Wynn v NSW Insurance Ministerial Corporation PDF

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BJU200 – Answer for Second Assignment 2016 In this essay, I will apply some of the ideas from Michel Foucault to the High Court’s decision in Wynn v NSW Insurance Ministerial Corporation (“Wynn”).1 In particular, I will focus on the notion of the disciplinary power of discourses (bodies of knowledge) and how practices of accounting impact on the outcome of the decision. Before I apply Foucault’s ideas to the decision, I will describe the basics of the method, and theory, in the abstract. Much of the French theorist’s work centred on power and the way power is organized in society.2 His early work had a particular focus on the role that discourses in organizing and maintaining power relations.3 To be clear, his work, and therefore this analysis, falls squarely into the “post-modern” category of legal research (with that category being, itself, a subcategory of the “critical” category of legal research). This legal research method can be understood to be ‘reacting against features of the prevailing orthodoxies’ in the law. 4 A central plank of it is to use ‘developments in philosophy, sociology and literary theory’ to challenge the law;5 therefore, a central aspect of the method is the identification and adoption of a specific theory upon which the critique is to be based. In my case, I am using the theory of Foucault (whose work is somewhere between philosophy and sociology). The idea that is central to this critique is that “accounting” is a form of organized knowledge that operates as a technique of power. In other words, the challenge to the prevailing legal orthodoxy inherent in this analysis is that what seems like a straightforward and sensible thing to do is, in fact, an exercise in control that is historically contingent. To take a contrasting example, it would not be self-evident to many who did not live in our society that money payable as a remedy should be subject to arcane and detailed calculations. For one commentator, in the Roman law system, ‘delict is imbued with the idea of vengeance, and the action is primarily not for damages, but for a penalty’. 6 If remedies are about punishment, then it makes much less sense to tally up certain aspects and vary the penalty on the basis of future circumstances rather than just the damage suffered. And yet, our courts do it without thinking about the basis, or the impact, of the decision-making process. 1 (1995) 184 CLR 485. 2 One easy reference for this point is the collection of his interviews in C. Gordon (ed) Power/Knowledge: Selected Interviews and other Writings 1972 – 1977, Pantheon, New York, 1980. 3 See, for example, M. Foucault, The Order of Things, London, Routledge, 2002. 4 A. Hunt, ‘The Critique of Law: What is “Critical” about Critical Legal Theory’ in P. Fitzpatrick and A. Hunt (eds), Critical Legal Studies, Basil Blackwell, Oxford, 1987, 5. 5 Ibid, 8. 6 W. Buckland and A. McNair, Roman Law and Common Law, 2nd ed., Cambridge University Press, Cambridge, 1965, 344.

Expressed differently, accounting ideas and practices are best understood as an exercise in discursive power. Of course, for Foucault, power is not seen as negative, but merely “constitutive”;7 and so to characterize any aspect of a discourse as a technique of power is not to criticize it, or to condemn it, but only to comment upon the aspect. As a specific example of the constitutive power, for Foucault, discourses operate as ‘rules that delimit the sayable’. 8 The rules of the discourse of accounting are such that certain things are “sayable” and others are not permitted to be said (in the case of accounting, certain manipulations of monetary amounts are allowed while others are contrary to the “Truth” of the discourse). There is not the space here to describe the discourse in the entirety – the point is only to indicate that accounting techniques are not valid in and of themselves in that they are an expression of a non-legal discourse that relies on the rules of that discourse to gain any validity. In terms of applying these ideas to the Wynn decision, I will focus on the role of accounting terminology in the outcome of the case. 9 One example of this is the term “deductions”. To reiterate, it is easy to take for granted the idea of deducting one amount from another in order to come to a “proper” figure. But this ease is the result of the manner in which “accounting” has become accepted as a discourse of power in our society. In other words, the balance of this essay is aimed at questioning the accounting strategies (as opposed to questioning the calculations themselves) that underpin the calculation of damages in Wynn – of course, this analysis could be applied to any remedies decision that calculates damages; this decision, however, Wynn provides an ideal example.10 The centrality of the discourse of accounting to the decision is highlighted by Brennan CJ’s characterization that ‘Grounds 1, 2 and 3 of the plaintiff’s grounds of appeal challenged the correctness of [the] deduction’.11 In other words, the most important challenges from the decision of the Court of Appeal of the Supreme Court of New South Wales focused on the disciplinary “technique” of deducting one amount from another. By way of background, the High Court case had a substantial focus on the calculation of compensation payable to a person hurt in a motor vehicle accident. More specifically, a key issue was on the relevance 7 See, generally J. Faubion (ed), Michel Foucault: Power – The Essential Works Vol. 3, Allen Lane, London, 2000. 8 G. Kendall and G. Wickham, Using Foucault’s Methods, London, Sage, 1999, 43. 9 Miller and Rose, for example, refer to ‘accounting and financial management’ as ‘calculative regimes’ within their broadly Foucauldian analysis of advanced liberal democracies: P. Miller and N. Rose, Governing the Present, Polity Press, Cambridge, 2008, 212. 10 Normally, the choice of case should be justified in terms of its value in highlighting the method. In reality, I am using in Wynn for two reasons – it is short, and many of you would have read it. 11 (1995) 184 CLR 485, 489.

