INQUIRY INTO ASPECTS
OF THE WRONGS ACT 1958
A submission by the Monash Law Students’ Society’s
Just Leadership Program (2013)
ANNA NGUYEN
LAUREN ANDERSON
MARGUERITE JOBLING
PAULINE FOSTER
ROBERTA HOSIKIAN
SIMON D’ANGELO
With thanks to the Just Leadership Program (2013) Coordinators:
Shalaka Parekh and Gemma Hallett.
1
Submission to the Victorian Competition and Efficiency
Commission
Inquiry into Aspects of the Wrongs Act 1958
1. Just Leadership Program
1.1 This submission is made in response to the Issues Paper of the Victorian
Competition and Efficiency Commission (VCEC) 'Inquiry into aspects of the
Wrongs Act 1958'.
1.2 We are a group of postgraduate and undergraduate law students from Monash
University, participating in the 'Just Leadership’ Program run by the Monash Law
Students' Society. Our group has undertaken this submission with the specific
focus of improving access to justice.
2. Scope and suggested changes
2.1 The 2002 and 2003 reforms (the reforms) to the Wrongs Act 1958 (Vic) (the Act)
were aimed at redressing the public liability crisis, which were implemented in
part due to the perceived ease with which tort claims could be brought under the
previous common law and statutory regime.1
2.2 The Victorian legislative amendments were wide-ranging, and had a significant
effect on both insurers and the community.
2.3 For this reason, our submission has narrowed its focus to sections 28LE and
28LF of the Act, that is, the limitations on non-economic damages for physical
injuries (commonly known as 'pain and suffering'). Currently, a plaintiff is required
to prove ‘whole person impairment' of more than five per cent.2 We have
examined this restriction with regard to the VCEC's proposed guidelines. We
suggest that while these restrictions have reduced the number of claims brought
before the courts, they have significantly hindered the ability of injured parties to
pursue legitimate claims.
2.4 Accordingly, we suggest that the VCEC consider the following options:
(a) reduction of the current threshold of 'more than five per cent' to 'five percent
or more'; or
(b) in combination with the introduction of a narrative test in order to redress the inequities inherent in the current regime, while still
preserving the underlying aims of the reforms.
1
Stuart Clark and Ross McInnes, 'Unprecedented Reform: The New Tort Law' (2004) 15(2) Insurance
Law Journal 1, 1-3.
2
Wrongs Act 1958 (Vic) s 28LF.
2
3. Summary of current legislative provisions
3.1 Currently, under the Act, non-economic loss is defined as pain and suffering, loss
of amenities of life, disfigurement and loss of enjoyment of life.3 Non-economic
damages provide monetary compensation for the physical and psychiatric harm
arising from such loss. Sections 28LE and 28LF were included in the Act to
impose restrictions on the recovery of non-economic damages for personal
injury.4 These restrictions do not apply to injuries arising from workplace
accidents, transport accidents, intentional torts and sexual assault or
misconduct.5
3.2 Certain injuries, namely, the loss of a foetus or loss of a breast and psychiatric
injury arising from the loss of a child, do not require assessment in order to meet
the threshold requirements for recovering non-economic damages.6 However, for
all other physical and psychiatric injuries, section 28LE limits the recovery of noneconomic damages to cases in which an individual has suffered a ‘significant
injury’.7
3.3 A physical injury is ‘significant’ if it satisfies the threshold level of whole person
impairment of ‘more than five per cent’ under the American Medical Association
Guides to the Evaluation of Permanent Impairment (the Guide).8 To satisfy the
threshold requirement, the claimant should generally obtain a Certificate of
Assessment, which involves an approved medical practitioner assessing the
injury in accordance with the Guide.9 A certificate may be issued regardless of
whether all injuries have stabilised.10 Section 28LF also provides for the
assessment to be referred to a Medical Panel for determination.11
3.4 Alternatively, an injury may be deemed to be ‘significant’ where the respondent
waives the requirement for an injury assessment, or where the court makes a
determination in urgent circumstances pursuant to section 28LZN.12
4. Consistency
4.1 There are inconsistencies between this scheme and other personal injury
regimes in Victoria, particularly in relation to the eligibility for, and award of, noneconomic damages. Given the extent of these inconsistencies, significant reform
would be required to achieve uniformity.13
Victoria and the ‘Narrative Test’
4.2 Within Victoria, both the Accident Compensation Act 1985 (Vic) (the ACA) and
the Transport Accident Act 1986 (Vic) (the TAA) also rely on a quantitative
‘significant injury’ threshold to assess claims of non-economic loss.
