Tort Law Reform in Australia: Fundamental and Potentially Far-Reaching Change

Article excerpt

Following the Ipp Report, reforms are going forward in New South Wales, with the emerging result that runaway insurance costs are coming under control

THE two years just past saw an intense period of unprecedented tort law reform in Australia. In 2002, claims from many sectors were that Australia was in the midst of a "public liability crisis" because of a legal system that was "out of control." The collapse of a major insurer and a leading medical indemnity insurer, coupled with several high-profile negligence cases in which plaintiffs were awarded significant damages, brought spiraling insurance premiums and aroused considerable societal concern.

The response of government to the perceived crisis was unusually swift and decisive. A committee was appointed at the federal level to undertake a Review of the Law of Negligence, and it delivered a series of reports within months. The review received evidence that the absence of insurance, or the availability of insurance only at unaffordable rates, adversely affected many aspects of community life.1 Claims regarding the unpredictability of the law, the ease with which plaintiffs succeed and the generosity of the courts in awarding damages were presented to link the state of the law of negligence with the "insurance crisis." These assumptions have some validity, and whilst there is no conclusive evidence that they are justified, they certainly have emotive and political appeal.

Opposition to the reforms from some unions and plaintiffs' lawyers was largely ignored. The perceived threat to the Australian community and the need to wind back the culture of "blame and claim" generated sufficient political will to ensure that the committee's recommendations were substantially implemented by the state and territory governments and supported at the commonwealth (federal) level.

As the flurry of legislative reform came to an end in 2004, there is an opportunity to begin to see what impact the reforms will have on insurance premiums and the legal landscape governing damages for personal injuries. There is little doubt that the reforms will continue to shape the development of the law in this area for many years to come.

AUSTRALIAN LEGAL SYSTEM

By way of background it is useful to briefly outline how Australia's legal system operates.2

Australia is a federation of six states and two self-governing territories. The Australian Constitution specifies a range of matters that are the responsibility of the federal government. The balance of legal issues remains the responsibility of the various state and territory governments.

Australia has both a federal court system and a hierarchy of courts in each of the states and territories. In all cases, the ultimate appellate court is the High Court of Australia, and its decisions are binding on all other Australian courts.

Actions heard by Australian courts proceed on an adversarial basis. The practice and procedure, including the rules of evidence, are similar to those in English courts, as Australia's laws and legal system have their foundation in the common law of England. Civil proceedings in Australia generally, though not always, are heard by a judge sitting without a jury.

DRIVERS OF THE "CRISIS"

There has been an intense debate amongst lawyers, politicians, journalists and others as to what gave rise to the emergence of the so-called culture of "claim and blame" and what led to the legal system spiraling "out of control." There is a broad acceptance that a range of factors played a part, but views differ markedly as to the relative importance of these factors.

A. Community Attitude

A fundamental force underlying the liability crisis is the litigious mindset entrenched in many individuals within the community.

B. Developments in Tort Law

From the 1960s to the 1990s, judicial expansion of the concept of negligence was ubiquitous. …