Comerical Law - Lecutre 1

COMMLAW 1004 Lecture slides-Week 1
10/02/2015
Lecture 1 The Legal System
Tutorials
Textbook chapters 1-4

What is law?
Sources of law
Start in Week 2 (next week- not this week)

Tutorial A is on applying the various rules
of statutory interpretation.
Statutes - rules made by parliaments

Parliament Powers
Interpretation of statutes
rules of statutory interpretation
Judge made law (common law)
Validity and conflict of legislation with court rulings

Mabo (No 2) 1992 (common law)
What is Law?
What is Law?
Put another way law can be defined as:
Law is generally defined (p6) as:

A set of rules, developed over a very long
period of time regulating peoples interactions
with each other and which sets standards of
conduct between individuals and other
individuals, and individuals and the
government and that are enforceable through
sanction.
3
The norms that regulate our behaviour in a

society where the breach of those laws attracts
a punishment or remedy.
10/02/2015
What is Law?
What is Law?
Justice and the law
A sobering thought:
A concept that is closely associated with law is

justice which means that which is right or
fair.
Justice is difficult to define but Lord Denning,
suggested:
Laws do not change the heart but they

restrain the heartless.
It is not a product of intellect but of spirit. The nearest we can

go to defining justice is to say that it is what right-minded
members of the community those who have the right spirit
within them believe to be fair.
Martin Luther King
Characteristics of a legal system

Certainty (law must be as clear as possible
and so predictable so people can conduct
their affairs knowing what the law is);
Flexibility (law must be able to respond and
adapt to changing circumstances);
Fairness (law must be seen to be fair and
reasonable as if not people will not
comply); and
Accessibility (people are able to find out
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what the law is).
Sources of law
Two main sources of law in Australia:
Common Law
Statute Law (legislation)
International law is not part of
domestic law in Australia until
implemented by Federal parliament.
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Common Law/Statute law
Common Law
The term common law applies as after the Norman
conquests of England in 1066 English kings/queens sent
travelling judges around England to administer the royal
justice.
Law made by the Courts and that has been

developed over time is known as the
common law or case law or judge made
law.
The judges initially applied local customs, which varied

from place to place.
Law made by Parliament is known as

statute law or legislation or
Parliamentary law.
Eventually, the judges began to follow earlier decisions

(precedents) and the rules gradually became common
throughout all of England and so came to be known as the
common law.
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Law of Equity
The legislation relevant to this course
Common law became restricted due to procedural limitations

and its only possible remedy was compensation which could
lead to unfair outcomes.
Where a citizen was aggrieved by a decision of the courts, or
where no court action was possible, the citizen could petition the
king/queen for relief.
The kings chancellor was empowered to settle these petitions
according to good conscience and from these cases the law of
equity was built up.
Commonwealth legislation (we will focus on in this course)

eg Commonwealth of Australia Constitution Act 1900 (UK)
Acts Interpretation Act 1901 (Cth)
Australian Consumer Protection Law (ACL) 2010
State legislation (relevant to this course)

eg Frustrated Contracts Act 1988 (SA)
Civil Liability Act 1936 (SA)
In time separate courts were established to hear equity cases.

In 1873 the laws of equity and the common law were fused into
one system.
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Three Parliament systems have

influenced South Australian law
UK (mainly pre 1856)
Queen
House of Lords
House of Commons
SA (from 1836)
Governor
Legislative Council
House of Assembly
Cth (from 1901)
Why do we have such a messy

system?
Colonisation
1836
Federalisation
1900
Reconciliation
1992/2008
Governor General
Senate
House of Representatives
13
Origins of Australian law

The doctrine of reception (p23)
Colonies established by England were classified as
either:
i Territory acquired by treaty or military victory, in
which case the existing institutions were largely

retained; or
ii Territory that was terra nullius, i.e., the inhabitants
were not recognised and there was no existing legal
system and so all of the laws of England applied at
the time of conquest.
This second view is how Australia in 1788 was
viewed and so the English legal system of the time
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applied in Australia by default.
14

Native title
In the case of Australia, this meant no recognition
was given to the rights of the Aboriginal people.
In 1992 in Mabo v. Queensland (No. 2) (1992)
(p24) the High Court acknowledged for the first
time that Australia had not been terra nullius and
that common law does recognise a form of native
title to land.
Therefore the High Court made it clear some
aboriginal legal rights did survive European
settlement.
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Origins of Australian law (p28)
Customary law
1828 to 1850
The Mabo decision related specifically to