3
Wrongs Act 1958 (Vic) s 28LB (definition of ‘non-economic loss’).
Ibid ss 28LE–28LF.
5
Ibid s 28LC.
6
Ibid s 28LF.
7
Ibid s 28LE.
8
Ibid s 28LF.
9
Ibid s 28LH.
10
Ibid 28LF.
11
Ibid.
12
Ibid.
13
Bernadette Richards, Melissa De Zwart and Karinne Ludlow, Tort Law Principles (Thomson Reuters,
2013), 14.
4
3
4.3 However, both the ACA and TAA allow recovery for loss that fails the threshold
test, through a qualitative ‘narrative test’. This forms an alternative test to the
quantitative ‘degree of impairment’ test, and may be utilised by claimants who
cannot meet the required whole person impairment threshold.14
4.4 The test enables a comprehensive assessment of the long-term effects of an
injury on an injured party's quality of life through a consideration of the
occupational, financial, social, domestic and psychological effects of a claimant’s
injury.15 Various factors will influence the deemed ‘severity’ of the injury
sustained, and each case must be assessed with regard to the personal
consequences that a person has experienced, resulting in a holistic consideration
and evaluation of all of the evidence raised.16 (See 5.1 to 5.7 below).
4.5 The introduction of a narrative test, in combination with the proposed changes to
the threshold requirements, would allow a more just and streamlined litigation
process. It would provide courts with the flexibility to assess the longstanding
effects of the injuries sustained, giving sincere regard to the permanent and
substantial consequences of personal injury on genuine claimants. Moreover, an
abundance of case law and further legislative amendments has developed
around this complex test, ensuring a degree of certainty and solidity in its
application.17
4.6 It must be noted that the thresholds stipulated in both the ACA and the TAA are
significantly more onerous than that of the Act, requiring a claimant to have
suffered a ‘whole person impairment’ of 30% or more, assessed in accordance
with 4.38 of the Guide.18 The ‘no fault’ nature of these statutory schemes does
not require proof of fault on the part of the tortfeasor. The thresholds in the ACA
and TAA function to prevent an excessive number of claims and protect the
ongoing viability of the schemes. However, as the Act requires a claimant to
prove fault, such a burdensome threshold is not necessary.
5. Equity
5.1 The use of the Guide to determine 'significant injury' has restricted access to
justice for people with legitimate non-economic losses due to its stringent nature,
effectively ‘locking them out’ of compensation. These are losses that we consider
to be ‘significant’, but which fall outside the scope of the current provisions.
5.2 The rigidity of the current provisions and their interaction with the Guide is best
demonstrated by Elsdon v Victorian WorkCover Authority19 (Elsdon), a case
where the plaintiff suffered multiple spinal fractures (five per cent impairment
under the Guide) and there was conflicting medical testimony regarding its
seriousness. Justice Macaulay's statement, following a previous case, Transport
Accident Commission v Serwylo,20 encapsulates the strictness of the threshold:
14
Peter Hanks, ‘Accident Compensation Act Review: A Guide’ (2008) Accident Compensation Act
Review, 20.
15
Hennie Kloper, ‘Determining ‘Serious Injury’’ (2011) 514 South Australia Attorney’s Journal, 30; Peter
Hanks, ‘Accident Compensation Act Review: A Guide’ (2008) Accident Compensation Act Review, 20.
16
Dwyer v Calco Timbers Pty Ltd [2006] VSCA 184 [41].
17
Hanks, above n 14, 20.
18
Accident Compensation Act 1985 (Vic), s 134AB(15); Transport Accident Act 1986 (Vic) s.47.
19
[2012] VSC 347.
20
Transport Accident Commission v Serwylo [2010] VSC 421.
