The doctrine of precedent is the hallmark of the common law.¹

The Commonwealth of Australia’s legal tradition is that of the English common law but affected by a federal structure and Constitution similar to that of the United States of America. The Constitution vests federal judicial power in both Commonwealth and State courts and created the High Court of Australia as the final court of appeal for the country in all areas of the law, private and public. Its decisions determine the law, including the content of the common law of Australia, and bind courts lower in the hierarchy. The High Court is not, however, bound by its own previous decisions.

The High Court of Australia has been the highest court of appeal in Australia² since the introduction of the Privy Council (Appeals from the High Court) Act 1975 (Cth). Before that legislation, appeals, with some exceptions, could also be made to the Judicial Committee of the Privy Council in London. Each State of Australia has its own statutes and system of courts. At the apex in each State is the Supreme Court of the State which normally includes a Court of Appeal which exercises the final appellate jurisdiction in the State below the High Court of Australia. There are also, normally, District or County Courts and Magistrates Courts lower in the hierarchy. Appeals can be heard at District Court or Supreme Court level. The appellate jurisdiction of the Supreme Court of a State is responsible, under the High Court, for the jurisprudence and statutory interpretation of that State.

There is also a federal system of courts below the High Court which deals with specific legislation of the Commonwealth or national government. They are the Federal and Family Courts and the Federal Circuit Court. The Federal Court and the Family Court hear appeals in a full court normally consisting of three judges. The federal territories, the Australian Capital Territory and the Northern Territory, have systems similar to the States.

The doctrine of precedent requires a court lower in the hierarchy to follow a binding decision of a higher court in that hierarchy to promote certainty in the law.

Decisions of intermediate appellate courts are binding on lower state courts of the same jurisdiction. But the relationship between intermediate appellate courts of different jurisdictions is nuanced, despite being quite settled. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd,³ which is the most recent statement of authority on the issue, the High Court said that⁴: “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.” The court further reasoned that, because there existed a common law of Australia, and not a common law of each State jurisdiction, the principle remains the same for non-statutory law.

In light of this principle, the meaning of “plainly wrong” is therefore important. In Transurban City Link Ltd v Allan, the Full Court of the Federal Court did not think it possible nor desirable that exhaustive criteria be enumerated.⁵ A decision will be plainly wrong if it fails to collect and attend to relevant legal materials or is egregiously erroneous in its reasoning.⁶ The error, in order to be plainly wrong, must be “so clear as to enable a later court to say that the point is not reasonably arguable.”⁷

The courts serve two primary functions in resolving disputes between parties: first, they are tasked with interpreting the legislation of parliaments; and secondly, they retain an inherent lawmaking function through which changes to the common law take place. The first of these roles ensures that legislation is constitutionally valid and gives meaning to statutory provisions. The courts’ interpretation of legislation is important as it guides the executive arm of government in administering the law. Statutory interpretation is doubly important in the Westminster system as any constitutionally valid legislation enacted by parliament, whether at a state or federal level,⁸ prevails over the common law. In Australia, however, it is for the courts to decide whether legislation is constitutionally valid.⁹

The common law can, therefore, be varied, abrogated or maintained through constitutionally valid statutory reform. Courts use legal theory to help determine the common law; one such theory is the declaratory approach. The declaratory theory entails the application of a principled approach to the deciding of novel cases. The novel case provides the opportunity to declare what the law is and always has been by reference to a body of principle.

The declaratory approach was popular with the Australian judiciary under Sir Owen Dixon, Chief Justice of the High Court of Australia from 1952 to 1964.¹⁰ The global surge towards legal positivism reached Australian shores in the latter half of the twentieth century; there are numerous decisions from this period which reject the validity of declaratory theory.¹¹ Sir Anthony Mason, Chief Justice of the High Court from 1987 to 1995, was one such proponent of legal positivism. Sir Anthony acknowledged that judges have regard to “policy factors and values” in determining the law.¹² Australian courts have grown to accept that policy considerations that are external to legal principles do at times inform legal decision-making.¹³

Despite this, several recent decisions highlight the continuing viability of the declaratory approach.¹⁴ The newfound support stems from the link between precedent, retroactive decision-making and declaratory theory. Extra-judicial discussion makes clear the inter-connectedness of these concepts¹⁵ and the view that “change in the positive law is perfectly consistent with the declaratory theory as long as that change can be seen to accord with more abstract legal principles.”¹⁶

The association between precedent, retroactive decision-making and declaratory theory is similarly drawn in the case law:¹⁷ “In the common law, precedential system in which Australian advocates work, the legal fiction to which I earlier referred, that what this Court decides has in effect always been the law, prevails.” The connection between declaratory theory and retrospective overruling was explicitly acknowledged by Sackville J in Torrens Aloha Pty Ltd v Citibank NA, with whom Foster and Lehane JJ agreed¹⁸: “In the absence of a doctrine of prospective overruling, changes in the law effected by judicial decisions are not confined to events or transactions occurring after the date of the decision changing the law. Doubtless from an historical perspective, this owes a good deal to the declaratory theory of law…”. This reasoning affirms that, with a system where judicial ruling is always retroactive, as it is in Australia,¹⁹ declaratory theory remains persuasive.

An unusual and controversial example of the application of the theory is PGA v The Queen ²⁰ where the majority of the Court decided that there was no presumption under the common law, as it applied in South Australia in 1963, of consent by a wife to sexual intercourse in marriage. A husband could be found guilty in 2012 of the rape of his then wife in 1963. Had the prosecution been brought in 1963 it may well have been decided then that the common law offence of rape did not apply within a marriage.

The doctrine of precedent enhances continuity and substantiates the rule of law. It does this by ensuring that judges do not decide cases arbitrarily, thereby eliminating inconsistency. Nevertheless, the perceived notion that the common law does not keep pace with societal change is one of the chief difficulties of the system of precedent. In an attempt to reconcile precedent with contemporary attitudes, a court may distinguish a case on inadequate or poorly reasoned grounds. Sir Anthony Mason explains the problem²¹:

If applied too rigidly, the doctrine of precedent produces both injustice and lack of rationality – the very flaws whose purpose it is to expel. Thus adherence to a past decision which reflects either a principle undermined by subsequent legal development or the values of a bygone era, will produce an unjust result, judged by the standards of today.

The High Court of Australia, however, is not bound by its previous decisions. Although there is “no very definite rule” as to the circumstances in which the Court will overrule a previous decision,²² several factors have been recognised to be relevant. Those factors were considered by the Court in John v Federal Commissioner of Taxation ²³:

The first was that the earlier decisions did not rest upon a principle carefully worked out in a significant succession of cases. The second was a difference between the reasons of the justices constituting the majority in one of the earlier decisions. The third was that the earlier decisions had achieved no useful result but on the contrary had led to considerable inconvenience. The fourth was that 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.

An uncontrolled ability to overturn a previous decision has the potential to be misused. The potential for harm to the system through too ready a willingness to overturn earlier decisions is illustrated by the two Territory Senators Cases. ²⁴