Aboriginal land rights. It is still the law today.
In Walker v. New South Wales (1994) (p25) the
court discussed the validity of Aboriginal
customary law relating to criminal cases. The High
Court decided that customary tribal criminal law
had been extinguished by the legislation enacted by
the States and Territories. So Aboriginal criminal
or tribal law is still not recognised in Australian
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law today.
The Australian Courts Act 1828 (UK) allowed

for the creation of Australian courts and marked
the beginning of the evolution of Australian law
as from this date English laws only applied in
Australia if there specific particular provisions for
them to do so.
The Australian Constitution Act 1850 (UK)
enabled the colonies to create local law making
bodies (i.e. parliaments), which was the next step
towards legal independence.
18
1836
All English laws
1836
South Australia was proclaimed as a State on 28th
December 1836.
19
1
8
3
6
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What happened in 1836?
SA statutes
1836-1856 - Governors proclamations
1856 SA Parliament established
All the applicable statutes and common

law of England arrived in SA
and remained even if repealed later in UK.
Has power to pass a statute about anything

(peace, order and good government)
but only applies in SA
SA introduced Australias first income tax in
1884.
21
Colonial Laws Validity Act 1865

(Imp.) (p29)
22
1901 Federation
This Act established that the colonies had the right to

amend their own constitutions and that they could enact
legislation without necessarily applying English domestic
law to Australian law, provided that no English statute
directly applied to the colony.
Where an English law contained express provisions that it
was to apply to Australian colonies then it was said that it
had paramount force and so English law could still
override Australian laws.
This paramount force principle continued until the
Australia Act was passed in 1986!
23
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Federation- 1901 (p31)
Commonwealth Parliament (p36)

Legislative Powers:
The Commonwealth of Australia Constitution

Act 1900 (UK) proclaimed the creation of the
Commonwealth of Australia on 1 January 1901.
A new level of federal government was established
- a national parliament with jurisdiction set down in
the Commonwealth Constitution (with some
exclusive powers).
State parliaments had jurisdiction within their own
borders on any matters not specifically reserved for
the Commonwealth (residual powers).
25
Exclusive powers which are exercisable only by

the Commonwealth: sections 52 (trade between the
States), 90 (customs and excise); marriage s51(xxi)
Concurrent powers which are exercisable by
either Commonwealth or State parliaments and are
granted specifically to the Commonwealth (under s
51-some of these powers are exclusive) but remain
within the law-making capacity of the States; and
Residual powers which are all non-exclusive and
non-concurrent powers (eg. education, transport).
26
Commonwealths concurrent powers in

s51
Commonwealth does not have certain

powers
Most of the Commonwealth powers are held

concurrently (shared) with the States eg s51:
Trade and commerce with other countries and
among the States: (i).
Taxation that does not discriminate between
the States: (ii).
Postal, telegraphic, telephonic, and other like
services: (v).
Foreign corporations, and trading or financial
corporations formed within the
Commonwealth: (xx).
27
External affairs: (xxix)
Commonwealth cannot legislate in respect of

religion, section 116.
Section 116 states:
The Commonwealth shall not make any laws for
establishing any religion, or for imposing
religious observance, or for prohibiting the free
exercise of any religion, and no religious test shall
be required as a qualification for any office or
public trust under the Commonwealth.
Does this allow for freedom of speech?
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To change the powers of the

Commonwealth (p40)
State Constitution
To change the Constitution requires a referendum

which is set out in section 128.
Approved by an absolute majority of both Houses of
Parliament,
Referendum (vote) approved by majority of the voters in a
majority of the States, and
The Governor-General gives Royal Assent.
To date there have been 43 proposals to change the
Commonwealth Constitution and only 8 have been
successful.
Constitution Act 1934 (SA)

Gives general (residual) legislative powers
to State Parliament.
Limitations on State powers:
Powers reserved exclusively to
Commonwealth Parliament: s90 (customs
and excise) & s115 (currency)
Commonwealth Constitution.
State cannot tax Commonwealth property:
s114 Commonwealth Constitution.
29
Relationship between Commonwealth &

State legislation
s109 Commonwealth Constitution.
If State legislation is inconsistent with
Commonwealth legislation, the latter
prevails.
State legislation is invalid to the extent
of the inconsistency.
31
30
Expanding Commonwealth power

