Research Topics: Legal Framework In Australia

src=”http://pagead2.googlesyndication.com/pagead/show_ads.js”> MODULE 1: WHAT IS LAW AND THE AUSTRALIAN LEGAL FRAMEWORK Introduction Most students undertaking Business Law 1 do not intend to become practising lawyers. However, to be successful managers they will need to be able to recognise legal principles and the context in which they arise, in their daily business lives. To truly understand legal principles it is necessary to look to their source. This is important because it gives students a framework from which they can base their application of the law. Where did the set of binding customs, rules and regulations applied in Australia and many other countries come from? Are they still binding, or can they be changed? What is the source of all legal power in this country? Is it similar to other countries? Also, in this course, we analyse legal cases which give an understanding of legal principles and their application. For a good introduction to legal type thinking, read Appendix A (i) “A Student’s Guide to Legal Analysis” by McFadden. Managers also need to understand the important differences between various entities in which business is conducted. From the sole trader through to the trading trust and partnership, the manager must have knowledge of the similarities between these structures and how they differ. Different types of business entities have evolved and are still evolving in response to various business aspects. Many have been structured for taxation purposes while others are structured to take advantage of the legal rights and protection afforded them, for example, limited liability of officers and members of body corporates. It is therefore fundamental in business law to have an understanding of the legal nature of business associations. This module introduces students to the legal environment in which a business operates and examines the authoritative sources of law in Australia. We will look at the Australian Constitution, which sets out the way in which a law may be created, maintained and shared in Australia. It is important to understand this document, as it provides a working application of a legal system similar to, but in many respects, a melding of governmental systems and ideologies from other countries. We will also consider the common law system and the development and role of equity law. In this module, a classification of law is undertaken since in business it is not possible to solve a legal problem unless you are able to classify the areas of law that impacts on your problem. We will identify law in private and public matters and see how law has been classified into separate areas such as contract, tort and crime.   Objectives On completion of this module, you will be able to: • Have an understanding of what is law and other legal systems; • Understand how the Australian legal system works, the interplay of statutory and case law and be able to classify • Identify the areas of law that impact on any business law problem.   2 GSN412: Business Law 1   Texts Gibson, A. & Fraser, D. 2005, Business Law, Pearson Education Australia Pty Ltd, Frenchs Forest, NSW. [“G&F 2005”]. The required reading is G&F2005 but references to Gibson & Fraser (2003) have also been included to show the passages from the earlier edition. For students reading G&F (2005), it is NOT necessary to also read G& F (2003)   Reference texts Ardagh, A. 2001, Business Law of Australia Workbook, 10th edn, Butterworths, Sydney (an accompanying workbook for Vermeesch & Lindgren). Butterworths Business and Law Dictionary, 2002, 2nd edn, Butterworths, Sydney Caffrey, B.A. (1991) Guidebook to Contract Law in Australia. North Ryde: CCH. Chisholm, R. C. & Nettheim, G. 1997, Understanding Law, Butterworths, Sydney. Griggs, L., Clark, E., & Iredale, I. 2003, Managers and the Law, 2nd end, Lawbook Company, Sydney. Heilbronn, G. N., Kovacs, D., Latimer, P., Nielsen, J. & Pagone, T. 1996, Introducing the Law, 5th edn, CCH Australia, North Ryde, NSW. Heffey, P., Paterson, J., Robertson, A. 2002, Principles of Contract Law, Lawbook Co, Sydney Latimer, P. 2004, Australian Business Law, 23rd edn, CCH, North Ryde. Pendelton, W. & Vickery, R. 2000, Australian Business Law—Principles and Applications, 3rd edn, Pearson Education Australia. Pentony, B., Graw, S., Lennard., J & Parker, D. 2003 Understanding Business Law, 3rd edn, Butterworths, Sydney. Sweeney, B & O’Reilly, J. 2001, Law in Commerce, Butterworths, Sydney Turner, C. 2003 Australian Commercial Law 24th edn Lawbook Co, Sydney Vermeesch, R. B. & Lindgren, K. E. 2001, Business Law of Australia, 10th edn, Butterworths, Sydney. Waller, L. 2000, Derham, Maher, Waller: An Introduction to Law, 8th edn, LBC Information Services, Sydney.     Module 1: What is law and the Australian Legal Framework 3   Topic 1 Required readings G&F (2005) Ch 1-31 1.1 What is Law? Additional Readings Griggs et al. (2nd edn) Ch 1 (pp3-5; 14-15). Horrigan, B. “Adventures in Law and Justice” [2003] Sydney Ch 1 McFadden, P. “A Student’s Guide to Legal Analysis” 1.2 Major Legal Systems Additional Readings Carrigan, F. “Globalisation and Legal Transnationalisation” (1999) 10 ACJL 122 David, R and Brierley, J. “Major Legal Systems in the World Today” [1985] London Kamural, B. “Reforming Economic Law in the Asia Pacific Region” (1996) 6 AJCL 93 1.3 The Australian Constitution Additional readings Griggs et al. (2nd edn) Ch 1 (pp14-20; 22-24). Derham, Maher & Waller (8th edn) ch. 1, pp. 4–8, ch. 5, pp. 69–73, 82–83. Vermeesch & Lindgren (10th edn) ch. 2, paras 2.21–2.30, 2.48–2.54, 2.59–2.63; ch. 3, para. 3.55. 1.4 Sources of law Additional readings Griggs et al. (2nd edn) Ch 1 (pp14-20; 22-24). Derham, Maher & Waller (8th edn) ch. 2, pp. 25–34, 37–39, ch. 4, pp. 62–65. Vermeesch & Lindgren (10th edn) ch. 1, Introduction, paras 1.1–1.4, 1.30–1.45, ch. 2, para. 2.29. Latimer (21st edn), ch. 1 [1-180] – [1-420]. Queensland Legal Handbook [2005] Ch 1 1 G& F (2003) Ch 1-3   4 GSN412: Business Law 1 1.5 Classification of law Additional readings Derham, Maher & Waller (8th edn), chs. 5 and 6. Vermeesch & Lindgren (10th edn), ch. 15, para. 15.25. 1.6 Alternatives to Legal Proceedings Additional Readings Latimer [23rd edn] pp47-55 Turner [24th edn] pp47-54 Activity Check out the GSN412 OLT site for important links to web sites that will assist your understanding of this module.     