Australia: Significant changes to personal injuries legislation in Victoria

Last Updated: 13 December 2015
Article by Kerri Thomas and Brooke Grealy

The Wrongs Act 2015 (Vic.) (Wrongs Act) has recently been amended, with several important changes being made to personal injuries legislation in Victoria. The changes are based on a number of recommendations produced by the Victorian Competition and Efficiency Commission (VCEC) in its review of Victoria's personal injuries legislation, contained in its final report Adjusting the Balance: Inquiry into Aspects of the Wrongs Act 1958.

The amendments are significant as they provide claimants with access to increased damages awards and compensation and they apply retrospectively.

Organisations regularly faced with common law negligence and personal injury claims are likely to be affected by these amendments. It is anticipated that insurers will see an increased exposure to personal injury claims in Victoria.

Key changes

The key changes are:

Lowering the impairment level threshold for psychiatric and spinal injuries

Claimants who suffer psychiatric injuries assessed at or equal to 10% impairment and claimants who suffer spinal injuries at or equal to 5% will now be entitled to access damages for non-economic loss in circumstances where they were previously unavailable.

Increasing the cap for general damages/non-economic loss

Under s 28G of the Wrongs Act, the cap will increase from $518,300 to $577,050, to be indexed annually to align with the cap of the Accident Compensation Act 1985 (Vic.).

Changing the maximum damages for economic loss under s 28F(2) of the Wrongs Act

Previously, high income earners were not entitled to any damages for economic loss if their pre-injury and post-injury earnings were in excess of three times the average weekly earnings, even where the claimant's post-injury earnings were less than the pre-injury earnings. The maximum amount of economic loss that can now be awarded is simply three times the average minimum weekly earnings.

This means that high income earners who suffer economic loss, but still earn more than three times the average weekly earnings at the time of the assessment, will be entitled to an award of up to three times the average minimum weekly wage for economic loss.

Further, in claims by dependants of a deceased, any deductions for a deceased's personal living expenses are now to be applied before the application of the cap (three times the average weekly earnings). Defendants will no longer be able to take advantage of the high personal living expenses of the deceased to reduce or avoid this head of damage.

The amendment seeks to address the economic loss provisions by treating claimants with differing earning capacities more evenly.

Allowing damages for the loss of capacity to care for others under s 28ID of the Wrongs Act

Claimants are now entitled to access damages for their loss of capacity to provide care for others.

For a claimant to access this head of damage, a Court must be satisfied:

  • the claimant provided care to their dependants before the liability, for which the claim is made, arose
  • the dependants were not, or will not be, capable of providing the care themselves because of their age or physical or mental incapacity, and
  • there is a reasonable expectation that, but for the injury, the care would have been provided to the claimant's dependants:
    • for at least six hours per week
    • for at least six consecutive months, and
    • in the future, and this is reasonable in all the circumstances.

Empowering the Courts to stay proceedings where a Certificate of Assessment has not been served under s 28LZMA of the Wrongs Act

The Court now has the power to stay proceedings in which the claimant is seeking non-economic loss until the claimant has served a Certificate of Assessment and all other information required to accompany the Certificate, which includes the prescribed information set out in s 28LT of the Wrongs Act.

This is a welcome amendment for defendants, as it promotes efficient and effective litigation. Defendants can now avoid incurring significant defence costs in cases where the claimant does not ultimately satisfy the "significant injury" threshold, so as to entitle them to non-economic loss, and their economic loss claims do not justify the matter being litigated.

Impacts of the changes on insurers and self-insurers

The amendments contain significant changes that will impact insurers/underwriters and self-insurers when fixing insurance premiums and assessing claims.

It is anticipated the number of personal injury claims will increase, notwithstanding that personal injury claims in Victoria appear to be disproportionate to those in other states and territories. The new higher awards and heads of damage will also likely result in the quantum being claimed and the awards made by the Courts increasing.

This will increase insurers' exposure to personal injury claims in Victoria and likely see them pass this increased risk on to their insureds by way of increased premiums. The VCEC has estimated public liability and professional indemnity insurance premiums will increase by up to 5% as a result of these amendments.

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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Kerri Thomas
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