How do courts make and apply law?
Explain how courts make law through precedent and how they interpret statutes.
How courts make common law through the doctrine of precedent and how they interpret the words of statutes, including binding precedent, ratio decidendi and the rules of interpretation.
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What this dot point is asking
You need to explain precedent (including binding and persuasive precedent and the key terms) and statutory interpretation (why it is needed and the main approaches). Use accurate legal terminology.
The doctrine of precedent
Precedent means that the reasoning behind a decision in one case is followed in later cases with similar facts. It is based on the principle of stare decisis, which means to stand by what has been decided. This gives the law consistency and predictability.
- Binding precedent. A decision of a higher court binds lower courts in the same hierarchy. A South Australian District Court must follow a relevant decision of the High Court.
- Persuasive precedent. A decision that does not have to be followed but may influence a court, such as a decision from a court in another state or a lower court.
How courts develop precedent
Judges have ways to adjust how precedent applies.
- Following. Applying an existing binding precedent to the current case.
- Distinguishing. Showing the material facts of the current case differ from the earlier case, so the precedent does not bind.
- Overruling. A higher court deciding that an earlier precedent from a lower court is wrong and replacing it.
- Reversing. A higher court changing the decision in the same case on appeal.
Statutory interpretation
Even though parliament is the supreme law-maker, the words of an Act are often unclear when applied to real situations. Statutory interpretation is the process by which courts decide what the words of a statute mean. When a court interprets a statute, that interpretation itself becomes a precedent.
Reasons interpretation is needed include:
- Words can be ambiguous or have more than one meaning.
- The Act may not have anticipated the situation, especially with new technology.
- Drafting may be unclear, or terms may be left undefined.
Approaches to interpretation
Courts use recognised approaches and aids.
- The literal approach gives the words their ordinary, plain meaning.
- The purposive approach asks what purpose parliament was trying to achieve and prefers a meaning that promotes that purpose. Australian interpretation legislation directs courts to prefer the purpose of the Act.
- Intrinsic and extrinsic aids. Courts may use parts of the Act itself, such as definitions and the long title, and external materials such as the second reading speech to find parliament's intention.
The relationship between courts and parliament
Precedent and statutory interpretation show that courts and parliament both make law and interact constantly. Parliament can pass legislation that confirms, overrides or codifies a court's common law decision. Courts in turn interpret and apply that legislation. This back-and-forth is sometimes called the relationship between the arms of government in law-making.
Strengths and weaknesses
Precedent provides consistency, predictability and fairness because like cases are treated alike, and it allows gradual development of the law. Its weaknesses are that finding the binding ratio can be difficult, the law can become rigid, and change depends on the right case reaching a high enough court. Statutory interpretation lets courts apply old words to new situations but can make outcomes depend on which approach a court takes. Both connect to law reform, since courts and parliament respond to each other when the law needs updating.
Exam-style practice questions
Practice questions written in the style of SACE Board exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
2019 SACE Stage 22 marksOutline the two types of judicial precedent.Show worked answer →
Award one mark for each type correctly outlined.
Binding precedent. A precedent that a court must follow because it was set by a higher court in the same hierarchy and the material facts are similar. The lower court has no choice but to apply the legal principle (the ratio decidendi).
Persuasive precedent. A precedent a court may consider and choose to follow but is not obliged to, for example a decision of a court in another hierarchy, a lower court, a court of equal standing, or comments made by the way (obiter dicta).
2019 SACE Stage 22 marksWith reference to one case, explain why some disputes require a judge to create law.Show worked answer →
For two marks, give a reason and support it with a case.
Some disputes arise where there is no statute and no existing precedent that covers the situation - a "gap" in the law - so the judge must develop a new principle to resolve the matter justly. This is how the common law grows.
For example, in Donoghue v Stevenson (1932) a woman became ill after drinking ginger beer containing a decomposed snail, but had no contract with the manufacturer. With no existing law to cover her, the court created the modern law of negligence by establishing the "neighbour principle" - that we owe a duty of care to those we can reasonably foresee being harmed by our actions. The new dispute required the judge to make law.
2019 SACE Stage 24 marksIdentify and outline two methods by which a judge might depart from a precedent when resolving a dispute.Show worked answer →
Two marks per method: name it and outline how it works (two needed).
Distinguishing. A judge decides that the material facts of the present case are sufficiently different from those of the earlier case, so the binding precedent does not apply. This lets the judge reach a different outcome without overturning the earlier decision.
Overruling. A higher court decides that an earlier precedent set by a lower court (or, for the High Court, its own earlier decision) is wrong or out of date and replaces it with a new principle. The old precedent no longer applies.
Other acceptable methods: reversing (a higher court changing the decision in the same case on appeal) or disapproving.
2019 SACE Stage 24 marksDiscuss whether or not the doctrine of precedent leads to just outcomes in the Australian legal system.Show worked answer →
A 4-mark "discuss" needs both sides and a brief judgement.
- Arguments that it leads to just outcomes
- Precedent provides consistency and fairness - like cases are treated alike - and predictability, so people can know the law and plan accordingly. It allows the law to develop incrementally through real disputes, and flexibility through distinguishing and overruling lets courts adapt.
- Arguments against
- Following an outdated or unjust precedent can produce unfair results; the law can be hard to find among thousands of cases; only higher courts can change precedent, so lower courts may be bound to apply rules they consider wrong; and change depends on the right case being litigated by someone who can afford it.
- Judgement
- A balanced answer concludes that precedent generally promotes just outcomes through consistency and gradual development, but can entrench injustice where reform is slow or access to higher courts is limited.
2018 SACE Stage 22 marksExplain one way in which parliament guides the judiciary in interpreting statutes.Show worked answer →
For two marks, identify one method and explain how it guides interpretation.
One way is through Acts Interpretation legislation (such as the Acts Interpretation Act): Parliament passes general rules directing courts on how to read statutes, for example requiring judges to prefer an interpretation that promotes the purpose or object of the Act (the purposive approach) over a strictly literal reading.
Parliament also guides interpretation through definitions and purpose clauses written into an Act, and through material such as the second reading speech and explanatory memoranda, which courts may use as extrinsic aids to work out the meaning Parliament intended.