Common law and statute

By Legal Eagle

So if one asks a student or a teacher of the law of obligations, “Which do you prefer, statutes or cases?”, the answer will almost invariably come back, “Cases, of course.” Cases have immediate human interest supplied by the facts; and the reasoning of the judges, while often complex, satisfyingly leads the reader from the facts through to a logical conclusion via the application of a rule or principle. Statutes, in contrast, have no facts and lay down rules without any reasoning. One commonly has to work forward from provisions to facts or imagined facts, and it is often hard work to understand what the words are aiming to achieve and what they mean. Cases are fun; statutes are preceived to be dull, dry and difficult.

(Andrew Burrows, ‘The Relationship Between Common Law and Statute in the Law of Obligations’ (2012) 128 LQR 232, 232.)

Yup. Guilty as charged. I love cases. No, I adore them. I like to ferret out background information about the litigants (simpler in these days of Google and Wikipedia).

One of my favourite cases when teaching Trusts this semester was Re Gulbenkian’s Settlement Trusts [1970] AC 508. In this case, Mr Calouste Sarkis Gulbenkian created a trust which provided that the trustees were to pay trust income for the duration of the life of his son, ‘Nubar Sarkis Gulbenkian and any wife and his children or remoter issue for the time being in existence whether minors or adults and any person or persons in whose house or apartments or in whose company or under whose care or control or by or with whom the said Nubar Sarkis Gulbenkian may from time to time be employed or residing…’ Did you understand that? [If not, don’t worry: the House of Lords found it rather difficult to untangle as well.] Basically it provided for trust money to be paid to any person who had care or control of Nubar Gulbenkian, or to any person by whom he was employed, or to any person with whom he resided.

That set me to wondering – what kind of a person writes a trust of this kind? Apparently Calouste Sarkis Gulbenkian was an Armenian Turkish oil magnate who was instrumental in the development of Middle Eastern oilfields. He was known as Mr Five Percent for his canny practice of demanding a five percent interest in the oil companies he founded. By the end of his life he had become one of the world’s wealthiest individuals, with an estimated fortune between US$280 million and US$840 million. He was noted for his miserly tendencies. But clearly he was generous to people who were kind to his son. Here he is, courtesy of Wikimedia Commons:

Nubar Gulbenkian was educated in Britain and considered himself a British gentleman. He began as an unpaid worker for his father, but later sued his father for $10 million, after a refusal by the company to allow him $4.50 for a lunch of chicken in tarragon jelly. As a result, Calouste Gulbenkian decided to leave $420 million of his fortune to the Calouste Gulbenkian Foundation in Portugal. Nonetheless, Nubar ultimately inherited $2.5 million from his father, and more in a settlement from the Foundation. He also became independently wealthy through his own oil dealings. This allowed him to live a highly eccentric and extravagant lifestyle. Nubar wore a beard, a monocle and the orchid in his buttonhole was replaced daily. He was known as an international playboy, and it was said of him, “Nubar is so tough that every day he tires out three stockbrokers, three horses and three women”. He was also a known gourmet, and was quoted as saying that ‘the best number for a dinner party is two – myself and a damn good head waiter.’ Another story said that once, when filling out a market research form, Nubar recorded his status as ‘enviable’. Here is Nubar:

(Photo from this post at The Esoteric Curiosa)

See, how can one not love that case?

In a technical legal sense, Re Gulbenkian represented a relaxation in the requirement for ‘list certainty’ for certain kinds of discretionary trusts (those involving ‘mere powers’, where there was a discretion as to whether to distribute, and to whom to distribute in what proportion). It held that as long as the criteria specifying the persons who were the beneficiaries under a discretionary trust were sufficiently certain, then the trust could stand. This was later followed up by a corresponding relaxation in relation to trust powers (see McPhail v Doulton [1971] AC 42) which applied a similar criterion certainty test, but it was qualified by a ‘loose class’ requirement (i.e. the beneficiaries must be capable of forming a loose class which is not administratively unworkable).

Anyway, I’ve illustrated the colour and movement which can be supplied by a case with interesting dramatis personae. Compare that, for example, with a section of the Victorian Trustee Act 1958 (Vic). Let’s take s 12C of the Trustee Act:

In proceedings against a trustee for breach of trust in respect of a duty under this Part relating to the trustee’s power of investment, the Court may, when considering the question of the trustee’s liability, take into account-

(a) the nature and purpose of the trust; and

(b) whether the trustee had regard to the matters set out in section 8 so far as is appropriate to the circumstances of the trust; and

(c) whether the trust investments have been made pursuant to an investment strategy formulated in accordance with the duty of a trustee under this Part; and

(d) the extent the trustee acted on the independent and impartial advice.

Yes, much less colour and movement.