More and more national business
regulation is coming from the
Commonwealth as the States have
referred their powers to the
Commonwealth.
Example: Corporations; consumer
protection and income tax powers.
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Interpreting legislation
Why do we need rules to interpret legislation?
Approaches include:
Commonsense rules
Rules of statutory interpretation
Lord Evershed in 1961 described statutory interpretation as

the intellectually exacting but spiritually sterilising duty
of interpreting the enacted law.
1. Literal rule; or
2. Golden rule; or
3. Mischief rule.
Different words can mean different things and rarely, if

ever, is legislation drafted with such precision that the need
for interpretation would never arise.
Purposive interpretation required

Extrinsic materials discretion
Presumptions
Maxims
Lord Denning (in a 1949 case) stated that the English

language is not an instrument of mathematical precision
and that drafters are not gifted with divine prescience.
33
34
Commonsense rules to help

interpret legislation
Justice Donaldson in Corocraft Ltd v Pan Am Airways
(1968) stated:
The duty of the courts is to ascertain and give effect to the
will of Parliament as expressed in its enactments. In the
performance of this duty the Judges do not act as
computers into which are fed the statutes ...and from
whom issue forth the mathematically correct answer...they
are finishers, refiners and polishers of legislation which
come to them in a state requiring varying degrees of
polishing.
An Act is to be read as a whole and a word interpreted in

its context.
General words that are not defined are to be given their
ordinary (dictionary) meaning.
Technical words that are not defined are to be given their
technical meanings.
A word used more than once in an Act is assumed to be
used with a consistent meaning throughout the Act.
If a different word is used where the same word could have
been used, it can be assumed a change of meaning is
intended.
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(p107)
1 Literal rule
The courts assume that the meaning and intent
of the legislation is clear and so the courts do
not have to do anything more than give effect
to those words.
The intention of the legislation is derived
from the words in the Act.
Those words are to be given their ordinary
meaning (unless the intention shows
otherwise, eg a word is expressly defined).
The Court is not concerned with the
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consequences of the interpretation.
Literal rule
This approach is defended on the grounds that it is the
responsibility of the author to draft the text carefully and
so if a literal reading reveals gaps in the law or results in an
outcome contrary to the authors intention, then it is the
authors fault, not that of the interpreter.
Higgins J in Amalgamated Society of Engineers v Adelaide
Steamship Company Ltd (1920) 28 CLR 129 stated:
...a statute is to be expounded according to the intent of
the parliament that made it; and that intention has to be
found by an examination of the language used in the
statute as a whole. The question is, what does the
language mean; and when we find what the language
means in its ordinary and natural sense, it is our duty to
obey that meaning, even if we think the result to be
inconvenient or impolitic or improbable.
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2 Golden rule (p108-9)
Lee v Knapp [1967] 2 QB 442 (p109)
The court uses the plain meaning of the words

used in the statute.
However, the Court takes into account the
consequences of a particular interpretation.
If absurdity or inconsistency results, the
Court will modify the ordinary meaning of
the words to overcome that result, Lord
Wensleydale in Gray v Pearson (1857).
However, the rule requires a mistake in the
wording of the Act before it is applied.
The Court can modify by reading words into
the Act or correcting typographical errors.
Section 77 of the Road Traffic Act (1960) (UK)

provides that it is an offence not to stop after an
accident.
Lee was involved in a motor vehicle accident with
Knapp and he argued he did stop after the accident
(momentarily) and then drove off.
The court rejected such a literal approach as it
was absurd (as to stop means to stop long
enough to exchange details and other necessary
information) and so Lee was found guilty of
the offence.
39
40
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3 Mischief rule (p109)
Smith v Hughes 1960 (p109)
The Court is to determine the purpose for the

passing of an Act.
The preferred interpretation will be the one that
advances the purpose of the Act.
Need to look at the overall intention of the
legislation and try to find out what mischief the
Act was trying to remedy.
Offence for a prostitute to solicit in a street.

To try and get around the wording of this law, some
prostitutes were not in the street but began to try and
attract business by standing at their windows or on
their balconies and calling out to passers-by.
Purpose of the statute was to clean up the streets so
people could use them without being solicited by
prostitutes.
Has an offence been committed?
41
42
Fisher v Bell 1961 (p108)
Smith v Hughes 1960 (p109)

Not if apply literal rule- as not standing on street when
trying to attract a customer.
Yes- if apply mischief rule- as the law was aimed to
prohibit this type of conduct.
Offence for flick knives to be offered for sale.

