Has Australian commercial litigation recovered from the pandemic?

Articles Written by Christopher Beames (Partner)

Last year, we looked at how the commencement of civil litigation in Australia had been impacted by the COVID-19 pandemic during FY20 and FY21 (revisit the article here). Around the country, there were nearly 20% less civil proceedings commenced in our superior[1] and intermediate[2] courts, and 23% less in the Magistrates/Local Courts, in FY21 when compared to pre-pandemic averages (across FY17, FY18 and FY19).

Nearly a year on, with pandemic lockdowns and restrictions largely a thing of the past, have all of those ‘missing’ civil proceedings returned to the courts? Was civil litigation back to ‘business as usual’ in FY22 – or has there even been an uptick in activity with all of the deferred actions finally being commenced in FY22?

While activity levels are improving in some areas, they are not yet back to where they were prior to the pandemic. There were approximately 2,500 (or 6%) more proceedings commenced in FY22 than the year before in the superior and intermediate courts, meaning that filings remain about 8,000 per year (or 15%) down on historical averages.[3] Of those missing actions, approximately 2,700 have been ‘lost’ from the Federal Court, 2,200 from NSW, 1,300 from Victoria and 700 from each of South Australia and Queensland.

In the Magistrates/Local Courts (outside the scope of the more detailed analysis in this article), civil lodgements in FY22 were effectively unchanged over FY21 (up only 0.3%), with only 275,000 cases commenced compared to pre-pandemic averages of over 350,000.

The trends however are not consistent across all courts and jurisdictions, and the more detailed analysis below examines how the individual State, Territory and Federal courts have fared in FY22.

Some themes

Last year, we observed that the overall decline in activity levels was more pronounced in the Supreme Courts than the District/County Courts. The situation is similar in FY22, with the recovery being limited almost entirely to the Supreme Courts, with little change in many of the intermediate courts.

One noticeable contributor to the decline in civil filings during the pandemic was the pause by the Australian Taxation Office, and state taxation authorities, in taking enforcement action in the courts (winding up applications, for example). The recommencement of that activity is likely one reason why the number of proceedings commenced overall in the Supreme Courts increased by 14% from FY21 to FY22.

Otherwise, we believe a general uptick in project related work, and therefore disputes, in sectors such as the resources industry (where we have seen an end to the mining downturn) is likely to be behind the increases in some of the Supreme Courts, for example in WA.

The general feeling amongst our litigators is that this higher stakes, higher value litigation in the Supreme Courts has largely returned to normal following the pandemic, which is borne out by the statistics in a number of jurisdictions.

Perhaps counter-intuitively, however, the recovery seen in the Supreme Courts was not echoed in the Federal Court in FY22, where the total number of proceedings commenced actually fell by 3% year on year.

Also in contrast to the Supreme Courts, lodgements in the District/County Courts were static overall in FY22. The reasons for this are less clear. This may be influenced by the jurisdiction limits in these courts which, over time, make it less economical for parties to litigate their disputes (as costs approach the value of the claim); also the proliferation of other mechanisms for litigants to resolve lower value disputes (such as tribunals and even online alternative dispute resolution processes that are growing in popularity).

A closer look at the State and Territory Courts

Leaving aside appeal proceedings initially (which are considered separately below), between FY17 and FY19, there were 45,000 civil proceedings commenced annually in our Supreme, District and County Courts.

That fell markedly to 37,400 in FY21 (after a smaller drop in FY20), a reduction of 17%. FY22 saw a recovery in that figure to just under 40,000, representing a 7% increase over FY21, but still 11% down on pre-pandemic averages.

As noted above, the increase came almost entirely from the Supreme Courts – where civil filings were up 16% on FY21 levels, but still 8% down on historical levels. FY22 saw 18,900 non-appeal proceedings commenced in the Supreme Courts, compared to only 16,300 in FY21 and a FY17-19 average of 20,500.

In the District and County Courts however, there was effectively no change on FY21 activity, which remains 14% down on the pre-pandemic averages.