Module 1: What is law and the Australian Legal Framework 5 1.1: What is Law? According to Griggs, Clark and Iredale (see pp3-5 and 14-15), laws have been found necessary to regulate social conduct in order to protect individuals and their property. This system of regulation is called a legal system and the regulations themselves are called laws. The legal system is designed to avoid conflict but where conflict arises, to then have a means of impartial settlement to promote social order. Griggs, Clark and Iredale recognise that legal rules and moral rules can overlap. For instance, contract law can be seen as enforcing a moral rule of keeping promises. They draw a distinction between law and justice (p 15) and show how difficult it can be to apply “justice” in practice in view of different individual view as to what justice means. For an interesting and thought provoking discussion on this issue of the law and justice, see the excerpt from Horrigan, Adventures in Law and Justice (Appendix A(ii)). He sees a legal system as having three senses: (a) As a set of legal rules for decision making within the legal system; (b) As one form of community governance, regulation and standard setting; and (c) As part of the institutionalised constitutional (government) framework. He further notes that the legal system certainly sets legal standards of justice and fairness but that we need to recognise that there are different views about the legal system. As he says: (a) Some view law as the formal embodiment of justice (even if imperfect); (b) Some view it as a means of imposing law and order as well as social control; (c) Some view law as the primary form of regulation, guidance and authoritative dispute resolution; (d) Some see it as the ultimate source of authority in the state; (e) Some see the law as a political mechanism protecting interests and position; and (f) Others view it as giving justification for state sanctions. Of course, these views are not exclusive and it is possible to hold some or all of these views. Horrigan’s point is that “Law defies any once-and-for-all definition which all . …accept”. In discussing law and social justice, Horrigan says that there are five fundamental questions: 1. What are the elements of a just society and what are the foundations of a society devoted to justice for all? 2. How do we identify and distinguish what is law from what is not law but is grounded in moral or other behaviour norms? 3. How do we justify state sanctions to enforce the law if its application is disproportionate to some social groups and is disputed, non-consensual and disadvantageous?   6 GSN412: Business Law 1 4. To what extent are standards of law and justice responsive to social and economic conditions in a wider society? 5. What part of government is best equipped to make particular kinds of decisions and how are these decisions influenced by institutional considerations as well as legal regulations? Answering these questions requires an understanding of how law and justice are linked within a liberal democracy like Australia. The values of a liberal democracy include: • The separation of government power; • Representative democracy; • Responsible democracy; and • Equality before the law But how do we balance up competing social and economic interests in ensuring a just society? Which of the three competing philosophies outlined by Horrigan do you feel best addresses this issue, namely: 1. Social Contract Theory Basic liberties and opportunities are given priority over other socio-economic considerations. The status of majority rule in a democracy must take account of underlying notions of equality and guaranteeing basic rights; 2. Utilitarian Theory This seeks the greatest benefit for the greatest number and so, some disadvantage might be tolerated in a trade-off for overall costs and benefits; or 3. Natural Law Theory This theory believes in universal fundamental values, human good and rights which are independent of any social contract or utilitarian theories, and which must be met in order to ensure and just society. Let’s consider some major legal systems and you should also consider the relevance of these theories to them.   Module 1: What is law and the Australian Legal Framework 7 1.2: Major Legal Systems Australia’s legal system is derived from Britain. It is a heritage we share with many other common law countries that were originally part of the British Empire including the United States. Although there is a common heritage, there are still significant differences between laws in Australia, New Zealand, Canada, USA, India, Singapore, Malaysia, South Africa, Ireland, Jamaica, Nigeria, Zimbabwe etc to name but a few. There are however, many other legal systems including Romano-Germanic law (which predominates in Europe and Scotland) and other national systems including those in always independent nations such as China and Japan, and those in countries which have become independent from former colonial powers and have since adopted their own unique national system even though it may be based on their traditional legal heritage eg. Malaysia (British), Singapore (British), Indonesia (Dutch law) and the Philippines (Spanish law and then American law) etc. See the article Major Legal System in the World Today, by David and Brierley, for an overview of the different legal systems. [Appendix A (iii)]. There are a number of “legal families”. 1. Romano-Germanic Law This is the legal science developed from the Roman Empire civil law. Rules are conceived as rules of conduct related to justice and morality. It developed in Europe from legal scholars (particularly in the universities) setting out doctrines, which were applied administratively. These doctrines were adapted and extended through European colonisation. A distinctive feature of this system is codification, that is, setting out the doctrines or laws in codes such as the Napoleonic Code. 2. Common Law This law developed in England and in countries whose laws are modelled on English law. It was formed primarily by judges in relation to specific legal disputes and so, it deals also with those matters relevant to a trial such as the rules of evidence and procedure. The western law tradition includes both Romano-Germanic law and the Common Law. The close contact between European countries and England, particularly in trade has led to some common developments. For instance, some practical examples are: • English Law regarding cheques has been adapted in other Romano – Germanic systems; • The concept of limited liability companies (a feature of our system) was developed in Germany; and • The use of a suspended term of imprisonment came from Belgium.   