Flick knives were displayed in a shop window with
prices attached.
Offer for sale is an indication of an intention to make
a contract of sale on the terms stated and is
distinguished from an invitation to make an offer.
Purpose of the statute was to restrict the sale of
offensive weapons.
Judge used the mischief rule in this case to give effect

to the legislations purpose, which was to clean up the
streets and make them safer for families to walk down.
43
44
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10/02/2015
Fisher v Bell 1961 (p108)
(p110)
Section 15AA(1)
Court said NO- display in window is just an

invitation to treat
Court used literal rule to achieve result it wanted
In the interpretation of a provision of an Act, a

construction that would promote the purpose
or object underlying the Act (whether that purpose
or object is expressly stated in the Act or not) shall
be preferred to a construction that would not
promote that purpose or object.
45

Section 15AB(1)
Court may consider extrinsic materials
(a) to confirm that the meaning of the provision is
the ordinary meaning
(b) to determine the meaning of the provision
when:
46
Statutory interpretation
Courts are cautious in using s15AB.
Often ends up shifting the problem of interpreting
words in a statute to interpreting words in the extrinsic
material.
(i) the provision is ambiguous or obscure; or

(ii) the ordinary meaning leads to a result that is
manifestly absurd or is unreasonable.
47
48
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10/02/2015
Presumptions
Maxims (p111-12)
Presumptions are staring points in the law (a default

position) but they can be rebutted by clear evidence to
the contrary.
There are a number of presumptions that apply to
contract law and we will look at these soon.
There are a number of these aim is to help make

interpreting words easier.
Example
General words at the end of a list of specific words
will be read down to the same meaning as apply to the
specific words- ejusdem generis (of the same kind or
class).
e.g. If a law stated, no person was to have in their
possession heroin, cannabis, cocaine or any other
drug.
Would a person be guilty of this offence if they were in
possession of a tablet of aspirin or cold tablet?
49
50
Judge made law-common law
Maxims
In applying this ejusdem generis maxim, the term any
other drug would be interpreted to mean a drug
falling within a class of drugs like the drugs listed
before it (heroin, cannabis, cocaine) and so aspirin or
cold tablets would clearly not fall within such a class.
The other drugs- heroin, cannabis and cocaine are all
illegal and/or addictive whereas aspirin and cold tablets
are not illegal nor addictive.
Topics:
Historical background
Court hierarchy
The doctrine of precedent (also called stare decisis)
Court cases used as authority to decide later cases
involving similar facts.
All cases in textbook are to be treated as binding
precedents.
Parties to a Court case
51
52
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Common law-English tradition
Civil law-European tradition (p12)
(see discussion on pages 14-15)

Although parliament is supreme in our liberal
democracy system it has chosen to not be the
only source of all law.
It has left intact much of what is called the
common law.
Most European countries, such as Germany,

Spain, France and Italy operate under a civil
law system.
Rules under a civil law system appear in the
form of a Code, such as the Napoleonic Code.
Judges in a civil law system merely interpret
and apply the statutes and codes. They do not
create law.
53
Judge Made Law-Case Law

Background to Australian tradition
Common Law
Originally Courts heard only contract, tort and recovery of
property disputes (needed a cause of action).
Courts offered only limited remedies, such as damages and
recovery of property.
Law of Equity
Overcame deficiencies of the Common Law by supplementing it
with a body of rules that provided justice according to equity
and good conscience.
More appropriate remedies were given.
Fusion of Common Law and Equity in 1873 (so now one system)
55
54
Hierarchy- State courts
High Court
Supreme Court
District Court
Magistrates Court
Specialist Courts include:
Environment Resources & Development Court
Licensing Court
Industrial Relations Court
In SA the Magistrates Court has jurisdiction to hear matters
involving personal injury claims arising from a motor vehicle
accident up to $80,000. There is also a small claims division that
hears claims up to $6,000.
56
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Hierarchy-Federal Courts (p50)
Doctrine of Precedent (p94-101)
High Court
Federal Court
Family Court specialist Court
Federal Magistrates Court
57
Other aspects of the doctrine-p101

Ratio decidendi reasons for a decision- binding.
Obiter dictum observations not necessary to the
decision (things said by the way)- persuasive only.
Reversed higher Court changes the decision of a lower
court and upholds the appeal.
Overruled higher Court changes the law by setting a
new precedent.
Distinguished not applying a precedent because the facts
of a case are sufficiently different to the precedent.
Adopted- a court follows an earlier decision of the same or
higher court.
59
Rules of precedent include:

Court must give reasons for its decision (ratio
decidendi)
Court must follow and apply a decision of higher
Courts in the same jurisdiction in cases involving
similar facts.
Courts at the same level are not bound to follow and
apply their own previous decisions, although they often
do. The Magistrates Court is not a court of record and
so its decisions do not get published.
Decisions of the highest court in a jurisdiction are final.
Decisions of Courts in another jurisdiction are not
binding authority, but may be persuasive authority.
(But all cases in textbook and for this course are to
58
be treated as equally binding).
Parties to a Court case (chapter 3-p76)

Parties are referred to differently depending on
whether case is a first hearing or an appeal.
Plaintiff - the person starting a civil action.

