| April 14, 2007
FIVE years ago, David Ipp proved he was no ambulance chaser. At the height of the insurance crisis, the NSW Court of Appeal judge drew up an instruction manual for state governments on how to end the litigation explosion.
It became the bible of tort reform and led to restrictions on personal injury claims that have slashed the amount of litigation around the nation. Plaintiff lawyers, who lost millions of dollars in potential income, still seethe.
Ipp's credentials on this issue are impeccable. And that is why this judge has just become the worst nightmare for state governments.
Ipp has aligned himself with those who have been arguing all along that tort reform had gone too far.
To lawyers, this is the equivalent of St Peter denouncing the Catholic Church for excessive zeal. If the architect of these changes says they went too far, it gives credence to those who have questioned whether Australia gave away too much in order to solve an insurance crisis of the time.
Ipp's intervention has highlighted the fact that the price of solving that crisis goes beyond the realignment of the civil justice system. It has also handed governments the power to strike out a category of litigation that could expose their incompetence.
One of the reasons public liability insurance was unavailable or unaffordable in 2001 was the withdrawal of many insurance companies from the Australian market. They were struggling under an avalanche of litigation, were losing money and, understandably, had no desire to lose more.
Ipp's 2002 report provided the intellectual framework for the legal changes that enticed them back. But he did not have the last word. The insurance industry had a seat at the table and helped state and federal governments design the new civil justice system. A revolution that began in NSW has spread in varying degrees to the other states.
So while it should come as no surprise that lawyers criticise the system that has cost them a fortune, it is entirely predictable that insurers defend it vehemently. It has put them in clover.
The general insurance industry's return on net assets in the year to last December was a healthy 19.4 per cent. And that was no fluke. The year before it was 21.4 per cent, according to figures compiled by the Australian Prudential Regulation Authority.
Net incurred claims for the year to December were down 5.1 per cent, following a 0.5 per cent rise in 2005.
The Insurance Council of Australia says the changes are "carefully designed and principled". "The reform brought together the fundamental issues of people in the community taking greater personal responsibility for their lives while providing for the needs of the seriously injured," ICA spokesman Paul Giles says.
Even though insurers still pay for most awards of damages, they have greater certainty over their exposure. They are insulated from thousands of small claims that once would have cost them money. And even when injured people win in court, insurers have the comfort of statutory caps on the amount of compensation.
Tort reform has undoubtedly eased the pressure on public liability insurance premiums, which have fallen by 20 per cent. It has also made it possible for the insurance industry to write 610,000 new public liability insurance policies between 2003 and 2005.
The number of civil claims lodged in the nation's courts has been slashed by 75,376 since 2000-01. More than half of that reduction was in NSW, where Productivity Commission figures show civil claims have fallen by 39,959 cases.
But the new system is far from perfect. Rushed and inconsistent law-making has left so many anomalies and loopholes that Ipp and some other judges are clearly exasperated.
The legislators have left a gap in the compensation arrangements of NSW that is big enough for an injured policeman to fall through.
This system also hands blanket immunity to some government authorities, a change that goes beyond the approach recommended by Ipp.
The judge started criticising NSW compensation arrangements in 2005 when he handed down a judgement that said: "The statutes in this state relating to workers compensation and common law damages claims by workers against their employers and others can be described as a hodge-podge. No consistent thread of principle can be detected."
He removed all doubts about his position last month when he addressed a legal convention after crossing paths with former policeman Gordon "Bennie" Ball, who is seeking compensation for psychological injury.
The judge had been obliged by NSW law to strike out crucial parts of Ball's compensation claim, undermining his chances of winning a payout and lumbering him with a legal bill expected to be between $25,000 and $30,000.
This is not the outcome envisaged by former NSW premier Bob Carr when he introduced the first stage of the Civil Liability Act, which is the centrepiece of that state's tort reforms. "There are fundamental rights involved in what we are drafting and no one wants to deprive the genuinely deserving of compensation," Carr told parliament.
Two days after ruling against Ball, Ipp made it clear he did not like what he had been obliged to do. He told a stunned gathering of lawyers in the NSW Hunter Valley that the legislative inconsistency at play in the Ball case had led to "anomalies and unfairness".
He was referring to the fact that Ball, like other long-serving police, is not covered by the statutory workers compensation system, which only gives benefits to injured officers who were employed after 1988.