Still, as Burrows points out in the article I quote above, statute is incredibly important in the law of obligations. He identifies a number of strands:

  • Statute law is often dependent on the survival or preservation of some of the common law;
  • Statute law may replace common law; but it is important to ascertain how much this is so;
  • Often case law is very important in indicating the way in which statute should be interpreted (Burrows calls this “statute-based common law”);
  • Sometimes statute freezes the common law, or turns back a development in the common law, but Burrows believes this should not be overused by judges as an excuse for failing to develop the common law;
  • Statute may be used by analogy in developing the common law.

Burrows’ article made me think about the interaction of statute with the common law of obligations in Australia. Two of the most prominent examples are the Australian Consumer Law (formerly the Trade Practices Act and State Fair Trading legislation) and the tort legislation enacted in all states in response to the Ipp Report into negligence.

I’m really quite fond of the Australian Consumer Law. For non-lawyers, it provides a variety of statutory remedies for certain misleading and unfair conduct in addition to the remedies provided by the common law of contract and tort. I am less impressed by negligence legislation. I don’t know if this is something to do with my vintage? When I learned Contracts, the Trade Practices Act and s 52 (which prohibits misleading or deceptive conduct) was already well ensconced in our law. By contrast, when I learned tort, it was mostly a creature of the common law, with some statutory input (particularly in regard to contributory negligence).

By the time I came to teach Tort, negligence had been well and truly colonised by statute (yes, an emotive metaphor, but that’s how I feel about it). I get irritated with statute when it is (a) not clearly drafted and (b) doesn’t actually fix the problems with the law. The amendments to the Wrongs Act in response to the Ipp Report annoyed me. The Ipp Report was a Review of the Law of Negligence in response to the perception that the law of negligence was giving rise to a culture of excessive litigation, and preventing socially useful conduct. However, all the States enacted different versions of the Ipp Report’s recommendations, and in some cases, ignored the Ipp Report’s recommendations altogether. For example, the Ipp Report made various recommendations for dealing with negligence and public authorities in Chapter 10 , but the legislatures largely ignored these recommendations, and went about their own ways of limiting the liability; thus the provisions differ from state to state. One section I particularly dislike is s 48(3) of the Wrongs Act . Section 48(1) of the Wrongs Act states that a person is not negligent in failing to take precautions against a risk of harm unless (a) the risk was foreseeable; and (b)  the risk was not insignificant; and (c)  in the circumstances, a reasonable person in the person’s position would have taken those precautions. So far, it’s okay, but unfortunately, s 48(3) of the Wrongs Act goes on to say:

(3) For the purposes of subsection (1)(b)-
(a)  insignificant risks include, but are not limited to, risks that are far-fetched or fanciful; and
(b)  risks that are not insignificant are all risks other than insignificant risks and include, but are not limited to, significant risks.

Waah! If you’re going to bother to draft legislation, leave out nonsensical stuff like s 48(3), m’okay? (grump, grump grump) It’s times like this that I really dislike legislation: when it confuses things or obfuscates rather than helping clear up any common law messes. But then I return to a fascinating issue like the availability of damages under the Australian Consumer Law and whether it’s analogous to deceit, contract or neither, and then I fall in love with legislation all over again.

Burrows’ piece is nonetheless a timely reminder to people like myself not to get too caught up in the colour and movement of cases, and to remember that legislation can be vitally important too. And who knows, the legislation may even spawn some cases with interesting facts!

15 Comments

  1. Tim
    Posted May 28, 2012 at 9:53 pm | Permalink

    Like. I concur. Cases are sexier. They are usually less resistant to the plain language movement, which I usually support. More, when written by a talented judge or clerk, they can be written in a style more elegant, interesting, and creative. (Although when I worked for a court of appeals I was categorically instructed never to draft an opinion in verse, as the losing party would not be amused.) A beautifully written and reasoned case is a pleasure to read, sometimes repeatedly. A well drafted statute is usually merely tolerable, albeit sometimes elegantly organized or structured.

    Sometimes statutes represent political brute force. This is more unseemly than cases, which less often do that (but don’t get me started on popular election of judges). While politics influence law, cases tend to be less political than statutes, at least according to my impression. In some jurisdictions, some drafters of legislation are better trained in politics than in law, though there are exceptions (such as my extremely sexy local stormwater detention basin ordinance;).

    On the other hand, a code (whether statute-based or rule-based) can simplify an unwieldy area of law. I am grateful that my jurisdictions have codes of evidence. I have the impression that when evidence was completely case based, it was chaotic, and perhaps unevenly applied, or perhaps it took longer to research evidentiary issues.

    These superior qualities of cases vis-a-vis statutes would appear to be greater when compared to regulations, which are sometimes drafted by bureaucrats who have little incentive to be concise.

    Holmes argued that common law is a form of legislation. In that capacity, it embodies ancient wisdom regarding what kinds of behaviors and circumstances are laudable, and what actionable, what kinds of things should be regulated by law, and what left private.

  2. Posted May 28, 2012 at 10:10 pm | Permalink

    In the Nuts (unground), other than ground nuts Order, the expression nuts shall have reference to such nuts, other than ground nuts, as would but for this amending Order not qualify as nuts (unground) (other than ground nuts) by reason of their being nuts (unground).

