EXECUTIVE SUMMARY
This paper argues that, as a result of a process of what might be described as ad hoc decision making, the differing 'tort schemes' operating in New South Wales have produced uncertainty and unfairness in the receipt of damages by tort victims.
Examples are provided of the way in which the 'mixed' common law and statutory schemes fail to ensure that the damages recoverable by tort victims are the same, regardless of the schemes applying to them. In this important respect, the schemes fail to meet the requirements of a 'principled' system for awarding of damages, an objective that now has wide community support. Put simply, the schemes fail because they do not provide a 'fair go' for all tortiously injured persons. Where an injury is sustained the damages available should the same, regardless of what scheme the person is to receive damages from.
The paper concludes that the obvious solution to this problem is further legislative reform, which ensures that the damages for all tort victims are assessed in accordance with the same principles. This could be done relatively easily by adopting, as a 'code' or basic model for the assessment of damages for all tort victims, the provisions on damages in the Civil Liability Act 2002. This Act is to be amended by the Civil Liability Amendment (Personal Responsibility) Bill 2002 which the Government introduced into Parliament on 23 October 2002 and which, it is anticipated, will be debated, enacted and assented to prior to the end of 2002.'
UNIFORM TORT LAW: 'A FAIRER SYSTEM FOR A FAIRER RESULT'
Recommendations for a balanced system that treats everyone equally.
By Dr John Ball & The Law Soc. of NSW.PART ONE: THE BENEFITS OF THE TORT SYSTEM
Why is there support for fault-based liability?
It seems beyond doubt that there is no great community support for academic arguments calling for the replacement of fault-based liability.
The community, in general, accepts the overriding importance of retaining the right of tort victims to sue for common law damages. It may be that the public is more concerned with a practical common sense approach to damages/compensation than with an approach based on the more intellectual arguments of the academics.
There might, for example, be considerable public support for the views of Justice Allen Linden on the importance of 'empowering the injured' through the right to certain damages in respect of actionable fault. Writing in 1998, he argued that 'the mission of tort law in the next millennium should be to empower' tort victims and that 'there will be a greater need for tort law than ever before in the next millennium'In these circumstances it might be useful to identify some of the main reasons, which could explain why the fault principle is still in accordance with community expectations.
Ordinary people accept the 'corrective' justice function of tort law. Community concepts of fairness and justice demand that a person injured by another's fault should be entitled to recover damages at common law from the wrongdoer. A reasonable person accepts that victims of negligence should be treated more generously than victims of faultless accidents or of 'acts of God' because the former, but not the latter, are victims of preventable mistakes.
Many people still believe that the tort process fulfils an important deterrent role in 'punishing' those who commit mistakes. The response to the argument that tort law encourages the adoption of 'defensive practices' is that this should not be seen as a negative result of fault-based liability. It should, instead, be seen as a benefit since it encourages safer practices and leads to a reduction in the risk of the same mistakes recurring. If wrongdoers are not held accountable to their victims, there is no real incentive for the wrongdoers to learn from their mistakes or to avoid repeating them.
Allowing victims their 'day in court' or an opportunity to settle with defendants provides them with a 'sense of closure'. This may be just as important to them as the receipt of damages. If this opportunity is taken away, it sends a powerful message to tort victims that no one will be held accountable for the negligent acts which have injured them.
The common law system is the only compensation system which attempts to make good all aspects of the plaintiff's loss and thus provide full compensation. Common law damages are assessed on an individual basis, taking into account the special circumstances and needs of the plaintiff Victims of negligence need substantial damages to assist them to acquire physical, emotional, and financial stability. Payments under no-fault compensation schemes will be significantly lower than common law damages and, unlike common law damages, will fail to provide the remuneration and compensation required to address the victims' individual needs. Perhaps Professor Glanville Williams' conclusion, more than fifty years ago, that compensation is the only defensible aim of the law of torts is equally true today.
The common law system commands greater respect than administrative/statutory schemes/systems because liability and assessment of damages are determined by judges whose independence and impartiality is well-known and whose actions are open to public scrutiny and review by appellate courts.
Replacing the tort system with a no-fault compensation system, such as that in New Zealand, will increase the burden of taxation at a time when many taxpayers believe that taxation rates are already too high.
A no-fault compensation system is likely to result in a compensation/pension syndrome delaying the injured person's return to community activities and employment.
