow
judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding
that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical
legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court’s jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and hierarchical
nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation.’
(emphasis added)
16. The High Court has sought to craft rules of practice in relation to judicial hierarchy in the context of Australia’s
nine distinct judicial systems. The judiciary is one of the three recognised principal arms of any government under the Westminster
system. The Constitution of the Commonwealth recognises the role of the judiciary in Chapter III. The authochthonous expedient in s 77(iii) enables the Commonwealth to conscript State courts as entities capable of exercising the judicial power of the Commonwealth, so
that for that purpose they become the means by which the Commonwealth exercises its power of government in the resolution of
matters arising in federal jurisdiction. And, s 122 confers power on the Parliament to create territories and to provide them with such institutions of government, directly or indirectly,
as appear appropriate. Thus, when the judicial power of the Commonwealth is exercised, there is a good reason for an imperative
that coherence and consistency should follow.
17. The decision in Australian Securities Commission v Marlborough Gold Mines Ltd was given at a time when the Corporations Law was state and territory legislation, and its application did not involve the exercise of federal jurisdiction, unless some (other)
federal matter attracted it. As the court expressly recognised, somewhat different considerations apply depending on whether
the legislation is Commonwealth on the one hand or uniform national on the other. In Farah Constructions the Court, again, obiter, made the same point, namely that intermediate appellate courts and trial judges in another jurisdiction
ought to follow the interpretation of Commonwealth legislation or uniform national legislation by other appellate courts in the
judicial hierarchy than the one in which they were exercising jurisdiction, unless convinced that the other interpretation was
plainly wrong.
18. Where federal jurisdiction is exercised by the intermediate appellate court, there may be scope to expand this
exhortation further by asserting that those decisions are binding. Their binding force would come not from the desirability of
achieving uniformity of interpretation, but because the intermediate appellate court was exercising federal jurisdiction and
the appeal from that exercise lay to the ultimate appellate court in the country, the High Court of Australia. Thus, where the
judicial power of the Commonwealth was exercised by an intermediate appellate court to resolve a particular dispute, that court’s
decision, in one sense, can be seen to be binding on all courts, because of its source of the power to determine the dispute
was derived from Chapter III of the Constitution. However, the High Court has not gone this far and has left intermediate appellate courts and trial judges free to depart from
decisions where they are convinced the interpretation is plainly wrong.
19. Uniform national legislation may be in a different class, since it is not usually federal, but rather state or
territory legislation and the exercise of judicial power to construe it by the intermediate appellate court remains an exercise
of that court’s power of government within the state or territorial jurisdiction in which it is sitting.
20. There is also a problem in construing what the source of the ‘common law of Australia’ is. When the High Court decides a question of unwritten law, it does so as the ultimate appellate court in all Australian
jurisdictions. It exercises jurisdiction under s 73 of the Constitution in appeals from all courts within the Commonwealth. This provides the ultimate source of, or control over, all unwritten law
jurisdictions within Australia. The result must be the exercise of the federal judicial power. But, what of the position where
the High Court has not yet pronounced on the common or unwritten law of Australia on a particular subject? Of course, all courts
will be bound by a decision of the High Court where the ratio is on the point. But, obiter dicta, for the reasons given above,
even by the High Court, are not binding and do not resolve the dispute in which they are uttered.
21. Intermediate appellate courts which resolve disputes by developing or expounding the unwritten or common law of
Australia do so as a function of their exercise of the power of government based on the constitutional structure of the state or
territory from which their judicial power derives, rather than as courts exercising federal jurisdiction. However, there may
be occasions where those courts do exercise federal jurisdiction and, as a part of that exercise pronounce upon the common law.
In the latter case, it may well be that where federal jurisdiction is being exercised in a matter, there is good reason for suggesting
that the decision will be binding on all courts in Australia for the same reasons as a decision on Commonwealth legislation might
be. Again, the High Court has not gone that far and has left a freedom to depart from the intermediate appellate court’s
decision where the other court is convinced that it is plainly wrong. In Marlborough Gold Mines Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ founded their reasoning on the importance of uniformity of decision making in
such cases.
22. These problems are instances of the consequence flowing from the separation of powers both under the Constitution and within the different polities of the federal compact.
23. The decision in McNamara raises yet another problem. There, the High Court held that it was not bound by its own earlier decision construing identical
words in a statute which had subsequently been repealed. Thus, where an intermediate appellate court has determined the law
in respect of repealed Commonwealth or uniform national legislation which has been re-enacted in exactly the same terms, those
decisions are not binding at all. It follows that decisions concerning the construction of the Corporations Law, even by the High Court itself, are not binding on the construction of the Corporations Act 2001, even though they may be in identical terms.
24. Worse still, the decision in Walker Corporation demonstrates that identical legislation in different jurisdictions in Australia which does not merit the description of uniform
national legislation, can only be a guide to the meaning of the legislation in the relevant court’s jurisdiction and cannot
control the ultimate decision. This leaves open real questions as to the approach in such cases: for example under the Commonwealth
and cognate, but not identical, Evidence Acts 1995.
25. In my view, these distinctions demonstrate that it is impossible to be prescriptive about the circumstances in
which courts within the overall Australian judicial system must follow one another. The High Court has developed these technical
differences and distinctions to deal with the complexities that arise out of our federation and its organisation into nine different
bodies politic. The aim of uniformity of decision on Commonwealth and uniform national legislation is very important.
26. Every legal system must provide its citizens with a recognised and certain judicial method or approach to the resolution
of disputes that gives rise to reasonable predictability of outcomes and transparent decision-making, hence the structured approaches
which the High Court has developed.
27. The differences between the approaches in Farah Constructions, McNamara and Walker Corporation suggest that, like the Chinese curse, we currently live in interesting times. We are not able to predict with certainty outcomes
where, for example, identical words are used in a subsequent statute that had previously been construed by an intermediate appellate
court, or their identical legislation has been construed by such a court, but it does not amount to uniform national legislation
or Commonwealth legislation. These differences recognise the difficulty that is created by having separate judicial systems within
the overall Australian context.
What is a precedent in judicial hierarchy in the Commonwealth of Australia?
28. Strictly speaking, a court can only be bound by a decision of another court in the same judicial hierarchy which
sits on appeal directly, or through the intervention of the intermediate appellate court, from the first instance decision-maker.
In the preceding section I have examined whether this view is strictly true of the courts in the Australian federal context.
29. A real question arises as to the constitutional power of the High Court to require a state or federal court to
follow the decision of its counterpart intermediate appellate court in another Australian jurisdiction. The role of the High Court,
at the apex of the Australian judiciary, is to provide uniform interpretation and to espouse, authoritatively, the unwritten
law of Australia. It is, however, difficult to accommodate the exercise of state or territory judicial power in one Australian
jurisdiction as having any binding authority under the Constitution in another jurisdiction. The more this is so because the High Court rarely grants special leave to appeal. The freedom of intermediate
appellate courts to consider for themselves the proper construction of legislation and the appropriate path to follow for the
development of the unwritten law of Australia is better reflected in Walker Corporation than in an inflexible rule that those intermediate courts should follow another intermediate appellate court’s decision unless
convinced it is plainly wrong.
30. It is the High Court’s role to resolve conflicts which may arise between the different courts properly exercising
their judicial functions. That role should not be exercised simply by prescribing a default position that once one Australian
intermediate appellate court has pronounced upon the position, its decision is, in a de facto sense, binding unless the subsequent
court is convinced it is plainly wrong. After all, as Oliver Wendell Holmes notably explained in his classic work The Common Law:
‘It is something to show that the consistency of a system requires a particular result, but it is not all. The life of
the law has not been logic: it has been experience.’
31. Rather, the desirable approach seems to me to be an adaption of what was said in Cook: namely, that the precedents of other Australian jurisdictions when not exercising federal jurisdiction should not be binding,
but only useful to the degree of the persuasiveness of their reasoning. Where there are conflicts between intermediate appellate
courts in various jurisdictions it is the constitutional duty of the High Court to resolve those differences by considering them
and the proper approach to the ultimate problem, rather than by prescribing a default position that the first intermediate appellate
court to pronounce upon the problem should hold the field unless it is apparent that its decision is ‘plainly wrong’.
32. As we know, many legitimate differences of opinion and approach can be open in the resolution of difficult legal
questions. The richness of the common law is that those differences flourish in the common law system unless and until they are
ultimately resolved by the final court of appeal. Stifling the debate at birth because one court has already looked at the problem
is not, in my view, warranted by the Constitution, except, arguably, in cases where federal jurisdiction has already been engaged in the earlier decision. Rather, the proper
approach is to permit different appellate courts to be free to arrive at their own decisions, although mindful and respectful of
the persuasiveness of the reasoning of the earlier courts’ decision. That preserves the real function of the High Court
to resolve the question authoritatively and recognises the judicial independence of the intermediate courts within their own constitutional
framework.
33. These distinctions are not easy to apply. Uniformity of decision-making in similar situations on similar facts
is desirable in any judicial system both in cases involving the unwritten law and where there is written law in achieving consistency
of result in the construction and application of similar statutes.
* This is an edited version of a paper presented on 7 November 2008 in Melbourne at the 4th Appellate Judges Conference
of the Australasian Institute of Judicial Administration.
The author acknowledges Alon Januszewicz and Sonia Keogh for their research assistance in the preparation of this paper.
[1] (2007) 230 CLR 89
[4] cf: Fostif 229 CLR at 431-432 [81]-[82] per Gummow, Hayne and Crennan JJ
[6] see Quinn v Leatham [1901] AC 495 at 506 where the Earl of Halsbury LC said ‘… every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the
expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular
facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually
decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning
assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at
all’; applied by McHugh J in Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573 at 593 and R v Henry [2005] 3 SCR 609 at [53] and [57] per Binnie J for the Court.
[9] In Re Judiciary and Navigation Acts 29 CLR at 267
[11] Cardozo BN, The Nature of the Judicial Process (Yale 1965) at pp 20-21
[17] citing Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 492 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ. And, in Nguyen v Nguyen (1990) 169 CLR 245, Dawson, Toohey and McHugh stated that where an intermediate appellate court holds itself free to depart from an earlier decision
it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong ((1990) 169 CLR 245 at 250 per Brennan J agreed with this aspect of their Honour’s judgment at 269, Deane J agreed at 251).
[22] at 632-3 [62]; see also Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [96] per myself
[25] Re Wakim; Ex parte McNally (1999) 198 CLR 511
[27] Marlborough Gold Mines 177 CLR at 492
[28] cp: the role of the Supreme Court of the United States which has limited power to decide issues of purely State law: e.g. Michigan v Long [1983] USSC 179; 463 US 1032 (1983) at 1039-1042 per O’Connor J; cf: Quick J & Garran RR: The Annotated Constitution of the Australian Commonwealth (1901 ed, Legal Books, Sydney, 1976) pp 724-725 §288
[32] Marlborough Gold Mines 177 CLR at 492
[37] Holmes OW: ‘The Common Law’ at p 1 (1991 Dover ed, General Publishing Co Ltd (1881))
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