Question: Explain the terms obiter dicta and ratio decidendi and discuss why the ratio of a case is

said to be vital in the operation of the doctrine of binding precedent.

The question above requires the definition of obiter dicta and ratio decidendi and the importance of
ratio decidendi in the doctrine of binding precedent. In the hierarchy of the courts, the ratio decidendi
is the binding authority. The following will be discussed in this answer: the obiter and ratio decided,
the test for identifying the ratio and the importance for ratio in operation binding precedent.

Obiter dictum is a statement of the judge which is not related to the material facts of the case. It
translates to “a thing said by the way”. MacCormaick has described obiter as, “statements of
opinion upon the law and its values and principles in their bearing on the instant decision, statement
which in some way go beyond the point or points necessary to be settled in deciding the case”.
(Holland and Webb) One of the most important cases of obiter is that of the UKSC Ivey v Genting
Casinos which overruled the test for dishonesty established in Ghosh. The Court of Appeal, in the
case of Barton and Booth has also accepted that they are bound to follow the obiter of the Supreme
Court.

Ratio decidendi translates to “reason for decision” thus confirming that the ration is the legal rule that
lead to the decision of a case which is most of the time formulated from the case’s material facts.
Ratio decidendi has been described by Sir Rupert Cross as “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”. It was also expressed by Legatt LJ at para 51 as, “The ratio is ( or is regarded by
the judge as being) part of the best or preferred justification for the conclusion reached: it is
necessary in the sense that the justification for that conclusion would be, if not altogether lacking,
then at any rate weaker if a different rule were adopted”.

The main task of judges and lawyers is to identify the ratio but there is no single or easy test existing
for identification of the ratio. Even the words “necessary step” used by Sir Cross in his definition is
said to be ambiguous. In para 58 of Youngsam, Legatt LJ has provided a guidance of ten non-
exhaustive factors. They are as follows:
1. “the degree of unanimity or consensus of the judges”
2. “the ruling and the supporting reason
3. “what the extend point is will be subject to argument”
4. “how clearly the court evinced an intention to establish a binding rule”
5. “extent prior relevant authority”
6. “whether the court would, or sensibly could, have reached the same result if it had not ruled
as it did”
7. “whether the court’s ruling has been applied or approved in later cases”
8. “whether the ruling was criticized by commentators or judges in later cases”
9. “whether the factual situation arising from the current cases was considered or contemplated”
10. “see the comparison of the higher court’s decision with the current court”

Beside these, two other tests have been proposed to identify the ratio by theorists Goohart and
Wambaugh. Goodhart’s test is considered to be authoritative where the ratio is identified by
examining the material fact. It was expressed by Lord Halsbury that “a case is only authority for
what is actually decided”. The advantage of this test is that the judges may depart from the precedent
if material facts are not presented. Comparatively, Wambaugh’s test is quite complicated as this
involves identifying the supposition of law which might be difficult if there are more than one ratio
of a case. This test is suitable for justifying what is not ratio of the case and which does not have the
capacity to identify the ratio.

Generally courts are bound to follow the earlier decisions as per the doctrine of binding precedent. In
English courts, precedent is of two types: vertical and horizontal.
Horizontal precedent is the approach taken by the courts which binds them to their own former
decisions. In 1898 after acknowledging that the UKHL will also following precedent, the HL avoided
a conflict of ratio for many years. Howvere, in 1966, the UKHL published a Practice Statement
which made the ratio flexible and gave them the power to depart from their earlier decisions. In 2009,
this approach was also accepted by the UKSC in the case of Austin v Southward London Borough
Council. The Statement. However, was used 20 years after publication to overturn the decision of R v
Shivpuri.
It was mentioned in the Court of Appeal case of Young v Bristol that although the EWCA is bound
by their earlier decisions, this case presented three exceptions. Firstly, in cases where the precedents
are conflicting, the court may choose to follow whichever they think fits best and that has to be
followed in further cases. Secondly, when decisions conflict with the UKSC, the court must follow
the decision of the UKSC. Thirdly, if any decision is found to be ‘per incuriam’, then that decision
loses its binding authority. For example in the case of Willers v Joyce, the UKSC held that the Court
of Appeal’s decision was not correct and thus it could not be used as precedent.

Vertical precedent is when the decision of the higher courts must be binding for the lower courts, for
example the decisions of the UKSC is binding for the High Court and the Court of Appeal. In the
case of Cassel & Co Ltd v Broome, however, Lord Denning refused to follow the guidelines of the
UKHL.

In conclusion to the above, ratio decidendi can be said to be the most important element in
developing the English common law due to its binding authority. The High Court is bound by the
decisions of the Court of Appeal and the Supreme Court while the Court of Appeal is only bound by
Supreme Court decisions.