LAW REFORM- NEWS

05.04.07

Tort changes went too far: judge

Justice Ipp, who wrote a report at the height of the insurance crisis telling state governments how to restrict negligence claims, has now joined those who believe the restrictions need to be wound back.

The judge told a legal conference that "tort reform has gone too far" and he intended to take that message to the insurance industry.

• Click here to Read Justice Ipp's address

The Australian 05.04.07

The Australian 14.04.07

01.06.06

Why NSW is no longer the state to litigate

NSW has long been thought of as the litigation capital of Australia.

But a Law Council study shows that title belongs to the ACT, with the premier state languishing in fourth place.

For the past decade Canberrans have been up to five times more likely to lodge personal injury claims than residents of other states and territories. Even after the tort law changes of 2002, courts in the national capital have been handing 7.4 claims per 10,000 people, ahead of Western Australia (4.5), Tasmania (2.8) and NSW (2.1).

The report by the dean of the University of Newcastle's law school, Ted Wright, reveals that since 2002, personal injury actions have fallen by up to 80 per cent, with NSW recording a 63.2 per cent decrease.

Professor Wright's study suggests there was no litigation "explosion" leading up to the reforms - a claim rejected yesterday by insurers who said this failed to consider increased payouts and claims that did not proceed to the courts.

The Chief Justice of NSW, Jim Spigelman, has questioned whether the changes went too far and other judges have said the level of impairment required to recover damages is too high.

The Premier, Morris Iemma, said the changes had brought about "significant benefits" in stabilising workers' compensation and liability insurancecosts. He did not refer to personal injury claims, which Professor Wright said had undergone a "breathtaking adjustment".

The ACT was a clear leader in negligence claims that had to be decided in the courts - before and after the 2002 changes. It handled 9.4 claims per 10,000 people before 2002, a figure that has fallen to 7.4. It was followed by Western Australia (8 per 100,000 to 4.5), Tasmania (6.4 to 2.8), NSW (5.7 to 2.1), Queensland (3.4 to 1) and Victoria (2.7 to 0.5).

The president of the Law Council, Tim Bugg, said the changes had "simply diminished the rights of injured Australians to claim compensation".

http://www.smh.com.au/news/national/why-nsw-is-no-longer-the-state-to-litigate/2006/05/31/1148956417304.html

Lawyers contest litigation reforms

Chris Merritt, Legal affairs editor

THE lawyers of Sydney are in shock: their city has lost its crown as the nation's litigation capital.

And to make matters worse, new research shows that Sydney's notorious litigation explosion of 2001 might never have happened.

That boom was one of the key justifications for the restrictions on personal injury lawyers and damages payouts that spread around the nation from NSW.

But research commissioned by the Law Council of Australia shows the most litigious citizens have always been in the ACT.

Even West Australians sue each other at a rate that is twice as high as that in NSW.

The research challenges the widely held belief that personal injury litigation had been out of control in NSW before the Carr government restricted access to the courts.

But when the number of personal injury claims for every 10,000 people is analysed, Canberra emerges as a litigator's heaven.

Before tort reform, the rate at which people sued each other in the ACT was almost twice as high as in NSW.

After tort reform - which barely touched the ACT - Canberra is the last bastion for personal injury lawyers.

Personal injury claims are being filed there at a rate that is more than three times higher than in NSW.

Canberra lawyer Richard Faulks, of the Australian Lawyers Alliance, attributes this to the ACT's rejection of most of the tort reforms that are in place in other states.

In Sydney, damages payouts are capped and personal injury lawyers risk prosecution if they dare to advertise their services.

Neither of those changes were made in the ACT, where the rate of litigation has fallen by just 21.2 per cent, compared with a 63 per cent decline in NSW. Nationally, litigation rates have fallen by 60 per cent.

"The changes here were not nearly as significant in terms of restricting claims as those that were introduced in NSW, Victoria and other states," Mr Faulks said.