8 GSN412: Business Law 1 3. Socialist Law This is the third major legal system and originated in the former USSR. It has been a model for other socialist regimes although there are substantial differences between them in view of their unique social systems. Socialist laws rely on the paramountcy of the legislature that is, popular will which is often expressed by the entrenched ruling political party. In socialist systems, the law is primarily public law that is, the rules of conduct are mandated by the state and private law - the law where individuals are able to regulate their behaviour and enforce individual rights eg contract law or tort law – is limited. See further Module 5, part 5.2.30 for the article on Chinese contract law (Appendix xiii) which shows the reliance on state directed concepts and administrative controls. 4. Muslim, Hindu and Jewish systems These systems relate law to a religious ideal of behaviour. The model law is linked to religious beliefs and a recent example of this is Iran where parliamentary made law is subject to veto by a council of religious deputies. The overriding principle is that “true law” is to be found elsewhere than in legislation, custom or judicial decisions. 5. China and Japan In China and Japan, there is an emphasis on social harmony and the western idea that law is necessary for good social order, is not accepted to the same degree. The citizen’s duty to conform socially is distinct from any legal requirement and indeed, any legal compulsion in enforcing this is seen as unnecessary. More important than legal action to enforce rights, is social harmony with an emphasis on reconciliation and mediation. These concepts are, however, changing due to globalisation and the extension of western economic and social thought. A knowledge of different legal systems is important because the increasing trend towards globalisation means that in the future, if not already, that you are likely to engage in international business either from Australia or from overseas countries. In modules 3 and 4, we will look at contract law and then, in module 5 in relation to the sale of goods and the international sale of goods contract. The trend towards globalisation has led to a number of reforms in economic law in the Asia-Pacific region. The increasing trend towards globalisation is an incentive to reform economic legal systems to accommodate international trade. The article by Bahrin Kamarul [see Appendix (iv)] outlines those trends leading towards law reform and economic development in the Asia-Pacific region. His view is that although Asian states have borrowed extensively from western legal systems and have incorporated international norms and standards in their laws, there are still cultural differences which means that there are still differences between the way those laws will operate within those Asian societies as compared with western countries. In dealing with Asia, he states that consideration needs to be given not only to the differences in legal regimes of the various Asian countries but also, the differences in social and cultural diversity within those nations which affect how laws are applied. The article by Frank Carrigan, Globalisation and Legal Trans-Nationalisation [see Appendix (v)] also examines the impact of globalisation on international business laws. His view is that the role of multi-national corporations (or transnational corporations) in the three major trading blocks of the European Union,   Module 1: What is law and the Australian Legal Framework 9 North America and Japan means that their competition for economic supremacy inhibits the movement towards harmonisation of international trade and business laws. He sees globalisation as being spear-headed by the explosive growth of giant firms. He points out that the top 15 global corporations have a combined income greater than that of over 120 companies. Further, the 500 largest multi-national corporation control over two thirds of world trade and that nearly half of world trade concerns transactions conducted within 180 multi-national corporations. According to Carrigan, multi-national corporations exercise sufficient economic power to ensure that legal reform in developing countries takes account of their interests. This can be done in two ways either through the need to preserve foreign investment made in the national economy by multi-national corporations or alternatively, by the influence which multi-national corporations exercise on international agencies including the World Trade Organisation and the International Monetary Fund. Interestingly, Carrigan sees alternative legal systems such as international arbitration (particularly the International Chamber of Commerce Court of Arbitration) as meeting the needs of multi-national corporations in bypassing national courts in favour of trans-national arbitral bodies applying rules based on the customary law of international business practices as employed by multinational corporations. Although Carrigan identifies these trends, he does not, however, consider whether this is a necessary response from international business to set up a common regime in the interests of economic efficiency for international trade to avoid being subject to a variety of restrictions from differing national laws which would increase costs. In module 5, we will look at this topic further in relation to international sales of goods. See also, the article by Shum [Appendix (xiii) for Topic 5] which sets out some major differences between contract law in Australia and China and we can examine this in seeing how agreed international rules can be used to overcome different national legal systems. Let us look, however, at the Australian Legal System.   