The fault principle also plays an important educative role, especially in relation to lifting the standards of professionals (for example, in the application of standards of medical practitioners). Why should 'once and for all' compensation be retained?
There also appears to be continuing support for victims of torts to have a general entitlement to 'once and for all' lump sum damages, including structured settlements when appropriate. Community support seems to be based on what might be regarded as uncomplicated common sense reasons.
Lump sum damages provide the financial security needed to rebuild the victims' lives by providing them with the opportunity of paying off their mortgages, starting a business, or otherwise making any adjustments required as a result of their tortiously caused disabilities. Lump sum damages allow tort victims to push the trauma of their accidents into the past and to concentrate on the future.
Lump sum payments promote finality of litigation. They enable insurers to bring their liability to an end and thus minimise their costs since a system of periodic payments will involve ongoing medical examinations and reviews. Periodic or 'drip feed' payments encourage a 'charity' or 'pension mentality', compel the victim to be always waiting for the next cheque, discourage rehabilitation, and almost certainly increase overall system cost.
PART TWO: THE COMMON LAW TORT SYSTEM: BACKGROUND
The essence of tort-based liability
Generally, liability under the law of torts can only be established if a plaintiff establishes fault, usually negligence, on the part of the defendant. The damages payable by the defendant are usually assessed on a 'once-and-for all' basis and as a lump sum. In a general sense, there can be no doubt that the expansion of common law liability, especially in the 20th century, has been beneficial for the community and that the legal profession has played a significant role both in developing the common law and in assisting clients to claim their rightful compensation for tortiously caused injuries. However, the expansion of tort victims' rights and the judicial recognition of their entitlement to new heads of damage have, inevitably, resulted in increased system costs.
Criticism of the tort system
The common law system of damages has been the subject of considerable criticism throughout much of the second half of the twentieth century and especially in the early years of the present century. The criticism has been especially strong in New South Wales although the Commonwealth Negligence Review Panel (the 'Ipp Committee') has also been critical of some aspects of the operation of the tort system. Here it is only necessary to identify the main thrust of such criticism.
One of the most popular criticisms, much argued by academic writers, is that basing liability on individual fault produces unfairness as a lucky few accident victims receive relatively generous common law damages. The lucky ones are those who can prove that they were injured by the fault of another person who is insured or who can afford to pay damages. The unlucky ones are those who are unable to do so.
Academic critics of the tort system have suggested various models for what they consider 'would be better ways of compensating accident victims. In doing so, they usually seek to make comparisons between the amount of damages received for injuries caused by fault and the limited payments received under the social security system and compensation schemes for sporting and criminal injuries!Torts: a cause-based not a needs-based system
Academic critics have also expressed concern about the tort system being a cause-based system of compensation not a needs-based system. It is said to discriminate between accident victims with exactly the same needs for compensation on the basis of whether or not they can prove fault on the part of another person. For instance, a typical example is the case of twopassengers in motor vehicles who were rendered quadriplegic in two accidents. One was injured when the recently licensed driver of the vehicle applied the brakes a little more slowly than an experienced driver would have done when confronted with an emergency. The other was injured in an accident caused by the driver of a vehicle collapsing through an unforeseeable heart attack. Only the first victim will receive damages for the injury. Another example would be the case of two university students who had to have both legs amputated to save their lives from meningococcal meningitis. If one student is lucky enough to have evidence of some delay in diagnosis, damages might be recoverable. The other student will be left remediless.
Limited role of individual liability
It has also been pointed out that a basic premise of tort liability — personal liability for individual fault — has now lost much of its significance as it has become much more widely known in the community that tort damages are usually paid not by the defendant but by the defendant's insurer. However, this is only the case where the defendant has insured against the risk, either voluntarily or compulsorily. It has also come to be better understood that ultimately, in many circumstances, everyone contributes to the cost of the damages through increased costs payable either as a consumer of products and services, or as a taxpayer, or as an insured person. The current public debate about public liability is indicative of the fact that many have come to question whether the cost of tort law, at least in the way in which it was operating at the beginning of the 21st century, exceeded its undoubted benefits. On the other hand, such debate has, in no way, cast doubts on the vital necessity of tort victims receiving adequate damages to restore them, so far as possible, to the position they were in before they were injured through another's fault.
