|Title||Legal and Constitutional Affairs References Committee
Impact of federal court fee increases since 2010 on access to justice in Australia
|Committee Name||Legal and Constitutional Affairs References Committee
Humphries, Sen Gary
Crossin, Sen Trish
LEGG, Associate Professor Michael James, Private capacity
Evidence was taken via teleconferenceâ
CHAIR: I now welcome Associate Professor Michael Legg. Professor Legg has lodged submission No. 9 with the committee. Do you wish to make any amendments or alterations to your submission?
Prof. Legg : No, I do not.
CHAIR: I now invite you to make a short opening statement, and at the conclusion I will invite members of the committee to ask questions.
Prof. Legg : There are only three points that I want to reiterate from what I put in the submission. The first one is that cost is a major barrier to access to justice in Australia. That is not just court fees. I understand that this particular committee is only looking at Federal Court fees. In terms of the impact on access to justice cost generally is problematic. It does not just impact the poor or the disadvantaged, although it clearly does impact them. It impacts the majority of Australians because accessing the legal system is expensive.
The second point I wanted to address was the link between the increase in court fees and the government's promotion of alternative dispute resolution. This, I guess, is worth pointing out in that that link was not something that was originally raised by the committee in its terms of reference. When one looks at the speeches and statements of former attorneys-general there is a clear link between wanting to promote alternative dispute resolution and the increase in court fees that took place. It appears that part of the rationale was that the fees were aimed at deterring citizens from using the courts, with a view to them having to then use alternative dispute resolution. But that is a very blunt instrument, because the fee increase applies regardless of whether alternative dispute resolution is in fact an appropriate way to deal with a particular dispute.
Secondly, this push towards ADR and increasing the court fees to encourage it undermines substantive rights. If you cannot afford to go to court then those substantive rights become almost meaningless. Yes, you may be able to go to ADR and try to negotiate about what you should get as part of enforcing your rights, but it is a negotiation; it is not an independent court that is making a determination. There is also, I think, a concern that this promotion of ADR, whilst also increasing court fees, creates the real risk of a bifurcated system of justice in that the havesâthe governments and corporationsâcan undertake litigation if ADR is unsuccessful. So, they can participate in ADR, but if they are not happy with the outcome the courts are always available for them. But compare that with the have-notsâwhich is really most individual citizens. They participate in ADR and they effectively have to accept whatever they are able to get through that sort of negotiation or mediation type of process, because they cannot afford to go to the courts. Once that is recognised, that imbalance in being able to approach the court will naturally impact the way in which ADR is conducted, because the stronger party will know, 'I've got no fear of actually being held accountable before a court', and that will impact how they conduct the ADR from their side.
The third thing I wanted to touch on was the substantial fee increases on corporations. I would be very surprised if there was anyone who was going to stand up and defend corporations before the committee today, but I do think it is worthwhile visiting how these fee increases impact, because I think it can be problematic in at least two ways. One is that the legal system is in fact a competitive factor in a globalised world. If you start to increase fees so that corporations start to say, 'It's very expensive to get our disputes resolved in Australia', then they may go elsewhere, and it may also mean that their underlying business goes elsewhere. And the second aspect in relation to corporations is that certainty in commerce is very desirable, because it promotes efficiency; people know how contracts are being interpreted, they know how particular terms are going to be considered by a court, and therefore parties can actually resolve things without needing the court, because they know how it would be done. You start to have corporations turned away from the courts and as business develops and those things are not resolved by the courts you end up with uncertainty.
So, they were my three opening points. The only other thing I would say is that in terms of questions I am much more familiar with the Federal Court of Australia than with the Family Court, but otherwise I am happy to take questions.
Senator HUMPHRIES: I was struck by your comments about the haves and the have-nots and the references in your submission to the way in which fees have risen and the question of what that does to people's access to justice. Do we differentiate sufficiently the cost of accessing justice according to a person's position or income? Is there a mechanism we should be using? Can you expand on what you think is the mechanism we should be using to give more subtlety in the system to recognise people's ability or inability to pay as a basis on which to file proceedings in any of our courts?
Prof. Legg : I guess the starting position should be that the court should be open to all citizens, so you do not want to erect barriers that stop people being able to get to the courts. There do need to be some feesâI think that is acceptedâbecause there are costs involved in providing the courts. But you want to try to make sure that everyone can access it. When you start to try to differentiate between different groups, the problem is one of how you do that in a way that is simple to administer so that you do not incur a whole bunch of costs trying to work out who gets which of these fees, but at the same time try to make it fair. I guess the easiest way is that you can try to income test the way in which the fees should apply, or you can simply say, as I would suggest, that the vast majority of individuals are going to have difficulty accessing the courts, so I would have individuals as a whole paying a lower fee than what is currently charged. So I do not think I would differentiate amongst individuals. I think it would just be a case of making sure that there is a fee there, and if it was appropriate to give assistance to someone it may be that they get that through some other avenue to assist them in paying the court fee.