10 GSN412: Business Law 1 1.3: The Australian Constitution Australia is a federal system. What this means is that a number of independent states (colonies) all agreed to give up some of their individual powers to a central government. In Australia, the six colonies (which are now the six states) referred their powers to the Commonwealth Government in 1901. This grant of power is set out in a document, the Australia Constitution. The States also have their own constitutions – these set out the powers of the State Governments to govern and make laws in their own areas. 1.3.1 Introduction Students should study this topic in conjunction with in the materials in Appendix A (vi) to (x). For background information about the Constitution, see House of Representative’s web site: http://www.aph.gov.au/house/info/infosheets/index.htm Parliament of Australia, Senate web site—The Australian Constitution: http://www.aph.gov.au/senate/general/constitution/ Also, see OTL site, Instructor Recommended Sites. The Australian Constitution is contained in an Act of the British Parliament. The name of the United Kingdom Act is Commonwealth of Australia Constitution Act 1900 (UK). The Constitution provides for the arrangement of the Australian legal system and prescribes the powers of its various organs. In understanding the legal system it is necessary to understand the concepts of the ‘separation of powers’ and the ‘division of powers’ (they should not be confused). 1.3.2 Separation of powers between the legislature, executive and judiciary 1.3.2.1 Overview ‘Separation of powers’ refers to the method by which control of the legal system is separated between three ‘organs’ of government: the legislature that makes the law, the executive that administers the law, and the judiciary that applies and interprets the law. The legislature (or parliament) makes law in the form of Acts of parliament (or statutes). The Commonwealth parliament in Australia is composed of the Queen and two houses of parliament. The federal executive in Australia is composed of the Governor-General, the Federal Executive Council (also called the Cabinet), State departments, public servants, administrative boards and tribunals. The Cabinet is made up of Ministers who are in charge of the various government departments. The judiciary is another name for the courts.   Module 1: What is law and the Australian Legal Framework 11 Under a strict separation of powers, the three organs of government should be independent of each other; each organ should exercise one function only. One person should be a member of one organ only and one organ should not exercise the function of another organ. However, under the Australian Constitution, there is not a strict separation of powers, e.g. Ministers who form the Cabinet must be elected members of the legislature (s 64). There is also a blurring of functions. With respect to subordinate (or delegated) legislation, the executive makes law, and not the legislature. It is essential for the liberty of the citizen that the judiciary remain independent of the legislature and executive. This aspect of the separation of powers doctrine is strictly enforced. 1.3.2.2. Role of the judiciary The judiciary stands as the safeguard against the excesses of the other two: (a) If the legislature passes laws that are unconstitutional (i.e. the legislature does not have the power under its Constitution to make a law of that nature), then the court can independently, pending a Constitutional challenge, rule that the law is invalid and that ordinary citizens do not have to obey it. Similarly, a court can declare an Act of Parliament invalid if the proper procedures were not complied with in enacting the Act (known as the ‘manner and form’ requirements). (b) If the executive, or some minister or public servant or administrative board or tribunal, makes a decision with no authority to do so, or they exercise their discretion improperly, the courts can interfere with those decisions of the executive, and declare them null and void (that is, ‘quash’ them). Citizens can appeal to the State supreme courts (in the State sphere) or to the High Court (in the federal sphere). These courts have traditionally had an inherent jurisdiction to issue prerogative writs (see Vermeesch & Lindgren, para. 3.55 (10th edn); Latimer, para. 1-165). Note that the Judicial Review Act 1991 (Qld) abolished the prerogative writs of mandamus, prohibition and certiorari and replaced them with statutory orders (called prerogative orders). These procedures of judicial review are appropriate to test the validity of, or the operation of, regulations or orders made as delegated legislation. 1.3.3 Division of powers between the Commonwealth parliament and the State parliaments Division of powers refers to the manner in which legislative power (Constitutional power of parliaments to pass laws on various matters) is divided between the Commonwealth Parliament on the one hand, and the State parliaments on the other. Australia chose a federal system where specific legislative powers are vested in: (a) the Commonwealth Parliament – known as the ‘exclusive powers’ of the Commonwealth; (b) the Commonwealth Parliament and the States who share some areas of power – ‘known as ‘concurrent powers’; and (c) the States which retain power over the remaining areas of powers – the ‘exclusive powers ‘ of the States.   12 GSN412: Business Law 1 Prior to federation, the colonies in Australia (which became States on federation) each had their own Constitution conferring very wide law-making powers on the colonial legislatures, for example, see s 2 of the Constitution Act of 1867 (Qld) (which was not repealed nor consolidated into the recently passed Constitution of Queensland 2001 which commenced on 6 June 2002). For background information and to see an annotated copy of the new Constitution of Queensland 2001 (see link on OLT site, Instructor Recommended Sites): http://www.constitution.qld.gov.au/constitution/constitution.pdf These State Constitutions have continued to operate after Federation but are subject to the Australian Constitution and the Division of Powers doctrine as set out in the Australian Constitution. The Australian Constitution specifies the way in which legislative power is divided up between the Commonwealth Parliament and the State parliaments. Broadly, the Constitution has the effect of dividing legislative power into three categories, viz. 1.3.3.1. Exclusive powers of the Commonwealth Only the Commonwealth has power to make laws with respect of only those areas as specified in the Constitution: For example: • Section 114 — defence • Section 90 — customs and excise matters • Section 122 — Commonwealth Territories. Therefore, if a State parliament tries to legislate in any of these areas, the State ‘law’ is totally invalid. 