Tort Reform Re-Formed

In 2013 the Victorian Competition and Efficiency Commission conducted a review of the personal injury provisions of the Wrongs Act 1958 with a view to ensuring that the Act was operating fairly and not preventing genuine claimants from bringing claims for compensation.

Many of the recommendations made as a result of this review were incorporated into the Wrongs Amendment Act 2015 which comes into effect today, 19 November 2015.

Key changes to Victorian personal injury law affected by the amendment are:

• For claimants suffering from spinal injuries, the threshold for access to damages for pain and suffering and loss of enjoyment of life will be lowered to 5 per cent.

At present, the threshold is greater than 5 per cent. This has been changed because the impairment produced by spinal injuries is assessed in increments of 5 per cent, meaning that in practice, claimants must have a 10 per cent impairment of the spine to be entitled to receive damages for pain and suffering. This outcome was seen to be unduly harsh.

• The impairment threshold for claimants with psychiatric injuries will change from greater than 10 per cent to simply 10 per cent. This will result in some increase in the number of claimants that are eligible to receive damages for pain and suffering arising from psychiatric injuries.
• A court may now stay proceedings until a plaintiff has served the documents required to establish the extent of their impairment. That is a welcome amendment.
• The maximum amount of damages that can be awarded for non-economic loss will increase from $497,780 to $577,050, and will continue to be indexed annually.
• Claimants can now be awarded damages for the loss of their capacity to care for others in certain circumstances. This means there is a (restricted) entitlement to such damages in Victoria despite a recent High Court decision that there is no entitlement to such damages under the common law.
• It has been clarified that the cap on damages for past and future economic loss and loss of expectation of financial support (being three times the average weekly earnings) does not prevent a court from having regard to the claimant’s actual earnings when assessing their loss.

The ‘greater than 10 per cent’ threshold never seemed to pose much of a hurdle for psychiatric claims and the hurdle is now even lower. The reduction of the physical injury threshold will result in more back injury claims. It remains to be seen whether plaintiffs will allege a loss of ability to care for others in order to pad out their claim, in the same way that Griffiths v Kerkemeyer (attendant care) claims are often used.