PARTE I EL FUNDAMENTO DEL ORDEN
CAPÍTULO 1. LA TRASCENDENCIA COMO FUNDAMENTO
1.4. Orden y trascendencia
than a deliberate system-wide approach to avoiding disputes and
resolving disputes better.”
Designing and funding a federal civil justice system
It goes without saying that costs can only be recovered if something is provided in return. In the case of the justice system, what is provided is essentially what we have discussed as the ‘supply’ side of the justice equation. This includes the following general elements (in whole or combination):
providing the infrastructure for handling legal controversies. This would include the courts,
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tribunals, access to ADR services (current examples include FDR, native title mediation, human rights discrimination conciliation)
designing a dispute resolution mechanism but leaving it to the market to provide it (for example,
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the Financial Ombudsman Service—an EDR mechanism mandated by legislation but provided and funded by industry participants)
leaving the design and provision of the mechanism entirely to the market (such as negotiation,
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ADR in commercial disputes)
providing legal information, advice and representation services to all or some disputants
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(like legal assistance), or subsidising such services (for example, the tax deductibility of legal costs), and
mechanisms to prevent disputes from occurring, for example through clearer and more
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accessible laws, building resilience in individuals.
Decisions about whether to provide, or to continue to provide, such services are affected by cost to the service provider, the costs required to use the service effectively (including legal representation), the accessibility of the service (including knowledge about the service and how to access it), and the effectiveness of the service (including issues of timing and delay, and enforceability of outcomes). It is important to recognise that many legal issues and disputes are handled by individuals, or resolved between disputants or through non‑formal community channels (family, friends, trusted members of the community and community leaders) without ever engaging more formal methods of dispute resolution. This form of resolution is often low‑cost or free for the disputants, and does not require government funding.
Cost recovery in the federal civil justice system
Designing a coherent policy on cost recovery in the civil justice sphere is complicated. When considering access to justice broadly, and the range of factors that influence what mechanisms are available for people to resolve disputes (supply) and what choices people make about how, when and for how long they access those mechanisms (demand), cost is a relevant factor. If we accept that government should be involved in providing certain justice services, the next question is whether government should recover the costs of the service from the person using that service. An outline of some relevant factors is at Table 3.4.
Persons accessing services to assist with a civil justice problem, whether legal services, ADR services, administrative tribunals or court services, are generally seeking a private gain. As a general
principle, a person purchasing a service on the market for the purpose of obtaining a private gain can expect to pay the full cost of that service. Should the same rule apply to services provided by government? however, there is also a public benefit in the existence of effective mechanisms for the fair resolution of disputes, determination of legal rights and enforcement of decisions.
Table 3.4: Factors relevant to cost recovery in the civil justice system
Factor Issue Consideration
Public good or private benefit
People access the justice system for private gain.
however, the existence of a functioning justice system is central to the rule of law, which is a significant public benefit. Identifying the ‘user’ is difficult in mixed public/private benefit scenarios.
Full cost recovery is not appropriate for public benefits.
however, only the parties have standing in any particular matter, and they have the most direct interest, and influence on the conduct and outcome (and therefore cost) of the process. The type of
dispute
There may be a greater public interest in the resolution of certain types of disputes (such as matters involving children, native title and human rights matters).
Cost recovery may not be appropriate for certain types of matters as a question of policy.
Is the justice system a monopoly
Cost recovery may not be appropriate in a monopoly situation where services are not contestable and the market cannot operate to allow optimum allocation and use of resources.
The essential judicial functions involve the use of coercive powers, declaring the state of the law and enforcing decisions. Similarly, Tribunals have a monopoly on certain statutory and/or coercive powers.
however, there is a ‘market’ for dispute resolution services and other services relevant to dispute prevention (including the provision of legal information and advice). Price should not
be a barrier
Access to the justice system should be equitable.
measure to ensure access (including direct support, exemptions and waivers) will be required. Full cost pricing
can provide incentives
If people had to pay the full cost of services, rather than have the majority of costs subsidised, they may be more likely to choose less expensive options. This could encourage use of cheaper, quicker alternatives (such as ADR).
Court fees are small in comparison to the private costs of litigation. The effect on users may be marginal.
As noted in Chapter 1, access to justice is an essential element of the rule of law which supports civic and economic life. maintaining the rule of law is fundamental to equity and economic prosperity in Australia, and requires the provision by government of civil justice services. Two simple examples show this—the provision of goods and services to consumers is dependent upon the expectation
that the provider will be paid, and that what is being supplied is of the quality described. Equally, aspects of the court system such as the capacity of citizens to challenge government decisions, and for courts to ensure that the exercise of statutory powers is lawful, are an important characteristic of accountable government and therefore have great public benefit.
Full cost recovery is not appropriate where the provision of the service is substantially or entirely for public benefit—the person required to pay the fee will effectively be paying for other’s benefit, which is properly the function of government. however, the specific functions of a court in any particular matter (orders, processes, hearings, decisions) are performed at the request of the parties who have the immediate and exclusive interest in the conduct and outcome of litigation. The laws of standing require this. The justice system therefore represents a mixture of public and private benefits.
