Topic

Judicial
Precedent

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1.

Elaborate the concept of judicial precedent;

2.

Discuss the five general rules of the doctrine of precedent; and

3.

Assess the four reasons of problems with the doctrine of precedent.

X INTRODUCTION
In a dispute between two parties, the court must first establish what happened. The
facts are usually determined by the trial judge. Although in some countries jury may
be used, in Malaysia, it was abolished in the 1980s. Once the facts are determined, the
judge will then make the application of law to the facts to determine which party
would succeed. The doctrine of judicial precedent is important because it is the ratio
decidendi of a previously decided similar case, decided by a higher court to the
current facts that will decide the solution of the case.

6.1

JUDICIAL PRECEDENT
SELF-CHECK 6.1

What do you understand about judicial precedent? Does every law system
have this form of doctrine of precedent?
The weight or authority of rules of law derived from cases may vary. These
relative weights are determined by the doctrine of precedent. Nearly all legal
systems (including civil law systems) have some form of a doctrine of precedent,
though its provisions may vary. Even a legal system which explicitly prohibits
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the citation of earlier cases in court could be said to have a doctrine of precedent
in that it has a rule which regulates the use of precedents.

6.1.1

Stare Decisis

Countries which derive their legal systems from the English common law are said
to employ the doctrine of stare decisis. They are regarded by many as having a
strict rule of precedent, although there is a substantial body of opinion that, in
fact, the rule is not applied as strictly as the theory indicates.
The general rules of the doctrine of precedent in common law systems can be
summarised as shown in the following Figure 6.1:

Figure 6.1: The general rules of doctrine of precedent

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The general rules of doctrine of precedent will be further elaborated as follows.

(a)

Each Court is Bound by Decisions of Courts Higher in its Hierarchy

(b)

A Decision of a Court in a Different Hierarchy may be of Considerable

Weight but Will Not be Binding
In the case of Director General of Inland Revenue v Kulim Rubber
Plantations [1987] 1 MLJ 214, the judge in this case referred to the decisions
of the courts in Australia, England and New Zealand and stated:

(i)

Only the ratio decidendi (the judges decision on the material facts) of
a case is binding
See the case of Carlill v Carbolic Smokeball Co (discussed under ratio
decidendi).

(c)

Any Relevant Decisions, Although not Binding, may be Considered and

Followed
The rule in the English case of Young v Bristol Aeroplane Co Ltd was
followed by the Federal Court. The practice of following this rule can be
traced back to the Court of Appeal case of Hendry v De Cruz (1949) 15 MLJ
Supp 25. In this case the court was faced with the question as to whether it
was bound to follow the previous decision in Butter Madden v
Krishnasamy (unreported). To answer the question the court stated:

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The question whether the Court of Appeal in England should be bound to

follow its own decisions remained in doubt until 1944 and was then settled
by the case of Young v Bristol Aeroplane Company Limited:

(d)

Precedents are not Necessarily Abrogated by Lapse of Time

The present Federal Court is the successor of the Supreme Court and as
such bound by decisions of the latter.

The courts at the top of the hierarchy normally treat decisions of lower, but
still superior, courts within the hierarchy as highly persuasive. Decisions of
superior courts within a different hierarchy, while not binding, may also be
considered highly persuasive. For example the Federal Court in the case of
Malaysia National Insurance v Lim Tiok [1997] 2 MLJ 165 adopted the
criteria laid down by the House of Lords in Food Corporation of India v
Antclizo Shipping Corporation [1988] 2 All ER 513.
In addition, the doctrine means that appellate courts are either bound by
their own decisions or will depart from them only with reluctance. For
example in the case of Koperasi Rakyat v Harta Empat [2000] 2 AMR 2311
in this case, the defendant a co-operative society appealed to the Federal
Court against a decision of the Court of Appeal in that a charge created was
void and unenforceable. This charge was in contravention of s 133 CA 1965
(Act 125). In deciding the case, the Court of Appeal disregarded the
decision of the Federal Court in Co-operative Central Bank v Feyen
Development [1995] 3 MLJ 313 (Feyen no 1). The plaintiff, a private
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housing development company in the instant appeal tried to invite the

Federal Court to review its previous decisions in Feyen no 1 and overrule it.
The attempt was rejected by the learned judge Gopal Sri Ram JCA and he
stated:
When judges say that they are adhering to the principle of stare decisis they
are merely saying that they are applying the doctrine of precedent; that is
there is a previous decision on a similar issue which the court must apply to
the case before it.
To talk of adhering to previous decisions is, however, to oversimplify what
judges must actually do. They may encounter a number of problems when
endeavouring to apply the principle of stare decisis.

