Farah Constructions Pty Ltd v Say-Dee Pty Ltd
High Court of Australia · 2007
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22
A Court of Appeal changed a rule the High Court had discussed but never squarely decided. How free is an intermediate court to do that?
AN INTERMEDIATE COURT HAS READ THIS RULE AS HAVING TWO REQUIREMENTS, NOT ONE, AND THE HIGH COURT HAS NOT SETTLED IT. Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530, Lee, Anastassiou and Stewart JJ. Their Honours set out the two possible readings of Farah: "one reading is to treat it as saying that it is wrong for an intermediate court of appeal to depart from 'seriously considered dicta' of a majority of the High Court (simpliciter), and ... another reading is to treat it as saying that there is an additional requirement, namely that the 'seriously considered dicta' concern a topic on which there is a long-established line of authority". They adopt the second: "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."
THE QUALIFICATION THEY ATTACH TO THEIR OWN CONCLUSION MATTERS AS MUCH AS THE CONCLUSION: "The High Court has not definitively settled this issue." So this is an intermediate appellate court's reading of what the High Court said about intermediate appellate courts -- a reading OF this rule, not an instance of it. Hill v Zuda Pty Ltd [2022] HCA 21 at [26] is express that Farah's two principles "are distinct": the first concerns "the relationship between an intermediate appellate court and this Court", the second "the relationships between intermediate appellate courts and between intermediate appellate courts and trial judges". Do not run them together. Their Honours note the same two readings had been identified in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603, and that Heydon J in Pape v Commissioner of Taxation (2009) 238 CLR 1 took the two-requirement view. WHAT A STUDENT SHOULD DO: do not assert that seriously considered majority dicta bind full stop. Say that they bind, and that on the Full Federal Court's reading they must also conform with long-established authority -- and that the point is open in the High Court. An answer that states the single-requirement version as settled has missed a live argument that is available to the party wanting to depart. Aristocrat independently corroborates the two-requirement reading and its attribution to this judgment at [54].
REAFFIRMED IN 2025, AND WITH TWO FURTHER POINTS WORTH AN EXAM. Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131. On the requirement: Farah at [134] is to the effect "that an intermediate court of appeal should not depart from long-established authority and seriously considered dicta of a majority of the High Court", and "[i]n applying that statement, it must be borne in mind that there are two requirements, namely that the seriously considered dicta conform with long-established authority and that they are the dicta of a majority of the High Court", citing Harvard Nominees at [54] as "the better reading of the passage in Farah".
FIRST FURTHER POINT, AND IT IS THE ONE STUDENTS GET WRONG: "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", citing Federation Insurance Ltd v Wasson (1987) 163 CLR 303 at 314. So counting judges who agree on an outcome is not the same as finding dicta of a majority; you need shared reasoning. SECOND: the Court's own catchwords record that "only unanimous or majority decisions of High Court have binding authority", that here there were "no seriously considered dicta of a majority in High Court decision", and that there was a "'compelling reason' to depart from Full Court's reasoning, being the High Court's criticism". That last phrase connects to the other Farah rule: the threshold for departing from another intermediate court's decision, where "compelling reason" and "plainly wrong" are both the Court's own expressions of the same standard -- Hill v Zuda Pty Ltd [2022] HCA 21 at [25].
THE THRESHOLD'S WORDING IS UNDER PRESSURE FROM ONE JUSTICE, AND THE COURT EXPRESSLY DECLINED TO TOUCH THE RULE. Lendlease Corporation Ltd v Pallas [2025] HCA 19, a bench of seven: Gageler CJ, Gordon, Edelman, Steward, Gleeson, Jagot and Beech-Jones JJ. EDELMAN J at [109] restates this rule and adds a preference: a trial judge or later intermediate appellate court "should not depart from the ratio decidendi of an earlier intermediate appellate court decision in another jurisdiction on the interpretation of Commonwealth legislation, uniform national legislation, or the common law unless the trial judge or later intermediate appellate court considers the earlier decision to be plainly wrong or, in language that should be preferred, unless there is a compelling reason to do so". Note what else that sentence does: it describes the rule itself as one "established by this Court in seriously considered obiter dicta", so Farah's two rules are connected -- the second is an instance of the first. He applies the compelling-reasons language at [119], and at [120] sets out questions about the rule's scope that were "not fully argued in this Court", including whether it reaches an intermediate court departing from its OWN earlier decision rather than another jurisdiction's.