‘user pays’ is difficult to apply in cases of mixed public and private benefit—as there are both public and private users. Notwithstanding this, while the existence of justice services has public benefits that clearly deserve public funding, it remains legitimate to explore the extent to which specific services or activities might warrant fees charged on a cost recovery basis.
“The specific functions of a court in any particular matter (orders,
processes, hearings, decisions) are performed at the request of
the parties who have the immediate and exclusive interest in the
conduct and outcome of litigation.”
As a general principle, one of the purposes of cost recovery is to improve the efficiency and inform the market about the true cost of a service so that decisions about consumption and production can be made.141 however, this does not apply in a monopoly or where functions cannot be provided
by the market. In this context it is clear that only a court can perform judicial functions—to finally declare the state of the law and enforce decisions. These features of the courts are fundamental to the rule of law and cannot be outsourced, nor granted to the private sector. Similarly, the coercive and statutory powers of administrative tribunals cannot be provided by the market.
however, not all of the functions of a court are judicial. There is a market in dispute resolution and ‘justice’ services. many of the justice services demanded (whether or not currently supplied), such as dispute resolution and better information, may be better supplied by the market. The corollary of this is that it is legitimate to consider which services are the most efficient, and price them accordingly. For example, this would also mean that finite court resources should be directed to those things that courts do best or that only a court can do.
Proper pricing of services should provide some capacity for better incentives about how people resolve disputes. For example, imposition of court fees could encourage people to resolve disputes directly, or through cheaper market provided services (such as industry complaint or EDR schemes).142 Incentives could also operate in relation to the use of court services—for example fees
that reflect the true costs of litigation currently borne by the taxpayer could encourage litigants to more fully utilise other options, such as court‑based ADR. however, it should also be noted that
141 Commonwealth Department of Finance and Deregulation, Cost Recovery Guidelines, 2005, p 11.
142 Note for example that the Dispute Resolution Surveys conducted in victoria in 2007 cited the perception that ADR was
court fees themselves are likely to be a relatively minor cost for litigants given the private costs of litigation (including legal fees and disbursements) are often very high.
Pricing a service beyond the reach of a disputant provides an inequitable barrier to justice. For a well‑functioning justice system, access to the system must not be dependant on capacity to pay.
“For a well-functioning justice system, access to the system must
not be dependant on capacity to pay.”
This may be achieved through providing universal services, or through exemptions and waivers for those who cannot afford to pay. As noted earlier, universal provision of justice services is not sustainable, and inefficient. On the other hand, some types of matters (and the means for their review) are generally not suitable for cost recovery—for example it might completely undermine the objectives of the SSAT if fees were charged, given its jurisdiction is dealing with income support applications. This reflects the key factors that apply to cost recovery policy—the balancing of the public good and private gain in deciding whether cost recovery is appropriate and if so, what level of cost recovery should apply.
A range of other factors should further nuance cost recovery policy decisions.
competition and the federal context:
• the existence of competing institutions that take a different
approach to cost recovery make it more difficult to create an effectively priced range of options where there are relevant drivers that are outside the Commonwealth’s control (a typical example being the availability of State and Territory courts that do not engage in cost recovery). The last significant increase in Federal Court fees occurred in 1996, where fees were raised to a level comparable to State and Territory courts. This was followed by a significant reduction in the number of filings in the Court for matters under the Corporations Law, where the Court had concurrent jurisdiction with State and Territory courts. The Court attributes this reduction to the increase in fees.143
prioritising finite resources:
• where it has been identified that it is desirable to fund a particular
service, some cost recovery may be appropriate when considering that service within a broader range of priorities and a finite amount of resources. Partial cost recovery may be appropriate where, for example, it is identified that funding of a dispute resolution service is in the public interest but funding that service is not as high a priority as funding another service. Rather than not providing the service at all, a policy of partial cost recovery in certain circumstances provides a means to continue a service which might otherwise not be available.
services not institutions:
• an equitable policy of cost recovery must focus on services not
institutions. A person should not be responsible for covering the costs of a service that they did not use, simply because they are the most convenient person to recover the cost from. Where it is not appropriate to recover costs from a particular party (for example, where a means test has been applied) or for a particular type of proceeding (such as native title) the cost of running such a proceeding would be recovered from unrelated parties if cost recovery sought to cover the cost of an institution rather than services.
Additional factors include:
type of dispute:
• the particular public interest in the resolution of certain types of disputes (such as native title and human rights matters)
encouraging desirable behaviour:
• the extent to which funding certain services would promote
desirable dispute resolution behaviour. Certain forms of resolution are in the public interest for some cases—for example, in family law disputes involving children, a mediated outcome is preferable to a more acrimonious litigated outcome. Similarly, fees in administrative tribunals could encourage better practice by government agencies if they provided incentives for better primary decision‑making or communication with clients to resolve disputes before formal review is sought, and
public interest litigation:
• where resolution of a dispute will prevent other disputes from occurring
or where it may result in behaviour change (such as through settling legal principle). Consequently, determining appropriate circumstances for cost recovery and the scope of that cost recovery will depend on a range of factors, not least the balancing of public good and private gain aspects of providing the service in question. Consideration of the various factors noted in the preceding paragraphs will not pinpoint a particular number, but provide useful guidance for a coherent and justifiable cost recovery policy across the federal civil justice system into the future.