1.3.3.2. Concurrent powers Both the Commonwealth and State parliaments have power to make laws. Section 51 of the Constitution confers the power to make laws for the peace, order and good government of the Commonwealth with respect to various areas including: (a) Trade and commerce with other countries, and among the States. (b) Taxation, but so as not to discriminate between States or parts of States etc. to (xxxix). See Appendix A (vi) for a list of powers under s51. 1.3.3.3. Exclusive powers of the States (‘residual’ powers) Only the State parliaments have power to make laws with respect to these areas. Therefore, if the Commonwealth parliament tries to legislate in any of these areas, the Commonwealth ‘law’ is totally invalid. By virtue of s 107 of the Constitution, those areas not specified by the Constitution to be within the exclusive or concurrent powers of the Commonwealth, are within the exclusive power of the States.   Module 1: What is law and the Australian Legal Framework 13 1.3.4 Interpretation of the Constitution It will be seen from the above that the Commonwealth has very little power. However, in interpreting the concurrent powers given to the Commonwealth and State Parliaments by s 51 of the Australian Constitution, the High Court of Australia has used a very liberal interpretation to extend Commonwealth powers. Thus, since 1901, there have been significant extensions of the power of the Commonwealth as opposed to the reduction of powers of the States, simply by the High Court’s interpretation of the s51 powers. For example, Koowarta v Bjelke-Petersen [Vermeesch & Lindgren, 10th edn, para. 2.56] Commonwealth v Tasmania [The Franklin Dam case], [Vermeesch & Lindgren (10th edn), para. 2.56]. 1.3.5 Conflict between State and Commonwealth laws Section 109 of the Australian Constitution provides that: When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. 1.3.6 Amendment of the Constitution Section 128 of the Australian Constitution provides as follows: (1) (i) A proposal for amendment of the Australian Constitution must initially be passed by an absolute majority in both houses of the Australian Parliament and then submitted to the electors in each State and Territory by means of a referendum. OR (ii) If the proposal for amendment is twice rejected by one of the Houses of Parliament whilst being passed by the other House with an absolute majority on both occasions, the Governor-General, on advice of the ministers, may submit the proposed law to the electors in each State and Territory in the form in which it was last proposed to the House which has passed the proposal. (2) Must be voted on by the electors within 2–6 months of being passed by the parliament. (3) Must be passed by a majority of electors voting in a majority of States with a majority overall. (4) If passed in the referendum, goes to the Governor-General for royal assent. 1.3.7 Amendment of State Constitutions In order to amend their Constitutions, States must conform with manner and form requirements required by the particular Act of Parliament of the State in question, which was enacted as a law before or after the commencement of the Australia Act 1986, (see s 6).   14 GSN412: Business Law 1 In general, only an ordinary Act of Parliament is required to amend a Constitution of a State. (That is, unless the matter has been doubly ‘entrenched’ (i.e. it is particularly difficult to amend a provision because additional steps must be followed before the amendment can proceed), in which case a referendum is also required — and, in order to abolish the necessity for a referendum, that abolition must be agreed to by means of a referendum; for example, re-introduction of the Legislative Council in Queensland) — see s 53 of the Queensland Constitution. 1.3.8 Constitutional Development and the Federal System The Constitutional Development of Australia as a sovereign nation can be seen in: • Statute of Westminster 1931 (adopted in Australia in 1942); • the limiting of appeals to the Privy Council (in 1968, 1975 and 1986); and • the Australia Act 1986. See Appendix (vi) (b) and (vi) (c) for excerpts from the Australia Act 1986 and the article by Mr Ian Harris as to the effects of the Act. Australia is a federal legal system which means that there is a central government (the Commonwealth) which has been given power to act in designated areas by the original six colonies (now the States). The state governments continue to act in those areas where the Commonwealth was not given exclusive power under the constitution. The states can also refer powers to the Commonwealth, that is, they can voluntarily agree to the Commonwealth exercising powers which the states have the right to exercise. This has happened with income tax which the state governments gave over to the Commonwealth in World War Two. It has also happened recently where the States have referred their power to act in respect of corporations to the Commonwealth so that there is a national uniform scheme dealing with corporations under Commonwealth law. There is also a third tier of government in Australia which is local government. State Governments have delegated powers to local governments so that they can make laws in those areas where they have been responsibility.   Module 1: What is law and the Australian Legal Framework 15 1.4: Sources of law — legal problem solving in business The term ‘sources of law’ can have several different meanings. Two of these are: (a) Authoritative sources of law (the laws we must obey). (b) Material sources of law (historical source). This course deals with authoritative sources of law. There are only two types of authoritative law: (i) Legislation (law made by parliament — Acts of Parliament/statutes). (ii) Precedent (law made by the courts — case law/common law). For a succinct overview, read appendix A (vii) which is the Queensland Legal Handbook published by Caxton Legal Service as to where the law comes from. Students are also, referred to sections 1 and 2 of the Appendix to Waller, L. 2000, Derham, Maher and Waller, An Introduction to Law, 8th edn, LBC Information Services, Sydney, for examples of a statute (or Act of Parliament) and a law report; and MacAdam, A.I. and Smith, T.M. (1989) Statutes, Sydney: Butterworths in Appendix A(x) for an example of a statute (or Act of Parliament). See also G&F [2005] p612, for a case report headnote. 