Senator CROSSIN: We have a submission from the department stating 'for many people, increases to court fees will not necessarily impede access to justice relative to the total cost of litigation,' due to the high cost of legal representation. In other words, there is a real emphasis on user pays. What is your response to that view, and do you have any other comments on what the department has presented to us, if you have read their submission?
Prof. Legg : It is definitely true that when we talk about access to the courts there are a range of costs, and court fees are only one of them. Lawyers' fees and disbursements, such as experts' fees, are usually the most expensive, and if anyone wants to access the courts they also need to be able to afford those. There are some avenues for getting assistance for those, in the sense that there is legal aid or pro bono. I actually think that all of the costs involved in litigation need to be reviewed. The United Kingdom did this back in 2009, when Lord Justice Jackson conducted a review of civil litigation costs. They effectively recognised that the system was just not accessible. It effectively was not working. So they actually decided that everything needs to be on the table. That would be my preferred approach.
But in terms of the department's perspective, the one thing I would say is that just because you have other costs out there it does not make it right for government to sort of put more of a burden on people and increase the costs even further, just because they are small part of it. The fact is that all of the costs impede access to justice, but if everyone is taking the view that it is not just me but it is also these other people, I do not think that is a good way to go. I think everyone should take responsibility for trying to keep the costs down.
Senator CROSSIN: Are you saying that $2,155 for an individual just to file an application in the Federal Court is too high?
Prof. Legg : I think it is. You have to look at it like this: if I am an average person and I suddenly find myself in litigation, before I can get there I have to find $2,155 above and beyond the normal amount of income that I need to sustain my existence, my life and my family, but it is not just that fee. Once you enter into litigation there is a whole bunch of fees that come along and hit people as they go through the system. So, I find that amount, but I need to issue some subpoenas. An interlocutory application is needed. All of those come with fees. I get to the final trial. I have to pay a fee to be listed to go to trial and then I have to pay a daily fee. All of that adds up.
Senator CROSSIN: On top of that, if you do not have legal aid or any pro bono assistance, you have the fees from your legal firm?
Prof. Legg : You do. The thing to factor in is that lawyers charge in a number of different ways. You might be paying a rate that is basically linked to the number of hours that the lawyer works, so you have to find that money as you go along. Equally, you may find a law firm that is prepared to do it on a no win, no fee basis, in which case you are not having to pay unless you get success. Even if the legal fees are high, that helps you get through the system to be able to enforce your rights.
Senator CROSSIN: Previous witnesses and submissions have said that there should be an exemption of court fees if you are being represented on a pro bono basis. What is your view?
Prof. Legg : I would support that.
Senator CROSSIN: Sorry, it is probably not an exemption of the court fees but an exemption for the application, essentiallyâthat the Federal Court or whatever jurisdiction you are in should be able to see that you are being represented on a pro bono basis, so you just tick a box and no exemption for court fees needs to be applied for.
Prof. Legg : Let me try to answer in this way. When you have a lawyer who is prepared to do a matter pro bono, they are effectively saying, 'You don't need to pay me for this,' or they might be saying, 'You don't need to pay me for this, but, if we actually recover costs from the other side, then that could come to me to help cover the costs that I have incurred.' We want to be in a position where we are able to support lawyers to conduct pro bono work. If there is a way in which the court fees could be structured or orders about costs could be structured to support that, then that is something that should be investigated.
CHAIR: I will start by asking you about a proposal that was made in the National Pro Bono Resource Centre submission that perhaps a percentage of court fees could be linked to funding for legal assistance services, to have that very clear link between the cost of being able to access courts and ensuring some way of acknowledging that legal assistance services need to be provided for those people who do not have the means to be able to get legal assistance otherwise. Do you have a view about that?
Prof. Legg : I cannot say that I have read that particular submission. Is the idea that the fee that you would pay is somehow linked to the amount of legal assistance that you would receive?
CHAIR: No, it was not quite that direct. I will go back to the submission so that I can give you the context of what I am asking you. It is just a proposal. It is just something to think about. It rises in the context of concerns about the revenue, particularly in relation to the last court fee increasesâthat a substantial proportion of that was being directed into general revenue. The suggestion was that a percentage could perhaps be tied and directed towards legal assistance fundingâsome kind of formula so that, where the executive government was imposing court fee increases, there would then be some flow-on to legal assistance funding.
