The general rule is that Courts are bound by the past decisions of courts of the same level and bound by the decisions of courts that are higher in the hierarchy. However, are Courts bound by a judgment at the same level? In certain circumstances (explained below), yes.
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What is the doctrine of precedent?
The doctrine of precedent comprises of several rules to which there are sometimes exceptions:
- Courts are bound by the past decisions of courts of the same level. So for example the Court of Appeal is bound to follow earlier decisions of the Court of Appeal on the same point.
- Courts are not bound by decisions of courts lower in the hierarchy. So for example the Court of Appeal is not bound to follow earlier decisions of the High Court on the same point.
- Courts are bound by the decisions of courts that are higher in the hierarchy. So for example the Court of Appeal is bound by decisions of the Supreme Court.
What is the hierarchy of courts?
In the Civil (non-public) law context such as the law of contract the hierarchy of the courts is as follows.
The High Court, when not acting in an appellate capacity (from the County Court) and the County Court are known as Courts of first instance. Assuming that there is no appeal the litigation will be concluded in one of these two forums. The High Court can only be used in a non-personal injury claim if the value of the claim exceeds £15,000. In claims for personal injury the claim in the High Court must exceed £50,000.
Is the Supreme Court bound by its own past decisions?
Traditionally the House of Lords was bound by its own past decisions: London Tramways v. London County Council  AC 375.
The rule applied even if a subsequent House of Lords were unhappy with the consequences of following their own past decision. A good example is the case on privity of contract where the House of Lords in Scruttons Ltd. v. Midland Silicones Ltd.  AC 446 were compelled to follow Dunlop Pneumatic Tyre Co. Ltd v. Selfridge & Co. Ltd  AC 847, even though Lord Reid in particular was unhappy with the consequences.
Since 1966 the position has changed. The Practice Statement of 1966 read as follows:
Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules.
Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose therefore, to modify their present practice and, while treating formal decisions of this house as normally binding, to depart from a previous decision when it appears to be right to do so.
In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlement of property, and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law. This announcement is not intended to affect the use of precedent elsewhere than in this House.The Practice Statement of 1966
Note that this does not mean that it was intended that the House of Lords would depart from earlier decisions on a regular basis. Indeed since 1966 the House of Lords have only departed from their own past decisions on a handful of occasions.
A good example occurs in the law of tort where the House of Lords in Murphy v. Brentwood  1 AC 398 overruled the earlier decision of the House of Lords in Anns v. Merton  AC 728. The Practice statement was not intended to change the rules for courts other than the House of Lords.
Can the Court of Appeal bind itself?
The rules of precedent for the Court of Appeal were laid down in the 1940s in Young v. Bristol Aeroplane Co.  KB 718:
The rule is that the Court of Appeal is bound by its own past decision with three exceptions:
- Where the decision of the Court of Appeal conflicts with a later decision of the House of Lords the Court of Appeal must follow the House of Lords;
- Where there are two earlier conflicting decisions of the Court of Appeal then the later Court of Appeal in a third case must choose between them;
- Where an earlier decision of the Court of Appeal was made per incuriam i.e. the earlier Court of Appeal overlooked something that was binding on it such as a statute the later Court of Appeal are not bound to follow their earlier decision.
Following the 1966 Practice Statement, Lord Denning in the Court of Appeal conducted what Lord Diplock called a ‘one-man crusade’ to adopt a similar position in the Court of Appeal i.e. to overturn the rule that the Court of Appeal was bound by its own past decisions. In Davis v. Johnson  AC 264, the House of Lords stamped on this attempt to relax the rules in the Court of Appeal.
The Court of Appeal is bound by earlier decisions of the House of Lords. A good example in the context of contract law occurs in Re Selectmove  1 WLR 474 in which the Court of Appeal found itself bound by Foakes v. Beer (1884) 9 App Cas 605 a decision of the House of Lords, even though the outcome was clearly distasteful to them.
Are judges in the High Court and County Court bound by past decisions in these courts?
The judges of courts of first instance are not bound to follow the decisions of judges in the same court. He or she is only bound to follow decisions of the Court of Appeal and House of Lords. Even at this level certainty is important and judges will usually follow the earlier decisions of judges at the same level see, Colchester Estates v. Carlton Industries  Ch 80.
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