4
In my view the VWA's construction argument is foreclosed by
the Serwylo decision. As I have shown, that decision was reached, on its
primary foundation, independently of any medical evidence, and regardless of
whether the particular condition was actually capable (or known to be
capable) of compromising the spinal structure.21
5.3 The fact that medical evidence and the injury’s actual effect on the plaintiff’s life
are irrelevant to the extent that it does not conform to the Guide,22 demonstrates
the degree to which the current provisions regarding non-economic damages are
inflexible.
5.4 Further examples of the inflexibility of the Guide creating unjust results may be
found by analysing the Guide itself. For instance, certain conditions already
described as 100 per cent impairment,23 such as diplopia-double vision, may still
allow a person to conduct his/her life reasonably normally. For example, the
ability to drive is retained. However, should negligent corrective surgery worsen
the condition, the person will not have access to non-economic compensation.
This is because, under the legislation, he/she cannot become any more impaired
than the pre-existing 100 per cent and therefore cannot exceed the threshold.
This logic is particularly concerning as it disadvantages already vulnerable
persons in the community.
5.5 The operation of the exceptions under section 28LF of the Act can also result in
incongruous results. For instance, under section 28LF(1)(d) of the Act, loss of a
breast is considered significant. However, in order to qualify for damages under
the Act, the patient must have undergone a full mastectomy.24 Therefore, it is
clear that significant damage to breast tissue can occur without constituting ‘loss’
as per section 28LF(1))(d) or the Guide, where in reality the woman would
classify her own loss as the loss of a breast.
5.6 Additionally, the current provisions do not take into account situations where a
five per cent whole body impairment actually equates to far more pain and
suffering in reality.25 In his submission to the Policy review of Comcare's
permanent impairment guide, Dr. Michael Epstein demonstrates this point by
utilising a 'classic' example of a concert pianist losing a little finger.26 In such
situations, a restriction to claiming serves to not only fail to adequately
compensate the person for his/her loss, but also to trivialise the seriousness of
his/her trauma.
5.7 These examples demonstrate the potential for the suggested changes to have a
significant and beneficial effect on the quality of life of people with legitimate noneconomic injuries, particularly in cases which fall just below the threshold.
21
Elsdon v Victorian WorkCover Authority [2012] VSC 347 [53].
Transport Accident Commission v Serwylo [2010] VSC 421 [26].
23
American Medical Association, Guides to the Evaluation of Permanent Impairment (American Medical
th
Association, 4 ed, 1993) 217 [8.3].
24
Ibid 275 [12.8].
25
Tim Bugg, 'Negligence and damages - personal injury, property damage and pure
economic loss' (Speech delivered at the Fiji Law Society 50th Anniversary
Convention, Fiji, 26 May 2006).
26
Dr Michael Epstein, Submission to Comcare, Policy review of Comcare's permanent impairment
guide, 24 April 2009, 2.
22
5
6. Efficiency
6.1 The maintenance of affordable public liability and professional indemnity
insurance is fundamental to the continuing functionality of many professions and
public services. Accordingly, the allocation of risk is an important factor in
assessing the viability of this submission’s proposals.
Changes to the threshold requirement under the Act
6.2 Further data is required to accurately assess the impact of the proposed change
to the threshold requirements, namely:
(a) the number of cases that constitute a five percent whole body injury (which
currently fall below the threshold minimum per section 28LB of the Act); and
(b) the potential increase in:
i. the number of legal proceedings;
ii. the associated costs and damages of litigation; and
iii. insurance premiums.
6.3 Nonetheless, given that this ‘bracket’ of injuries is presently on the cusp of
qualification, it is unlikely that there would be a significant impact on the number
of medical panel investigations, as such claims are likely to already require
assessment and determination by a medical panel.
6.4 Moreover, as the proposed change concerns claims at the lower end of the
spectrum, it is unlikely that this would result in a significant overall increase in the
economic cost to insurance providers and other parties required to pay
compensation.
Introduction of a narrative test
6.5 It is apparent that the introduction of a narrative test would bring with it a
significant increase in litigation, both in terms of the issues requiring
determination in each matter and also the number of matters brought before the
courts. To ensure that such a change is neither inequitable nor onerous on
defendants, insurers and the courts, a threshold requirement regarding economic
loss should be considered. For example, a prospective claimant may be required
to establish economic loss of 30 per cent earnings before being able to claim
under a narrative test for non-economic loss.