6.2

WHY ARE PRECEDENTS USEFUL

Precedents are used in areas other than the legal system. Decision making bodies
of all kinds may be faced with problems involving conflicting principles on which
a determination must be made.
In reaching a solution they will take into account previous decisions in relation to
similar problems and they will be aware of the example they are setting for the
future.

The usefulness of employing existing legal rules and categories in order to

resolve disputes which come before courts is explained by Professor Lon Fuller.

6.3

PROBLEMS WITH THE DOCTRINE OF

PRECIDENT

Although the doctrine of stare decisis is useful, it has disadvantages. Some

judicial decisions are unavoidably unjust. That may be because the case law the
judge is applying seems unjust.
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Yet, if the terms of the law are clear, there is no way for a judge who conforms to
the doctrine of precedent, particularly one in a lower court, to avoid applying it.

A contrary argument is that the legislature has the duty to remedy such an
injustice by enacting remedial legislation.
On the other hand, most cases coming to appellate courts for decision allow
judges considerable scope for avoiding precedents which would result in
injustice or an otherwise inappropriate decision.
Some appellate courts are more adventurous than others more responsive to
suggestions from academics, as well as practicing lawyers and, in some
circumstances, are probably more prepared to accept that judicial creativity is
desirable.
The composition of the appeal court bench is all important in producing such an
attitude.

ACTIVITY 6.1
In Young v Bristol Aeroplane Co. Ltd, it was shown that relevant decision
or rule can be followed and considered although it was not binding.
Identify what are other rules of doctrine of precedent in common law
system?

6.4
6.4.1

THE IMPORTANT ELEMENTS (RATIO

DECIDENDI AND OBITER DICTA)
Ratio Decidendi

Another aspect of the doctrine of precedent affecting the weight to be accorded a

rule pronounced in a case is the distinction between those that are binding and
those that are not. Some of the legal rules articulated are binding, others are more
or less persuasive, and some may be of very little significance. Only the ratio
decidendi (literally 'reason for deciding') in a case can be binding. It may take a
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variety of forms and there is no way of predicting with certainty the form which
will be accepted by a later court.
Among the reasons for this difficulty are the following:

the ratio (or rations if there is more than one) may be difficult to identify;

it may be possible to state the ratio at a higher or lower level of generality;

there may be no majority in favour of a particular ratio; and

it may be difficult to distinguish the ratio from the obiter dicta in the case.

(a)

Identifying the Ratio

In many other cases the relevant legal principles have long been
determined, so that once the facts have been established the application of
the principles is straightforward whereby, the principle that one way to
create a contract is by agreement with consideration and the intention to
create legal relations is one such well-established rule. Neither of these sorts
of case will set a precedent to be followed in later cases (the one, because it
relates only to a set of facts and not to law, the other because the law is well
settled). Neither, therefore, has a ratio which will be employed in later
cases. It is in cases in which the facts do raise a legal issue that the judge's
decision becomes a ratio having a precedent value.
For example, have a look at the case Carlill v Carbolic Smoke Ball Co [1893]
1 QB 256. In that case, it was established that the company had advertised a
product known as a 'smoke ball' which was supposed to prevent those who
used it from catching influenza.

