This article has been written by rod@thelawproject.com.

au

The Ratio Decidendi and Obiter Dicta

Over the years, there has been a lot written on the subject of what
exactly constitutes the ratio decidendi. Professor Goodhart kicked off
the debate in 1930 with his article Determining the Ratio Decidendi of a
Case and legal academics have been arguing ever since. Turns out,
determining the true ratio is not as simple as identifying ‘the reason for
deciding.’ Unfortunately, the precedent judge doesn’t explicitly
announce the ratio so it’s up to future judges and everyone else to
figure it out. The reason for this, according to Cross & Harris, is that if
the mere act of declaring the ratio made it binding, then judges would
have infinite law-making power. They would be like gods among mere
humans. Cross & Harris write:

If a judge has this amount of freedom to determine which of his

observations is ratio decidendi and which obiter dictum, is there not a grave
danger that he will exercise an undue influence on the future development
of the law? He only has to state twenty propositions and say that he bases
his decision on each of them to have created twenty new legal rules.[1]

Thus, this article is my attempt to simplify and clarify the ratio

decidendi for the Australian jurisdiction. To do this, I’ve considered the
relevant sections in 9 books, 12 academic journal articles, and 38 cases.

First, I start with a summary checklist of what constitutes as the ratio

decidendi and the obiter dictum. Secondly, I provide an explanation on
the distinction between descriptive  ratio vs prescriptive  ratio. This is
fundamental for understanding the difference between identifying the
ratio vs applying the ratio to the matter at hand. Then, I explain that the
ratio is applied by way of analogy and I give some suggestions on how
to escape the binding ratio. Thirdly, I provide an in-depth description on
what constitutes a) the ratio decidendi, b) obiter dictum, and c) binding
obiter dictum from the High Court. Lastly, I provide some suggestions
on how to rapidly find the ratio if you’re in desperate need.

Before we proceed, there is a distinction that I want to emphasise: the

distinction between law and empiricism. What the law is, does not
necessarily imply how lawyers and judges actually think and behave.
For example, some theories claim that judges have an intuitive hunch
for the solution of a case, then reason backwards, that is, they find
authorities and believable reasons for why their hunch is correct.
[2] How judges think and behave is an empirical question and cannot
be answered by legal rules. Therefore, the following article is a legal
analysis of what the ratio and dictum is, not an empirical description of
what really occurs in courts and in the minds of lawyers and judges.

Summary Checklist: Ratio & Dicta

THE RULES OF THE RATIO DECIDENDI
1.     Must be a necessary step to the conclusion.

2.     Must be directly related to the issue.

3.     Must come from disputes of law, not disputes of fact.

4.     Must be argued in Court.

5.     The facts of the precedent case shape the level of generality.

6.     The later courts decide the level of generality.

7.     When a precedent has multiple reasons, all reasons are binding.

8.     The ratio can come in multiple forms:

a.      Common law rules;

b.     Interpretation of statute;

c.      Interpretation of the common law rules.

9.     Where there are multiple judges:

a.      The majority of judges must agree to be binding.

b.     If the judges have different reasons, find essential areas of

agreement.

c.      If the majority of judges agree on the order but do not agree
on the reasons, cannot discard the precedent.

d.     Cannot construct a ratio by the aggregation of various

elements of separate reasons.

10.   A precedent can be binding without a ratio.

11.   When the ratio cannot be determined, later courts may not be

bound.

12.   Not all cases must have a ratio.

13.   Unstated assumptions are not the ratio.

THE RULES OF OBITER DICTA

1.     Generally, obiter dictum is not binding;

a.      Except, the High Court’s ‘seriously considered dicta’ is binding.

2.     Obiter dictum is persuasive

a.      However, obiter dicta can have different degrees of weight.

The Descriptive-Prescriptive
Distinction
Before we get into the actual law, we will first examine the distinction
between Descriptive  ratio decidendi and Prescriptive  ratio decidendi. The
essence of the distinction is that the descriptive   ratio is the ratio from
the original case and the prescriptive ratio is how the ratio may be
applied to a future case. I give credit to Professor Julius Stone for
expounding this distinction in his article, The Ratio of the Ratio Decidendi.[3]

DESCRIPTIVE RATIO DECIDENDI

Ratio decidendi is Latin for ‘the reason for deciding.’ This ‘reason’ is not
1) the facts of the case, 2) the law that the case applies, or 3), the orders
of the case. Instead, it’s the ‘necessary step’ that the judge needed to
resolve the case.

For example, consider the following hypothetical judgment from the

book Legal Technique  by Christopher Enright. Imagine that there’s a Dog
Act 1947  and  s 6  states: ‘A person may bring an action against the owner
of a dog if the dog enters land owned by that person.’

Now, imagine the following extract is the judgment:

Elisabeth owns a meadow. Elisabeth sues Kit Walker because Kit allowed
his pet wolf Devil to walk onto her meadow and molest her pet rabbit,
much to the distress of both Elisabeth and the rabbit. Elisabeth now brings
proceedings under s 6 of the Dog Act 1947.

Three things are clear regarding a breach of s6. First, Elisabeth's meadow is
land. Second, Elisabeth is owner of the land so Elisabeth is entitled to bring
the action in her own right. We add that this would be the case even if
Elisabeth had not discharged her mortgage to the Rural Bank some years
ago. It would not have been necessary in that case for the action to be
brought by both Elisabeth and the Rural Bank as co-plaintiffs. Third, Devil
has entered Elisabeth's land.

What is not immediately clear is whether Devil, a wolf, is a dog within the
meaning of s 6 of the Dog Act 1947. From a zoological perspective a wolf is
a member of the dog family. On the surface this may seem conclusive on
the question of whether a wolf is a dog. However a number of the
provisions of the Dog Act 1947 referring to dogs clearly mean only dogs of
a type which are ordinarily domesticated. Given this we feel that we have
to interpret s 6 in the same way and so find that in s 6 ”dog" means only a
 dog of a type which is ordinarily domesticated. In this case the offending
animal is a wolf. While the particular wolf was domesticated, as a species
wolves are not usually domesticated.

For this reason Devil is not a dog within the meaning of s6 of the Dog Act
so the plaintiff fails in her claim.

The ratio decidendi from this fictional judgment was the interpretation
of the word “dog” in s 6 of the Dog Act. Reason, it was the only part of the
judgment that needed an extra step. The other parts of the judgment
were simply the facts, the existing law, and the application of the law to
the facts. Therefore, the ratio decidendi from this fictional judgment
was: the term “dog” under s 6 of The Dog Act 1947 “means only a dog of a
type which is ordinarily domesticated” and did not extend to wolves.

To illustrate this point further, there was a phrase in this judgment that
sounded like the ratio but was in fact, obiter dictum:

We add that this would be the case even if Elisabeth had not discharged
her mortgage to the Rural Bank some years ago. It would not have been
necessary in that case for the action to be brought by both Elisabeth and
the Rural Bank as co-plaintiffs.

