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Structure And Key Characteristics Of The Australian Legal System

We provide below a break down of the characteristics that make up the Australian Legal System which provides the context and framework for the work of forensic accountants in Australia as distinct from other countries.

Classification of countries legal system

It may be convenient to broadly classify a democratic country’s legal system into either a common law or civil law country.

Common law countries:

The system of common law originated in England where courts of equity were set up by the Crown to hear writs.  The centuries-old tradition of English law is that judges decide each dispute as it comes to court, and give reasons for their decision. These reasons, or judgments, are published in books called law reports. The accumulation of judges’ decisions over many years is what is called the common law – law made by judges in deciding common disputes.

In England, a Bill of Rights was signed in 1689 acknowledging the Monarch could only rule with the Parliament’s consent thus establishing the power of Parliament. 

Countries like Australia, United States of Amercia, South Africa, Canada, New Zealand and many countries of the British Commonwealth can be called Common Law countries which feature:

  • Legislation made by a Parliament; and
  • Case law made by courts (where legislation takes precedence).  Courts can interpret legislation and fill in gaps in the law.  An adversarial system of justice with an active role played by the parties in a dispute with judge to adjudicate the evidence presented

Civil Law countries:

The system of civil law originated in Roman times and therefore most countries in Europe are considered civil law countries (as distinct from common law countries) which feature:

  • Legislation made by Parliament
  • Courts involving a system of justice which is inquisitorial, involving an active role for judge to find the truth. 

Some countries, like Scotland, adopt a hybrid system.

In Australia, customary law was acknowledged and recognised in Mabo v Queensland (No.2) (1992) 175 CLR 1

How legislation is made in Australia

In Australia, a proposal for a Bill is given to government ministers and the Bill is drafted for queue for passage of Bills by Parliament (read and debated by both houses of Parliament) and when Royal Assent (by the Crown’s representative) is given to the Bill, it then becomes an Act of Parliament and the Act is proclaimed to be in force and published in government Gazette.

Delegated or subordinate legislation is made by authorities created under an Act eg a Council, Minister of the Crown, a University, an Owners Corporation of Strata Title property in NSW and delegated legislation includes things such as By-Laws, Regulations, Rules, Ordinances, etc.  Later legislation takes precedence over earlier legislation in relation to inconsistency, Act or statute takes precedence over delegated legislation unless expressly stated to the contrary.

What does ‘rule of law’ mean?

Rule of law is used when referring to a democratic country and means:

  1. absolute supremacy of government by law as opposed to government by arbitrary fiat or decree; and
  2. government can operate only if they have specific legal authority to do so; and
  3. a person can only be punished for a breach of the law and not otherwise.

Rule of law reflects principal of legality.  Therefore every government action requires a legal authority to act.

How making of laws can be classified

Laws can be classified into public law or private law.

Public law governs the operation of the state and the relationship between state and its citizens.  Public law concerns criminal law, taxation law, immigration law and administrative law; and

Private law concerns the relationship between citizens and deals with private disputes known as civil law matters including contract, torts, property, etc

What does ‘separation of powers’ refer to?

Originally statutes (which we now also refer to as government legislation) were simply royal decrees, i.e. what the Monarch wanted.  From start of the 17th century, parliament was introduced which commenced the separation of power from the Monarch.

Separation of powers now refers to the separation of power which features in common law countries between the Legislative (i.e. Parliament), Executive (i.e. Ministers & Officials) and Judicial (Courts).

Federal system of government in Australia

In Australia, the Constitution of Australia Act 1900 (Cth) (“Constitution”) establishes that the Commonwealth of Australia has a federal system of government with:

a) defined powers for the Federal Parliament of Australia.  Section 51 of the Constitution sets out the federal government’s powers to make laws relating to (for example) defence, taxation, customs, migration, social security and marriage.

b) residual powers of the various Parliaments of the States of Australia, being powers not defined under section 51 of the Constitution.  State Parliaments have powers to make laws relating to (for example) health, education, roads and traffic, building, local government and the environment.

The Territories of Australia have limited self-government.

An Act of Parliament is binding on all courts and judges in Australia. Judges can overrule or challenge the validity of an Act only in rare circumstances, i.e. if it is considered unconstitutional. 

Court hierarchy in Australia

In Australia we have a federal court hierarchy and a state court hierarchy.

The Federal hierarchy of courts comprise:

  1. High Court of Australia.  Seven justices sit on the High Court of Australia
  2. Federal Court of Australia.  Single judge or Full Court (at least three judges)
    • Family Court of Australia (Appeal division can hear from Magistrates Courts of the territories and the Federal Circuit Court)
    • Federal Circuit Court of Australia (established in 1999 as the Federal Magistrates Court and in Sep 2018 this Court was abolished)
    • Administrative Appeals Tribunal and other tribunals
  3. State hierarchy (e.g. in NSW)
    • Supreme Court of NSW Court of Appeal (3 Judges)
    • Supreme Court of NSW – Common Law Division and Equity Division
    • District Court of NSW
    • Local Courts
    • NSW Civil and Administrative Tribunal (NCAT)

Most superior courts have both original jurisdiction (directly taken without first being heard by a lower court) and appellate jurisdiction (originally heard in a lower court). 

Administrative tribunals are official bodies, not considered courts, tasked with making decisions to resolve legal disputes.  Carry out ‘quasi-judicial’ functions as the courts are technically considered the only bodies which carry out ‘judicial’ functions.  For example, the Commonwealth Administrative Appeals Tribunal (“AAT”), Australian Industrial Relations Commissions (“AIRC”)

What is the doctrine of precedent?

Each court is bound by decisions of courts in its hierarchy.
A decision of a court in a different hierarchy or lower in the same hierarchy may be persuasive but not binding. A court is not bound by its own past decisions but will depart from them with reluctance na
Only the ‘ratio decidendi’ i.e. the reason for the decision, of a case is binding.
A court is not bound by its own past decisions but will depart from them with reluctance.

Important cases will be published in series of law reports which contain valuable precedents.


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