Failure of academic proposals
Academic proposals for alternative models for compensating accident victims appear to have foundered on the inability of their proponents to persuade others of their real value and, more importantly, of how the community could afford to pay for such alternative compensation schemes. There seems little doubt that fundamental reform of the common law tort system to address the perceived unfairness of the common law system is no longer on the political agenda. As a result, academic commentary calling for the replacement of the tort system need not be reviewed further in this paper.
PART THREE: STATUTORY INTERVENTION IN THE TORT SYSTEM
Why was legislative reform needed?
It is one thing to argue that there is strong community support for the maintenance of the tort system. It is quite another thing to argue that the community has been satisfied with all aspects of the tort system. Quite the contrary; there have been many calls in recent years for legislative action to address real and perceived abuses of the tort system. The main grievances seem to have related to the fact that from the 1 980s developments in the common law of negligence seemed to be almost always in the direction of expanding liability and increasing damages.
In 1984 Professor Fleming wrote of the tendency of 'liberal' judges 'to make-over tort law in the image of social insurance' because of a widespread judicial conviction that the legislatures were too slow in increasing the benefits and coverage of social security and social welfare. It appears that Judges have attempted to address this imbalance. The New South Wales Government with its two-stage civil liability changes of 2002 has also attempted to readdress these concerns.
The direction of legislative reform.
Legislative reform, aimed at addressing the real and perceived excesses and abuses of the common law system, began in the 1980s. As the Attorney-General's Position Paper on the draft Civil Liability Amendment (Personal Responsibility) Bill 2002 noted, the initial approach of the New South Wales Government was to provide for statutory intervention in tort law in areas of activity which engaged large sections of the public, where most defendants were insured, and where injuries were frequent. The early reforms, therefore, focused on motor and work-related accidents. The statutory changes significantly restricted the damages recoverable by victims of motor accidents and all but removed the common law rights of workers to sue for common law damages arising out of negligently caused work accidents.
The Position Paper also noted that the 'broader area of public liability' had been left relatively free of statutory reform. This changed during 2001/2002. The New South Wales Government decided to intervene legislatively in the broader area of tort liability. It decided to address widespread public concern about large increases in the cost of premiums for public liability insurance, the impact of this on the community and government, and the perception that some claimants were continuing to receive unjustified and/or excessive damages. The first stage of the reforms, relating to limitations on damages, was introduced by the enactment of the Civil Liability Act 2002.
The second stage of the reforms is being introduced by the Civil Liability Amendment (Personal Responsibility) Bill 2002 which restates and amends a number of important principles of the common law of tort and incorporates them into the main statute, the Civil Liability Act 2002.” These reforms are seen as implementing a suggestion by Sir Harry Gibbs, a former Chief Justice of Australia, that legislative action might 'redefine, more narrowly, the principles of the law of negligence, perhaps by providing a more clearly defined duty of care, and a less burdensome standard of care, and by introducing a proportionate relationship between the degree of negligence and the amount of damages'. They have received a generally favourable reception although there has been criticism of the possibility of differences emerging between the New South Wales law and the proposed national law reform which has been recommended by the Ipp Committee.
Critics of some aspects of the statutory intervention in tort law have been concerned that they are based on ad hoc decisions rather than on universally defensible principles. Examples of such decisions include the 1999 reform of the motor accident compensation system to meet the electoral promises of the recently re-elected government of 'a $100 reduction in the average price of greenslips' and the 2001 reform of work-related accident compensation law which effectively removed the worker's right to sue the employer for common law damages and was directed expressly at reducing premiums to 2.8% of the payroll from an estimated 3% of payroll.'
The only truly defensible model of legislative intervention is that which has been identified by the Chief Justice of NSW, the Hon JJ Spigelman AC as 'principle driven reform'. He has argued that restricting liability and damages 'In accordance 'with the application of universally applicable principles' is equally capable of restraining the escalation in insurance premiums as is ad hoc decision making. It is implicit in such an approach that there should be compelling reasons shown if victims of negligence in the workplace, in motor accidents, in the health care area, or in the broader area of public liability are not provided with the same access to the common law system and with the same basis for assessment of their damages for their injuries. Whether this has been achieved by recent statutory reforms will now be considered.