Obiter dicta are statements within a judgment that do not constitute as

the ratio and is subsequently non-binding on future cases. The
statement sounded authoritative and definitive and had the feel of
being ratio, however, it was obiter because Elizabeth did not discharge
‘her mortgage to the Rural Bank,’ and therefore, the statement was not
necessary to the decision. The phrase ‘her mortgage to the Rural Bank’
had nothing to do with the matter.

Now that we’ve examined the descriptive  ratio, we need to examine

the prescriptive  ratio, that is, how the precedent ratio may apply to future
cases.

PRESCRIPTIVE RATIO DECIDENDI

There is a logical dichotomy between the descriptive ratio decidendi and
the prescriptive ratio decidendi.[4] We may be able to identify the ratio in
the precedent case but it is not possible to directly apply it to a future
case. Reason being, the precedent case and the future case will never
be precisely identical. There will always be distinctions between the
two. What is the probability that identical facts in the past will occur in
the future? Very slim. Thus, there needs to be a level of generality.

LEVEL OF GENERALITY

I define the ‘level of generality’ as the transformation of a single

judgment to the future judgment. Inevitably, a transformation needs to
occur as a precedent may be utterly useless if we wait for the exact
facts of the case to exist again. Thus, the level of generality is the
determination of how similar or different the facts need to be from the
old case to the new case.

To briefly illustrate, the book Laying Down the Law  gives us a good

example:

In Donoghue v Stevenson [1932] AC 562 … the House of Lords held that the

manufacturer of a bottle of ginger beer could be liable to the consumer if,
before the bottle was sealed, the ginger beer was contaminated by the
remains of a snail and the consumer became ill as a result of drinking it. At
the lowest level of abstraction the decision would be binding on later
courts on in cases with precisely the same facts. On that basis, it would not
be binding in a later case where the drink was Coca-Cola. But, in terms of
the legal rule, why should there be a distinction between ginger beer and
Coca-Cola? Logic suggests that the principle should apply, at the lease, to
all food and drink which is packaged so as to prevent inspection.[5]

Thus, if we stopped at the level of describing the ratio, Donoghue v

Stevenson  would only be applicable to cases that involve: 1) Women, 2)
from Scotland, 3) in the year of 1932, 4) in which harm can only come
from snails, 5) in ginger beer bottles, 6) placed negligently, 7) by Mr.
Stevenson, 8) etc., etc.

To push this further, Professor Julius Stone’s article, The Ratio of the Ratio
Decidendi,[6] listed a spectrum of ways that the level of generality could
be formulated from the case:
(a) Fact as to the Agent of Harm. Dead snails, or any snails, or any noxious
physical foreign body, or any noxious foreign element, physical or not, or
any noxious element.

(b) Fact as to Vehicle of Harm. An opaque bottle of ginger beer, or an opaque

bottle of beverage, or any bottle of beverage, or any container of
commodities for human consumption, or any containers of any chattels for
human use, or any chattel whatsoever, or any thing (including land or
buildings).

(c) Fact as to Defendant’s Identity. A manufacturer of goods nationally

distributed through dispersed retailers, or any manufacturer, or any
person working on the object for reward, or any person working on the
object, or anyone dealing with the object.

(d) Fact as to Potential Danger from Vehicle of Harm. Object likely to become

dangerous by negligence, or whether or not so.

(e) Fact as to Injury to Plaintiff. Physical personal injury, or nervous or

physical personal injury, or any injury.

(f) Fact as to Plaintiff’s Identity. A Scots widow, or a Scots-woman or a

woman, or any adult, or any human being, or any legal person.

(g) Fact as to Plaintiff’s Relation to Vehicle of Harm. Donee of purchaser, from

retailer who bought directly from the defendant, or the purchaser from
such retailer, or the purchaser from anyone, or any person related to such
purchaser or other person, or any person into whose hands the object
rightfully comes, or any person into whose hands it comes at all.

(h) Fact as to Discoverability of Agent of Harm. The noxious element being not

discoverable by inspection of any intermediate party, or not so
discoverable without destroying the saleability of the commodity, or not so
discoverable by any such party who had a duty to inspect, or not so
discoverable by any such party who could reasonably be expected by the
defendant to inspect, or not discoverable by any such party who could
reasonably be expected by the court or a jury to inspect.
 (j) Fact as to Time of Litigation. The facts complained of were litigated in
1982, or any time before 1932, or after 1932, or at any time.

And finally, Professor HK Lucke writes:

…if the strongest possible case for application is the case involving the
closest possible factual similarity, and if growing dissimilarity weakens the
case for application, then a precedent would never be completely binding,
for some difference between the precedential facts and the facts of later
cases can always be detected.[7]

HOW TO DETERMINE THE LEVEL OF GENERALITY

There seems to be no strict rules for what constitutes the precise

degree. While it is impossible to determine the exact level of generality,
commonsense suggests the prescriptive ratio will inevitably fall in the
middle ground. The ratio decidendi becomes useless if it’s restricted to
the precise facts of the precedent and also becomes useless if it can be
widened infinitely. Therefore, the level of generality will fall in the
middle ground somewhere even if we don’t know what that middle
ground is. Erwin Griswold, professor and dean of Harvard Law School
said:

…There is in nearly every case an area of choice. How a judge marks out
and determines that area largely determines the type of judge he is. In this
area, most matters are ones of degree, ones of more or less. They are not
black and white.

If a judge keeps this area too small, he is likely to be a poor judge, for he
will be too hidebound by precedent, too much tied to the past, too
unaware of the relevance of variations in the situation before him.

On the other hand, if a judge allows this area to be too broad, he is not
likely to be a good judge. He may run some risk of deciding according to his
own personal choice rather than according to law as he is given light to
understand the law; he may give too little weight to precedent, and make
the law unsettled.
 Most judges successfully avoid these extremes. Even then, there is an area
of choice. That is what judges are for. Within this area, it may not be
possible to give a purely logical demonstration that one result is better
than another. A judge has to call on all the resources of his experience and
wisdom in coming to a conclusion. Some judges hew rather closely to the
line; some are more free-wheeling.[8]

There are, however, some general indicators which will shape the level
of generality:  

1. ‘The more general, or abstract, the statement of the facts is, the
greater the number of subsequent cases which will fall within the
principle which is being formulated, and therefore the wider the
ratio will be.’[9]

2. The fewer the facts and the less specific the facts, the broader the
prescriptive ratio.[10]

THE COURT DECIDES THE LEVEL OF GENERALITY

Ultimately, it is for the future court to decide how narrow or wide the
precedent ratio ought to be. This was elaborated by Gleeson CJ,
Gummow, Hayne And Heydon JJ in Woolcock Street Investments Pty Ltd v CDG
Pty Ltd [2004] HCA, at [61]:

…if later courts read down the rule of the case, they may treat the
proclaimed ratio decidendi as too broad, too narrow or inapplicable. Later
courts may treat the material facts of the case as standing for a narrower
or different rule from that formulated by the court that decided the case.
Consequently, it may take a series of later cases before the rule of a
particular case becomes settled. Thus for many years, courts and
commentators debated whether the landmark case of Donoghue v
Stevenson was confined to manufacturers and consumers and whether the
duty formulated in that case was dependent upon the defect being hidden
with the lack of any reasonable possibility of intermediate examination. If
later courts take the view that the rule of a case was different from its
stated ratio decidendi, they may dismiss the stated ratio as a mere dictum
or qualify it to accord with the rule of the case as now perceived.
Also, in Povey v Qantas Airways Limited [2005] HCA, McHugh J said at [76],
‘Later courts commonly treat the material facts of a case as standing for
a narrower or broader ratio decidendi than that expounded by the
court that decided the case.’ For example, in Smits v Roach [2006] HCA
Kirby J found differences between the cases but he widened the level of
generality of Ebner v Official Trustee in Bankruptcy  [2000] HCA to extend to
the present case.

