What happened?

  • On 15 September 2015, the Victorian Labor Government announced that a new Bill had been introduced to remove some restrictions on entitlements to compensation for personal injury.
  • These proposed changes will not alter the entitlements of those whose injuries happen at work or involve the use of vehicles.

What does it mean?

  • If passed, the Bill may substantially increase the entitlement of certain claimants.
  • The changes propose to:
    • allow more claimants who suffer back injuries to sue for pain and suffering damages;
    • entitle carers and parents who sustain personal injury to damages where their ability to continue to care for others is affected by the injury;
    • Increase the current cap on general damages from $497,000 to $577,000.
  • Whilst the Andrews’ Labor Government will be able to ensure the safe passage of the Bill through the Victorian lower house, the Labor party does not hold the balance of power in the upper house. Whether the Bill will receive safe passage in that house will depend on the support of minority parties and independents. However, we suspect they will throw their support behind the changes, although perhaps with some modifications.

FULL SUMMARY

In 2003, sweeping tort law reform in Victoria placed restrictions on claimants seeking damages for non-work or vehicle related injuries. As a result, the Wrongs Act 1958 (the Wrongs Act) was amended. The amendments had a substantial impact on the number of personal injury claims commenced in Victoria.

The most significant reform meant personal injury claimants could not sue for pain and suffering damages unless they had a “Significant Injury”. This means a personal injury claimant needs to establish that their injury is permanent and:

  • for physical injuries, assesses at more than 5% whole person impairment using AMA Guides Edition IV; and
  • for psychiatric injuries, assesses at more than 10% primary psychiatric impairment.

As the focus of AMA Guides Edition IV is on assessing bodily “impairment”, certain categories of injury are more likely to meet the “Significant Injury” threshold test than others.

For instance, a large percentage of personal injury claims involve elderly claimants who have sustained shoulder injuries.

On the other hand, certain categories of injuries, whilst potentially “significant”, do not exceed the “Significant Injury” threshold. As a result, pain and suffering damages cannot be claimed and  often these claimants do not pursue any entitlements at all.

One example is back injuries. Unless there is evidence of neurological compromise, back injuries do not tend to reach the physical impairment threshold to be considered a “Significant Injury”. This may be the case even if the injury has rendered the person unable to work.  Therefore, whilst the same injury sustained at work (in which case the “Significant Injury” threshold does not apply) may attract significant awards (often upwards of $200,000), no pain and suffering damages can be awarded.

There are also other restrictions in Victoria that do not exist in other states. For instance, in Victoria, damages cannot be awarded for loss of capacity to care for others. This is inconsistent with the position in New South Wales and Queensland, where this head of damage was re- introduced following the High Court decision of CSR Ltd v Eddy [2005] HCA 64.

The inconsistencies, both at an intra and interstate level, have resulted in two governments introducing Bills into Parliament seeking to address some of the issues.

The first Bill was introduced in 2014 by the then Liberal Government. The Bill never gained any traction because an election was called.

With a new Government came a new Bill.

On 15 September 2015, the Victorian Attorney General, the Honourable Martin Pakula MP, announced that a Bill had been introduced into Parliament to amend the Wrongs Act.

The Bill adopts recommendations made by the Victorian Competition and Efficiency Commission’s 2014 review of the Wrongs Act.

The Bill adopts some of the VCEC’s recommendations, including:

  • amendments to the “Significant Injury” threshold so that more spinal injuries will fall within the threshold;
  • introduction of a limited entitlement to damages for loss of capacity for carers and parents who are injured and cannot care for their dependents;
  • an increase in the amount of damages awarded for pain and suffering from $497,000 to $577,000, bringing the cap into line with the current worker’s compensation scheme.

The Attorney General has said that “these amendments will lead to fairer outcomes for claimants in Victoria, without placing undue pressure on the price or availability of insurance.”

However, whether that proves to be the case will depend on the number of additional claims that may be pursued once the thresholds have been relaxed.

More details of the Bill are not available at this stage.