Ball is receiving a proportion of his final income. But if he wanted compensation for his injury, he would have had little option but to go to court. That would have put him up against the legal immunity the Carr government gave government agencies in the Civil Liability Act.
Ipp told his audience that tort reform had gone too far and those seeking changes had "really good points".
While adhering to what he said in his 2002 report, Ipp said he believed the legislation put in place had gone further "and sometimes much further" than what he had recommended.
He also revealed that two weeks earlier he had criticised the NSW Government for placing government agencies in a privileged position.
"Public authorities are given a host of novel and powerful defences that are in conflict with the notion that the Crown and government authorities should be treated before the law in the same way as an ordinary citizen," Ipp told a conference marking the anniversary of the Australian Law Journal.
"It is difficult to accept that public sentiment will allow all these changes to remain long-term features of the law."
In 2002, when introducing changes to the Civil Liability Act, Carr said he believed that courts should not have the power to determine how a public authority should spend its money. As a result, public authorities were given immunity from all actions concerning the general allocation of resources.
That might sound reasonable. But in practice, the immunity has allowed the NSW Government to dodge the sensational accusations of mismanagement contained in Ball's statement of claim.
Until he retired, Ball had been crime co-ordinator in the state child protection enforcement agency: the pedophile police.
His statement of claim accuses the Government of almost halving the number of police pursuing the state's pedophiles and child molesters in the late 1990s.
In the five years to 2001, the strength of his unit fell from 50 to just 30 officers, Ball's claim says.
Under-resourcing meant his unit had insufficient resources "to adequately carry out its investigations or prosecute pedophiles", it says.
He also claims staff shortages led directly to many investigations being suspended when he believed they should have been pursued. As a result, he claims he had to prioritise every investigation until he retired on medical grounds suffering from guilt, depression and post-traumatic stress syndrome.
The case has outraged the NSW Police Association.
Association secretary Peter Remfrey accuses the state Government of "hypocrisy" over its handling of the matter.
Instead of testing Ball's claims in court, the Government assembled a high-powered legal team and took him to the Court of Appeal.
The Government's legal team included Crown Solicitor Ian Knight, Paul Menzies QC and barrister Elpi Chrysostomou. They did not challenge the substance of Ball's claim that government negligence had directly caused an injury that forced him to leave the force.
They urged Ipp and the other judges to apply the immunity that rules out claims based on a government authority's general allocation of resources.
The judges found themselves duty-bound to rule against Ball.
By relying on the immunity, the NSW Government might have beaten Ball. His case will need to be re-pleaded on narrower grounds that do not accuse the government of causing his injury by under-resourcing his unit. That will weaken his ability to prove the government was at fault. It could also reduce the amount of any damages.
By invoking the immunity, the NSW Government has pushed the police association into the arms of those who want the immunity abolished.
Remfrey says the government had effectively "legislated themselves out of being liable for their own actions".
He says the police association agrees with Ipp.
"This tort reform has gone too far," Remfrey says. "Why should the NSW Government be able to pass laws making itself immune from the obligations placed on every other employer?
"Police officers are particularly vulnerable under these changes because they are charged with dealing with the implications of shortfalls in spending by all government agencies."
The Law Council of Australia and the NSW Bar Association believe it is time to review the impact of tort reform.
Law Council president Tim Bugg said the fact that the author of the last round of changes believes they have gone too far is a strong reason for calling a second review. "Our starting point is that no wrongdoer should be protected from his or her negligent actions, regardless of whether it is a government instrumentality or someone out in the street," Bugg says.
NSW Bar Association president Michael Slattery QC said any law that gave governments privileges above those of the rest of the community was not sustainable.
"Even worse, why should the community tolerate the suppression of litigation that would have revealed government incompetence and mismanagement?" Slattery says.
"This legislation suppresses criticism of government operations. The Ipp report did not authorise that."
A spokesman for NSW Police Minister David Campbell said details were not available on staffing levels when Ball was still in the force.
As well as appointing 40 extra police to prevent and investigate crimes against children, the Government had increased police powers and introduced new laws to protect children, he said.
Newly appointed Attorney-General John Hatzistergos adheres to Carr's argument in favour of the immunity.
"It is not the courts' function to be determining budgets. That is obviously a matter for the executive government," he said. "We need to ensure that duties of care are observed but that the courts, at the end, are not entrusted with a role of resource allocation in the general sense," Hatzistergos says.