Righting a wrong? Amendments to the Wrongs Act 1958 (Vic) in relation to personal injury claims.

Amendments have been made to the Wrongs Act 1958 (Vic) which are designed to ameliorate, to some extent, the effect of the Victorian tort law reforms introduced in 2002 and 2003 regarding personal injury claims.  These amendments came into effect on 18 November 2015 when the Wrongs Act Amendment Act 2015 (Vic) received Royal Assent.

The amendments are responsive to the final report of the Victorian Competition and Efficiency Commission (VCEC), published in February 2014, entitled ‘Adjusting the Balance: Inquiry into Aspects of the Wrongs Act 1958’.  The amendments do not affect the operation of the proportionate liability regime under Part IVAA of the Wrongs Act.

Summary of the Key Amendments

Both Parts VB and VBA of the Wrongs Act have been amended, which deal with the law of negligence and the ‘significant injury’ threshold for damages for non-economic loss, respectively.  The key amendments are as follows:

1. The maximum amount of damages that may be awarded to a claimant for non-economic loss have increased from $371,380 to $577,050, consistent with the equivalent cap on awards of damages for pain and suffering in the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).  The amount will be indexed annually.
2. In limited circumstances, damages can now be awarded for loss of a claimant’s capacity to provide gratuitous care to their dependents.  These damages are often referred to as Sullivan v Gordon damages, following the 1999 decision of the New South Wales Court of Appeal of the same name.  In order for an entitlement to arise, the claimant must establish that:
   1. they provided care to dependents before the time at which the liability in respect of which the claim is made arose;
   2. the dependents were incapable of providing the care themselves due to their age, physical or mental incapacity;
   3. there is a reasonable expectation that but for the injury to which the damages relate, the gratuitous care would have been provided to the dependents for at least 6 hours per week and for a period of at least 6 consecutive months; and
   4. the need for the care is reasonable in all the circumstances.
3. The threshold for ‘significant injury’ has been lowered slightly in respect of psychiatric and spinal injuries only.  Significant injury is the threshold for claimants being entitled to an award of damages for non-economic loss, in circumstances where liability is established. Whereas previously the threshold was impairment of ‘more than 10%’ for psychiatric injuries and ‘more than 5%’ for spinal injuries, the threshold is now ‘10% or more’ and ‘5% or more’, respectively.  Other types of injuries are not affected by this amendment.
4. Courts now have discretionary power to stay any proceeding where damages for non-economic loss are sought but a certificate of assessment has not been served by the claimant.  A certificate of assessment is a certificate provided by an approved medical practitioner who makes an assessment of the claimant’s level of impairment under Part VBA of the Wrongs Act – ie whether the claimant satisfies the threshold for significant injury.

Conclusion and Implications

With the exception of the Court having the power to stay any proceeding for damages for non-economic loss until the claimant serves a certificate of assessment, these amendments to the Wrongs Act are favourable to claimants.  Whether the amendments are justified is open to debate.  Submissions were variously made to VCEC by the Insurance Council of Australia and Avant Mutual Group Ltd opposing any winding back of tort law reforms, whereas the Australian Lawyers Alliance and the Law Institute of Victoria were supportive of amendments being made that favoured claimants.  Based on modelling prepared by the Victorian Managed Insurance Authority (VMIA), it is likely that these amendments will result in at least modest increases in premiums for public liability and medical malpractice policy holders.

In our view, the most significant amendment is arguably the introduction of damages for loss of capacity to care for others, in circumstances where:

1. In CSR v Eddy (2005) 226 CLR 1 the High Court held that these damages were not allowable at common law.
2. Prior to that decision, the courts in Victoria had not always followed Sullivan v Gordon.

Clearly, this will have an impact on ongoing reserves for and the final costs of pending claims as these damages were previously not taken into account.

From a premium pricing perspective, the VMIA has suggested that this amendment alone is likely to cause medical indemnity premiums to increase between 5% and 10% in Victoria.

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