Litigation in a pandemic – where have all the cases gone?

In recent years, commercial litigators have become accustomed to delays in interlocutory steps and adjournments of hearings and trials as the courts have responded to the COVID-19 pandemic and adjusted to the restrictions that have come with it.  However, the data suggests that the pandemic has also had a noticeable impact on the amount of new commercial litigation commenced in our courts.

Below, we crunch the numbers to examine the impact on the number of new civil cases started in the superior[1] and intermediate[2] courts nationwide since 2020.  We do this by comparing the number of civil proceedings commenced in FY20 (noting that any impact from the pandemic would only affect part, and perhaps only a few months, of that year) and FY21 against the average levels over the previous three financial years (FY17, FY18 and FY19).[3] 

The analysis reveals that, around the nation, there were nearly 10,500 (or 20%) less civil proceedings commenced in these courts in FY21 when compared to pre-pandemic averages.  The same figure for the State and Territory Magistrates/Local Courts (outside the scope of the more detailed analysis in this article) is in excess of 80,000 (or 23%).  That is 90,000 civil proceedings that we would (based on historical averages) expect to be commenced in our courts that were not in FY21.

While there are other factors that may affect the number of cases commenced in our courts over time – such as legislative amendments, changes to Court structures and jurisdiction, other economic factors and one-off events (such as disputes or corporate failures that generate a large number of related proceedings) – the pandemic has coincided with a significant reduction in new civil litigation.  It is difficult to escape the conclusion that the two are connected, whether as a result of the pandemic impacting the underlying commercial and economic conditions that would otherwise give rise to disputes, or by causing parties to think twice about approaching the courts (whether now or at all) to resolve those disputes, or both.

We take a closer look below at how each jurisdiction has been affected, and some courts that have bucked the national trend (including one Supreme Court whose cases actually increased by nearly 50% over the period).  With lockdowns now seemingly a thing of the past, and restrictions easing, we will revisit the data when the figures for FY22 are released to see whether the trends have continued, or if there are signs of recovery towards historical levels.

The States and Territories

Leaving aside appeal proceedings initially (which are considered separately below), the overall trend (although not uniform across all jurisdictions) in the number of civil matters commenced in the superior and intermediate courts of the States and Territories courts has been downward in FY20 (modestly) and in FY21 (much more pronounced).

Between FY17 and FY19, there were 45,000 civil proceedings commenced annually in the Supreme, District and County Courts.  (The New South Wales and Victorian courts alone account for nearly 60% of these, and so have a big impact on nationwide averages.) 

FY20 saw a small fall in these levels, down 3% to 43,700 (the percentage difference being similar in the superior and intermediate courts). 

In FY21, the figure was approximately 37,400, a reduction of 17%.  Overall, the impact in FY21 was greater in the Supreme Courts (down 20%) than in the District/County Courts (down 14%).  That equates to approximately 4,200 less Supreme Court actions, and 3,400 less District/County Courts action, commenced in FY21 than annually between FY17 and FY19.

In most States, and consistent with the cumulative figures (and echoed in the Federal Court experience discussed below), the impact has been slightly greater in the Supreme Courts, suggesting that a high proportion of the disputes not being litigated (that might have been in previous years) are the more complex or higher value disputes over which the District and County Courts lack jurisdiction.

We take a closer look below at each of the States and Territories.

On the face of it, the Supreme Court in Western Australia (the State with some of the most persistent pandemic restrictions) has seen the greatest decrease in activity in recent years, with the number of new civil proceedings commenced down 18% in FY20 and 44% in FY21.  Whereas the Court saw between about 2,300 and 2,600 new civil actions launched each year between FY13 and FY19, there were only 2,125 commenced in FY20 and 1,438 in FY21.

However, in the same State, new civil proceedings in the District Court were actually up 6% in FY20, and down only 1% in FY21, with FY21 merely seeing the arrest of what had been a reasonably steady increase in activity in the District Court since FY13. 

 

One of the next largest declines can be seen in the South Australian courts.  Civil lodgements in the Supreme Court were down 10% in FY20 and 33% in FY21.   Just over 650 proceedings were commenced in FY21 compared to an average of nearly 1,050 per year between FY13 and FY19. 

Similarly, the number of civil proceedings commenced in the District Court was down 7% in FY20 and 27% in FY21 – with just 1,150 proceedings commenced in FY21 compared to an annual average of more than 1,600 between FY14 and FY19.

The Tasmanian Supreme Court also exhibited a noticeable drop, with civil lodgements down 27% in FY20 and 33% in FY21.  That said, the number of new proceedings commenced in that Court has been steadily declining since FY13 (with falls year on year of between 3% and 20%, with the exception of a small uptick in FY17), so the FY20 and FY21 observations do not represent a significant deviation from the recent trend and cannot necessarily be attributed to the pandemic.

Falls in activity levels could also be observed in the largest (by number of cases) State jurisdiction – New South Wales.  While proceedings commenced in the Supreme Court fell by only 1% in FY20, they were down by 16% in FY21, while the falls in the District Court were broadly similar at 6% in FY20 and 17% in FY21.