Defendant - the person defending a civil action.
The plaintiff has the burden of proof (onus) to
prove the case on the balance of probabilities.
Case name lists first the party bringing the action.
60
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Parties to a court case
Parties to a Court case-p77

For appeals:
Appellant - a person appealing against a previous
decision and who can be either the plaintiff or
defendant from the first case.
Respondent - the party who was successful in the
first action.
AvB
natural persons
corporations
governments (Crown)
61
Adversarial system (p77-79)
62
Criminal cases
Features of the adversarial system

Two opposing sides who argue their case in a court
presided over by a neutral third party (e.g. Judge).
One side will win; one side will lose
In a civil case parties prove their case. on the balance
of probabilities.
In a criminal case the Crown proves the case beyond
reasonable doubt.
63
For criminal matters:

Crown - represents the state in a criminal action
against an accused.
Accused - the person against whom a criminal
action is brought by the State.
The Crown has the burden of proof (onus) to
prove the case beyond reasonable doubt.
64
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10/02/2015
Approach to answering a legal

problem
Are criminal and civil trials different?

Criminal
Government
Civil
Citizen
Outcomes
Fine/Jail
Money
Burden
of proof
Prosecution
Plaintiff
Standard
of proof
Beyond
reasonable
doubt
Balance
of
probabilities
Initiator
65
IRAC APPROACH
Basic steps:
Read the facts and Determine the
Relevant Issue.
Identify the Relevant Law that might
apply and Identify the laws required
elements.
Apply the law to the relevant facts.
Reach a Conclusion
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COMMLAW 1004 Lecture slides-Week 1

Lecture 1 The Legal System

Textbook chapters 1-4

Start in Week 2 (next week- not this week)

Statutes - rules made by parliaments

Validity and conflict of legislation with court rulings

Law is generally defined (p6) as:

The norms that regulate our behaviour in a

COMMLAW 1004 Lecture slides-Week 1

Justice and the law

A concept that is closely associated with law is

Laws do not change the heart but they

It is not a product of intellect but of spirit. The nearest we can

Martin Luther King

Characteristics of a legal system

COMMLAW 1004 Lecture slides-Week 1

Common Law/Statute law

Law made by the Courts and that has been

The judges initially applied local customs, which varied

Law made by Parliament is known as

Eventually, the judges began to follow earlier decisions

The legislation relevant to this course

Common law became restricted due to procedural limitations

Commonwealth legislation (we will focus on in this course)

State legislation (relevant to this course)

In time separate courts were established to hear equity cases.

COMMLAW 1004 Lecture slides-Week 1

Three Parliament systems have

Cth (from 1901)

Why do we have such a messy

Origins of Australian law

which case the existing institutions were largely

Origins of Australian law

COMMLAW 1004 Lecture slides-Week 1

Origins of Australian law

Origins of Australian law (p28)

The Mabo decision related specifically to

The Australian Courts Act 1828 (UK) allowed

Origins of Australian law

All English laws

COMMLAW 1004 Lecture slides-Week 1

What happened in 1836?

All the applicable statutes and common

Has power to pass a statute about anything

Colonial Laws Validity Act 1865

This Act established that the colonies had the right to

COMMLAW 1004 Lecture slides-Week 1

Federation- 1901 (p31)

Commonwealth Parliament (p36)

The Commonwealth of Australia Constitution

Exclusive powers which are exercisable only by

Commonwealths concurrent powers in

Commonwealth does not have certain

Most of the Commonwealth powers are held

Commonwealth cannot legislate in respect of

COMMLAW 1004 Lecture slides-Week 1

To change the powers of the

To change the Constitution requires a referendum

Constitution Act 1934 (SA)

Relationship between Commonwealth &

Expanding Commonwealth power

COMMLAW 1004 Lecture slides-Week 1

Lord Evershed in 1961 described statutory interpretation as

Different words can mean different things and rarely, if