[112] Strictly, the ratio decidendi of Ebner (and Clenae) concerned an issue

that is not present in this appeal. It concerned disqualification of judges for
pecuniary interests of their own in a bank which had its own pecuniary
interest in the outcome of the litigation (in Ebner) or was actually a party to
proceedings before the judge (in Clenae). In the present case, the primary
judge had no personal pecuniary interest whatever in the outcome of the
proceedings. His brother had a pecuniary interest that was indirect and
contingent. In so far as the primary judge had an interest, or apparent
interest, its nature was potentially familial, emotional or empathetic. It was
not pecuniary. This was, therefore, a case of disqualification by familial
association with the brother who, in turn, had an indirect, contingent
pecuniary interest in the dispute which the judge, his brother, was
deciding.

[113] Notwithstanding the differences between the issues raised

in Ebner and Clenae, and in this case, I accept that, by analogy, what the
Court held in Ebner, if extended, would apply to this appeal. Certainly, it
could be expected that the approach adopted in Ebner and Clenaewould be
adapted to the circumstances of this case.

CLARITY BY TIME

Overtime, through litigation, the level of generality for the particular

ratio will become clearer.[11] To illustrate, a ratio that’s been applied
1,000 times has clearer picture than a ratio that has been applied 1
time. The ratio becomes increasingly cemented by restatements in
subsequent cases and commentaries.[12]
APPLYING THE RATIO: ANALOGICAL
REASONING
Moving from descriptive ratio to the prescriptive ratio works by way of
analogy. However, the analogy is never exact, only to related to degree.
The descriptive ratio is similar or dissimilar to the future case. The
greater the similarity to the future case, the more likely the ratio will be
binding. The more dissimilar the ratio, the less likely it will be binding.

Some legal academics have debated whether precedential reasoning

works by way of deductive logic, inductive logic, or analogy. In my
opinion, deductive logic was ruled-out by Professor Julius Stone’s article
where he illustrated that we cannot deductively move from descriptive
ratio to the prescriptive ratio (See the section titled, ‘PRESCRIPTIVE
RATIO’). This leaves inductive logic and analogy. Inductive arguments of
the kind that the scientific method employs, such as an array of
probabilistic methods,[13] are not really applied in legal reasoning.
Therefore, in my opinion, precedential reasoning uses more of a rough
form of inductive logic, that is, analogy. For judicial support, some
judges will explicitly use the word ‘analogy’ in their reasoning when
applying the ratio. For example, Kirby J writes in Smits v Roach [2006]
HCA:

[88] Were the circumstances of Ebner, in this respect, analogous to those of

the present case, thereby rendering the ratio decidendi of Ebner binding in
these proceedings? Was it open to the Court of Appeal, in the light of
factual differences between Ebner and the present proceedings, to
approach the issue of disqualification in the way that it did?
…
[113] Notwithstanding the differences between the issues raised
in Ebner and Clenae, and in this case, I accept that, by analogy, what the
Court held in Ebner, if extended, would apply to this appeal. Certainly, it
could be expected that the approach adopted in Ebner and Clenaewould be
adapted to the circumstances of this case.

DISTINGUISHING: ESCAPING BINDING

RATIO
To avoid being bound by the precedent case, a common technique is to
distinguish between the precedent case and the present case.
In Woolcock Street Investments Pty Ltd v CDG Pty Ltd  [2004] HCA, McHugh J at
[61] said, ‘If later courts take the view that the rule of a case was
different from its stated ratio decidendi, they may dismiss the stated
ratio as a mere dictum or qualify it to accord with the rule of the case as
now perceived.’ According to Neil Duxbury in his book The Nature and
Authority of Precedent, a judge may distinguish ‘cases not because they
have a law-making agenda but because following the precedent will not
produce what they consider to be the right outcome.’[14] However, he
further writes that the judge will likely not distinguish on a whim:

The judge who tries to distinguish cases on the basis of materially

irrelevant facts is likely to be easily found out. Lawyers and other judges
who have reason to scrutinize his effort will probably have no trouble
showing it to be the initiative of someone who is careless or dishonest, and
so his reputation might be damaged and his decision appealed. That
judges have the power to distinguish does not mean they can flout
precedent whenever it suits them.[15]

And lastly, Mason J writes in H.C. Sleigh Ltd. V. South Australia  [1977] HCA, ‘If
it is not distinguishable, then this Court has no alternative but to follow
its earlier decisions.’

Example

In the book Legal Method, 9th Ed (2013), Ian McLeod give us a simple

example of distinguishing:

…in Bridges v Hawkesworth  (1851) LJ 21 QB 75, a customer was held to be

entitled to keep money which he found on the floor of a shop. By way of
contrast, in South Staffordshire Water Company v Sharwood  [1896] 1 QB 44,
the finder of two gold rings in the mud at the bottom of a reservoice was
held to be not entitled to retain them, because the site of the finding had
not been open to the public.[16]

A longer example of distinguishing is found in Channel Seven Adelaide Pty

Ltd v Manock [2007] HCA. Here, Kirby J distinguished between the
precedent case Pervan V. The North Queensland Newspaper Company Limited
and Another [1993] HCA and the present case. In summary, the
distinctions Kirby made were the legal issues in question and the
factual circumstances. I have emboldened the key points.

[142] …this Court must find the rule applicable to the present case in its
own earlier authority. They nominate Pervan. However, when Pervan is
properly analysed, it can be demonstrated that neither the joint reasons in
that case, nor any other decision of this or another Australian court,
answer the exact problem now presented for our decision.

[143] Pervan  was a case concerned not with the common law of

defamation but with the enacted provisions of s 377 of the Criminal
Code (Q). Section 377(8) of that Code provided that there was a "lawful
excuse for the publication of defamatory matter" if the publication was
"made in good faith in the course of, or for the purposes of, the discussion
of some subject of public interest, the public discussion of which is for the
public benefit, and if, so far as the defamatory matter consists of comment,
the comment is fair". The reference in the first part of the enacted
Queensland defence to the requirement that the relevant discussion must
be "for the public benefit" has never been part of the common law. In
particular, it has never been part of the law of South Australia.

[144] Necessarily, in deciding Pervan, this Court was therefore concerned

not with the common law of Australia but with the meaning of the defence
provided in the Queensland Code. The primary holding in Pervan was that
s 377(8) of the Code did not import a requirement that the "comment",
upon which the defendant relied, had to be based on facts which were
true. Nor did s 377(8) require that the publisher hold the opinion expressed
in the defamatory publication. Such were the issues in that case.

