Australia: Victorian parliament makes changes to the Wrongs Act

In brief - Amendments aim for fair and consistent operation of personal injury legislation

The Victorian Parliament recently passed the Wrongs Amendment Act 2015 (Vic) ("Amending Act") which makes several important changes to Victoria's personal injury legislation. The amendments to the Wrongs Act 1958 (Vic) are based on five recommendations given by the Victorian Competition and Efficiency Commission (VCEC). They are significant in that they either allow for increased awards of damages or for damages to be awarded in circumstances where they were previously unavailable.

VCEC addresses concerns about personal injury legislation limitations

Following on from our September 2014 article entitled Victorian inquiry into Wrongs Act 1958 - VCEC recommendations and government's response, the Victorian parliament has now passed an Act amending aspects of the Wrongs Act.

The amendments are the result of a 2014 report by the VCEC entitled Adjusting the Balance: Inquiry into Aspects of the Wrongs Act 1958. In its report, the VCEC raised a number of concerns about the limitations that were implemented into Victoria's personal injury legislation in the early 2000s to improve the availability of professional indemnity and public liability insurance.

The Amending Act implements five of the VCEC's recommended changes to the Wrongs Act which are outlined below.

Calculation method for maximum damages in cases of economic loss to change

The Amending Act amends section 28F(2) of the Act which prescribes the maximum damages for past or future loss of earnings. The Act currently requires the court to "disregard the amount by which the claimant's gross weekly earnings would (but for the death or injury) have exceeded an amount that is 3 times the amount of average weekly earnings at the date of the award."

The VCEC report raised concerns that this cap was unfair to the dependants of high income earners who also had high living expenses. In a dependency claim for loss of financial support, the cap may be applied prior to the deceased's living expenses being deducted.

It also suggested that high income earners may be unfairly disadvantaged because if their post-injury earnings remained higher than the cap, they may not be entitled to any damages, even if their income was significantly reduced by the injury.

The Amending Act changes the wording of section 28F(2) so that damages are capped "for each week of the period of loss of earnings" at "an amount that is 3 times the amount of average weekly earnings at the date of the award". Under the new wording, it is intended that claimants with different earning capacities will be treated more evenly because the court will not be required to consider the claimant's income. Additionally, the new section aims to clarify that deductions for a deceased's living expenses should take place prior to the application of the cap.

Maximum damages for non-economic loss to be increased

Sections 28G and 28H of the Act limit the maximum amount of damages that may be awarded to a claimant for non-economic loss. The maximum listed in section 28G of $371,380 is indexed annually in accordance with the CPI calculation in section 28H. The indexed maximum currently sits at approximately $520,000. The Amending Act increases the amount in section 28G to $577,050, which will also be indexed annually.

The VCEC report noted that this latter amount was the limit on damages for pain and suffering in the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) and that there was no reason for a different cap to apply to workplace and personal injuries.

Damages for loss of capacity to care for others now allowed

The Amending Act also amends section 28ID of the Act to provide a new statutory entitlement to damages for the loss of a claimant's capacity to provide gratuitous care to the claimant's dependants. Alongside this, the definition of "dependants" has been expanded to include any unborn children at the time that liability arises.

The purpose of this section is to encompass the recommendation of the VCEC to enact a section to apply despite contrary common law, most notably CSR v Eddy (2005) 226 CLR 1. In that case, the High Court held that where a plaintiff is prevented by an injury from providing gratuitous services to another, the damages recoverable cannot include an amount calculated by reference to the commercial value of the services, and the loss of capacity to care for another (in this case, a man's wife) should be dealt with under general damages. This amendment will overrule this concept and provide a specific head for such a type of damage.

Restrictions remain for the type of "dependant" covered under this section. The court must be satisfied that the claimant provided care to the dependants before liability arose, that the dependants were or will not be able to provide care for themselves due to age or physical or mental incapacity, and that, but for the injury, the claimant would have been provided for at least six hours and for a period of six consecutive months.

Threshold impairment level for non-economic loss in certain cases decreased

The Amending Act also changes the definition of "threshold level" in section 28LB of the Act. Currently, damages for non-economic loss can only be awarded for psychiatric injury where the claimant's impairment is assessed as being greater than 10%. However, the Amending Act sets the required impairment level at "10 per cent or more".

Additionally, the Amending Act creates a specific category for spinal injuries, setting the threshold impairment level at "5 per cent or more". Currently, spinal injuries are treated the same as any other physical injury and an impairment level of more than 5 per cent is required before damages for non-economic loss can be awarded.

In both cases, the Amending Act allows for claimants on the edge of the threshold level to recover damages for non-economic loss where they were not previously entitled to do so.

Courts can stay proceedings in claims for damages for non-economic loss where certificate of assessment not served

The Amending Act inserts a new section 28LZMA, which gives the court power to stay proceedings in respect of a claim for recovery of non-economic loss until the claimant has served on the respondent the certificate of assessment and any other information prescribed under Part VBA to accompany the certificate.

Transitional provisions introduced for the new threshold level

The Amending Act introduces important transitional provisions in relation to the new "threshold level" which will give retrospective effect to the provisions. Section 28LZS(1) provides that the new definition will apply to an injury subject to a claim "irrespective of when the act or omission causing the injury and giving rise to the claim for recovery of damages occurred." Further, section 28LZS(2) states that it will also apply to a claim that "commenced before the commencement of section 11 of (the) Act but has not been finally settled or determined before the commencement of that section".

Amendments intend to lead to better or fairer outcomes for claimants, but are they necessary?

It is significant that the amendments either allow for increased awards of damages or for damages to be awarded in circumstances where they were previously unavailable. The "second reading speech" notes that the amendments are aimed at ensuring that Victoria's personal injury legislation operates fairly and consistently, leading to better or fairer outcomes for claimants. In circumstances where damages settlements and awards for personal injury claims in Victoria appear to be growing in size and are disproportionate to those in other states and territories in Australia, the need for the amendments is questionable.

Rose Raniolo
Health and medical
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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