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Important statutory changes relating to claims brought in Victoria under the Wrongs Act 1958

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Important statutory changes relating to claims brought in Victoria under the Wrongs Act 1958

Important statutory changes relating to claims brought in Victoria under the Wrongs Act 1958

In November 2015, following a review by the Victorian Competition and Efficiency Commission (VCEC), the Wrongs Amendment Act 2015 (‘the 2015 Act’) was passed by the Victorian Parliament and received Royal Assent.

The 2015 Act amends parts of Wrongs Act 1958 governing the assessment and limitations on certain types of damages for injured claimants in Victoria.

Claims under the Wrongs Act 1958 are founded in negligence or where there is an allegation of fault against a respondent, other than WorkCover or Transport Accident claims.

The recent changes may have implications for respondents to those liability claims.

Increased caps on damages

The cap on damages for non-economic loss has been increased to $577,050 from $371,000. This increase brings the statutory maximum award in line with the cap on damages under workers compensation legislation.

In addition, the method of calculation for damages for economic loss is set at 3 times the amount of average weekly earnings at the date of award.

Recent reductions to certain thresholds – (aka ‘the one percenters’)

In order for a claimant to be permitted an award of non-economic loss (or damages for pain and suffering) they are required to establish they have suffered a significant injury, as defined under the Wrongs Act 1958. The process for assessing injuries requires an assessment of the claimant’s ‘whole person impairment’ by an approved medical practitioner under the AMA Guides.

The 2015 Act amendments will increase the pool of people who may establish significant injury by reducing the required thresholds for whole person impairment for claimants with spinal or psychiatric injury.

Where a claimant suffers a spinal injury they now require a whole person impairment of “5% or more”. This is a reduction of the previous threshold which required a whole person impairment of more than 5%. In other words, 6% or above.

While this 1% increase may not seem an enormous change, the VCEC’s review noted that assessments for spinal injuries under the AMA Guides are assessed in increments of 5%. A person with a 5% spinal injury may suffer significant pain and loss of function. The recent amendments address this concern so that a person with a spinal injury of 5% whole person impairment will now be eligible for an award of general damages.

Claimants with physical injuries that do not involve the spine are still required to meet the threshold of “more than 5%”.

A claimant suffering from a psychiatric injury of “10% or more” may now be entitled to damages for non-economic loss. This is distinct from the previous threshold requirement of more than 10% which meant the assessment needed to be 11% or more.

The amended threshold operates for much the same reason as those for spinal injuries. Psychiatric injuries are assessed according to classes with each class including a range of impairment. This could create the possibility of two people within a class having different entitlements, one may recover damages for non-economic loss and the other may not.

Allowance for damages for the loss of capacity to care for others

As a result of a 2005 decision of the High Court in CSR Ltd v Eddy a claimant who suffered an injury that impacted on their ability to provide care to their dependents could not seek damages for that lost capacity at common law.

This particular head of damage has been reinstated by the 2015 Act, with conditions, in order to recognise the importance of parents and carers and the financial stress put on families in the event of an injury or death of a parent or caregiver.

The definition of a dependent has also been expanded to include unborn children.

Claimants may now seek damages where:

  • the injured claimant provided care before the accident to a dependent;
  • the dependent is unable to care for themselves because of their age or physical or mental incapacity;
  • there is a reasonable expectation that the care would have continued to have been provided for at least 6 hours per week for 6 consecutive months; and
  • the need for care is reasonable “in all the circumstances”.

The amounts capable of being recovered are capped with the maximum being the average weekly earning for Victorian employees for those providing care for more than 40 hours per week and an hourly rate of up to 1/40th of the maximum to be applied to those providing care on average less than 40 hours per week.

The damages awarded:

  • must not include any damages for non-economic loss damages paid that compensates the claimant for the lost capacity;
  • may not compensate the claimant where the dependent has already recovered damages in respect to the loss of capacity;
  • may not be awarded to any person where the claimant has previously recovered damages for the loss of capacity to provide gratuitous care.

This particular amendment is likely to generate the most debate between claimants and respondents as it relies on interpretation of evidence and the needs or capacity of not only the claimant but also the dependent in order to establish the entitlement or foundation for an award of damages.

Retrospectivity

The new provisions for the threshold level for establishing significant injury and the allowance for damages for the loss of capacity to care for others will apply retrospectively and may have an impact on existing claims.

The power to stay proceedings

A considerable procedural change introduced by the 2015 Act enables the Court to suspend a proceeding where the claimant has not provided a certificate of assessment. Previously the Wrongs Act 1958 required the issue of significant injury to be determined before verdict. This meant the parties could get close to trial (including court ordered mediation) without any certainty on whether the claimant would be eligible for an award of general damages.

This amendment will primarily affect those claims where the principal head of damage is for general damages and where there may be some uncertainty as to whether the claimant meets the definition of significant injury. It may also allow a respondent the ability to have better certainty around it exposure and assessment of heads of damage before incurring significant costs.

Summary

These recent legislative changes:

  • improve the prospect of some claimants with spinal or psychiatric injuries to be eligible for an award of general damages, even in existing matters where the question may have been considered to have already been answered;
  • increase the potential award of general damages to very seriously injured claimants and may encourage comparative increases to general damages assessments for lesser injuries and an increase in the assessments of existing claims;
  • allow for new and additional claims to be brought for a claimant’s lost capacity to care for dependents, including on existing matters and increasing the scope of the claim;
  • give respondents’ better scope for requiring service of a certificate of assessment which may clarify available heads of damage earlier in proceedings.

The changes may increase a respondent’s overall damages exposure in a common law damages claim brought under the Wrongs Act 1958. Given the retrospectivity provisions, it would be important for claims managers to conduct a review of existing claims and their reserves.

If you have questions regarding this note, please contact Ingrid Nunnink on 9604 9406.

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