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It promised compensation of 100 to anyone who used one correctly. The

advertisement went on to explain that the company had deposited 1000
with the Alliance Bank (on Regent Street in London) as a sign of its sincerity
on that matter. Any proper claimant could get their payment for that sum.
Relying on the advertisement, Mrs. Carlill bought the smokeball and used
as directed but yet caught the flu. She sought her 'reward' (as the company
described it in the advertisement).
When the company refused to pay she then sued, alleging a breach of
contract. The transaction had to be analysed by the court to see whether it
conformed to existing principles of contract law and whether, therefore, the
company's promise could be enforced.
Lindley L.J. stated that there was 'a string of authorities' confirming that
advertisements offering rewards for performance of a condition are
correctly characterized as 'offers' in the technical legal sense.
Two legal issues remained to be decided as no previous decision had dealt
with a similar set of facts. The two issues were:
1.

whether there had been the necessary acceptance of the companys

offer; and

2.

whether there had been consideration for its promise.

Lindley L.J.'s decision on each issue was as indicated in Figure 3.2.

Figure 6.2: Lindley L.J.'s decision

Each of the decisions above is a ratio of the case and is, therefore, an
authoritative statement of that principle of law for application in later,
similar, cases.

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All three Lord Justices of Appeal gave judgements in favour of Mrs. Carlill
although slightly different reasoning, arguments and examples was given
by them.
(b)

Level of Generality
The way in which the rule of law is stated by the judge may not, however,
be the rule accepted as the ratio by later courts. For any principle of law
from one case to be applicable in later cases which are not identical, it will
almost certainly have to be stated at a level of greater generality.
The rations from Carlill's case, given above, were stated at the lowest level
of generality. They can be restated at a higher level of generality in the
following manner:
in cases of unilateral offer, the offeree's performance of the condition
constitutes acceptance of the offer; and

in cases of unilateral offer, performance of the condition is good

consideration for the offeror's promise.

The restatement of these rules at a higher level of generality allows each of

them to encompass a wider range of cases and so to have greater value as a
precedent. This sort of restatement is necessary in order for the doctrine of
precedent to be useful.
If the statements are taken as the authoritative principles of Carlill's case
then it will not be necessary for judges in later, similar, cases to work out
the correct decision from first principles.
Had the rations remained fixed at the lowest level of generality, forever
confined to the particular facts of the case, they would have value only if a
later dispute arose on almost identical facts.
There does eventually come a point, with all principles of law, where they
can no longer be raised to a higher level of generality while at the same
time, remaining acceptable to society in general and to the courts in
particular. An illustration of such an extreme would be some of the
possibilities envisaged by Professor Fuller.

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Over the years the courts will have to deal with cases which are on the very
edge of the scope of the principle and to decide whether or not the rule is
applicable.
Gradually, in this way, the parameters within which the rule is to operate
will become set and there will no longer be a need for people to resort to
litigation to determine the effect of that particular principle although it may
always be challenged.
(c)

Ratio of Appellate Decisions

As a ratio decidendi is a proposition with which a majority of the court has
agreed, it may be necessary to determine, by a head count, what the
majority thought were the relevant principles of law applicable to the case.
However, even when each judge comes to the same conclusion it may be as
the result of following different arguments and applying different rules.

Alternatively, it might treat propositions contained in individual judgments

as having persuasive, but not binding force.

(d) Obiter Dictum

A judge will often find it necessary or convenient to state principle of law
which relate to hypothetical events rather than to the specific facts of the case.
Such statements sometimes serve to illustrate or clarify the principle which is
actually applied in the case (the ratio) but they are not themselves rations.

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The distinction between ratio and obiter, therefore, can be stated thus;
pronouncements of legal principle necessary for the judge' decision on the
established facts of the case are the ratio or rations decidendi of the case,
whereas pronouncements of legal principle which are not strictly relevant to
the issue or issues will be obiter dicta only.
It must be appreciated, however, that not every statement of a rule of law
by a judge is necessarily ratio or obiter. Frequently, during the course of the
judgment the judge will restate and discuss rations from existing cases. It is
simply a recitation of the development of the relevant legal principles where
it is a foundation for the judge' reasoning, but those statements are neither
ratio nor obiter in the case before the court.
Sometimes it is very hard to distinguish between statements which are ratio
or obiter and those which are restatements of principles in earlier, slightly
different cases.
In the case of Carlill v Carbolic Smokeball, Bowen LJ gave the legal answer
to a set of facts which were not in issue in the case. They are thus obiter
dicta. The learned judge did this to assist him to clarify the answer to
Carlill's case.