    I had no problem understanding this. I think my mind must be warped.

  3. kvd
    Posted May 29, 2012 at 4:02 am | Permalink

    Plus 1 for the ‘Like’ LE – a very interesting post! It made me think of a solicitor friend who went into a legislation drafting job in some Canberra department; in cricketing parlance he “retired hurt” after about two years. It must be very difficult to seek within legislation to convey clear intent (never cover all eventualities), knowing that there is a roomfull of very clever lawyers and judges seemingly waiting to pounce on inadequacies thrown up by the particular circumstances of a particular case. That Wrongs Act example is possibly the result of several bruising encounters with said roomfull.

    The other thing which always fascinates me is how long a piece of legislation can survive before a potential weakness is demonstrated; I’m thinking of several High Court decisions over the years whereby quite ‘old’ legislation was found to be flawed in some way.

  4. kvd
    Posted May 29, 2012 at 4:49 am | Permalink

    Further thought, which I suppose has been done somewhere or other: I wonder what the Ten Commandments would look like if redrafted today by the same people who did your Wrongs Act?

  5. Posted May 29, 2012 at 7:33 am | Permalink

    I know about judgements, specifically one by Mr Patrick Street S.M., in May 1981, who wrote fourteen pages on why it was a very very bad thing to have displayed on the flat counter of a music store, a 7-inch square of paper record cover, printed with the words Too Drunk To Fvck.

    But let us drink the health of our hero, Sir Humphrey Appleby, obvious author of s 48(3) and all similar all-encompassing textual triumphs.

  6. Posted May 29, 2012 at 8:03 am | Permalink

    I’ve always preferred statues to case law, although my preference does depend on the quality of the material. Perhaps its just my background in reading software source code, but I find it easier to understand how the law works, in a broader sense, when looking at statues. Cases just seem to be a collection of isolated views on various parts of the law, and often don’t really reveal how those parts fit into the wider system of that area of law. That said, they do provide useful illustrations on how the law works.

  7. Posted May 29, 2012 at 2:17 pm | Permalink

    Legal drafting is hard, especially at common law. The desire to cover every eventuality is common, and often impossible to do. That said, there can be beautiful and elegant statutes that – while still litigated from time to time – can cut through thickets of difficulties.

    The late Victorian period produced some good ‘uns: The Sale of Goods Act 1893. The Partnership Act 1890. And every now and again, a modern statute rises to the occasion: the Land Titles Act 1994 (Qld) is a very clear Torrens Title codifying statute.

  8. kvd
    Posted May 29, 2012 at 4:46 pm | Permalink

    Just to record this Lowitja O’Donoghue Oration by Justice Michael Kirby. I know it is not to the point of LE’s post – or maybe ultimately it is, if ‘case law’ is important to legal developments which affect our society? Anyway, apologies for the intrusion.

  9. Davoh
    Posted May 30, 2012 at 1:33 pm | Permalink

    Burrows’ piece is nonetheless a timely reminder to people like myself not to get too caught up in the colour and movement of cases, and to remember that legislation can be vitally important too. And who knows, the legislation may even spawn some cases with interesting facts!

    Yep. Apologies, but am not conversant with the details of “The Law”. However, the words ‘common law’ caught my attention.

    Was, some time ago, caught in a situation where was unaware of ‘local, common lore’.

    Brief facts; had moved from South Australia to New South Wales (Australian version).

    There was some ‘vandalism’ nearby, so, mentioned my ‘suspicions’ as to the perpetrator to the land lord.

    Hooo boy. Night visits. Rocks on roof. “Ya don’t rat on yer mates!!!” ??? think i, yer not me mates (yet), was just mentioning something to the landlord.

    Self, while not exactly “elderly”, live in a house with a very friendly dog, some distance from “neighbours”,

    yes, there was a time when i lived with “fear”.

    Fascinating concept – “law” – or common “lore”.

  10. Patrick
    Posted May 31, 2012 at 2:24 pm | Permalink

    I really want more time to defend statute.

    My instincts are exactly the same as yours but there is a separate art to parsing statutes, giving weight to each word and the context of those words in the structure of the particular provisions as well as in the broader legislative scheme. That is not, though, to underplay that common law, including the interpretation and application of statutes, is a critical element of the evolution of law.

    But statutes are the primary means for significant legal changes to occur, as well. Judges can’t, and shouldn’t, fundamentally change or create law, and they create monstrosities when they do.

    Also, the stories behind and in front of statutes are often less colourful but interesting nonetheless, it’s just that they rarely enter the public record the way the facts behind cases do!

  11. Dingo
    Posted April 24, 2014 at 4:50 pm | Permalink

    Hi, I would like to ask a simple question….does statute law supersede common law? or put another way, when the statute was made that defined ‘theft’ and all its elements and incidents etc, did this replace or supersede common law larceny? or does someone have the choice to elect one over the other?

    cheers

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