The provisions contained in the Civil Liability Legislation Amendment Bill 2008 ("the Bill") aimed at overcoming the Court of Appeal's decision in Harrison v Melhem are opposed by the New South Wales Bar Association. The Association does not agree with the Government's assessment that the amendments are necessary to stop significant increases in damages awards for gratutitous care, and is concerned about the effect of the proposed amendment on injured people.
Schedules 1, 2 and 2 of the Civil Liability Legislation Amendment Bill 2008 amend the Civil Liability Act 2002, the Motor Accidents Act 1988 and the Motor Accidents Compensation Act 1999 to make it clear that damages are to be awarded for gratuitous attendant care services only if the services are provided (or to be provided) for at least six hours per week and for at least six consecutive months. The amendment is intended to overcome the effect of the Court of Appeal decision in Harrison v Melhem  NSWCA 67.
In Harrison v Melhem, five judges of the Court of Appeal (including the Chief Justice) considered the proper application of section 15(3) of the Civil Liability Act 2002. That provision relevantly reads:
"...no damages may be awarded for gratuitous attendant care services if the services are provided, or are to be provided:
"(a) for less than six hours per week, and
(b) for less than six months."
Equivalent provisions are contained in the Motor Accidents Act 1988 and the Motor Accidents Compensation Act 1999.
The majority of the Court of Appeal in Harrison v Melhem interpreted section 15(3) as requiring that there be either 6 months or 6 hours per week gratuitous care before damages can be recovered. The Bill seeks to overcome this interpretation by requiring that care services must be provided for at least six hours a week over a period of at least six months before damages for such care will be awarded.
This interpretation is in line with decisions of appellate courts in Victoria and Queensland on the same issue, bringing New South Wales law into line with that of those states.
The New South Wales Bar Association opposes the proposed Government amendments concerning gratuitous attendant care.
The Court of Appeal's decision has not resulted in a flood of litigation or any significant increase in damages awards in these kinds of cases. In fact in the only reported case the Association is aware of which applies the decision of Harrison v Melhem, a Supreme Court decision of Hall J in Kipriotis v Royal Tiles Pty Ltd  NSWSC 871, the total amount awarded for gratuitous care was only $6531.20. Any modest increases in damages would easily be absorbed by insurers without the need for increases in premiums, given the substantial insurer profits which are currently being made, as indicated in the 2006-07 Motor Accidents Authority Annual Report, for example.
Although the Attorney General in his Second Reading Speech indicated that "if the changes are not made damages awards are likely to increase and with it insurance premiums", the Association believes that, although there may be individual cases where the decision may result in modest increases in damages awarded for voluntary care, there may well be other cases where damages fall.
The Court of Appeal's decision in fact provides a positive incentive for claimants to use cheaper gratuitous services rather than the more expensive paid services which are not subject to the constraints of section 15 Civil Liability Act and its equivalents.
The rate at which damages to cover domestic voluntary care are awarded is modest ($22 per hour as opposed to the commercial cost of the provision of care services, which is closer to $35-$40 an hour). As the relevant legislation does not provide minimum time periods to qualify for damages for commercial domestic care, in some cases involving the need for domestic assistance (particularly those involving future domestic care), some claims will be reshaped in the light of the Court of Appeal's decision so that they will involve voluntary care for less than six hours a week rather than paid care for an equivalent period. This will result in savings for insurers.
Without the need to satisfy both a six hour and six month threshold, it may well be that judges and assessors make more realistic assessments of care requirements given that lesser time periods are involved, rather than attempting to come to a higher assessment which ensures some compensation for gratuitous care is available.
The proposed amendment will also mean that the carers of injured people, in some cases individuals with quite serious injuries with long term care requirements, are deprived of compensation for regular ongoing care. In Harrison v Melham, the appellant had a 15% permanent impairment of his back, a 5% permanent loss of efficient use of the left leg at or above the knee, a 7.5% loss of efficient use of the right leg at or above the knee and impaired sexual function due to the lower back disorders). The appellant was not fit to return to labouring or heavy work due to his injuries.
The court found that he had an ongoing need for four hours care per week. The Government's amendment would ensure that no damages would be awarded for gratuitous attendant care in these circumstances.
It is recommended that the proposed amendments to the Civil Liability Act 2002, the Motor Accidents Act 1988 and the Motor Accidents Compensation Act 1999 contained in Schedules 1, 2 and 2 be opposed.
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