On 30 May 2013, the Victorian Competition and Efficiency Commission (“VCEC”) was directed to inquire into aspects of the Wrongs Act 1958 (Vic) (“the Act”).

The terms of reference required the VCEC to “identify and make recommendations to address any anomalies, inequities or inconsistencies in the Act that can be implemented without compromising the original objectives of the tort law reforms”.

The VCEC circulated an Issue Paper in July 2013, with submissions from key interest groups and affected parties due by 6 September 2013.  A number of submissions were received.  Following a draft report, further consultation and submissions, the VCEC Final Report was produced in 2014.

The Final Report – Adjusting the Balance: Inquiry into the Wrongs Act 1958 – was provided to the Treasurer on 26 February 2014 and released publicly on 2 September 2014.  The Final Report made a number of recommendations.  The Government’s response to the Final Report was released on 2 September 2014 and support was provided for a number of the VCEC’s recommendations.

In late 2014, the Department of Justice released a public Exposure Draft of the Wrongs Amendment ActBill 2014 (“the Bill”) endorsing a number of the recommendations contained within the VCEC Final Report.

The Bill seeks to counter-balance some inconsistencies between assessments of claims for personal injuries.  It also represents a departure from some of the thinking which led to substantial national tort reforms in the early 2000s.  It is an acknowledgment that, as a result of the major tort reforms in the early 2000s, some claimants had their entitlements limited too far and that inconsistency existed between damages caps and thresholds under personal injury legislation.

While the amendments proposed are likely to lead to an increase in claims and claim size (which may potentially impact insurance premiums) they reflect a recognition that amendments are required to balance inequity that has resulted from the Act.

The proposed reforms include:

Changes to the caps on economic and non-economic loss:

  • To calculate damages for economic loss, a cap of three times the total average weekly income applies under the Act.  This is seen to disadvantages high income earners.  The Bill proposes to change the way the cap on damages for economic loss is determined by assessing the difference between the claimant’s pre- and post-injury earnings.  The Court will also have discretion to consider any other matter it considers relevant.
  • An increase in the cap for non-economic loss (currently $371,380) to make it consistent with the higher cap provided under the Workplace Injury Rehabilitation Compensation Act 2013 (a sum $571,080).  This sum is to be indexed annually.

Changes to thresholds:

  • A change in the threshold for psychiatric injury from more than 10% to greater than or equal to 10%.

Confirmation of the capacity to claim for the loss of capacity to care for others: 

  • The assessment method will remain identical as under the Act; requiring at least six hours per week for at least six months.

Power to stay a proceeding:

  • To make a claim for non-economic loss under the Act, the significant injury threshold must be met.  This requires a certificate of assessment from an approved medical provider certifying that the threshold level for physical or psychiatric injury has been met.  There is currently no restriction on when this certificate can be issued, which can disadvantage respondents to a claim and their ability to access a medical panel.  The Bill introduces a power for the Court to stay proceedings until a certificate of assessment (and other information required to accompany a certificate) has been served. 

Bill status

The Bill remains in draft form.  Clause 2 of the Bill indicates that it will come into operation on 1 July 2015 unless proclaimed earlier.  The Bill is yet to be introduced into Parliament.