7 Legal Developments

AUSTRALIA

Political Whirlwind: A Reality In Law
Tort Law Developments in Australia

By Russell Adams, Partner, Phillips Fox, Australia

The year 2002 will be remembered as the year politicians throughout Australia were moved to restrict the rights of injured people to obtain compensation. This was in response to the increases in the cost of insurance and its reduced availability to businesses, individuals and community based organisations, and a broad sweep of recommended reforms in the government-sponsored Ipp Report.

2003 saw a quieter year of implementation. A raft of legislation was introduced which made the political whirlwind a reality in law. To some extent the legislation extends beyond personal injury claims.

Given the novelty of the legislation, there has not yet been much judicial interpretation. This is obviously key. The intent behind the myriad of reforms may have been clear, but has not necessarily been captured in the wording of legislation.

Core changes

The legislation passed in the various jurisdictions should achieve a reasonable degree of uniformity in negligence claims and the appropriate measure of damages. For example, to establish negligence the plaintiff must prove that the risk against which the defendant should have taken reasonable precautions was not insignificant. Similarly an act of negligence must be shown to be a necessary condition for the suffering of loss or damage by the plaintiff for the test of causation to be established. These statutory reforms displace the less demanding common law principles.

Other significant areas of reform are:

• allowing a reduction for contributory negligence of the deceased in compensation claims brought by relatives;
  
• the presumption of contributory negligence where the plaintiff was intoxicated at the time of his or her injury (or at least relevant to whether there was a breach of duty).

In addition, all states and territories have introduced legislation which excludes or significantly curtails the circumstances in which a plaintiff injured during the course of committing a criminal offence can seek damages. There are reasonably consistent reforms to protect good Samaritans and volunteers from being sued where their actions or omissions cause injury. Volunteers' liability is also restricted in the federal Volunteers Protection Act 2003 (Cth). This excludes liability for work done on a voluntary basis which has been organised by the Commonwealth or one of its authorities.

Damages

All jurisdictions except the ACT (Australian Capital Territory) have either a minimum threshold before any general damages will be paid, a maximum cap for general damages and/or a requirement that a court determine general damages by reference to the plaintiff's injuries assessed as a percentage of a most serious case.

Every state and territory now has a limit on the amount of damages which are payable for loss of earning capacity. Other than in South Australia and Tasmania, that limit is three times the average weekly earnings. Each state and territory will apply a 5 per cent discount rate to future heads of damage except the ACT which has a 3 per cent discount rate.

Court-approved structured settlements are available in each state and territory as a result of the legislation passed in 2002 and 2003. This is complemented by federal legislation.

Proportionate liability

Another significant plank of reform is the introduction of proportionate liability legislation across all Australian jurisdictions. These new regimes will provide that wrongdoers against whom claims for damages are brought (other than for personal injury) will be held liable only for their contribution to any damage or loss. Under proportionate liability, any shortfall to meet a judgment will be the plaintiff's loss to bear. The impact of this reform will be most felt in the area of professional liability. Unfortunately, there are already some shades of difference between the proportionate liability provisions introduced in some jurisdictions.

Trade Practices

A potentially significant gap in tort reform has emerged in relation to the Trade Practices Act 1974 (Cth). The no-fault provisions of this Act are attractive to plaintiffs and until now, no damages caps have applied. The Act is increasingly relied upon by plaintiffs who suffer personal injury, particularly arising from the use of products or in connection with the provision of services.

The Federal Government has already amended the Trade Practices Act with the introduction of section 68B to allow providers of recreational services an increased right to rely on waivers of liability in contracts entered into with users of those services.

A broader reform is proposed in the Trade Practices Amendment (Personal Injury and Death) Bill 2003. The Bill proposes to exclude death and personal injury claims from the misleading or deceptive conduct provisions of the Act. There is currently a political stalemate in relation to this Bill and its future is uncertain. More recently, another Bill was introduced which will allow death and personal claims under certain other divisions of the Act dealing with product safety, but subject them to the limitation periods and damages caps recently adopted in the States. These changes to the Trade Practices Act will strengthen the operation of the State and Territory reforms under which plaintiffs' claims will now be determined.

Directions in 2004

The likely consequences of these reforms are a more attractive insurance market for insurers and consumers. The immediate losers are those who seek compensation for personal injury claims and their lawyers. Injured people will be required to take more responsibility for themselves both in terms of preventing injuries and funding the recovery from those injuries.

Although it is still too early to assess accurately the effects of the changes and whether they will lead to a significant decrease in the cost of insurance, anecdotal evidence suggests that, in some jurisdictions at least, claim numbers have dropped significantly. The key to any long term outcomes, however, will be the judiciary and the manner in which they interpret and apply the law.

Recent superior court decisions augur well for the implementation of tort reform. In cases where plaintiffs have attempted to shift responsibility for their own negligence to a 'deep pocket' defendant, the pendulum appears to have shifted back in favour of defendants. The concepts of personal responsibility and reasonableness have been given new emphasis by appeal courts and a number of decisions at first instance have been overturned. The move to greater legislative uniformity across the states and territories should go a long way to ensuring that this trend continues.

For more information about tort law reform in Australia, please contact:
Russell Adams, Partner
Phillips Fox Australia
Phone +61 2 9286 8259
russell.adams@phillipsfox.com
www.phillipsfox.com

CZECH REPUBLIC

Update from the Czech Republic on the harmonisation of legal regulation, by Magdalena Wawerková in Prague

Harmonisation of the legal regulation of the insurance and the insurance industry has been completed in our country. Members of the Czech AIDA Section took an active part in this work.

The latest developments

At the end of the year 2003 and at the beginning of the year 2004 the following laws were approved in our country:

• the Law No. 37/2004 Coll., the law on Insurance Contract,
  
• the Law No. 38/2004 Coll., on insurance mediators as well as independent claims settlers,
  
• the Law No. 39/2004 Coll., the amendment of the Law No. 363/1999 Coll., on insurance industry,
  
• the Law No. 47/2004 Coll., the amendment of the Law No. 168/1999 Coll. on Insurance of Liability for damage caused by performance of motor vehicle.

All new laws will be on web sites

All new laws are translated into the English language now. You can see full texts of them all at www.cap.cz from April.

Prague, March 2004
M.Wawerková