[145] The publication sued upon in Pervan was an advertisement in a

regional newspaper. The advertisement, in the public notices section of the
newspaper, summoned a meeting of ratepayers. The notice repeated
statements made originally under privilege in the Queensland Parliament.

[146] Factual circumstances more different from the present case

would be difficult to imagine. Pervan addressed a statute not the
 common law. It related to a defence of fair comment expressed in
distinctive terms in a particular setting. It concerned a publication in a
regional newspaper, not a broadcast on a commercial television station.
And the publication appeared in a notice in permanent printed form, not a
brief broadcast of a promotional advertisement.

[147] To conclude that, for the defendant to succeed in invoking a defence

of fair comment in the circumstances of the present case, it must persuade
this Court to overrule a legal principle for which Pervan stands (as the joint
reasons suggest) mis-states the requirement of the Australia law of
precedent. Although due respect will be paid to judicial observations,
as a matter of law, only the ratio decidendi is binding. The ratio
decidendi of Pervan is, as I have demonstrated, far removed from the
legal question in issue in this appeal. That question is, relevantly,
whether, in a publication such as the words and images broadcast by the
defendant in the promotion, the facts in respect of which the defence of
fair comment was claimed were sufficiently "indicated".

Rules of the Ratio Decidendi

After a judgment is written, there is a period of discovery that is needed
to figure out what the ratio truly is. This involves deciphering whether it
has fallen outside of what constitutes as the ratio and how narrow or
wide the ratio is likely to be or ought to be. Therefore, the following is a
list of rules for what constitutes the ratio decidendi.

1.     MUST BE A NECESSARY STEP TO THE CONCLUSION

To constitute as the ratio, it must be a necessary step to the conclusion.

There are many ways to conceptualise this rule. Christopher Enright in
his book Legal Technique describes it as, ‘To be the ratio a rule of law
formulated in a case must determine the case.’[17] In the book Precedent
in English Law,  Cross and Harris write, ‘The ratio decidendi of a case is any
rule of law expressly or impliedly treated by the judge as a necessary
step in reaching his conclusion, having regard to the line of reasoning
adopted by him, or a necessary part of his direction to the jury.’[18] Or,
the High Court judge Anthony Mason describes it in his article as, ‘The
ratio is the principle or statement of law on which the previous decision
is based to the extent to which it is essential to the decision.’[19]

The case law begins at Bole v Horton (1673) stating, ‘An opinion given in
court, if not necessary to the judgment given of record, but that it might
have been as well given if no such, or a contrary had been broach’d, is
no judicial opinion; but a mere gratis dictum.’[20] In Osborne v
Rowlett  (1880) Jessel M.R. writes:

Now, I have often said, and I repeat it, that the only thing in a Judge’s
decision binding as an authority upon a subsequent Judge is the principle
upon which the case was decided: but it is not sufficient that the case
should have been decided on a principle if that principle is not itself a right
principle, or one not applicable to the case; and it is for a subsequent Judge
to say whether or not it is a right principle, and, if not, he may himself lay
down the true principle. In that case the prior decision ceases to be a
binding authority or guide for any subsequent Judge, for the second Judge
who lays down the true principle in effect reverses the decision.[21]

Kirby J in Garcia v National Australia Bank Limited  (1998) 194 CLR 395, said at
[56], ‘Judicial remarks of a general character upon tangential questions
or issues not necessary to the decision are likewise discarded, however
persuasive the reasoning may appear.’ Lastly, in Tabet v Gett [2010] HCA,
Heydon J expressed the dangers of stating opinions that are not
necessary for the outcome of the case. He argues that all players in the
case - both parties and the judges - should feel as if their arguments
will impact the outcome because the subsequent ‘consciousness …
sharpens’ the quality of the law:

[97] The question of law which the plaintiff wishes to agitate was argued by
the parties fully and forcefully because on one factual basis it would have
been a live and decisive issue. But now the question has ceased to be live
and decisive. The question has become hypothetical in the sense that the
assumption it rests on has turned out to be incorrect. The question is
controversial among lawyers and in other cases, but as between the
plaintiff and the defendant in this case the controversy has turned out to
lack concreteness. For them it has become moot. There is no answer to the
 question posed which will produce any consequences for the parties. The
question has become purely abstract and academic. The only significance
of an answer would lie in what future courts would make of it. They are
likely to treat it not as a decision, but only as a dictum; not as the resolution
of a controversy, but only as advice; not as an event, but only as a piece of
news.

[98] The consciousness of parties and their legal representatives that the
outcome of a debate about the correctness of contested propositions of
law is decisively important to the interests of those parties often greatly
assists the sharpness and quality of that debate. Doubtless it did so here.
But the efficacy of a debate does not depend only on whether the
participants in the debate have that consciousness. The efficacy of its
resolution depends on the court sharing that consciousness and being
assisted by that consciousness. Here a stage has been reached in a journey
along the path to decision which has caused that consciousness to cease to
exist because an issue has ceased to be decisively important. No assistance
can be gained from a consciousness that has ceased to exist. In this field,
for me, at least, to embark on difficult and doubtful inquiries in an attempt
to answer the question without the assistance to be gained from that
consciousness is a potentially very dangerous course. This is a case in
which, since it is not necessary to do so, it is desirable not to.

[99] Accordingly, the appeal must be dismissed.

Example

To illustrate, the following hypothetical contains a statement that

is not necessary to the judgment. The facts of the case are as follows:

At 12:30 pm on Monday 13 April, Jack, a Fletcher by trade, was walking

down Holly Lane. He stopped when he came to the field which Jill, a cooper,
held as a tenant of Lord Sheffield. Jack Decided that he wanted to take a
short cut to get to the market. Therefore he walked across Jill’s field. Jill did
not say to Jack that could walk across her field.[22]

Assume the Jack’s actions were held as trespass and assume the judge
further stated the following: ‘Ms Jones Raised in the argument the
consequences if a defendant tunnels under land possessed by the
plaintiff. This also, we believe, would constitute trespass.’[23] However,
the facts of the case did not involve tunneling. Therefore, the statement
was irrelevant to the case and does not constitute as the ratio.

For a longer example of this rule, scroll up to the section entitled

‘DESCRIPTIVE RATIO DECIDENDI.’

2.     MUST BE DIRECTLY RELATED TO THE ISSUE

To constitute as the ratio, it must to be directly related to the issue.

In Garcia v National Australia Bank Limited  (1998) HCA, Kirby J writes, ‘It is
fundamental to the ascertainment of the binding rule of a judicial
decision that it should be derived from… a matter in issue in the
proceedings.[24] Next, McHugh J said forcefully and plainly in  Coleman v
Power (2004) HCA, at [79]:

The essence of judicial power is the determination of disputes between

parties. If parties do not wish to dispute a particular issue, that is their
business. This Court has no business in determining issues upon which the
parties agree. It is no answer to that proposition to say that this Court has a
duty to lay down the law for Australia. Cases are only authorities for what
they decide. If a point is not in dispute in a case, the decision lays down no
legal rule concerning that issue. If the conceded issue is a necessary
element of the decision, it creates an issue estoppel that forever binds the
parties. But that is all. The case can have no wider ratio decidendi than
what was in issue in the case. Its precedent effect is limited to the issues.