While more modest in percentage terms than some of the other States, the impact on these larger volume courts was Supreme Court lodgements in FY21 (6,036) being down nearly 1,700 on the FY13-FY19 average (over 7,700).  Similarly, FY21 lodgements in the District Court (5,553) were 1,400 fewer than the FY13-FY19 average of nearly 7,000.

That is, there were over 3,000 less civil cases commenced in these two NSW courts alone in FY21 compared to longer term (FY13-FY19) pre-pandemic historical averages.

Both the Victorian courts actually recorded small increases in civil case numbers in FY20 (4% in the Supreme Court and 3% in the County Court), followed by significant falls in FY21.

Civil lodgements in the Supreme Court were down 24% in FY21, with just over 4,100 new cases commenced compared to an average of more than 6,100 from FY13 to FY19.  The fall in the County Court was more modest – 8% less than the FY17-19 average (but still the lowest annual lodgements in that Court since at least FY13).

The Queensland courts exhibited some mixed results.  While the District Court experienced noticeable falls of 11% in FY20 and 27% in FY21 compared to FY17-19 averages[4] – with FY21 lodgements of less than 3,500 compared to an average of nearly 5,100 between FY13 and FY19 – the Supreme Court experienced only a minor drop of 3% in FY20, and no fall at all in FY21.  Supreme Court lodgements of 2,825 in FY20 and 2,896 in FY21 were largely consistent with the FY17-19 average of 2,900 annual lodgements (and continuing a very steady level of filings since about FY14).

 

In the Territories, the ACT Supreme Court experienced moderate falls of 2% in FY20 and 13% in FY21.

In contrast, the NT Supreme Court actual recorded significant increases in the number of civil lodgements of 10% in FY20 and 46% in FY21.  210 new proceedings were commenced in the NT Supreme Court in FY21 whereas lodgements between FY13 and FY20 had not previously exceeded 160.

State and Territory appeals

Intuitively, it is appropriate to consider appeal proceedings differently from the actions discussed above, as appeals necessarily flow out of previous proceedings (that may have been commenced prior to the pandemic) and are subject to strict time limits that make deferring the commencement of appeal proceedings until a more convenient time impossible.  One might, therefore, expect to see less of an impact in the statistics for appeal proceedings.

Overall, however, some similar trends in the number of appeals filed in the State and Territory superior and appeal courts emerge, although the smaller sample sizes (with only about 10% as many appeals filed as non-appeal proceedings) and the greater volatility in historical activity levels make the identification of consistent trends more difficult.

There is also considerable variability between the different jurisdictions.  In FY20, the WA Supreme Court experienced an 18% increase in appeal lodgements, whereas all of the other Supreme Courts experienced falls of between 1% and 37%.  Appeals in FY21 increased by 12% in the Tasmanian Supreme Court, but fell everywhere else by between 3% and 31%.

Cumulatively,[5] appeals commenced in the State and Territory Supreme Courts and Courts of Appeal were down 6% in FY20, and 10% in FY21.  (Again, these calculations are heavily influenced by figures from NSW and Victoria, which account for 60-70% of all appeals.)  This represents approximately 140 fewer appeals filed in FY21 compared to the FY17-19 average.

The Federal Court

The Federal Court has not been immune to the impacts of the pandemic and, subject to noting some volatility in historical figures, has actually taken one of the biggest hits in civil lodgements in FY20 and FY21.

The number of appeal lodgements in the Federal Court fell by 17% in FY20 and 34% in FY21.  Only 815 appeal proceedings were filed in FY21, compared to the FY17-19 annual average of nearly 1,250.  The FY20 and FY21 figures mark a sharp reversal of a steady increase in appeal numbers in the Federal Court since at least FY13 – having more than doubled between FY13 and FY19.

The impact on non-appeal lodgements was even more significant.  Annual lodgements having held fairly steadily at 4,600-4,700 between FY17 and FY19, new lodgements in FY20 were 3,443 (down 26%) and barely above 2,400 in FY21 (down 48%).  Indeed, the number of non-appeal proceedings commenced in the Federal Court in FY21 was less than half of most recent peak in FY16 (when 5,000 new proceedings were commenced).

These figures notionally represent 1,400 proceedings in FY20 and 2,650 proceedings in FY21 that, based on historical averages, we would expect to have seen commenced in the Federal Court that were not.

The data and its limitations

Each of the Australian courts reports at least high-level statistics of its annual activity levels – including the number of civil and criminal proceedings commenced and finalised in the court each year, and the backlog of unresolved matters.  This data can be found on many of the court’s own websites and/or in their published annual reviews/reports.  However, the data is also reported to, and collated by, the Productivity Commission in a consistent format, and it is this data from which the figures in this article are sourced.[6]

As an indicator of the number of commercial proceedings being commenced and disputes being litigated, this article focuses on the data for civil lodgements (as opposed to finalisations) in the State, Territory and Federal superior and intermediate Courts.  Data is also available for lower level courts (such as the Magistrates and Local Courts) but not considered in depth in this article.

Most courts report their data on a financial year basis, and data is not yet available for most courts after 30 June 2021.  A clearer picture may emerge later when FY22 statistics become available.

 

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).