Australia: The pendulum swings: Victoria looks at reducing Wrongs Act limitations on personal injury damages

Clayton Utz Insights

Key Points:

On one analysis, the recommended modest changes to damages awards would match the incremental increase to premiums, but they might be a sign of future changes to personal injuries damages recovery.

The Victorian Commission and Efficiency Commission has made recommendations which, if adopted, would modify some of the limitations imposed by the Wrongs Act 1958 (Vic) and make it easier for some victims of negligence to claim personal injury damages.

With an eye to keeping insurance premium increases to a minimum, the Commission carefully chose which limitations ought to be changed. If the recommendations are implemented, those in the private sector should expect to see a 2-5% increase in public liability and professional indemnity insurance costs.

Beyond insurance premiums, these recommendations also appear to signal what could become a relaxation of the current legislative barriers to recovery for damages in personal injuries cases.

Background: national tort reforms

In the early 2000s, as part of a national tort reform movement, the Victorian Government introduced limitations on, and thresholds for, claims for personal injury. The reforms enacted through the Wrongs Act, and largely mirrored in all jurisdictions, were driven by what was then perceived to be an insurance crisis. They represented a strong legislative intent to reduce overall claim numbers as well as recoverable damages in individual claims.

The reforms have been a constant source of discussion and scrutiny. Plaintiffs' advocates claim that they serve as a barrier to legitimate compensation. They also point to the fact that similar injuries across Victoria's three compensation regimes (ie. the Wrongs Act, the Accident Compensation Act and the Transport Accident Act) produce different damages awards.

Against this background, the current Victorian Government tasked the Commission with identifying clear anomalies, inconsistencies and inequities so as to improve outcomes for people injured as a result of negligence. However, the challenge was to avoid any "unduly adverse"1 impact on the availability and cost of insurance – which, after all, was the reason for the initial reform.

The Commission's recommendations: thresholds and damages caps

Having received submissions from a range of interest groups, the Commission made the following recommendations:

  • Claimants with spinal injuries assessed at greater than or equal to 5% whole person impairment should be eligible to access damages for non-economic loss (currently, the threshold is greater than 5%).
  • The psychiatric injury impairment threshold for eligibility to access damages for non-economic loss should be adjusted to greater than or equal to 10% whole person impairment (currently, the threshold is greater than 10%).
  • The cap on damages for economic loss should apply to the gap between pre- and post-injury earnings. This means that high-income earners will be entitled to damages for loss of earning capacity even if they are able to earn a partial income post-injury. This addresses an anomaly between the Wrongs Act and the Transport and Accident Compensation Acts.
  • In claims for expectation of financial support, deductions for the deceased person's expenses should be made before applying the cap on economic loss. Given that above average earners are more likely to have higher personal expenses to deduct, modifying when deductions occur will ensure that dependents of high income earners will not be unfairly and unjustly treated.
  • The maximum amount of damages that may be awarded to a claimant for non-economic loss should be increased to align with the cap under the Accident Compensation Act.
  • A limited entitlement for loss of capacity to care for others, otherwise known as Sullivan v Gordon damages, should be provided. This would bring Victoria into line with the law in NSW, Queensland, South Australia and the ACT. Importantly, these damages, previously available under the common law, are not currently available in Victoria. Therefore, this would represent the introduction, rather than a modification, of a damages entitlement.
  • The impairment assessment for spinal injuries should take into account the claimant's post-surgery, rather than pre-surgery, condition to determine whether the claimant has improved or deteriorated after surgery. This would help to more accurately determine an appropriate damages award, and addresses an anomaly between the Wrongs Act and the Transport and Accident Compensation Acts.

What didn't make it in

Importantly, the Commission also recognised that some recommendations that it was asked to make, and that it certainly considered, would have an unduly adverse impact on the cost of insurance. As a result, the following recommendations were expressly not made:

  • a reduction in the "discount rate" applied to lump sum payments to account for the net present value of an award, from 5% to 4%. This was despite acknowledging a strong case and the benefit such a reduction might provide to young and severely injured people. This benefit was offset by the unduly adverse impact it would have on the cost of insurance. Statistically, a 1% decrease would result in a 4% increase in public liability insurance premiums and an 8% increase in medical indemnity insurance premiums.
  • A "narrative test" (ie. a description of the level of impairment / injury rather than a numeric threshold) to assess eligibility for non-economic loss claims that fall just below current thresholds (The Health Services Commissioner recommended this in its submission). This was informed by experience drawn from the accident compensation and transport accident schemes and the concern that a narrative test has the potential to lead to a significant increase in claims and hence insurance premiums.

Impact on premiums

The Commission estimates that its recommendations would impact the private sector markets for public liability and professional indemnity insurance premiums by around 2-5%. Naturally, this would also be impacted by other economic factors not linked to any legislative changes. Other factors may be the results of the upcoming state election (so far, only the incumbent government has promised to adopt the changes if re-elected in November, although it is likely that a Labor Government would do likewise) and the unknown impact of the National Disability Insurance Scheme.

A modest change to recovery for personal injury, or a sign of things to come?

In the end, the Commission's recommendations are somewhat limited, which is not surprising given the constraint of keeping insurance premiums at bay. On one analysis, the modest changes to damages awards which the recommendations would introduce would match the incremental increase to premiums. Also, any such recommendations are limited to Victoria.

However, as practitioners in the field, we should keep an eye open to see whether this may be a sign of things to come and a loosening of the legislative grip on personal injuries damages recovery.


1The Commission made a technical assumption that "unduly adverse" meant limiting the aggregate increase in insurance premiums to about 5 percent or less.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.