3.     MUST COME FROM DISPUTES OF LAW, NOT DISPUTES OF

FACT

The ratio must be derived from disputes of law, not disputes of fact.
Rations will not come from cases where the parties only disagree on
the facts.[25]

4.     MUST TO BE ARGUED IN COURT

To constitute as the ratio, it must first be argued in court. A point of law

that will become precedent should have the opportunity to be argued
by both parties in court, or the law will go without the benefit of
counter arguments and fine-tuning. This rule was first proposed in the
old case R v Warner (1661) 1 Keb 66 at 67: "[T]he presidents … sub
silentio without argument, are of no moment". Many years later,
Gleeson CJ, Gummow And Heydon JJ re-expressed this point in CSR
Limited v Eddy[2005] HCA, at [13]:

It is of course commonplace for the courts to apply received principles

without argument: the doctrine of stare decisis in one of its essential
functions avoids constant re-litigation of legal questions. But where a
proposition of law is incorporated into the reasoning of a particular court,
that proposition, even if it forms part of the ratio decidendi, is not binding
on later courts if the particular court merely assumed its correctness
without argument.

Mansfield J later affirmed this in Taylor v Rudaks [2007] FCA at [39] by

writing:

Although his Honour’s remarks suggest that he held the view that a claim
under s 588M(2) of the Corporations  Act is not a claim provable in the
bankruptcy of a director, that view was not expressed after the benefit of
argument on the matter. It does not form part of the ratio decidendi of the
decision. It is not a view which his Honour reached after the opportunity of
considering the decisions to which I have referred or the analysis of the
precise wording of s 588M. I accordingly do not think that the decision
obliges me to reach a conclusion different from that I have reached; nor
that I should do so.

5.     THE FACTS OF THE PRECEDENT CASE SHAPE THE LEVEL OF

GENERALITY 

The facts of the precedent case shape how narrow or wide the ratio
should be applied to future cases. I expanded on this point above in
section titled, ‘The Descriptive-Prescriptive Distinction.’

While it’s impossible to determine the precise level of generality, some

general indicators are:
 1. ‘The more general, or abstract, the statement of the facts is, the
greater the number of subsequent cases which will fall within the
principle which is being formulated, and therefore the wider the
ratio will be.[26]

2. The less facts and the less specific the facts, the broader the
application of the ratio.[27]

6.     THE COURT DECIDES THE LEVEL OF GENERALITY

Ultimately, it is for the future court to decide how narrow or wide the
precedent ratio ought to be. This was elaborated by Gleeson CJ,
Gummow, Hayne And Heydon JJ in Woolcock Street Investments Pty Ltd v CDG
Pty Ltd [2004] HCA, at [61]:

…if later courts read down the rule of the case, they may treat the
proclaimed ratio decidendi as too broad, too narrow or inapplicable. Later
courts may treat the material facts of the case as standing for a narrower
or different rule from that formulated by the court that decided the case.
Consequently, it may take a series of later cases before the rule of a
particular case becomes settled. Thus for many years, courts and
commentators debated whether the landmark case of Donoghue v
Stevenson was confined to manufacturers and consumers and whether the
duty formulated in that case was dependent upon the defect being hidden
with the lack of any reasonable possibility of intermediate examination. If
later courts take the view that the rule of a case was different from its
stated ratio decidendi, they may dismiss the stated ratio as a mere dictum
or qualify it to accord with the rule of the case as now perceived.

Also, in Povey v Qantas Airways Limited [2005] HCA, McHugh J said at [76],

‘Later courts commonly treat the material facts of a case as standing for
a narrower or broader ratio decidendi than that expounded by the
court that decided the case.’ For example, in Smits v Roach [2006] HCA
Kirby J found differences between the cases but he widened the level of
generality of Ebner v Official Trustee in Bankruptcy  [2000] HCA to extend to
the present case.
 [112] Strictly, the ratio decidendi of Ebner (and Clenae) concerned an issue
that is not present in this appeal. It concerned disqualification of judges for
pecuniary interests of their own in a bank which had its own pecuniary
interest in the outcome of the litigation (in Ebner) or was actually a party to
proceedings before the judge (in Clenae). In the present case, the primary
judge had no personal pecuniary interest whatever in the outcome of the
proceedings. His brother had a pecuniary interest that was indirect and
contingent. In so far as the primary judge had an interest, or apparent
interest, its nature was potentially familial, emotional or empathetic. It was
not pecuniary. This was, therefore, a case of disqualification by familial
association with the brother who, in turn, had an indirect, contingent
pecuniary interest in the dispute which the judge, his brother, was
deciding.

[113] Notwithstanding the differences between the issues raised

in Ebner and Clenae, and in this case, I accept that, by analogy, what the
Court held in Ebner, if extended, would apply to this appeal. Certainly, it
could be expected that the approach adopted in Ebner[83]
and Clenae would be adapted to the circumstances of this case.

7.     WHEN A PRECEDENT HAS MULTIPLE REASONS, ALL REASONS

ARE BINDING

In Commissioners of Taxation (NSW) v Palmer  [1907] AC 179 at 184, Lord

Macnaghten for the Privy Council said, ‘It is impossible to treat a
proposition which a court declares to be a distinct and sufficient
ground for its decision as a mere dictum, simply because there is
another ground stated upon which, standing alone, the case might
have been determined.’ Next, in Cheater v Cater [1918] 1 KB 247, at [252],
‘If a judge states two grounds for his judgment and bases his decision
upon both, neither of those grounds is a dictum. In London Jewellers Ltd v
Attenborough[1934] 2 KB 206, at 222, Greer LJ said:

In that case two reasons were given by all the members of the Court of
Appeal for their decision and we are not entitled to pick out the first reason
as the ratio decidendi and neglect the second, or to pick out the second
 reason as the ratio decidendi and neglect the first; we must take both as
forming the ground of the judgment.

Later, in Jacobs v London County Council [1950] AC 361 at 369 Lord Simonds

said, ‘There is in my opinion no justification for regarding as obiter
dictum a reason given by a judge for his decision because he has given
another reason also.’ And finally, in McBride v Monzie Pty Ltd [2007] FCA
1947, at [6] ‘If a judge gives two or more alternative reasons for
reaching his (or her) decision each reason is part of the ratio.’ While this
rule comes from UK, these cases have been affirmed in many
Australian cases, such as McBride v Monzie Pty Ltd  [2007] FCA.

8.     THE RATIO CAN COME IN MULTIPLE FORMS

The ratio can come in three forms:

1. A common law rule; or

2. Interpretation of statute, or

3. Interpretation of a common law rule.[28]

9.     WHERE THERE ARE MULTIPLE JUDGES: a) THE MAJORITY OF

JUDGES MUST AGREE TO BE BINDING

To constitute as the ratio, the majority of judges must agree where

there are multiple judges.[29] By implication, dissenting judgments are
not binding. ‘Dissenting judgments’ are judgments by the minority of
judges, such as 2 out of 6 judges.