6.6 Importantly, the requirement of an ‘economic loss threshold’ requirement in order
to claim under the narrative provision would minimise such effects, while also
allowing greater access to justice. Additionally, low threshold requirements would
mean that, unlike under the TAA or ACA, most cases would proceed on the basis
of a threshold test. That is, the increased scope of serious injury covered by the
quantitative assessment of the threshold test would allow for a reduced number
of claims to be brought under the more complex qualitative assessment of the
narrative test.
6
Cost impacts on defendants of unmeritorious (frivolous) litigation
6.7 The reforms were in part an attempt to decrease the number of unmeritorious
claims.27 After the reforms, there was a sharp, nation-wide fall in personal injury
claims, the sharpest of which occurred in Victoria.28 However, while such
statistics may be cited to indicate that the initial reforms have successfully
stymied a large number of claims for personal injury, it does not follow that this is
reflective of a decrease in frivolous litigation. There are no public statistics
available on frivolous cases, as the issue of measuring frivolous litigation itself is
fraught. However, Victoria's pre-reform claiming rates were below the national
average even prior to 2002 to 2003.29
6.8 Examples of non-economic claims that the community would not consider
frivolous which are currently excluded under the s 28LE30 exception have already
been discussed in detail above. It also needs to be noted that despite the public
perception of frivolous litigation,31 the court process is a long, arduous and often
intimidating process, particularly to those with no experience of the justice
system. It is also costly,32 both financially and in terms of the time and emotional
expenditure required for such a case to proceed. This in itself would constitute a
deterrent to opportunists, particularly given the fact that a favourable outcome is
not guaranteed.33
6.9 This is not to imply that frivolous proceedings are not without cost to a defendant.
In fact, the reforms were successful in limiting the number of claims that were
cheaper to settle than to litigate, even when unmeritorious. However, the
inflexible nature of the reforms has also had the unfortunate effect of conflating
trivial claims with those that are deserving of judicial review (as discussed in 5.1
to 5.7 above). It stands to reason that in a society in which a victim may have no
other means of redress for pain and suffering, restricting access to the courts is
unduly reactive. 34 It may be suggested that a deterrent to such cases could be
more efficiently pursued through punitive measures on individuals rather than the
broad exclusion of entire classes of injured people.35
Impacts on incentives for persons to take care to avoid injuries
6.10 As the aforementioned examples demonstrate, negligent conduct resulting in
pain and suffering can still occur, even though it is difficult to show meaningful
evidence of such claims (due to the restriction). Given that such conduct may
also result in compensation being paid under the operation of some other part of
the Act, the prevention of negligent conduct resulting in physical injury is
desirable both from an insurer and community perspective.
27
Panel for the Review of the Law of Negligence, Review of the Law of Negligence: Final Report
(The Ipp Report) (2002) p.185 at 3.15.
28
E W Wright, ‘National Trends in Personal Injury Litigation: Before and After “Ipp”’ (Commissioned
Report for Law Council of Australia, 2006), 30.
29
Ibid.
30
Wrongs Act 1958 Vic.
31
John Flint, 'Turning the Tide' (2005) 73 Precedent 31, 32.
32
See, eg, County Court of Victoria, Fees <http://www.countycourt.vic.gov.au/fees>.
33
Australian Law Reform Commission, Costs Shifting — who pays for litigation, Report No 75 (1995) 7.
34
John Chu, 'Analysis and evaluation of Victorian reform in general damages for personal injury under
the tort of negligence' (2007) 10(2) Deakin Law Review 125, 161.
35
Ibid.