"There were no restrictions on damages and there was no significant erosion of the right to bring a claim in the ACT."

The research was undertaken by the Justice Policy Research Centre at the University of Newcastle and is part of the law council's campaign to wind back tort reform.

It says there was little or no evidence of a sustained rise in personal injury litigation around the nation in the lead-up to the Ipp review of the law of negligence and the national wave of tort reforms.

Those changes were introduced by state and federal governments to ease the crisis in the insurance industry, which bears the cost of most personal injury claims.

The Insurance Council of Australia said the most important factor behind the crisis was growth in the cost of claims, not merely the number of claims.

ICA chief executive Kerrie Kelly said the continuing campaign to wind back tort reform risked a return to the days when insurance was either unaffordable or unavailable.

http://www.theaustralian.news.com.au/story/0,20867,19324252-2702,00.html

31.05.06

Personal injury law change 'unnecessary'

Reforms to personal injury laws designed to stop a litigation explosion in Australia were unnecessary, a Law Council of Australia report has found.

In 2002 the commonwealth, state and territory governments reacted to a crisis over the availability and affordability of personal injury liability insurance cover by appointing a Panel of Eminent Persons to review the law of negligence - the Ipp Review.

Between 2002 and 2004 the legislatures in every Australian jurisdiction enacted significant tort law reforms, many of them recommended or inspired by the Ipp Review.

But a national report commissioned by the Law Council of Australia and authored by Newcastle University Justice Policy Research Centre director Professor Ted Wright, has found no evidence the reforms were needed.

The report analysed trends in personal injury litigation, excluding motor and workplace accident claims, in Australian states and territories over the past decade, both before and after the introduction of the reforms.

"The data show that, contrary to widespread belief, litigation rates had not, generally, been increasing in the period leading to the Ipp Review," the report said.

"This finding provides no empirical foundation for the premises underlying tort law reform as a strategy for addressing the insurance crisis in 2002.

"It is evident that the reformers could have had no empirical foundation, either for predicting the impact of the reforms on personal injury litigation in their jurisdictions, or for determining by how much it was desirable to reduce it."

Prof Wright said reforms had also failed in its aim to unify the process of personal injury claims across the states and territories.

"National uniformity has not been achieved either in the law or in the impact of the law," he told AAP.

"The differences in the rights of an injured person to compensation depend significantly in which state or territory they are injured."

Law Council president Tim Bugg said the comprehensive national report showed no justification for the sweeping reforms to tort law.

The Law Council long held concerns about the loss of compensation rights and the effect on people who had been injured through other people's negligence, Mr Bugg said.

"This report confirms what we have been saying for many years - tort law reforms were hastily-introduced and ill-thought out," Mr Bugg said.

"They were a knee-jerk reaction to a problem that, according (to) this hard data, had little or nothing to do with litigation rates."

But the Insurance Council of Australia (ICA) says regular monitoring of the tort law reforms shows they have been effective, with average premiums coming down and cover more widely available.

"Lawyers should do better than to mislead the public by quoting the court statistics of public liability cases as the complete picture of the number of claims being handled and settled by insurers," ICA chief executive officer Kerrie Kelly said in a statement.

"The reality is that the vast majority of claims for personal injury compensation are dealt with outside the court process."

Ms Kelly said there had been five Australian Competition and Consumer Commission (ACCC) price monitoring reports, with the last one finding that average liability premiums declined by 4 per cent in 2004 with further reductions expected in 2005.

A NSW Parliamentary inquiry into personal injury reforms also reported in late 2005 the insurance industry had not been systematically profiteering from liability insurance, Ms Kelly said.

"Winding back the reforms can only operate to the detriment of ordinary Australians, community groups, small businesses and the major corporates, who all depend on a stable insurance market for the public liability insurance protection they need," she said.

http://www.theage.com.au/news/National/Personal-injury-law-change-unnecessary/2006/05/31/1148956405740.html

[National Trends in Personal Injury Litigation: Before and After "Ipp" (PDF)]