The first case comes from Bone v Commissioner of Stamp Duties [1972]

NSWLR at 654. Jacobs P writes in reference to a statement made by
Owen J in a High Court Decision:

That decision is naturally entitled to the greatest respect. It is of its nature a

most persuasive precedent, but it is not a precedent which is binding upon
this Court. It was not a decision given by Owen J when sitting as a member
of a court in the framework of the appellate structure of which this Court is
part.
In the same case, Hope JA states:

A decision of a justice of the High Court sitting at first instance is of course

of the greatest persuasive authority for this Court, but this Court is not
bound to follow it, and since the decision is challenged, it becomes
necessary to decide whether the construction placed upon the agreement
by Owen J was the correct one.[30]

McLelland J affirms this in Appleton Papers Inc v Tomasetti Paper Pty Ltd  [1983]
NSWLR: 

Nor am I bound by a decision of the High Court constituted by a single

justice (cf Bone v Commissioner of Stamp Duties [1972] 2 NSWLR 651, at
654, 664), or by a decision of the House of Lords, although in either case
such a decision is also entitled to great weight and respect.[31] 

In Federation Insurance Limited V. Wasson and Others  [1987] HCA Mason C.J.,
Wilson, Dawson And Toohey JJ write at [17]:

It is not strictly necessary for this Court now to resolve the controversy as
to what Deaves actually did decide. If it matters, we agree with the
assessment made by McHugh J.A. Certainly, it would not be proper to seek
to extract a binding authority from an opinion expressed in a dissenting
judgment … That is not to say, however, that a dissenting judgment may
not deserve respectful consideration. A dissenting judge will often see his
or her judgment as an appeal to the brooding spirit of the law, waiting for
judges in future cases to discover its wisdom.

Kirby J said in Garcia v National Australia Bank Limited (S18/1997) [1998] HCA at

[56]:

 …the rules governing the ascertainment of binding precedent observe

principles which are at once majoritarian and precise. Even so great a
Justice of this Court as Dixon J cannot speak for the Court unless his
reasoning attracts the support, express or implied, of a majority of the
participating Justices (disregarding for this purpose any who did not agree
in the order of the Court disposing of the proceedings on the point in
question).
In New South Wales v Commonwealth of Australia  [2006] HCA at [487] Kirby J
also said:

First, in Pacific Coal, Gaudron J (along with McHugh J and myself) was in
dissent. Her reasoning therefore forms no part of the ratio decidendi of
that case.

Again, Kirby J writes in Vasiljkovic v Commonwealth of Australia  [2006] HCA, at

[188]:

Detention and criminal punishment: The Commonwealth argued that the

broad statements in Chu Kheng Lim v Minister for Immigration, about the
exclusive judicial role in imposing involuntary detention in the context of
criminal punishment, were not endorsed by a majority of the Court in that
case. They were not, therefore, part of the ratio decidendi of that case.

And Lastly, in Novartis AG v Hospira Pty Limited [2012] FCA, Yates J said at

[64]:

Whilst a decision of a single justice of the High Court is deserving of close

and respectful consideration, I am not bound by the observations quoted
above. This is because, first, they are obiter dicta and, secondly, the
decision in F Hoffman-La Roche is not binding on me as a matter of
precedent in any event: Bone v Commissioner of Stamp Duties [1972] 2
NSWLR 651 at 654 and 664.

b)   WHEN JUDGES HAVE DIFFERENT REASONS, FIND ESSENTIAL

AREAS OF AGREEMENT

When judges have different reasons for their decision, find essential
areas of agreement. Justice Kirby gives us this advice in his
speech, Precedent –  Report  onAustralia:

Determining the ratio decidendi of a judicial decision becomes a complex

task when multiple concurring reasons are published by several judges in a
single case. In such a case, the ratio must be drawn from the essential
areas of agreement found within the reasons of the judges in the
majority.”[32]
Frederick Schauer in breaks it down in his book, Thinking Like a Lawyer: A
New Introduction to Legal Reasoning:

So if judge A decides for the plaintiff for reasons x, y, and z, and judge B
decides for the plaintiff for reasons p, q, and x, and if judge C decides for
the defendant, then the ratio decidendi is x, the reason (and the only
reason) shared by a majority of judges.[33]

c)   CANNOT DISCARD A CASE WHERE THE MAJORITY OF JUDGES

AGREE ON THE ORDER BUT DO NOT AGREE ON THE REASONS

In Garcia v National Australia Bank Limited (1998) 194 CLR 395, Kirby J wrote
at [57]:

As all of the Justices concurred in the order of the Court allowing the
appeal in that case, the reasoning of none could be discarded. As none of
the Justices expressly concurred in the reasoning of another, the analysis
depends upon a comparison of the reasons which each gave.[34]

d)  CANNOT CONSTRUCT A RATIO DECIDENDI BY THE AGGREGATION

OF VARIOUS ELEMENTS OF SEPARATE REASONS

In Great Western Railway Company v Owners of SS Mostyn  [1928] AC 57 at 73,

Viscount Dunedin said: ‘With great hesitation they have added the
opinion of Lord Hatherley to that of Lord Cairns and then, with still
greater difficulty, that of Lord Blackburn, and so have secured what
they think was a majority in favour of Lord Cairns’s very clear view.’
Viscount didn’t think that this method ought to be binding.

Barwick C.J. affirmed this in Victoria V. The Commonwealth (1971) HCA, at

[39], ‘It is not permissible to construct such a ratio by the aggregation of
various elements from separate reasons given by their Honours.’

Lastly, In Perara-Cathcart v The Queen [2017] HCA, the majority judgment at

[134] states:

Authority makes plain that it is not permissible to construct a ratio

decidendi by the aggregation of various elements of separate reasons, still
less to extract an element from a dissenting judgment and combine it with
 an element from a majority judgment in an attempt to create a majority in
favour of that element. Parity of reasoning dictates that, where a majority
of the Court of Criminal Appeal has decided that there has been a
miscarriage of justice, it is not permissible to construct a further decision
by a majority of that Court that there has been "no substantial miscarriage
of justice" by aggregating the decision of one member of the Court to that
effect with the decision of another member of the Court who was not
persuaded, at the point of the anterior question, that there had been a
miscarriage of justice. In such circumstances, a majority of the Court has
decided that there has been a miscarriage of justice, and it follows that the
appeal to that Court must be allowed.[35]

10.   A PRECEDENT CAN BE BINDING WITHOUT A RATIO

Where the material facts are the same, judgments may still be binding
on lower courts even if there was no ratio, providing that the facts are
the similar. The book Laying Down the Law  phrased this point well: ‘Where
the material facts are the same, the lower court will still be required to
reach the same outcome, applying the same rules of law as the
superior court, even if the law had not been in dispute in that particular
superior court decision.[36]

In Re Tyler; Ex Parte Foley [1994] HCA, McHugh J said:

[4] The divergent reasoning of the majority judges in Re Tracey and Re

Nolan means that neither of those cases has a ratio decidendi. But that
does not mean that the doctrine of stare decisis has no relevance or that
the decisions in those cases have no authority as precedents. Because it is
impossible to extract a ratio decidendi from either of the two cases, each
decision is authority only for what it decided ((59) Dickenson's Arcade Pty.
Ltd. v. Tasmania (1974) 130 CLR 177 at 188; Philip Morris Ltd. v. Commissioner
of Business Franchises (Vict.) (1989) 167 CLR 399 at 496.). But what is meant
by saying that a case, whose ratio decidendi cannot be discerned, is
authority for what it decided? It cannot mean that a court bound by that
decision is bound only by the precise facts of the case. Stare decisis and res
judicata are different concepts.
 [5] In my opinion, the true rule is that a court, bound by a previous decision
whose ratio decidendi is not discernible, is bound to apply that decision
when the circumstances of the instant case "are not reasonably
distinguishable from those which gave rise to the decision" ((60) Scruttons
Ltd. v. Midland Silicones Ltd. (1962) AC 446 at 479 per Lord Reid.).