7
6.11 Both the law and the community recognise that non-economic, 'pain and
suffering' damages can amount to a quantifiable monetary amount.36 Given that
the claims identified above which are currently restricted under the Act would
clearly create pain and suffering for victims, it seems both inconsistent and
inefficient that compensation is denied to them. Whether or not they understand
this in a legal sense, expenditure either in time or money by injured persons
surely strives towards the ideal restitutio in integrum, restoration of the plaintiff to
his/her original condition.37 Therefore, the money and productivity lost by the
victim in pursuit of restitutio in integrum equates to money and productivity not
spent by them as an employee or consumer, a cost which ultimately falls on the
wider community in some form.38
6.12 Given that pain and suffering is quantifiable, the question then becomes ‘who
should bear this loss?’ The suggested changes would not allow everybody to
claim as such a result would be inefficient, as well as potentially overly
adversarial. Additionally, it must of course be acknowledged that loss occurs and
need not always be arbitrarily apportioned. However, from a policy point of view,
the current threshold system espoused by the Guide is somewhat counterintuitive. While the point should be made that the basis of negligent conduct is
that it is generally unintended, the prospect of damages for non-economic losses
can help to prevent lax attitudes or unsafe practices by giving businesses and
individuals an economic incentive to avoid injuries.39
6.13 The suggested changes also make sense from a policy point of view. The reality
of most negligence cases is that the defendant is in a better position to protect
himself/herself against negligent conduct occurring, than the plaintiff, as it is the
defendant who is in a position of relative control.40 Therefore, it makes more
sense economically to incentivise a good relationship between consumers and
businesses or between patients and doctors rather than clients and insurers, as
this encourages safe practice over negligence.41
7. Other considerations relevant to the inquiry
The National Disability Insurance Scheme
7.1 Chapter 5 of the National Disability Insurance Scheme Act 2013 (Cth) (NDIS Act)
provides that a person may become a participant in the National Disability
Insurance Scheme (the Scheme) even when they have not made a claim for
compensation. Nonetheless, the Chief Executive Officer (CEO) of DisabilityCare
Australia (the Agency) can require that person to take reasonable action or make
a claim for compensation, or can himself/herself take action or take over an
existing claim.42 As such, it is important to consider the NDIS Act when assessing
the dynamics of reform to the Act.
36
NJ Mullany, 'Tort Reform and the Damages Dilemma' (2002) 25(3) UNSW Law JournaI 876, 878.
th
Kit Barker et al, The Law of Torts in Australia (Oxford University Press, 6 ed, 2012) 695 [16.1.2];
Haines v Bendall (1991) 172 CLR 60, 63.
38
Law Society of NSW, NSW Bar Association, Law Council of Australia and Australian Lawyers’
Alliance, 'Injured Workers Denied Compensation' (Background Briefing Paper, 2006) 2
<http://www1.lawcouncil.asn.au/lawcouncil/images/LCA-PDF/a-z-docs/PIC-briefing-paper.pdf>.
39
Above n 34, 880.
40
Ibid.
41
Ibid.
42
National Disability and Insurance Scheme Act 2013 (Cth) s 104.
37
8
7.2 Firstly, it must be noted that it is in the interests of the CEO to commence or take
over proceedings where a claim has the potential to be paid by the negligent
party or insurers, as doing so will divert the costs of the participant’s care to
another party. The NDIS Act has the potential to increase the number of injured
persons seeking compensation under the Act, as persons who may not have
otherwise litigated may be required to do so in order to receive benefits under the
Scheme. Accordingly, the NDIS Act may cause an increase in the number of
court proceedings under the Act and, in turn, a rise in insurance premiums.
7.3 Secondly, the potential effect that the CEO’s powers under section 104 will have
on prospective participants must also be considered. Section 105B allows the
Agency to recover the costs of the participant’s plan paid under the Scheme and
costs incidental to the claim from any award of damages by the court. However,
currently, there seems to be no delimitation to the category of damages from
which the Agency can recover.
7.4 For example, would the CEO be entitled to recover the full amount of the
participant’s plan, and the costs incidental to the claim, if such amounts were not
met by the court’s award of costs and damages for gratuitous care under the Act?
That is, could the Agency ‘dip’ into the economic and non-economic damages
awarded to the participant? To do so would seem contrary to the recognition that
injured persons have the right to recover for ‘pain and suffering’, as a category
distinct from others, such as economic loss and gratuitous care.