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

The busiest State courts are those in New South Wales. Between FY14 and FY19, the Supreme Court saw between 7,000 and 8,000 civil proceedings commenced each year. That fell to 6,000 in FY21, before recovering partially to 6,500 in FY22 – a year on year increase of 8%, but still 10% down on the pre-pandemic average (of 7,200).

However, only 5,300 proceedings were commenced in the District Court in FY22, a 5% decline on FY21 (which was already significantly down on previous years). This is the continuation of a steady decline in NSW District Court activity since at least FY17, with case numbers now 22% lower than in the 3 years prior to the pandemic, and at their lowest in nearly a decade.

Overall, there were 11,700 cases commenced in the NSW Supreme and District Courts in FY22 compared to 16,000 back in FY13.

JWS-23040001-Litigation-Infographics-2023-NSW.jpg

Similar trends were evident in the Victorian courts, which have the next highest volume of cases around the country.

The Victorian Supreme Court, which saw between 5,400 and 7,500 new cases annually between FY13 and FY19, saw only 4,100 new filings in FY21, but 5,000 in FY22. That is a 20% increase over FY21, but still 9% lower than the pre-pandemic average (of 5,500).

Similar to NSW, however, filings continued to fall in the County Court. Whereas 6,000 to 6,700 cases per year used to be the norm, only 5,500 proceedings were commenced in FY22 – 6% lower than in FY21, and 9% lower than average.

JWS-23040001-Litigation-Infographics-2023-Vic.jpgThe Queensland courts saw increased activity at both levels, but more pronounced in the Supreme Court.

In fact, more proceedings were commenced in the Trial Division of the Supreme Court of Queensland in FY22 (3,500) than in any year since FY13. The number of proceedings filed in FY22 was 19% greater than in FY21, and 18% greater than pre-pandemic averages.

The District Court saw a smaller increase of only 2% over FY21 levels, and still 25% down on historical averages (3,600 compared to 4,700). Ignoring the larger dip in FY21, FY22 activity levels were consistent with a general decline in Queensland District Court activity over at least the past 10 years (where lodgements were over 6,000 in FY12).

JWS-23040001-Litigation-Infographics-2023-QLD.jpgActivity also increased in Western Australia in FY22. (As an aside, measured by civil proceedings in the superior/intermediate courts, Western Australia is by far the most litigious jurisdiction in the nation on a per capita basis, with around 2.85 proceedings commenced in FY22 for every 1,000 people. The ratio in the other States and Territories varies between only 0.88 (in Tasmania) and 1.61 (in Victoria).)

In the Supreme Court of WA, 1,900 new proceedings were filed compared with only 1,400 in FY21 (up 31%) and the pre-pandemic average of 2,600 (still down 27% despite the significant year on year recovery).

The District Court however saw a 14% increase over FY21, also a 13% increase over historic averages, and the highest number of filings in the last 10 years. FY21 now seems to have been only a minor blip in a period of continued growth in that court.

JWS-23040001-Litigation-Infographics-2023-WA.jpgIn South Australia, the Supreme Court was back to historical levels of business, while activity in the District Court continued to fall.

FY22 saw 900 proceedings commenced in the Supreme Court – up a considerable 40% on FY21, and back to only 6% below historical averages.

The District Court, however, which saw a 21% drop in activity in FY21, saw a fall of a further 17% in FY22. Less than 1,000 proceedings were commenced in a court that, between FY14 and FY19, saw between 1,450 and 1,850 proceedings filed each year.

JWS-23040001-Litigation-Infographics-2023-SA.jpg

Activity levels in the Tasmanian Supreme Court have remained steady over the past 3 years, and the pandemic appears to have had minimal impact. FY22 saw only a small (3%) increase over FY21, and remains 31% down on historical averages, but case numbers have been declining fairly steadily since FY13. Less than 450 proceedings were commenced in FY22 in a Court that saw around 1,000 filings per year a decade ago (FY12 and FY13).