The words of this judge could be used by a council (if ever such facts were
in issue in a court case) as persuasive precedent. On 1973, Carlills case was
applied in Peck v Lateu but was distinguished in AM Satterwaite & Co v
NZ Shipping Co (1972).

ACTIVITY 6.2
What is the major difference between obiter dictum and ratio decidendi?
Give supporting cases to your explanation.

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6.4

THE RULES OF PRECEDENT

SELF-CHECK 6.2

Do you think that the decisions on the question of law by a judge in

inferior courts are binding to other courts? Why?

6.5.1

Judicial Decision Making

The real focus of attention of contemporary lawyers should be upon the extent of
legal creativity, its proper occasions and the techniques that may be used to
achieve and justify it. When a dispute between two or more parties comes before
it, a court must first attempt to establish what happened. In some trials the
relevant facts are determined by the presiding magistrate or judge.
In cases where a jury is used, though, the jury is responsible for making the
decisions on the facts, while the judge decides the law. Once the facts have been
established, it falls to the judge to apply the law to them in order to determine
which party should succeed.

According to the the President of the New South Wales Court of Appeal, Kirby J,
the learned judge put it clearly when he said:

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Judges do have to make choices but some of them have more scope in that
endeavour than others. In considering this point, a distinction should be made
between judges at first instance (that is, judges in inferior courts, or single judges
in superior courts), and those in appellate courts.
While a judge in an inferior court, ought to be aware of the contemporary values
of society and what the average person would consider to be the appropriate
decision in that context, generally speaking, judges of first instance are obliged to
follow 'binding authority' in the form of decisions of a higher court in the same
hierarchy on a similar issue. If, despite a faithful adherence to the doctrine of
precedent, the judge's decision is considered by one or both of the parties to be
'wrong' in law, an appeal can be brought against it to a higher court. If the appeal
court decides that the existing rule, which was applied in the lower court, is
indeed wrong then it can change that rule either totally or in part.
The decisions of ultimate courts of appeal, however, cannot be changed by a
higher court. Such superior courts normally consider themselves free to overrule
their earlier decisions in the appropriate circumstances.
The notes above have raised several questions. They include in Figure 6.3.

Figure 6.3: Questions raised in overrule earlier decision

The questions will be further explained as follows.

(a)

Is It Possible for the Facts of an Incident to be Objectively Determined?

A philosopher would probably answer that question in the negative while
the reasonable lay person might well say Yes. Fortunately, in many cases,
the question does not need to be argued for the parties may agree on a
statement of fact leaving only the legal issue(s) raised for determination by
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the court. In other cases the jury, or the judge if no jury is empanelled, will
decide the facts.

It is the characterisation of the facts, in terms of the level of generality at

which they are stated, that can always be disputed and that leads to
argument about the articulation of the ratio which is based on them. An
example of that process is Professor Julius Stones demonstration of how the
facts in Donoghue v Stevenson [1932] AC 562 could be characterised at
several different levels of generality leading to different rations decidendi of
that case.
(b)

How Does a First Instance Judge Decide What is the Legal Rule Binding the
Court Given the Established Facts of the Case?
As has already been explained, under the doctrine of stare decisis, if a
superior court in the same hierarchy has previously made a decision on the
question of law raised by the same or similar facts, the first instance judge is
bound to follow the earlier decision. However, there several techniques in
avoiding precedents that would otherwise be binding. If the judge decides
not to follow such a precedent:

he or she must expressly distinguish it (that is, explain how the earlier
case is different from the current one and therefore not applicable); or

the later decision will be deemed to have been made in ignorance of the
earlier one. Such a case is said to be decided per incuriam (literally
'through want of care') and incapable itself, of constituting a binding
authority for later cases.
Decisions are said to be per incuriam where they are given in ignorance or
forgetfulness' of:
a inconsistent legislative provision; or
a case which is binding on the court which made the decision: Morelle
Ltd Wakeling [1955] 2 QB 379 at 406.