However, Harris & Cross argue that ‘the authority of a decision for
which no reasons are given is very weak, because it is so hard to tell
which facts were regarded as material and which were thought to be
immaterial.’[37]

11.   WHEN THE RATIO CANNOT BE DETERMINED, A COURT MAY

NOT BE BOUND

When the ratio cannot be determined, a court may not be bound.

In Great Western Railway Co v Owners of SS Mostyn [1928] AC 57, at [73]:

When any tribunal is bound by the judgment of another court, either

superior or co-ordinate, it is, of course, bound by the judgment itself. And if
from the opinions delivered it is clear … what the ratio decidendi was which
led to the judgment, then that ratio decidendi is also binding. But if it is not
clear, then I do not think it is part of the tribunal’s duty to spell out with
great difficulty a ratio decidendi in order to be bound by it.

At first instance, this seems as if it conflicts with the last point (10).
However, the court may not be bound by the ratio but may still be
bound by the precedent.

12.   NOT ALL CASES MUST HAVE A RATIO

Not all cases have a ratio decidendi. In Perara-Cathcart v The Queen  [2017]
HCA, Gageler J said:

[74] The individual members of a multi-member court will sometimes

disagree. Sometimes disagreements will be resolved by dialogue, one
member ending up convinced by another to take a different view;
sometimes not. Where disagreements are not resolved, the law supplies a
decision-making rule which allows the court to produce the order that is
necessary for its institutional duty to be fulfilled.
 [75] The decision-making rule applied to produce the order of a multi-
member court in a case in which there is disagreement between its
members is different in timing, concept and purpose from the principle
applied in an attempt to extract a ratio decidendi from the reasons for
decision of the members of that court in that case. The decision-making
rule is applied at the time of decision. The rule is directed to ensuring an
outcome in the case. When triggered by disagreement, the rule applies to
produce a result. The principle is applied subsequently and in retrospect.
The principle is directed to the ideal of ensuring that cases are decided
consistently through time. The principle cannot be expected always to
achieve that ideal. Every case must have an outcome, but not every case
need have a ratio decidendi.

[76] When members of a Full Court of the High Court are "divided in
opinion as to the decision to be given on any question", the decision-
making rule is supplied by s 23(2) of the Judiciary Act 1903 (Cth). If the case
is in the High Court's appellate jurisdiction and there is an equal division of
opinion, the decision appealed from is left to stand. If there is an equal
division in the High Court's original jurisdiction, the opinion of the Chief
Justice or Senior Justice prevails. In each of those circumstances of equally
divided opinion, the applicable decision-making rule produces a resolution
of the case at hand. In neither of those circumstances does application of
the rule produce a decision which necessarily constitutes a binding
precedent. When the division in opinion in the High Court is not equal, the
decision-making rule is that "the question shall be decided according to the
decision of the majority". That decision-making rule produces a resolution
of the case at hand notwithstanding that aggregation of the reasons for
decision of members of the majority can sometimes fail to yield a ratio
decidendi.

13.   UNSTATED ASSUMPTIONS DO NOT CONSTITUTE THE RATIO

Unstated assumptions do not constitute the ratio. In Muldoon v Church of

England Children's Homes Burwood [2011] NSWCA Campbell JA at [39]
writes :
 Reasons for judgment are not authority for a matter that has been
assumed, rather than actually decided, in the course of those reasons for
judgment: Baker v The Queen [1975] AC 774 at 788; Archer v Howell (1992) 7
WAR 33 at 46; Savouts v Minister for Immigration and Multicultural
Affairs [2000] FCA 1059 at [32]-[33]; R (Kadhim) v Brent London Borough
Council Housing Benefit Review Board [2001] QB 955 at [20]-[25], [33]-[39],
962-963, 965-966;Markisic v Commonwealth of Australia [2007] NSWCA 92;
69 NSWLR 737 at [56].

Rules of Obiter Dicta

Obiter dictum is typically seen as statements that don’t constitute the
ratio decidendi, that is, obiter is everything else but the ratio. However,
not all sentences in a judgment fall under either ratio decidendi or
obiter dictum. The book, Laying Down the Law writes:

Frequently during the course of a judgment a judge will restate and discuss
proposition of law from previous cases. Such recitations may provide a
useful foundation for the judge’s reasoning but they will neither be ratio no
obiter unless they receive the endorsement of the judge.[38]

Thus, obiter dicta are statements made during the course of a

judgment that do not fall under the other categories, such as the ratio,
the orders,[39] the headnote, the restatements of law, etc.

1.     GENERALLY, OBITER DICTUM IS NOT BINDING

Generally, obiter dictum is not binding. John Chipman Grey in his

book, The Nature and Sources of The Law  writes, ‘It must be observed that at
the Common Law not every opinion expressed by a judge forms a
Judicial Precedent.[40] However, the exception is ‘seriously considered
dicta’ from the High Court (See the section titled, ‘Binding Dicta: The
High Court Exception’). Therefore, all obiter that is not from the high
court, is not binding.

The case law starts at Bole v Horton  (1673). Vaughan CJ at 382 said, ‘An
opinion given in a court, if not necessary to the judgment given of
record, but that it might have been as well given if no such, or contrary
had been broach’d, is no judicial opinion: but a mere gratis dictum.’[41]  A
few hundred years later, Jessel MR writes in Osborne v Rowlett (1880) Ch at
785:

Now, I have often said, and I repeat it, that the only thing in a Judge’s
decision binding as an authority upon a subsequent Judge is the principle
upon which the case was decided: but it is not sufficient that the case
should have been decided on a principle if that principle is not itself a right
principle, or one not applicable to the case; and it is for a subsequent Judge
to say whether or not it is a right principle, and, if not, he may himself lay
down the true principle. In that case the prior decision ceases to be a
binding authority or guide for any subsequent Judge, for the second Judge
who lays down the true principle in effect reverses the decision.