JWS-23040001-Litigation-Infographics-2023-TAS.jpgNeither of the Territories saw much change in FY22 – there were 3 more cases commenced in the ACT Supreme Court (1%), and 3 less cases commenced in the Supreme Court of the NT (1%), than in FY21.

In the ACT, this means that current activity levels (500 cases) remain 13% down on pre-pandemic averages (of about 575) whereas, following a big jump in FY21, activity in the NT (210 cases) remains 48% higher than back in FY17-FY19 (145 cases).

JWS-23040001-Litigation-Infographics-2023-ACT.jpgAppeals in the States and Territories

As we did last year, we have analysed appeal proceedings separately due to the different drivers at play in whether and when appeal proceedings are instituted. Again, it is difficult to identify any consistent trends among the State and Territory Supreme Courts/Courts of Appeal.

Overall, superior court appeals were down negligibly on FY21 levels (by 1%), and remain down 9% on pre-pandemic averages. Total District/County Court appeals activity was unchanged from FY21.

In the superior appeal courts, most states and territories (with the exception of Queensland and Tasmania) saw less than a 10% change between FY21 and FY22. Three jurisdictions (NSW, SA and the NT) saw increases, the others declines. All jurisdictions, however, saw less appeals commenced in FY22 than prior to the pandemic.

JWS-23040001-Litigation-Infographics-2023-appeals-NSW.jpgJWS-23040001-Litigation-Infographics-2023-appeals.jpg

The Federal Court

While the State and Territory Supreme Courts had generally increased activity in FY22, any recovery in the Federal Court has been much more subdued. Overall activity (combined appeal and non-appeal proceedings) was actually down 3% over FY21, and remains considerably lower (47%) than prior to the pandemic. Only 3,100 civil proceedings were commenced in FY22 in a Court that typically (other than in an uncharacteristically slow FY15) saw between 5,000 and 6,000 proceedings commenced annually (from FY13 to FY19).

The number of appeal lodgements in the Federal Court fell by 20% in FY22, and remains 48% down on pre-pandemic averages. Non-appeal lodgements increased slightly (3%) over FY21, but remain 46% lower than pre-pandemic. There were 2,500 non-appeal proceedings commenced in the Federal Court in FY22, compared to usually[4] between 4,000 and 5,000 between FY13 and FY19.

JWS-23040001-Litigation-Infographics-2023-Federal.jpgSummary

In conclusion, consistent with the impression of many of our litigators working in these jurisdictions, some parts of the commercial litigation landscape appear to have returned (or almost returned) to normal following the pandemic, particularly the (generally-larger value) litigation in the State Supreme Courts. 

Activity in the Federal Court and a number of the intermediate State courts however remains depressed – and it will be interesting to see in future years whether the recovery after the pandemic has merely been delayed in those courts, or we are witnessing a longer term decline in activity in some jurisdictions.

The data and its limitations

Each of the Australian courts report 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 courts’ 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.[5]

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.

 

[1] State and Territory Supreme Courts and the Federal Court of Australia.

[2] State District and County Courts. There are no intermediate courts in Tasmania or the Territories.

[3] In this article, referring to FY17-FY19 averages unless otherwise stated.

[4] That is, other than in FY15.

[5] https://www.pc.gov.au/ongoing/report-on-government-services/2023/justice/courts. In some cases, the Productivity Commission data differs from that reported directly by the relevant court, and the Productivity Commission data has been used. In most cases, such discrepancies are not material and do not affect the overall analysis in this article.

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).

Related insights Read more insight

One step forward, one back: advancements in digital defamation reform amidst a setback in uniformity

The latest signpost on the long road to defamation law reform appears to point to another departure from national uniformity with the announcement that not all states are on-board for a revised set...

More
Lessons from the first Tribunal decision on a merger authorisation

In its first review of a merger authorisation application since the current regime came into effect in 2017, the Australian Competition Tribunal (Tribunal) has upheld the Australian Competition and...

More
Medicare's first penalty against a pathology provider for paying above market rents

A recent Federal Court decision has resulted in a $1.65 million penalty being imposed on a pathology service provider for paying rents for collection sites within medical centres at significantly...

More