PART FOUR: A NEW DIRECTION
Denial of common law rights to some tort victims
Earlier in this paper it was suggested that fundamental reform of the common law tort system to address its perceived injustices was no longer on the political agenda. In what follows it is argued that one of the results of recent statutory 'reform' of the tort system has been the creation of a tort law system which denies some tort victims equal access to the common law system and to equal entitlement to common law damages.
Thresholds and a principled approach
Statutory reforms in New South Wales have made use of thresholds either to restrict access to common law rights or to limit the amount of damages recoverable by a successful claimant. Such thresholds should be based on sound principles rather than be the product of ad hoc decision making. Such thresholds, it is suggested, should satisfy' the following relatively uncontroversial principles if they are to be part of a truly principled system of compensation.
The same thresholds should be used in assessing the damages for tortiously injured victims irrespective of where or how the injury occurred. In the absence of compelling considerations to the contrary, negligently injured victims of motor accidents, work accidents, medical negligence or other misadventures who have the same injuries and needs should receive the same entitlements. It should be obvious, however, that a principled threshold, rather that a lowest common denominator principle, should be used.
Thresholds should not be imposed arbitrarily; a clear need should be established for excluding certain classes of people.
There should be no defacto abolition of common law rights by stealth through the imposition of thresholds which are virtually impossible to reach, for example, an extremely high threshold for workplace injuries.
Thresholds should be broad enough to take into account the claimant's physical impairment; any psychiatric or psychological injury; and the past and future effect of the injury on the claimant's life.
Thresholds should not exclude from any type of compensatory damages, tort victims who would be considered by ordinary people to have suffered a 'serious injury'. The exclusion of such victims from any part of compensatory damages is likely to cause injustice and hardship.
Thresholds should not be based on medical guides unless they have been developed specifically for the purpose of assessing the compensatory damages required to meet the individual needs of each claimant.
The application of thresholds should not be based on the opinion of 'a single medical assessor' who may have had inadequate training in the application of the complex tests upon which thresholds are likely to be based, but who, nevertheless, makes an assessment which is, to some extent, subjective. Thresholds in New South Wales
Thresholds are used in each of the current common law based compensation regimes in New South Wales. Tort claims arising out of work and motor accidents are principally regulated by the Workers Compensation Act 1987 and the Motor Accidents Compensation Act 1999 respectively although some provisions of the Civil Liability Act 2002 also apply to motor accidents.' Claims for tortiously caused injuries occurring in other circumstances are regulated by the Civil Liability Act 2002.
An analysis of the statutory thresholds used in these regimes indicates that they do not meet the principles suggested above. They do not ensure equal treatment for all accident victims, the thresholds are arbitrary, and they have created both actual and potential injustices. While all three schemes impose restrictions on or preclude the recovery of certain common law damages, the restrictions imposed on those injured in tortiously caused work-related accidents are the most extreme, effectively removing the right to sue for common law damages.
Arbitrary treatment of claims for non-economic losses
It is as regards thresholds for claims for non-economic damages that recent statutory reforms are most vulnerable to criticism that they have been based on ad hoc decisions rather than on sound defensible principles. Let us assume three people have each suffered a very serious leg injury, one at work, one in a motor accident and the other as result of medical negligence. The victims will have spent weeks in hospital, have subsequently hobbled around on crutches for months, and been left with unsightly scarring. They will have experienced and will continue to experience great pain and suffering. Their personal and social relationships will have suffered and their sporting and recreational life will have been seriously interrupted or even ended. The victims will have become depressed and/or anxious and they will have experienced loss of confidence and self esteem.
Most impartial observers would expect that any compensation system which claimed to be based on a principled approach to compensation would treat each of the three victims in the same way so far as their non-economic losses are concerned. In fact, under the existing and proposed laws in New South Wales, claims by these three victims for non-economic losses would be treated in three quite different ways depending on the purely coincidental way in which the injury occurred. The right of victims of work accidents to recover damages for non-economic losses in a common law claim has been abolished with claims being limited to past and future loss of earnings.' Motor accident victims and other tort victims can still recover damages for non-economic loss but they are subject to two quite different thresholds which are discussed in Parts Six and Seven.This document continues….. for a complete reading of 20 pages…go to “Uniform Tort Law” written by Dr John Ball for The Law Society of New South Wales.
Source;
http://pandora.nla.gov.au/pan/32709/20021210/www.lawsociety.com.au/uploads/filelibrary/1036038275267_0.20611256790313381.pdf