Prof. Legg : I think that would be helpful, in the sense of ensuring that you did have funds available for those people who were unable to afford access to the courtsâso, if the fees were to go up, there would be more money to assist those who needed to access the courts. The only comment I would have against it, I guess, would be simply to say that you are assisting those who are very much disadvantaged but the more average citizen who needs to approach the court still gets hit with higher fees and may be discouraged from enforcing their rightsâand they are not going to qualify for legal assistance. My view is that, basically, almost all of the Australian population would have difficultly in accessing a superior court in relation to litigation, so you have to try and make it accessible for everyone. This tends to try and help some people but not everyone.
CHAIR: Thank you for that. You may feel like you answered this earlier, but I would like to tease it out a bit more. In relation to corporations, would it be of any interest, or would there be any attraction for you, to have a slightly more nuanced fee system for corporations in the current scheme of things, where there could be some differentiation between smaller and larger corporations?
Prof. Legg : It would be possible to do that in the sense that the Corporations Act, I think, has various factors that it uses to differentiate sizes of companies. So, administratively, you could pick that up and you would be able to do it relatively easily. The problem is that you still have to be concerned that, if you are increasing the fees for corporations as much as has currently taken place, those corporations will vote with their feet. It is not just a case of, 'Oh, I'm stuck in the Federal Court of Australia so therefore I have to pay this'. It would more be a case of, 'I could go to another court, one of the Supreme Courts in Australia', or, 'I could go to a court overseas', or, 'I could use arbitration'. So I think there has to be a concern not just about the equality of making corporations pay more than citizensâI don't have any difficultly with thatâbut how much do you increase the corporation costs by, and what will that do in terms of how companies then decide to conduct themselves. So, yes, you could do that, but you would still need to consider what the absolute fee was.
CHAIR: Thank you for that. I will come to the question about the Attorney-General's Department's submission that talks about using price signals to direct litigants towards less costly forms of litigation and also to deter unmeritorious litigants. Would you like to make a comment about that?
Prof. Legg : I have to say that, to me, it is a bit outrageous that a government would want to deter its citizens from accessing the courts and suggest that alternative dispute resolutions are the answer. To me it demonstrates a lack of understanding of the significance of courts. They provide procedural protections that you do not get in ADR. There is open justice in courts; the person who is deciding the case is independently appointed. ADR is great for some disputes, but to try and see it as being the panacea for funding the legal system is just misguided. The United Kingdom went down this routeâI think I quote Dame Hazel Genn in my submissionâand what happened was you did not actually get more access to justice; in fact, all that happened was that people found it harder to be able to get to the courts. It became a sort of 'take what you can get from ADR' situation. But trying to actually enforce your rights? Forget about it. We do not want to go down that route in this country.
CHAIR: What about the aim of deterring unmeritorious litigants, whatever that means?
Prof. Legg : The best way to understand that is, perhaps, to compare the Australian cost system with the American cost system. The Australian cost system is set up so that the loser pays. So if you lose your case you pay your opponent's fees. In the United States each party bears their own costs. So in the United States it can be worth having a role of the dice in litigation, because you only have your fees to bear. And if you have a lawyer on a contingency fee it can become even less.
In Australia, you have the problem that if you lose you have to pay your opponent's costs. So that acts as a disincentive. I have to say it would be a much larger disincentive than anything you are going to do with court fees, because the amount is much greater. In terms of the unmeritorious type of litigation you might have people who, sort of, try to judgement-proof themselves: 'I've got no assets; I don't care if I lose.' It is still highly likely that that person could be bankrupt. I do not think that trying to use court fees to dissuade them is really going to work. I think we already have the system through making the loser pay. That is a pretty big incentive to ensure that I am not bringing a case that is going to lose.
CHAIR: Coming to another aspect of imposing fees for things like subpoenas or additional proceedings during the course of a litigious matter, there is an idea that that may be a way of discouraging undue action to delay a case or to drag a case out, because in some cases that might end up being advantageous to one party, who has a deeper pocket than the other. What do you think about the use of application fees or additional fees during the course of an action to do that?
If you do not agree that that is something that is useful, is there any other means of, maybe, discretion on the part of a court to impose fees on parties that may be seen to be doing that, as opposed to having an automatic fee for additional proceedings, like subpoenas?
Prof. Legg : I find that idea very interesting, in the sense of its being an additional tool for case management. I would add to that this idea of increasing the fees the longer the case runs, because that is a way of discouraging your mega litigationâthe large cases.
