Precedent in Australian law 

Australian legal reasoning depends heavily on precedent, but students often overstate what precedent does. A case is not binding simply because it is famous, and not every sentence in a binding case is itself binding.

Binding and persuasive authority

The classic first distinction is between binding and persuasive authority. Binding authority usually depends on the relationship between courts in the hierarchy and on whether the earlier decision actually determined the point now in issue. Persuasive authority may still be important, but it does not compel the later court in the same way.

Ratio decidendi and obiter dicta

Students regularly encounter the terms ratio decidendi and obiter dicta. The ratio is the legal reasoning necessary to the decision. Obiter comments may still be valuable, especially from an apex court, but they do not automatically carry the same binding status.

The practical difficulty is that the ratio is not always written out as a neat sentence. Students often have to reconstruct it by asking what legal proposition was necessary to justify the outcome on the facts actually before the court.

Why the issue matters in Australian doctrine

The High Court has emphasised disciplined attention to authority. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, the Court strongly criticised lower-court reasoning that departed from settled authority without adequate basis.¹ The case is often taught not because it answers every question about precedent, but because it reminds students that doctrinal change has institutional pathways.

Reading precedent well

A useful method is to record four items for every case:

1. the issue the court had to decide;
2. the material facts;
3. the legal proposition necessary to the outcome; and
4. any broader discussion that may be persuasive but not strictly binding.

That method helps students avoid treating a memorable sentence as if it were the whole rule.

Precedent is not mechanical

Precedent does not remove judgment. Lawyers and judges still argue about how broadly or narrowly a prior case should be read, whether it is distinguishable, and whether the later dispute raises a materially different issue. That is why careful case reading matters so much.

Vertical and horizontal precedent

Vertical precedent concerns hierarchy. A lower court follows the binding decisions of a higher court in the same hierarchy, and Australian courts treat High Court decisions as authoritative across the country. Horizontal precedent concerns a court's treatment of its own earlier decisions or decisions of courts at the same level. It is usually more flexible, but it is not casual.

A state trial judge does not treat a High Court decision as a helpful suggestion. A single judge of the Federal Court will usually follow a decision of another single judge unless convinced it is plainly wrong, but the precise rule depends on the court and context. An intermediate appellate court must handle both its own decisions and High Court authority with particular care.

Following, distinguishing and overruling

Following means applying the same rule because the material facts and legal issue are sufficiently close. Distinguishing means accepting the earlier authority but explaining why a material difference changes the result. Overruling is different: it means a higher court says the earlier legal rule should no longer be treated as correct.

Reversing is also different. A judgment is reversed when an appellate court changes the result in the same litigation. That does not always mean every statement of principle in the lower court judgment is overruled for all future purposes, but it is a warning to check the appellate reasons carefully.

Majority, plurality and dissent

When reasons are fragmented, count agreement in reasoning, not just agreement in result. A plurality may produce no single majority path. In that situation, a student should avoid pretending the case is simpler than it is. State which judges said what and explain the narrowest proposition that can responsibly be drawn.

Dissenting reasons are not the ratio. They can still be valuable when explaining competing arguments, later developments or areas of uncertainty.

Whether that rule has one requirement or two is unsettled. In Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530² the Full Court of the Federal Court — Lee, Anastassiou and Stewart JJ — set out the two readings Campbell JA had identified in Zotti v Australian Associated Motor Insurers Ltd [2009] NSWCA 323 and adopted the narrower: "The High Court has not definitively settled this issue, but it is our view that this approach is correct. That is, that there are two requirements, namely that the dicta conform with long-established authority and that they are the dicta of a majority of the High Court." Note what that is — an intermediate appellate court's view, on a question it says the High Court has not settled. Cite it as that, not as the rule.

A 2025 Full Court decision sharpens both halves. Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131³ adopts the two-requirement reading — dicta must "conform with long-established authority" and be "the dicta of a majority of the High Court" — and adds the trap students fall into: "it is not permissible to construct a purportedly binding ratio by adding reasons of a dissentient to one or more of the majority to form a majority of judges". Counting judges who agree on the outcome is not finding a majority on the reasoning.

The companion rule -- about departing from ANOTHER intermediate appellate court -- was restated in Lendlease Corporation Ltd v Pallas [2025] HCA 19⁴. Edelman J said at [109] that such a court "should not depart from the ratio decidendi of an earlier intermediate appellate court decision in another jurisdiction" on Commonwealth or uniform national legislation unless persuaded it is plainly wrong. That is one Justice of seven, and the Court did not disturb the rule.

Self-check

Before using a precedent, ask whether it is binding, persuasive or illustrative; whether it has been followed or distinguished; whether the passage is ratio or obiter; and whether your facts make the analogy honest.

For more detailed case-method work, read Ratio, obiter and material facts, alongside reading cases with purpose and legal reasoning and problem solving — doctrinal discipline and practical method are both needed here.