If the role of the High Court on appeal is, in part at least, to decide whether the intermediate appellate court made a legally correct decision, then their role must include formulating principles about the law of precedent which bind the intermediate court. Hence they are entitled to say that an intermediate appellate court must (1) now observe what would otherwise be regarded as "dicta" from previous decisions of the High Court, and (2) follow previous decisions of other intermediate appellate courts. And when they say that, it will be part of the ratio of the High Court decision (necessary for them in coming to a view on whether the intermediate court was correct), and hence it will indeed be binding on future intermediate courts.

It is important in any case to note what the High Court actually said in Say-Dee at [135]:

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 (fn: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ). Since there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non-statutory law.

The first sentence relating to Commonwealth legislation or "uniform" national legislation, as the footnote demonstrates, has long been accepted. It is the extension of the principle to the common law which is controversial. And even there the principle is now that there ought not generally to be departure, but that there can be if the intermediate appellate court in question is "convinced" that the earlier judgement is "plainly wrong".

There is something odd about the new rule, however, which is illustrated by Say-Dee itself. Interestingly it does not come up in the main discussion of the Court of Appeal's mistake in its attempt to decide the case on unjust enrichment principles (which is resolved by the rule about intermediate courts in future following "seriously considered" dicta, in reference to Consul.) The second limb of the new rules as to precedent comes up in the concluding paragraphs of the discussion, on the topic of indefeasibility.

The background is that there were three previous decisions of intermediate courts of appeal on the question of whether the rule in Barnes v Addy could be an in personam exception to statutory indefeasibility under the Torrens system. Two of the decisions said it could not: Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 at 156-157 and LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517; one of the decisions said that it could: Tara Shire Council v Garner [2003] 1 Qd R 566. In effect the NSWCA here followed the decision in Tara rather than the other two.

What were they meant to do according to the High Court? Say-Dee at [196] says they ought to have followed Macquarie Bank and LHK. I happen to agree with the High Court (and did so even before Say-Dee) that these are correct and that Tara is wrong on the indefeasibility point. But was the NSWCA meant to follow Macquarie Bank simply because it was first in time? I suppose this is what they are saying, in which case Tara was in any event wrong to have also followed the earlier case. I suppose the logic of the HC is that if the issue is up to whichever intermediate appellate court gets it first, then it will avoid some of the problems for trial courts knowing who to follow (unless someone is "convinced" of the wrongness of the earlier one.)

The other odd thing is that in fact this issue is hard to describe as one of "common law". It is really a question of statutory interpretation. The Torrens statutes around Australia perhaps ought to be a "uniform" scheme of national legislation (the rule previously accepted), but they are not (I take it that in Australia what we mean by a uniform scheme is one where all the States have formally agreed on a model and agree to keep the local versions in step with each other, as we had with the Corporations scheme before a formal reference of Constitutional power). So even if the principle of State intermediate appellate courts deferring to each other on common law was intended to be part of the ratio of Say-Dee (as a reason offered by the High Court why the CA was wrong), it was not actually applied in Say-Dee itself!

Regards
Neil Foster

Neil Foster
Senior Lecturer, LLB Program Convenor
Newcastle Law School
Faculty of Business & Law
MC158, McMullin Building
University of Newcastle
Callaghan NSW 2308
AUSTRALIA
ph 02 4921 7430
fax 02 4921 6931

>>> Robert Stevens 24/06/08 2:10 >>>

I assume that Mason P's remarks in his farewell speech are, in part, referring to the harsh words of the High Court of Australia in Farah Constructions v. Say-Dee. One thing which puzzles me, and I am sorry if this goes off the topic of restitution somewhat, is why he thinks that the statements in Say-Dee (at [78]) have altered the rules of precedent?

The High Court of Australia seem to state that intermediate courts of appeal are bound to follow 'seriously considered dicta' of the High Court. However that statement was itself necessarily obiter dicta. Any statement made by the High Court on what a Court at a lower level should consider binding is necessarily obiter dicta as it cannot be necessary for the outcome of the case before the High Court.

Indeed, the High Court's decision appears to me, as an outsider, to be somewhat inconsistent.

If an intermediate appellate court refuses to follow serious considered dicta of the High Court of Australia, its power to ignore such dicta forms part of the ratio of that decision of the intermediate court. It will be necessary for the outcome of the case (as it was before the NSW Court of Appeal in Farah) and therefore ratio. If, as is stated by the HC of A at [135] in Farah, intermediate appellate courts are bound to follow earlier decisions of intermediate appellate courts, they are bound to conclude that they have the power to ignore seriously considered dicta of the High Court of Australia. They are bound to ignore obiter statements, even those from the High Court, to the contrary.

Further, I wholeheartedly agree with the High Court that courts should only authoritatively pronounce on issues which have been tested in argument before them [132]. Court should not embark upon frolics of their own. However, this is one of the reasons why the High Court cannot authoritatively pronounce upon what the intermediate courts should consider binding. Such a question is never of relevance before the High Court itself, and counsel will not have addressed the court on the question (as they did not in Say-Dee). Before an intermediate appellate court, by contrast, such a question can be of relevance to the outcome, can and will be the subject of submissions by counsel, and can be authoritatively resolved.

The logic of the High Court's position seems to me to indicate that courts in the position of the Supreme Court of New South Wales should consider themselves bound by their own earlier decisions both as to what counts as binding precedent for themselves and as to their own power to develop the law. Statements from the High Court on these matters are just obiter dicta given without the benefit of argument and, insofar as inconsistent with prior NSW Court of Appeal practice, must necessarily be ignored.

(For what it is worth, I think the High Court were clearly right in the result reached in Say-Dee on the substantive issue.)