1.4.1 Legislation 1.4.1.1. Composition of Australian Parliaments (Commonwealth and State) The Commonwealth Parliament in Australia consists of: (a) the Queen; (b) an upper house (called the Senate); and (c) a lower house (called the House of Representatives) — see s 1 of the Australian Constitution (see Appendix A(vi)(a)). A parliament consisting of two houses is called a ‘bicameral parliament’. Queensland has a unicameral parliament that is, there is only one house of parliament — called the Legislative Assembly. The upper house, the Legislative Council, was abolished in 1922. The Queensland Constitution provides that the Queensland parliament consists of the Queen and the Legislative Assembly — see s 2A(1) of the Queensland Constitution. The term ‘Parliament’ should be distinguished from the term ‘Government’. The political party (or coalition of parties such as Government. 1.4.1.2. Procedure for passing Acts of Parliament See ‘How to Pass Acts of Parliament’ in Appendix A(vi)(d) 2 G&F [2003] p 59   16 GSN412: Business Law 1 1.4.1.3. Subordinate (or delegated) legislation Overview Subordinate (or delegated) legislation refers to legislation made by some executive person, authority or body other than the legislature (parliament). Most of the rules that run our daily lives come from this area of legislation. Subordinate legislation usually comes under the name of ‘regulations’, ‘by-laws’, ‘rules’ or ‘orders’. Delegated power The executive only has power to make law through a delegation to it of lawmaking power from Parliament. In Acts of Parliament, whether Commonwealth or State, there is usually a section towards the end of the Act in which parliament delegates its authority to make laws to the Governor-in-Council (in a State statute). If it were a federal statute, then the Governor-General-in- Council would be referred to. • The term ‘Governor-in-Council’ means the Governor acting on the advice of the Executive Council. • The Executive Council is the formal name for Cabinet. Cabinet comprises members of parliament, who are called ‘ministers’. The formal name for Cabinet in the federal sphere is the Federal Executive Council. Chapter II of the Australian Constitution deals with the Executive Government. See ss 62, 63 and 64. Advantages and disadvantages of subordinate (or delegated) legislation, see Waller, L. 2000, Derham, Maher, Waller: An Introduction to Law, 8th edn, LBC Information Services, Sydney, pp. 8–10 and Heilbronn, G. N., Kovacs, D., Latimer, P., Nielsen, J. & Pagone, T. 1996, Introducing the Law, 5th edn, CCH Australia, North Ryde, NSW, paras 338–40. See also, Appendix (viii) for the steps in making delegated legislation. 1.4.1.4. Conflict between rules of law The general rule is that the law made by parliament (statutory law) is supreme over judge made law (case law). Therefore, when case law is inconsistent with statutory law, the statute will override the case law to the extent of the inconsistency. Thus, however authoritative the decision or however eminent the bench, a court decision can always be changed by an Act of the relevant parliament. The only way in which a court can override a law made by parliament is for the court to find either: (a) The proper procedures have not been complied with in enacting the law (for example, for a Commonwealth Act generally it must be passed by both houses of parliament and assented to by the Governor-General). OR (b) That the parliament does not have power under its Constitution to make a law of that nature. Even though statute law overrides case law, there is still a need for case law when attempting to solve a legal problem.   Module 1: What is law and the Australian Legal Framework 17 1.4.2 The role of the courts Courts make laws in two ways: (a) Statutory interpretation The parliament makes laws but the courts interpret these laws. (b) In areas where there is little or no statute law; for example, contract law — the courts have been responsible for building up the whole body of law. Indeed, some Acts (Partnership, Sale of Goods) represent the codification of law developed by the courts. 1.4.3 Precedent 1.4.3.1. Doctrine of precedent The reason why the courts are said to be a source of law is because of what is known as the doctrine of precedent. Briefly, this means that, if a court makes a decision on a set of facts one way today, if a similar set of facts arises tomorrow, it will make the same decision. People under the jurisdiction of the courts are aware of this doctrine and thus decisions of the courts have the effect of becoming laws. 1.4.3.2. Understanding case reports Ratio decidendi and obiter dicta A case report is a report of the presentations made by disputing parties in court and the conclusion of the judge or judges hearing the case. If there is more than one judge, the report usually includes all the judges’ reasons and decisions. The main reasoning or principle of the case is known as the “ratio decidendi” and this is the view of the majority of judges. On the other hand “obiter dicta” are observations made by the judges and are not necessarily relevant to the decision but form part of the judge’s reasoning. Obiter dicta made in a higher court has persuasive powers in lower courts. The opinions of the judges who disagree with the majority view are known as the “dissenting judgements”. Judges are known by their surname and then their title. For example, Smith J. A Chief Justice would be known as Smith CJ. An example of the way a case is reported is in Waltons Stores (Interstate) Ltd v Maher (1988) 76 ALR 513. To find this case you would look at the book number 76 titled with the year 1988 of the Australian Law Reports (ALR) at page 513. Now, most cases are reported on-line and I have set out a number of instructorrecommended web addresses on the OLT site where cases can be located.   