Not all of the judgment of a higher court is necessarily binding on a lower court. Only the reason/ s given for deciding the earlier case, called the “ratio decidendi” (often shortened to ratio), creates a binding precedent. In the High Court decision in O’Toole v Charles David Pty Ltd (1991) 171 CLR 232, the court said: “[T]he law is changed by judicial decision, especially by decision of the higher appellate courts. Thereafter, the law is taken to be and to have been in accordance with the principle which informs the new decision: the ratio decidendi. The ratio, which is expressed in or necessarily implied by reasons for judgment to which a majority of the participating judges assent, is the law. It is not merely a judicial opinion as to what the law is; it is a source of law”. A statement of principle made in the earlier case that was not strictly necessary for the decision is not binding: such a statement is called an “obiter dictum” (singular) or “obiter dicta” (plural). However, the High Court has modified this traditional rule by stating that lower courts are bound by its “seriously considered dicta”. A lower court must determine precisely what was the ratio of the higher court which is binding, a task which is often more complex than might at first appear. Furthermore, it might be found that there is some differentiating feature between the fact situations in the two cases so that the earlier case can be distinguished from the later, in other words, held not to apply because of the differing circumstances of the later case. The following case provides an example of the way in which the courts “make” law and demonstrates the interconnectedness of the parliament and the courts in the development of law.