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Soaring litigation levels keep the courts clogged

The Australian Financial Review - 31 January 2006
By Marcus Priest

Courts are reducing the cost of running civil litigation but are facing a significant increase in the number of cases being lodged.

In NSW, one of the major causes of rising court lodgements in the Supreme Court - a 14 per cent jump in the past year - has been mortgagor repossessions, as the downturn in the property market starts to bite.

But the figures in the annual review of government services by the Productivity Commission, to be released today, mask the continued fall in personal injury cases as legislative changes to tort law, particularly in NSW and Victoria, reduce the number of claims coming to court.

In other areas, the report by the steering committee for the review of government services reveals that Australian governments have cut their spending on vocational education and training by more than $120 million, despite the national shortage of skilled workers.

Total federal, state and territory government funding for vocational education and training fell by more than 3 per cent between 2003 and 2004. Spending is well down in Victoria, NSW, Tasmania and the Northern Territory.

Only in Western Australia, where the skills shortage is biting particularly hard, did spending on vocational training increase.

On health, the report is critical of the impact that cost-shifting between federal and state governments is having on services and shows that growth in private health-care funding continued to outstrip growth in public-hospital funding.

The report finds that across all courts in Australia, the average cost to the taxpayer of a case fell from $592 in 2002-03 to $536 in the last financial year. But last year, the number of civil cases across all levels of courts increased from 648,000 to 662,000.

The largest state, NSW, has one of the lowest cost to taxpayers per civil case in the Supreme Court, $2821, followed closely by Victoria - which has cut the cost of civil cases by 20 per cent in the past four years. "We have really done more with less," Victorian Chief Justice Marilyn Warren said.

Over the past five years, while most superior courts have become more efficient in processing claims and clearing backlogs, they still fail to meet the national benchmark: that no more than 10 per cent of lodgements should be more than 12 months old.

The Federal Court had one of the largest backlogs - 54.9 per cent of its civil cases were more than 12 months old - and the average cost to taxpayers of a case was among the highest of all superior courts, $16,767.

Western Australia has the largest proportion of criminal cases awaiting trial in the Supreme Court for more than 12 months - 28 per cent.

The increase in court efficiency amid rising litigation reflects continuing emphasis by courts, particularly in NSW and Victoria, to speed up the resolution of claims through alternative dispute resolution.

"The horror stories of the long waiting lists are no longer the norm," the president of the Institute of Arbitrators & Mediators Australia, Tim Sullivan, said.

"[This] appears to be due to an improvement in management structures within the courts and a greater reliance on and support for the alternative dispute resolution processes available."

The largest increases of civil claims has been in the supreme courts of NSW, Victoria and WA, which handle the largest cases and last year had the highest number of civil lodgements in the past five years.

The number of civil lodgements in the NSW Supreme Court increased last year by 1600 to 12,900. At the same time, the NSW Supreme Court made large inroads into its backlog of civil cases, reducing the proportion of those delayed over 12 months from 40 per cent to 28.6 per cent - one of the lowest in state supreme courts.

In the past two years, the NSW Supreme Court has also reduced real net recurrent expenditure by 7 per cent, while nationally that expenditure for supreme courts grew by more than 5 per cent. "While NSW has approximately one-third of Australia's population, it incurs only about one-quarter of the national court administration costs," state Attorney-General Bob Debus said.

The increase in civil litigation has masked the impact of changes to tort law in NSW and Victoria in 2002 and 2003. In the last financial year, lodgements in the NSW District Court fell by 1200 to 7200 and by 3300 in the Victorian County Court to 5500.

This is a far cry from the year before the tort law changes, when lodgements in NSW District Court were nearly 21,000.

ccording to figures obtained by the Law Institute of Victoria, the number of public liability claims dropped from 1734 to 40 in the year since the introduction of the tort changes in September 2003.

"It is time to review the impact of the laws, which has been more harsh and tougher than anticipated," LIV chief executive John Cain said.

"The government could not have anticipated, even in their most optimistic view, to see the reduction that has occurred."

By contrast to NSW, real net recurrent expenditure on the Victorian Supreme Court has grown by 55 per cent over the same period to deal with an increase in criminal cases arising from gang-related matters.

While superior courts are making inroads into their civil case loads, their backlogs of criminal cases are proving harder to reduce.

The WA District Court has the largest number of backlogged criminal cases - 29 per cent are more than 12 months old - while the proportion of backlogged cases in the SA District Court has increased to 25 per cent.

We gratefully acknowledge the permission from Marcus Priest and The Australian Financial Review to reprint this article.