18 GSN412: Business Law 1 Parties The parties involved in court cases have different names according to the level of the court where the case is being heard. Cases are first heard in lower courts – such as the Magistrates Court or the District Court and if the magistrate’s or judge’s findings are challenged, then they go on appeal to higher courts such as the Supreme Court or the highest court of appeal in Australia, the High Court. In the court where the original claim is made the person who brings the action is known as the “plaintiff” and the person who responds is known as the “defendant”. If the decision is appealed, the person who brings the action is the “appellant” (who can be either the plaintiff or the defendant from the original case) and the person who responds is the “respondent”. Case Summaries Case summaries in the area of contract law are available on the OLT site including the essential principles. They are divided into the following areas: • ‘Facts’ – the events surrounding the case • ‘Issues’ – the main points in dispute • ‘Held’ – the court’s decision Please read these summaries in conjunction with the Study Guide and textbook. You may also access summarised versions of contract cases in casebooks found in the library, such as “Carter, J.W. and Harland, D.J. (2003) Cases and Materials on Contract Law in Australia. Sydney: Butterworths. 1.4.3.3. The meaning of the term ‘common law’ (a) Common law as opposed to equity Here common law means that body of case law developed by the courts exercising a common law jurisdiction as opposed to that body of case law developed by the courts exercising an equitable jurisdiction. (b) Common law as opposed to statute law Here common law means that body of law developed by the courts exercising common law or equitable jurisdiction (that is, precedent or case law) as opposed to that body of law that has legislative action by parliament as its source. (c) Common law as opposed to civil law Here common law means the legal system of England (case law and statute law) that was also introduced in various countries for example, Australia, United States, as opposed to the civil law system of Europe and various other places. This latter system was based on Roman law.   Module 1: What is law and the Australian Legal Framework 19 1.5: Classification of law — public international law and domestic law Refer to the diagram in Appendix A(ix) for an overview of classifying law. (a) International law — regulates the relationships between nations. (b) Domestic law — refers to the national legal system of each country (the law operating within a nation). 1.5.1 Public domestic law Concerned with the nation as an entity: (a) Constitutional law This body of law sets up the machinery by which private law can be made, that is, it provides for the arrangement of the legal system itself and the powers of its various organs. (b) Administrative law One of the most important groups of rules included here is that which concerns the law-making powers of the Executive. Included in this classification are such things as prerogative orders. (c) Industrial law This classification of public law includes such activities as workers’ compensation, the relationships between employers and employees, and employment conditions. (d) Revenue law This area of law deals with all pieces of legislation involving the raising of revenue for the nation. This includes all direct and indirect taxes. (e) Criminal law This classification is concerned with punishment for breaking a code of behaviour and deterrence of similar conduct. 1.5.2 Private domestic law Concerned with the relationships between individuals within the nation, that is, it deals with those matters that do not concern the nation as an entity: (a) Law of torts A tort is a civil wrong other than a breach of contract providing a private right to the victim of the tort to sue the wrongdoer for compensation. That is, the law of torts deals with rules prohibiting certain kinds of behaviour. (b) Contract law This classification deals with legal rules about enforceable agreements between two or more legal persons. (c) Property law This area of law focuses on the acquisition, disposition and use of property (real property and personal property).   20 GSN412: Business Law 1 (d) Family law This classification of law concerns relationships arising out of marriage and civil dissolution (divorce) as well as the maintenance of children before and after divorce, custody of such children, property distribution etc. (e) Succession law This classification of law is concerned with the distribution of a person’s estate after their death. (f) Conflict of laws This classification of law also has the name of ‘private international law’. This classification determines which body of law governs a matter involving parties from different jurisdictions, and also which court will hear the matter. (g) Procedure law The law of procedure comprises those rules dealing with ways of initiating litigation, controlling the process before trial, regulating the mode of trial, and stipulating the attacks on the results of the trial that may be made by appeals. 1.5.3 Distinction between criminal and civil law The major distinction of law made by lawyers is between civil law and criminal law. A basic distinction that could be drawn is that ‘anything that is not criminal is civil’. Private law is regarded as civil law. Criminal law is concerned with punishment for breaching a code of behaviour whereas civil law is generally concerned with actions initiated to recover damages. 1.5.4 Distinction between tortious, contractual and criminal liabilities 1.5.4.1. Nature of liability Contractual rights and duties are created by agreement between the parties. Tortious liability arises through the relationships that exist between people in society and the interaction of people within society. Criminal liability involves the imposition of penalties (i.e. fines and imprisonment) and the concept of punishment. 1.5.4.2. Damages Damages awarded for breach of both tortious duties and contractual duties are compensatory in nature (i.e. money is required to be paid). Criminal proceedings do not confer on the victim a right to sue for damages. Punishment is the aim of criminal proceedings not compensation. Note, however, that in Queensland the victim of a crime can apply for compensation under the Criminal Offence Victims Act 1995 (Qld) after the criminal wrongdoer has been convicted of an offence.   