Course:Law3020/2014WT1/Group M/Positivism

Legal positivism can largely be seen as a reaction to the central tenants of the natural law theory. Positivism is based on the proposition that law is separate from morality; therefore "positive law" is generally defined in negative terms, by what it is not. For this reason, it is perhaps not surprising that different positivist thinkers have proposed very different definitions for what positive law is:

John Austin

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For John Austin, the validity of a law is empirically provable. Positive law constitutes a command, issued by superiors to subordinates, and backed by sanctions. The superior, or sovereign, may be an individual (such as a monarch) or an aggregate body (such as Parliament). In order to be a sovereign the individual or body must command obedience from the bulk of the given society. A judicial decision maker, although not the sovereign, derives its authority from the sovereign. Under Austin's positivist legal theory, judicial decision makers may interpret and apply law and even create law so long as it does contradict positive law as expressed by the sovereign. Although the decision in Hodgkinsons v. Simms is based on the common law as opposed to written legislation, the development of common law regulations is not inconsistent with Austin's theory of legal positivism.

However, the fiduciary duty described in Hodgkinsons v. Simms does not take the form of law articulated by Austin, as it is not a "command" followed by "sanctions". Instead it is a civil regulation of commercial relationships between private actors. The law is expressed by the Supreme Court is an awkward fit with Austin's positive law, as it is regulatory and descriptive in nature as opposed to a command which must be followed on pain of punishment by the state. The fiduciary duty articulated in this case may actually be a better fit with Austin's concept of "positive morality" as it appears to be an example of how the judicial decisions makers believe people in commercial relationships should act. In addition, the fiduciary duty in this case arises in part from the professional standards imposed on accountants. These are perhaps more akin to "club rules" (a type of positive morality) than they are to positive law per se.

H.L.A. Hart

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Another positivist thinker, H.L.A. Hart, breaks positive law down into primary rules (which tell us what we can and cannot do) and secondary rules (rules by which we can change the rules, adjudicate disputes about the rules, and figure out what the rules are). The law that stems from the instant case describes fiduciary liability and thereby is a primary rule as it tells a certain class of people (accountants) what they can and cannot do.

For Hart, the rule of recognition requires that positive law must be recognized by officials, it must be consistently applied, and those who apply the law must believe in its application. Hart sees laws as more than just commands, and asserts that those applying the laws must also believe that the laws are just.

With regard to the instant case there has been much jurisprudence upholding fiduciary duties in the professional context, suggesting those who apply such duties also believe in them. Fiduciary duties are a well established principle of many professional organizations, and are accepted and obeyed by the vast majority of accountants and other professionals. On this basis, the common law fiduciary duty described in Hodgkinsons v. Simms fits much more comfortably with Hart's conception of positive law than with Austin's.

In short, Hart's theory provides us with a more flexible approach as to what constitutes law. Austin's theory focuses almost entirely on a specific form of law (i.e. a command followed by a sanction), and is really only applicable to criminal and regulatory restrictions imposed directly by the state. Hart's theory, on the other hand, encompasses any generally accepted rule for how individuals are expected to behave. Many of the rules and regulations which Austin might define as mere "positive morality" (including the fiduciary duty arising in Hodgkinsons v. Simms) would fall within Hart's more flexible and expansive definition of "positive law".