WHAT THE JOINT REASONS OF GAGELER CJ, GLEESON AND JAGOT JJ DID. At [32] their Honours put the rule aside rather than develop it: "[t]he question for this Court, in contrast, is not whether Wigmans v AMP Ltd is plainly wrong", and the fact that the Court of Appeal faced a Full Federal Court decision holding an earlier Court of Appeal decision plainly wrong "provides no occasion to add to or modify the rules of precedent applicable between intermediate appellate courts established in Australian Securities Commission v Marlborough Gold Mines Ltd and Hill v Zuda Pty Ltd". At [33] the question they answer is one of statutory construction. So on those reasons the rule this proposition states is undisturbed, because their Honours said there was no occasion to add to or modify it -- not because the Court affirmed it. WHAT A STUDENT SHOULD DO: either expression is the Court's. In Hill v Zuda Pty Ltd [2022] HCA 21 at [25] the Court -- unanimously, Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ -- states the second principle as departure only where the interpretation is "plainly wrong" "or, to use a different expression, unless there is a compelling reason to do so". So Edelman J at [109] is preferring one of two accepted formulations rather than proposing a new test, and an answer using either is on the Court's own words. The rule's edges -- particularly the same-court case -- are expressly open on the Court's own account.
What happened?
Say-Dee and Farah Constructions were in a joint venture to redevelop a property. When it failed, Say-Dee alleged that Farah's principal had misused information and that related parties held property on constructive trust. The New South Wales Court of Appeal found for Say-Dee, and in doing so reworked the first limb of Barnes v Addy along lines the parties had not argued.
What did the Court decide?
The appeal was allowed. Beyond the substantive points, the High Court held that the Court of Appeal had gone wrong in method: it had changed the law without notice to the parties, without supporting authority, and against what a majority of the High Court had said on the question.
Proposition
What is the principle?
Two, and they are why this case is cited far outside its subject matter.
On dicta: seriously considered dicta of a majority of the High Court are not ordinary commentary that a lower court may set aside; an intermediate court that departs from them without authority is in error.
On uniformity: intermediate appellate courts and trial judges should not depart from a decision of an intermediate appellate court in another Australian jurisdiction on the interpretation of Commonwealth or uniform national legislation unless convinced that decision is plainly wrong.
Why does this case matter?
It is the case a student is most likely to meet outside its own field. The joint venture and the constructive trust are incidental; what gets cited is a passage about how courts are supposed to treat each other's reasoning, and it appears in argument across every area where a uniform statute operates differently in two states.
Its practical effect is to narrow the room a lower court has to innovate, and you can see that in how the argument now runs: counsel inviting a state court to go its own way on a national statute spends the argument on the strength of the other court's reasoning rather than on whether their own court is free to differ.
Note also how the Court framed the error — the Court of Appeal decided a point the parties had not argued. That is a procedural fairness complaint as much as a precedent one, and the two are worth keeping distinct when you read the passage.
Exam and application relevance
Where a question turns on a High Court statement that was not strictly necessary to the outcome, do not dismiss it as obiter and move on. Ask whether it was seriously considered and whether it carried a majority. And check what kind of decision the interstate authority is: the obligation attaches to a decision of an intermediate appellate court, not to a single judge and not to that court's own obiter. It is not confined to statute — because there is one common law of Australia rather than one per jurisdiction, the same discipline applies to non-statutory law. An answer that quietly prefers the local decision has skipped the step this case is about.
Check your understanding
A single judge finds a South Australian appellate decision on a Commonwealth Act unpersuasive. What must they establish before declining to follow it?