Despite the initially predicted financial apocalypse that COVID-19 was expected to bring, the Australian economy is currently flourishing in many indicators of economic health. From employment rates to property prices, Australia is experiencing figures that have not been seen for a long time, if ever. A side effect of such prosperity is the increased chance of recoverability. If you have been putting off filing claims, you may wish to reconsider and re-evaluate the recoverability of those claims before you give up on them.


Employment Rates

According to the Australian Bureau of Statistic’s seasonally adjusted unemployment data published for July 2021, the unemployment rate has fallen to just 4.6%, a decrease of 0.3% since June 2021 and the lowest Australian unemployment rate since December 2008. This also marks eight straight months of decline, and a 2.8% decrease since July 2020 (which was Australia’s highest unemployment rate since pre-2000).

Economists are attributing this fall in unemployment to both government stimulus payments during lockdown, which created a rebound effect at the end of the various state lockdowns, and the closure of borders which has limited the increase in the size of the labour force. Whilst the effects of the NSW lockdowns are yet to be fully felt by the Australian economy, it is predicted that the continuing financial support of the Australia Government may lead to a similar rebound effect, largely mitigating long term negative impacts to unemployment.

 

Property Prices

During the COVID-19 pandemic we have also witnessed incredible performance across the Australian property market, with a surge in house prices across all states. Six of Australia’s capital cities have recorded record median house prices for their third consecutive quarter, with the remaining two cities reaching their highest point in years.

Home Value Index August 2021


Month Quarter Annual Total Return Median Value
Sydney 1.8% 6.4% 20.9% 23.8%% $1,039,514
Melbourne 1.2% 4.0% 13.1% 16.0%% $769,968
Brisbane 2.0% 6.1% 18.3% 23.1% $612,377
Canberra 2.2% 7.3% 22.5% 26.8% $816,644
Adelaide 1.9% 5.3% 17.9% 22.7% $522,180
Hobart 2.3% 7.2% 24.5% 30.2% $639,219
Darwin -0.1% 2.4% 22.0% 29.0% $486,248
Combined Capital 1.5% 5.2% 17.5% 20.9% $751,014
Combined Regional 1.6% 5.4% 21.6% 27.1% $493,925
National 1.5% 5.2% 18.4% 22.1% $666,514

Source: CoreLogic

The Australian property market has slowed down somewhat in recent months, coinciding with the prolonged lockdowns along the Australian east coast. Experts are saying however that, while lockdowns are having a negative impact on consumer sentiment, this is not yet translating to a fall in house price growth. Instead, this slowing of growth is being driven by affordability constraints.

Growth is being bolstered by the large disparity between supply and demand, but the slowdown is certainly noticeable and it is unclear whether, and for how long, prices will continue to maintain such heights.


Mortgage Interest Rates and Refinancing

Undoubtedly the huge demand seen in the property market is driven in no small part by the record low interest rates we’ve seen on offer in recent times. The Australia Reserve Bank cut the official cash rate to a record low 0.25 per cent in March last year, followed by an even lower 0.1 per cent in November. Off the backs of these rates, many lenders, including some big four banks, were offering three or four-year fixed rates below 2 per cent earlier this year, as well as the lowest variable interest rates on record.

Owner-occupier Variable Housing Rates


Source: APRA; RBA

These low interest rates have resulted in an all-time high in mortgage refinancing. Whilst historically, about 85% of borrowers stay on floating or variable rate mortgages, Commonwealth Bank was seeing up to 50% of people fixing their mortgage rates earlier this year.

We have already begun to see an increase in mortgage rates, and many economists are predicting they will continue to rise, which will likely see a subsequent drawback in the property market.


Practical Consideration in COVID-19 Litigation

Often in court proceedings, parties are required to personally serve documents on their opponents or even third parties. Personal service means that the documents must be handed to the recipient personally rather than by post or email. One might think that social distancing requirements would prevent or inhibit personal service during lockdown, but in reality process servers are still operating more or less as normal.

One factor to note however is that, in our experience, serving people at their business addresses has become much more difficult as a result of lockdowns and stay at home orders. As such, we recommend trying to locate and serve persons at their residential address to avoid wasting money on unsuccessful service attempts.


Limitation Period

Almost all civil claims are subject to a limitation period, a period of time prescribed by statute within which a legal action can be brought or a right enforced. With some exceptions, a claim cannot be commenced outside the limitation period, making it one of the most important things to keep in mind once you become aware of a potential cause of action.

The length of a limitation period generally varies between 1 to 12 years, and the time from which it begins to run will also depend on the type and factual circumstances of the claim. As such, it is important to get legal advice as soon as possible to avoid running out of time. Even if you are sure that a claim is not commercial to run, we recommend getting advice on the limitation period so you are aware of how long you have to potentially revisit the claim in the future.


Conclusion

So what does this all mean for potential litigants?

A huge factor in deciding whether to commence court proceedings is the prospects of recovery, or how likely your opponent will be able to pay a judgment if you are successful. If opponents can’t afford to pay the judgment, this may result in them entering bankruptcy or insolvency, ultimately decreasing how much you might expect to recover. Prospects of recovery also factors in how likely your opponent will be to enter an early settlement agreement, and how much such a settlement will be worth. Such considerations are vital when commencing a claim to ensure you don’t pay out more in legal fees than you get back in the end.

A silver lining to the pandemic we find ourselves in is the pervasive increase in prospects of recovery. The property market boom, coupled with high likelihood of defendants being employed to some degree, increase the chances that defendants will have sufficient assets to satisfy a judgment or settle a claim early. These may even be the key factors in whether a matter is commercial to pursue or not. Indeed, even claims that there were once considered uncommercial to run may now be worth pursuing given how rapid the growth in the property market has been recently.

Finally, due to expiring limitation periods, the ongoing lockdowns and the inherent uncertainty in economic forecasting, it is important to investigate the prospects of your claim as soon as possible to capitalise on these highs.