2.     OBITER IS PERSUASIVE

Over and over again, you will hear the mantra that obiter dictum is
“persuasive.” When someone mentions the word “obiter”, inevitably,
you will hear someone robotically respond that it’s “persuasive.” So, if
obiter is not binding, what does persuasive actually mean. In my view, it
means that the statements made in obiter should be consciously
considered, rather than immediately ignored. In Ex parte Bell Cox
(1887)  QBD: 

I do not think that a judge would wish any statement which he may have
made in the course of a case, merely obiter and casually, to be treated as
necessarily being an authority on the subject in question; but when a judge
has thought it necessary for the purpose of the case to make a deliberate
examination of the practice of his Court, and to state such practice, I do not
think the authority of such statement can be got rid of merely by arguing
that it was not really necessary for the actual decision of the case. I think
that such a statement if cited as an authority is entitled to great weight,
though of course not bind on is as a decision.

Also, in Eslea Holdings Ltd v Butts (1986) NSWLR, at 361 Samuels JA

commented on the need ‘to pay the very greatest respect and attention’
to High Court dicta. And, in Forgeard v Shanahan (1994) NSWLR at 226,
Meagher JA stated that a lower court should not ‘lightly decline’ to
follow ‘considered dicta of a very distinguished High Court.’ Note the
High Court’s binding dicta exception (see ‘Binding Dicta: The High Court
Exception.’)

3.     OBITER HAS DIFFERENT DEGREES OF WEIGHT

Obita dicta have different degrees of weight. On the light end, there are
simple passing remarks and on the heavy end, there are statements
that have been fully argued, as if it were the ratio.[42] In Brunner v
Greenslade [1971] Ch, Megarry J states:

A mere passing remark or a statement or assumption on a matter that has

not been argued is one thing, a considered judgment on a point fully
argued is another, especially where, had the facts been otherwise, it would
have formed part of the ratio. Such judicial dicta, standing in authority
somewhere between a ratio decidendi and an obiter dictum, seem to me to
have a weight nearer to the former than the latter.

Also, some statements made in dicta are so influential that it in effect

becomes ratio. In the book Precedent in English Law, 4th Ed,  Cross and
Harris write: ‘Dicta of the highest degree of persuasiveness may often,
for all practical purposes, be indistinguishable from pronouncements
which must be treated as ratio decidendi.’[43]

Binding Dicta: The High Court

Exception
SERIOUSLY CONSIDERED DICTA

Historically, obiter dictum has never been binding. However, In Farah

Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA , the High Court unanimously
stated that lower courts are bound by the High Court’s ‘long-established
authority and seriously considered dicta of the majority of this court.’
They write:
 [134] It is true that those statements were dicta in the sense that the case
was decided on the second limb of Barnes v Addy. But, contrary to the Court
of Appeal's perception, the statements did not bear only "indirectly" on the
matter: they were seriously considered. And, also contrary to the Court of
Appeal's perception… it was shared by the entire majority… [That] is not a
step which an intermediate court of appeal should take in the face of long-
established authority and seriously considered dicta of a majority of this
Court.

[158] The changes by the Court of Appeal with respect to the first limb,
then, were arrived at without notice to the parties, were unsupported by
authority and flew in the face of seriously considered dicta uttered by a
majority of this Court. They must be rejected.

I express my gratitude to Professor Matthew Harding and Professor Ian

Malkin for writing a brilliantly researched journal article on the issue of
‘seriously considered dicta’ entitled, The High Court of Australia’s Obiter Dicta
and Decision-Making in Lower Courts.  The authors analysed a large amount
of cases on the effect of dicta by the High Court on the lower courts.
Prior to Farah, they found that many judges from lower-courts did not
see themselves as having a duty to follow dicta from the High Court:
‘[T]he cases in which lower courts appear to have considered
themselves under a duty of obedience to High Court dicta are not
numerous. In our view, these cases [that did,] were ‘outliers’ in the pre-
Farah world.’[44]

Post Farah, most courts consider themselves under a duty of follow

seriously considered dicta and the courts that don’t, are now the
outliers.[45] For example,  in Zotti v Australian Associated Motor Insurers
Ltd (2009) NSWCA, Spigelman CJ wrote, ‘this court is obliged to
follow...the clearly expressed dicta of the High Court even if not part of
the ratio decidendi.’ In Lassanah v State of New South Wales  [2009] NSWDC at
[25], Gibson DCJ said ‘[e]ven if, rather than forming a part of the ratio
decidendi, this [passage] amounts to “considered obiter dicta”, I am still
bound by this decision for the reasons explained by the High Court in
Farah.’ Lastly, In Net Parts International Pty Ltd v Kenoss Pty Ltd  [2008] NSWCA
at [28], MacFarlan JA:

Whilst...the statement of principle in Lion White is strictly an obiter dictum,

the statement is one which this Court is in my view required to apply
unless and until the High Court opines further on the question, the
statement of principle having stood without contradiction for some 90
years and the statement being a well-considered one.

DISTINCTION BETWEEN ALL DICTA VS SERIOUSLY CONSIDERED

DICTA

There is a distinction between all dicta and seriously considered dicta.

For example, Perram J in Australian Capital Territory v Queanbeyan City
Council [2010] FCAFC felt that he was not bound by the High Court’s
dicta:

The principle thus elucidated is neither long-established by authority nor

the result, I think, of seriously considered dicta of a majority of the High
Court. Thus this Court is not bound to follow it: Farah Constructions Pty Ltd v
Say-Dee Pty Ltd (2007) 230 CLR 89.

Also, Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA, Perram J decided

that the High Court’s statement was ‘not a considered dictum otherwise
binding on [the court]’.

CURRENT AMBIGUITIES

Harding and Malkin found a few ambiguities with Farah:

1. What constitutes as ‘long established authority?' For example,

'In Pape v Federal Commissioner of Taxation , Heydon J (in his dissenting
judgment) pointed out that certain dicta were ‘seriously
considered dicta, but they could not be described as conforming
with long-established authority’.’[46]
2. What constitutes as ‘seriously considered?' For example, ‘in the
Victorian Court of Appeal in 2010, Doughty v Martino Developments Pty
Ltd, Nettle JA said of a statement that was not the product of a
consideration of relevant authorities or substantial argument that
 it ‘does not rise to the level of considered dicta in the sense
identified in Farah.’’[47]

EMERGENCY: I Need the Ratio

Fast!
If you don’t have time to read and understand the actual case, here are
a list of shortcuts. When the source refers to the ratio, they will say
something like, ‘It was held…’, ‘It was found...’, ‘The majority stated...’,
and so on. (Of course, these are just suggestions and can subsequently
result in you misidentifying the ratio. So, you’re at your own risk.)

1. Journal articles on the particular precedent.

Try https://scholar.google.com or http://www.austlii.edu.au/au/sp
ecial/journals/;

2. Textbooks;

3. Law blogs, such as www.modaq.com;

4. Good ol’ Professor Google. There are many law firms out there
summarising cases because they’ve got nothing else to write
about… (joking);

5. Case summary books. Eg. ‘LexisNexis Case Summaries: Contracts

- 7th edition’;

6. If you’re in Australia, go to jade.io, type in the case, and scroll

down ‘till you find a lot of citations. For example, In the case Rogers
v Whitaker (1992),  paragraph 4 has been cited 106 times. This is an
indicator that it’s the ratio, if not, at least something important to
consider. See the screenshot below: