Discuss the operation of the doctrine of precedent in the Australian courts

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TOPIC 4

  1. Discuss the operation of the doctrine of precedent in the Australian courts;
  1. How precedent may impose limits on judge’s decision;
  2. How precedent can provide judge’s with flexibility in reaching their decision;

[Taking into consideration cases dealing with unconscionable contracts in topic 4 (Extracts 7-10)], or by referring to Case study C.

 

Ans 1] The doctrine of precedent requires that ‘like cases be decided alike’. If a case now raises similar issues like the one decided before, then the decision for the present case would be the same as before. In this way the earlier case is referred to as the ‘precedent’. Precedent provides a model for future cases to follow. It has two components- ratio decidendi and stare decisis. It is an approach for the courts to develop general principles and apply them to future cases. This method increases certainty and consistency. It also promotes justice in so far and treats all like cases alike. It is considered economical because the court is reinventing the wheel every time it hears a case. This approach may impose both limits and flexibility to judges’ decision.

The limits that are imposed on the judges’ decision are that precedent constraints the power of judges to view the merits and demerits in each case and to make decisions according to what seems fair at that time. Another aspect of precedent is that a decision will be a binding precedent if it was made by a higher court in the same authority. For instance, a judge of the district court of New South Wales Supreme Court is bound to follow a high court decision. Also it is known that under the doctrine of precedent, the rule in the precedent case is only binding if the facts of the case are similar to those of the case now before the court. But there is no simple or precise formula to tell when this is so. Judges’ analogy is different from those of scientist in the sense that it is not prediction or factual observation but a value judgment about whether the rule in the previous case should be applied to the present one.

There is some degree of flexibility in precedent:

  • Courts can avoid using precedent by distinguishing it. If a court finds, in its analysis of the case before it and the case it is asked to apply (the precedent), that there are material, significant differences between the two cases, it will not have to apply the precedent.
  • Common law is first made by a court choosing some facts as material and generalizing those facts to make a principle. Because each process is a choice a later court could argue that other facts were equally relevant or other levels of generalization taken. If they had, obviously the ratio would be different.
  • Judges don’t always clearly articulate the principles they are applying in their decisions. Later courts, therefore, can speculate on and choose the principle for themselves.
  • Legal decisions are based on words, which are, by nature very ambiguous.
  • Principles are formulated for a reason and it is always open for a court to argue that the reason in the earlier case is no longer relevant.
  • The concept of stare decisis allows for flexibility because courts are not bound to follow decisions of similar level or lower courts, only higher ones.

According to the common law, parties were free to make contracts on their own and the role of the courts were to simply interpret the contract and not to rewrite the contracts on their own, to accord some standard of fairness. Common law was concerned with the question of whether a contract was in existence but equity was concerned with the circumstances under which the contracts came into existence. Unconscionable conducts rely on inequality of bargaining power. The classical doctrines of contracts were the freedom and sanctity of contracts. The common law principles were based on vicarious liability. This form of liability means legal responsibility of misconduct, no matter even if the person charged with misconduct, is not at fault. But some landmark cases have changed this situation, where the court has decided to interfere in contracts.

With reference to cases discussed in the topic, a decision was taken which formed the precedent for the other cases to follow. In the Smith vs. Hughes case, the defendant declined the contract when he found that the oats sold were new. But the plaintiff provided the defendant with the sample, granted full freedom to inspect them but nothing was mentioned about the age. Here the court applied the doctrine of precedent that there arises no legal obligation to conceal facts to the other party unless avoiding such concealment would lead to fraudulent contract.

With reference to Blomley vs. Ryan, the vendor, Blomley was heavily drunk at the time of making the sale of grazing property to Ryan. In the common law, this transaction would be void. But the equity looked at the matter having regard to all circumstances. Hence the doctrine of precedent stated that if a man by habits or drunkenness had entirely destroyed his capacity as a man of understanding, any instrument executed by him was invalid. Such a decision of the court posed a limit to future cases in which a party was at a special disadvantage while making contracts.

In the case of Clark vs. Malpas, which was referred to an old case Fry vs Lane in 1888. In the case of Clark vs. Malpas, the court held that the result of the decisions is that where a purchase is made from a poor and ignorant man, a considerable undervalue of the asset, the vendor was having no independent advice.

In case study C, it was decided by the high court that the common law did not recognize native rights and merely followed the doctrine of terra nullies. But following this decision, in the Mabo case, there was flexibility in the judges’ decision to the extent that there was recognition of the existence of native land rights of the aborigines.  

  1. Explain how the two components of precedent, ratio and stare decisis, impose limits on the exercise of judicial power.

Ans 2] The Precedent has two components. They are ratio decidendi and stare decisis.

a) Ratio Decidendi: The cases make common law and interpret both common law and statute. The decision on the case rests on a principle or a rule. This principle will usually be stated in the case itself. Typically the rule will be laid down in one case and followed, developed and interpreted in the other cases. This is known as Ratio Decidendi. The limitations of ratio decidendi can be described as, firstly, the ratio is the revered foundation of the common law, yet it is very rare to find a case which actually says what ratio is. There is really no official statement of the doctrine of ratio. Secondly there is no standard form for a judgment and no control on the writing of judgments. There is no guarantee that judgments are cleared or structured. There is no way of ensuring that the judges’ reasons are true or comprehensive. Thus in any case there is no way of ensuring that all judgments dealing with the principle is consistent. In reality the ratio is uncertain and flexible. Thirdly, there is also no magic formula for telling us which facts in a case are material. Different judges looking at the same case may disagree about which facts or combination of facts are really material. The choice between more than one rationes decidendis’ could depend on the value judgments of the judges.

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b) Stare Decisis: This principle means to stand by what is decided. This principle is traditionally presented and is not a complete explanation of what occurs in the making of the common law. This principle suggests that common law is static and simple, which is not. The doctrine of stare decisis that the principles would remain unchanged. The principle of stare decisis is not flexible, that is what ever the judge’s decision is, and he has to stand by it. The principle does not  allow judges to view the merits and demerits of each case.  

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