Module 1: What is law and the Australian Legal Framework 21 1.5.4.3. Nature of action The action is one of person v person for both contractual and tortious liability (private law). Criminal action is the state v the person (public law). ‘Person’ refers to either a natural person or an artificial person for example, a company. 1.5.4.4. Election to sue A party injured by breach of a tortious or contractual duty may elect not to sue for damages. The victim of a crime has no such option where the prosecution of the criminal is concerned. The State will decide if a prosecution should proceed. 1.5.4.5. Who imposes obligations? Law of torts and criminal law both involve codes of behaviour and the obligation to observe those codes is imposed by the general law. In the law of contract, however, the obligations that the parties to the contract must observe are imposed by the voluntary agreement between them. 1.5.4.6. Standard of proof Tort and contract: Civil standard — balance of probabilities. Crime: Criminal standard — guilt of accused must be proved beyond all reasonable doubt. 1.5.4.7. Source of law The source of criminal law in Queensland is contained only in Acts of Parliament whereas the source of law in contract and tort law is in case law. (This varies from State to State, however).   22 GSN412: Business Law 1 1.6: Alternatives to Legal Proceedings From your reading of chapter 2 [G & F (2005) pp.29-54] you will have an understanding of the origins of the court system in Australia and the court hierarchy. You will also be aware that the courts system in Australia is an adversarial system. What this means is that there are opposing sides to a legal dispute who each argue their case before an independent judicial or administrative officer who makes a decision on the evidence presented by the parties. Subject to the rules of evidence, the parties have the responsibilities for calling the witnesses and evidence that they wish to present in support of their case. The truth of the evidence is tested by the parties asking questions of the other side. The party taking action has the burden of proof. In the civil jurisdiction, this burden requires the plaintiff or applicant to prove that their case is more believable “on the balance of probabilities”. In a criminal case, the burden is on the prosecution to prove their case that the accused committed the crime beyond reasonable doubt. In business, whether to take legal proceedings (or the extent to which criminal proceedings should be defended) are often subject to a cost benefit analysis. The factors which are taken into account include: • The probability of winning or losing; • The money involved (including costs); • The cost of downtime in being involved in a legal dispute both in terms of any impact on business efficiency and management time; • The effect on business reputation in not taking action or in taking action which is unsuccessful; • The impact on the business relationship concerning the other party who is involved in the legal action; and • Whether the decision will lead to an appeal and the cost of any appeal. Recently, there has been an increase in alternative methods of dispute resolution instead of using adversarial court proceedings. This resulted from criticisms of the traditional court system including: • lack of accessibility to the courts; • delays in having litigation heard; • the costs of litigation; • the ability to use specialists to decide matters in alternative dispute resolution; and • the less confrontational approach from some alternative systems of dispute resolutions. The alternative means of resolving disputes include: • negotiation; • mediation; and • commercial arbitration; • alternative dispute resolution (ADR). Negotiation between the parties can result in a settlement. For this to be binding, the parties must sign a legally binding document that the dispute has been resolved for it to be effective.   Module 1: What is law and the Australian Legal Framework 23 Mediation is a voluntary negotiation process where a trained mediator who acts as a neutral third party, assists the parties in coming to a resolution of their problem as part of a formal process. It is often a preliminary step to commercial arbitration or further legal proceedings. Commercial arbitration is a long standing means of resolving commercial disputes. It is used internationally and also, within Australia. It involves the hearing of a dispute by an independent third party (an arbitrator or panel of arbitrators) which the parties select or alternatively, the parties select the means by which the arbitrator or panel of arbitrators can be nominated. The arbitrator will hear the matter and make a decision which is usually binding on the parties (although there are appeals on matters of law). Alternative dispute resolution is similar to mediation and involves the parties coming to an agreement themselves through being assisted by a third party who may use a variety of techniques to achieve a resolution of dispute, including negotiation, mediation and the use of independent experts. The rise of alternative dispute resolution has produced a number of reforms in the court system. There is now more stringent and better case management in how courts require the parties to litigate their claims. This leads to greater efficiency and reduces costs. It is by no means the case now that commercial arbitration is cheaper than a traditional legal action. Also, the courts do set up specialist court divisions to deal with particular commercial litigation (eg. building claims, planning and environmental law etc). This means that judges are able to specialise in these jurisdictions and become recognised experts in those areas. It is not surprising that a number of retired judges have become sought after specialist arbitrators or consultants after leaving the bench. As well, the court system allows for preliminary mediation in a number of areas preliminary to trial. This is especially common in small claims and also, as part of the case management process for personal injury, family law and, industrial disputes.     src=”http://pagead2.googlesyndication.com/pagead/show_ads.js”> </div> Credit:ivythesis.typepad.com

What is law and the Australian Legal Framework

src=”http://pagead2.googlesyndication.com/pagead/show_ads.js”> MODULE 1: WHAT IS LAW AND THE AUSTRALIAN LEGAL FRAMEWORK Introducti...