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(c)

131

If the First Instance Judge Decides there is no Relevant Authority, What Rule
Should He or She Apply?
If, however, no earlier decision exists on, or analogous to, the matter before the
court, how does the judge find the appropriate rule? At one time, legal theorists
used to subscribe to what was called the 'declaratory theory of law'. Under that
theory, judges did not make law even if the issue before them had never been
dealt with before. Rather, by looking at existing common law and statute law
principles, they were said to have extracted a rule that was held always to have
existed but which had remained unused, waiting to be declared at the
appropriate moment. By the end of the eighteenth century, however,
philosophers such as Bentham and Austin had exposed that theory as a fiction
and had asserted that in some cases judges did make law when making their
decisions.
More recently, Lord Reid, a Law Lord, has described the declaratory theory
as a 'fairy tale'. He said this:

Now it seems that most, if not all, judges, other lawyers and thinkers accept
that judges do make law. Indeed, many people would agree that, in the
appropriate circumstances, it is essential that they do so.
(d) What Factors are Taken into Account by Appellate Courts in their DecisionMaking?
Everything stated above in relation to courts of first instance applies, with
some qualification, to appellate courts. Under the doctrine of stare decisis,
the Courts of Appeal and the High Court are bound by decisions of the
Federal Court. Federal Court, itself, although not strictly bound by its own
previous decisions, is reluctant to depart from them without cogent reasons.
As Sir Anthony Mason CJ has said:
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In some decisions, judges openly admit that they have reached their
decisions on the basis of principle and policy in preference to the doctrine of
precedent. In other cases, a judge will say that he or she is adhering to the
doctrine of precedent but in fact, if the decision is analysed, it can be seen
that the reasoning has been heavily influenced by principle and policy. Such
an outcome is achieved by the clever use of techniques of interpretation and
distinguishing in avoiding precedents.
These three influences which are principle, policy and legal authority will need
further attention. The following are the matters that are needed to be
considered.
(i)

Deciding cases according to principle

A case in which the court paid close attention to social developments,
while, at the same time, using principle by which to reach a decision,
is Gillick v West Norfolk AHA [1986] AC 112. In this case the issue
was whether a doctor could lawfully prescribe contraception for a girl
under sixteen without the consent of her parents.

(ii)

Deciding cases according to policy

An excellent example of the decision being reached on policy grounds
is an Australian case of Mabo v Queensland (No 2) (1992) 175 CLR 1
Bernnan J said (at 42):

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(iii) Deciding cases according to legal authority

However, even a straightforward application of the doctrine by judges
who are determined not to be influenced by principle or policy may
result in two or more of them coming to different decisions on the same
set of facts. That is because of the difficulties in interpretation both of
the facts and of the legal authority. Choices are always there to be
made. And even supposing that wide agreement can be reached on
what constitutes the ratio decidendi of a theoretically binding decision,
a court may, nevertheless, be able to avoid the precedent in some way.

6.5.2

How to Avoid Precedents

It is not uncommon where; there are occasions where a judge is convinced that
the rule in an earlier decision should not be applied to the case before the court
even though prima facie, the precedent is binding or highly persuasive. In these
circumstances, the judge should expressly avoid the precedent and explain why it
is not being followed. If a precedent which is prima facie binding is simply
ignored, the decision may be considered to be per incuriam.
There are many ways of arguing that a precedent should not be followed given
the flexibility of language and the complexities inherent in the concept of ratio
decidendi. Some of the most common methods used to avoid precedent are to
hold that are indicated in Figure 6.4.

Figure 6.4: The common methods used to avoid precedent

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These methods are further explained below.

(a)

Precedent was Wrongly Decided

This argument can generally be used only in superior courts, as a lower
court would normally regard itself as bound to follow the decision of a court
above it in the hierarchy, even if the lower court was of the opinion that the
precedent was incorrect in law.

