court. Leave may be at the discretion of either the court from which or to
which the appeal is taken. Third, some courts have a procedural rule that a
party needs the permission of
the court in order to argue that a court should
change an established precedent.
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Adjustment Costs
Adjustment costs are incurred when there has been a change of rule.
Adjustment costs consist of the cost of adjusting from one rule, including a
version or interpretation of a rule, to another.
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People and businesses need to
adjust their lives and practices when there is a change of law. Continuity, by
contrast, avoids adjustment costs. Those affected by the present law stay with
it and do not have to adjust their affairs to a new legal rule.
To illustrate adjustment costs, assume that a court changes a common law rule
regulating insurance. This could make it necessary for insurance companies to
rewrite all of their policies, legal firms acting on behalf of plaintiffs and
insurance companies will need to familiarise themselves with the new
framework and provide appropriate advice on the changes to clients, and
plaintiffs (as a class) will need to familiarise themselves with the limitation or
expansion of their ability to seek insurance payouts. The change may lead to
an accompanying rise or decline in levels of litigation, thus affecting the legal
industry, and associated social changeover costs. Indeed it may take several
decisions on the matter in the courts
before the full implications of the
alteration are fathomed. The alteration may also have effects on the premium
levels and competitiveness, thereby possibly altering the corporate make up of
the insurance industry and by this means incurring additional economic
changeover costs.
Legislature
Where there is only a minor change to a statute, the adjustment costs tend not
to be large. By contrast, adjustment costs tend to be large when a new
legislative scheme is introduced. These costs include writing textbooks and
manuals to explain the scheme; teaching the working of the scheme to public
servants who administer it, lawyers who work with it and the sectors of the
public who are affected by it;
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preparation and printing of new forms;
acquisition of new plant
and equipment; and training operators of new plant
and equipment.
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Proctor v Jetway Aviation [1984] 1 NSWLR 166, Evda Nominees v Victoria (1984)
154 CLR 311
322
For a more detailed discussion of adjustment costs see Van Alstine (2002).
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Van Alstine (2002)
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