of amounts that, hypothetically, could have been made for the cost of child care in the person’s future. So, the decision uses terms such as ‘expenditure’, 12 ‘deductions’, discount’ and ‘vicissitudes of life’;13 in addition to more common words like ‘compensation’, ‘earning capacity’ and financial loss’.14 The former group of words are “terms of art” – words with a specific and technical definition within the discourse of accounting; whereas the latter group are words which are used much more flexibly. An example of the specificity of definitions of the former group is evident in the Wynn case. The Court15 provides a distinction between two forms of ‘saved expenditure’16 – with the two forms not being in a style of writing that would be evident in most daily communications between individuals (unless they’re accountants). In other words, these are technical terms (that did not have a legal heritage) with technical definitions that can only be used in a specific way. The examples can be analysed further. There was a phrase used by the Court in its judgment – ‘pleasure-giving expenses’.17 What is notable about this phrase is that it is still a term of art and yet it covers aspects of life that are not within the expertise of the discourse. Accounting knows numbers and it can attribute numbers as markers of value but it cannot know “pleasure”. This, therefore, is an example of another way in which bodies of knowledge control and perpetuate themselves. Foucault discussed this in his piece ‘The Order of Discourse’.18 He discussed three categories of discursive control – those that are internal, those that are external and those that are neither fully internal nor external (or processes of rarefaction).19 The phrase “pleasure-giving expenses” falls within the category of “processes of rarefaction” because it is a term of art for the discourse but one that delimits matters outside the scope of the discourse (so it is neither fully internal nor external). What then does it mean that this decision is based on a non-legal discourse? At one level, because the courts have accepted the language of accounting as a legitimate tool for assisting 12 “Expenditure” was also further categorized as ‘optional’ and ‘saved’: (1995) 184 CLR 485, 491. 13 (1995) 184 CLR 485, 490, 493. 14 (1995) 184 CLR 485, 495. 15 I use this term broadly to cover both judgments – both agreed in terms of the orders made by the Court and both used the language of accounting in much the same way. 16 (1995) 184 CLR 485, 490. 17 (1995) 184 CLR 485, 490. 18 In R. Young, (ed) Untying the Text: A Post-Structuralist Reader, Routledge & Kegan Paul, London, 1981. 19 For a discussion of these in a legal context, see C. Dent and I. Cook, ‘Stare Decisis, Repetition and Understanding Common Law’ (2007) 16 Griffith Law Review 131 and C. Dent, ‘The Privileged Few and the Classification of Henwood v Harrison: Foucault, Comment and Qualified Privilege’ (2005) 14 Griffith Law Review 34.

with the calculation of compensation, it does not matter where the terms come from. 20 To be clear, the incorporation of the words does not mean that the other discourse dictates what the court decides; as the legal tests, and their application, remain as statements of the legal discourse. Instead, the law just “borrows” aspects of the other body of knowledge in order to justify its decisions. At another level, however, it shows that the law is entirely happy to co-opt whatever it needs in order to get the job done. It’s not even clear that the judges are using the terms correctly – most members of the judiciary do not have degrees in accounting or finance and most have not run their own business (yes, most were barristers, however, the good ones are not left with doing their own accounts). There may, therefore, be an arrogance to the legal system that enables it to adopt the expressions of other areas of expertise in order to support the legitimacy of the system itself. 21 Modern governance operates in a ‘numericized environment’;22 the law, by itself, does not deal with numbers and, therefore, it has to do what it can to make it look relevant in today’s number-centred society. This analysis was not so much about arguing whether the Wynn decision was rightly or wrongly decided. Instead, it used a specific theoretical framework to critique the decision at a deeper level. The analysis, instead, suggests that the unspoken colonisation of the language of another discourse is a ploy (no doubt an unconscious ploy) calculated to prevent the law being sidelined as a process of deciding disputes 23 – keeping the courts in business and stopping compensation simply being agreed to by the number-crunchers of both sides’ insurance companies.

20 Once a set of words have been introduced by a court at a high enough level, then it can be used by all courts. For a discussion of how the use of the word “confusion” by the House of Lords changed trade mark law, see C. Dent, ‘Confusion in a Legal Regime Built on Deception: The Case of Trade Marks’ (2015) 5 Queen Mary Journal of Intellectual Property 2; for a discussion of how the doctrine of precedent operates through the repeatability of statements, see C. Dent and I. Cook, above n 19. 21 For a discussion of the role of expertise in a Foucauldian understanding of governance, see N. Rose, ‘Governing “Advanced” Liberal Democracies’ in A. Barry, T. Osborne and N. Rose (eds), Foucault and Political Reason: Liberalism, neo-liberalism and rationalities of government, UCL Press, London, 1996, 54-6; and T. Johnson, ‘Expertise and the State’ in M. Gane and T. Johnson (eds), Foucault’s New Domains, Routledge, London, 1993. 22 N. Rose, ‘Governing by Numbers: Figuring Out Democracy’ (1991) 16 Accounting, Organizations and Society 673, 691. 23 For those pedants who consider that there cannot be such a thing as an unconscious ploy with a specific calculation in mind – the law has long considered that an act can be ‘calculated, and I think designed, to create’ a named outcome: Eno v Dunn (1890) 15 App Cas 251, 263. The distinction between “calculation” and “design” implies that one is conscious and one is unconscious....