In relation to such decisions it is given in ignorance or forgetfulness of

binding authority. For example in the case of MNI v Lim Tiok [1997] 2 MLJ,
the contention was whether the Supreme Courts decision in Tan Chik bin
Ibrahim v Safety Line and General Insurance [1987] 1 MLJ 217 should be
reviewed to determine whether it should be overruled because it was
wrongly decided. The Federal Court reviewed Tan Chik's case and decided
it was wrongly decided and should not be followed.
(b)

Changed Social Conditions

Precedents may retain their authority no matter how old they are.
Nevertheless, it is well recognised that the law gradually adapts itself to
changing social conditions and that very ancient precedents are often
inapplicable to modern circumstances. For this reason they are cited with
comparative infrequency. For example a court may have to decide whether
there was such a crime as rape in marriage. For over two hundred years, the
common law rule had been that by reason of marriage, there was an
irrevocable consent to sexual intercourse on the part of a spouse. A husband,
therefore, could never be found guilty of raping his wife. The principle,
which had been authoritatively expounded in 1736 in an Australian case, had
apparently been accepted by another Australian case in 1933.

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(c)

Statement of Law is too Wide

It is often possible to argue that the statement of a rule of law in an earlier
case should be construed narrowly and confined to the particular facts of
that case.

(d)

Statement is Obiter Dictum

Statements made by judges are often clearly obiter dictum. The statement
may be preceded by words such as, 'although a consideration of this
question is not necessary for the decision in this case'; or it may be arguable
that the statement is not strictly necessary to the conclusion arrived at by
the judge. This area of uncertainty may be exploited to avoid an earlier
precedent.

(e)

Distinguishing an Earlier Case on its Facts

When this method of avoiding precedents is used, it is argued that the facts
of an earlier case are so different from the ones under consideration that the
conclusion of law arrived at in the earlier case is not applicable. This
technique can be illustrated by the following example:
In Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, the English Court of
Appeal had to decide whether the plaintiff was bound by a clause in a
notice affixed to a pillar in a car park, which purported to exempt the car
park company from liability for injury to customers. It was argued that the
case was the same as a series of older, so called ticket cases, in which
booking clerks working for railway or steamship companies issued tickets
to customers.
Under the old cases, the issue of the ticket was regarded as an offer by the
company. When a customer took a ticket and kept it without objection the
offer was deemed to have been accepted. The customers were then bound
by the conditions printed on the tickets. The theory on which the cases were
based was that customers could hand the tickets back if they did not like the
conditions printed on them and thus refuse to enter into a contract. In the
Thornton case, however, the court distinguished those earlier cases on their
facts.

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ACTIVITY 6.3
It is stated that changed social condition is one method to avoid precedent.
Given an example a crime rape in marriage where two hundred years ago,
common law gave a precedent that a husband could never be found guilty
of raping his wife. However, social condition and value have changed and
this principle is no longer acceptable. By referring to any law books, find
any principles that are unacceptable in today's society condition.

EXERCISE 6.1
Give the meaning of ratio decidendi and obiter dicta. Is there any
distinction between these two elements?

6.6

PRINCIPALS OF JUDICIAL PRECEDENT

In considering the doctrine of precedent, the general principles in Figure 6.5

should be borne in mind:

Figure 6.5: The general principle in Doctrine of Precedent

Some of the examples given to illustrate the various techniques could just as
easily be used with one or more of the other techniques. The appropriateness of a
particular case as an example depends on an individual's interpretation of that
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case. Suggestions made may help readers to think about legal decisions, even
relatively old ones, both critically and inquiringly. Discussion should be focused
on the limits and justifications of the practice.
Judges in the superior courts need to keep in mind that they are not elected, as
the legislators in parliament are, and that they do not have the resources available
to law reform commissions or parliamentary committees. As long as they
recognize those limitations, however, the creative role that they have increasingly
been undertaking would seem to be a necessary one.
If courts were to go too far, either by usurping parliament's function in a major
way or by making a law with unforeseen but far reaching bad consequences, it is
always open to the parliament to change it. Such a process of law creation,
however, would be inefficient and would also be damaging to the reputation of
the courts. The task of the current generation of judges, academic lawyers and
legal practitioners is to help discover that boundary.

When faced with a case, Judges will have to make an informed decision.
However, some judges have more choices than the others.

A first instance judge is obliged to follow the binding authority of a higher

court's decision in the same hierarchy of a similar issue.

However, there are in appropriate circumstances whereby the lower court

judge may depart from the binding authority.

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