So, at the moment, I would not say that I am against it or for it. I think it is something that needs to be examined a bit more. But what I would say is that when you look at something like a subpoena, for instance, the Federal Court moved to a system a number of years ago, where you cannot just go and issue a subpoena; you have to have it approved by a member of the court. So the court actually has oversight over those subpoenas and they are able to say, 'Why do you want it?' and 'When I look at how it is drafted, is this going to get the documents you are after? Is it going to put a burden on the person who needs to respond?' That is a much more tailored way to ensure that people are not doing this sort of thing: 'I'm just going to issue many subpoenas and create all of the burdens that go with that.'
The court has tried to deal with interlocutory applications through some case management techniques. In some of its practice notes it requires that the parties must confer beforehand, and only if they are unable to reach some sort of resolution are they able to file. So there is this idea that the practitioners have a responsibility. They have introduced provisions in the Federal Court Act, such as the overarching purpose, where you are supposed to be considering things such as cost and delay. So all of those, I think, help in trying to avoid unnecessary steps in litigation.
If you are going to put a cost on it, I guess my major concern here is that, yes, you then have to weigh up whether you want to incur that cost in terms of taking that step. But I do not know that that is necessarily going to weed out the unmeritorious from the meritorious applications. It is really just going to come down to: do I have the money to pay? That is why I think some of the case management techniques are probably better. What I am talking about here would be perhaps having the judges instructed to determine whether particular applications are able to be made, whether there should be some sort of leave requirement in some instances. That is a long way of saying there are already some things in place to deal with this but I think it needs to be looked at a bit more.
CHAIR: Thank you for that. Hearing your answer there made me to think about the fact that access to justice is a broad concept. In fact, just getting to court is not necessarily enough, because if you have one litigant, one party, that has much deeper pockets and greater ability to delay proceedings or stretch them out, that may also ultimately be a barrier to justice if it means that, through attrition, the other party then has to withdraw or lose. So managing the process is an important part of the means of ensuring access to justice as well, isn't it? And the case management you have talked about is an important part of that.
Prof. Legg : Definitely. I think it was Justice Weinberg, who is now on the Victorian Court of Appeal, who said once that in any particular case there is always one party that would benefit from litigation being slowed down or delayed, so the judge has to be very much alert to what is driving the steps have been taken. And they, obviously, are able to take a much more nuanced approach to dealing with the case, compared to simply having a fee being imposed.
CHAIR: I have one last question, in relation to alternative dispute resolution. I will declare an interest here: I was formerly a mediator, so I have a lot of respect for alternative dispute resolution as what I think is one aspect of the justice systemâthe ability to have justice from a personal, subjective point of view. I understand that you are not saying that there is not a role for alternative dispute resolution, although your submission does say:
â¦ ADR â¦ cannot be equated with access to justice.
Certainly, I think you are making the point that, if that were the only means available to people to try and resolve disputes, that would not equate with them having access to justice. But you go on to say that there is a role for it, that ADR can be 'beneficial'. That is what I understand you to be saying. But it seems to me that it is important to underline the point that you have been making, which is that alternate dispute resolution, if it is to be effective, has to be voluntary and consensual. That is when there is the greatest benefit because the person has the power to engage in that process and to be part of the outcome that affects them, without being bullied or intimidated or forced into it as a last resort. Is that essentially what you are saying?
Prof. Legg : Yes, I would agree with that. Alternative dispute resolution offers a lot of advantages and opportunities for resolving cases or disputes in a better way than litigation could resolve them. But to try and see ADR as a panacea, I think, is a mistake. The approach I would take to ADR is that it is really about educating lawyers, and at the University of New South Wales we are now going to great pains to make sure that our graduates are very familiar with ADR so that when they face a dispute, when a client seeks advice, it is not automatically, 'We need to go to court.' It is: what are the avenues that could be pursued? So you try and educate your legal practitionersâand we need to educate citizens generally that these things are available and this is how they work. But you cannot, I think, just say that ADR will be the answer. And the courts? 'Well, we're just going to increase the fees to push you towards ADR.' I do not see that as being an effective way in which to structure our justice system.
CHAIR: I think you were making the point that if you have a situation where one party is forced to resolve the dispute because they have no other options, whereas the other party can afford ultimately to go to court if the dispute is not able to be resolved, then it is not equal bargaining. The position is not equal power, and therefore you cannot be satisfied that it was ultimately a fair result.
Prof. Legg : Yes. There is the idea of the shadow of the courtâthe fact that you know that if we cannot get a resolution here then we are going down the road of a court, and there are some costs with that. There is going to need to be evidence and a judge will decide. If that is available to both sides then you get a much more reasonable approach from both sides. If one side does not have that option I think it can really detract from the way in which the ADR can proceed.
CHAIR: Thank you very much. We will leave your evidence there.