7.5 It must be remembered that the ACA and TAA include such provisions.43
However, unlike the ACA and the TAA, the NDIS Act and the Act function in two
different jurisdictions. Therefore, it would be conceivably difficult to reconcile the
two Acts, in the event that one was significantly amended. The change to one act
could compromise the operation or purpose of the other. This can be
distinguished from the nature of the ACA and the TAA schemes, where such
effects would be a consideration of legislative reform, by virtue of the fact that
they fall under the same Act.
Compatibility with the Victorian Charter of Human Rights
7.6 The enactment of the Charter of Human Rights and Responsibilities Act 2006
(Vic) (the Charter) requires all Bills of Parliament to have regard to the rights
expressed in the Act. Given that the bulk of the amendments to the Act were
made in 2003, we submit that any reforms made as a result of this Inquiry should
aim for consistency with the Charter, particularly section 24. Reforming the
‘significant injury’ threshold in sections 28LE and 28LF to enable more legitimate
claims to be heard will ensure greater consistency with section 24 of the Charter.
7.7 Section 24 of the Charter protects an individual’s right to a fair hearing in civil and
criminal proceedings. The restrictive nature of the current thresholds has led to
widespread concern in the legal community, particularly since these thresholds
are denying many legitimate plaintiffs their right to access the courts, which is
potentially inconsistent with the Charter.
43
See, for example, Transport Accident Act 1986 (Vic) ss104 and 105. 9
7.8 It has been suggested that the Victorian Court of Appeal might find that the
current ‘significant injury’ thresholds are inconsistent with section 24.44 This would
result in a declaration of inconsistent interpretation pursuant to section 36(2) of
the Charter. While a test case has yet to come before the courts specifically in
relation to the Act, given the severe restrictions imposed, it appears to be only a
matter of time.
7.9 The operation of the Charter would require a court to determine whether the
infringement of the right (section 24) can be justified according to the factors
listed in section 7(2).45 As it is unlikely that the courts will be able to reconcile the
two, per section 32,46 a declaration of inconsistent interpretation will be issued.47
This inconsistency between the threshold provisions and the Charter leaves itself
open to challenges.
7.10 The potential for challenges under the Charter due to this incompatibility presents
an opportunity to reform the Act in such a way that promotes greater consistency
with the Charter.
7.11 Regard to the Charter will be unavoidable if a reform Bill eventuates from the
current Inquiry. Since 2006, all Bills introduced through Parliament must be
accompanied by a Statement of Compatibility, which states whether the Bill is
compatible with human rights.48 It is hoped that amendments to the threshold
provisions will facilitate access to justice for a greater number of people and
avoid a very possible inconsistency with the Charter. Given the Victorian
government’s pledge to not only retain the Charter, but also commit to its ongoing
development, it is clear that rights such as that to a fair trial are indicative of
values held in high regard by the wider community, and should therefore be
reflected in legislation.
8. Conclusion
8.1 While the reforms immediately reduced the rates of litigation, it is only now that
the implications for members of the wider community and their access to justice
are coming to light. The effect of these stringent ‘significant injury’ thresholds has
impeded the ability of many to pursue personal injury claims through the courts.
We have suggested that the current threshold should be reconsidered and that
there should also be consideration of the introduction of the ‘narrative test’. Such
reform would facilitate access to justice for individuals in our community who are
currently unable to meet the stringent threshold requirements.
44
Jeremy King, ‘Where justice is significantly injured’ (2012) 86(3) Law Institute Journal 26.
Julie Debeljak, ‘Momcilovic v The Queen and Ors: From Definite Pessimism to Cautious Optimism in
273 pages!’ (Speech delivered at the Public Law Weekend – 10 Years on from September 11: the
Impact on Public Law, Australian National University, Canberra, 9-10 September 2011).
46
King, above n 42, 26.
47
Charter of Human Rights and Responsibilities Act 2006 (Vic) s 36.
48
Charter of Human Rights and Responsibilities Act (Vic) s 28.
45
10
Acknowledgements
We would like to acknowledge the input of the following people and organisations in
preparing this submission:
Mr. David Martin
Common Law Bar Association
Ms. Nicki Mollard
Monash University Law Students’ Society
Shalaka Parekh
Gemma Hallett
We acknowledge that any views or errors within this submission are our own.
11