Wrongs Amendment Bill 2015

Ms PENNICUIK (Southern Metropolitan) — The Greens will be supporting the Wrongs Amendment Bill 2015. The bill makes a number of amendments to the Wrongs Act 1958 and implements most of the recommendations of the report of the Victorian Competition and Efficiency Commission (VCEC), Adjusting the Balance — Inquiry into the Wrongs Act 1958, which was released in September last year. The report identified a number of anomalies, inconsistencies and, importantly, inequities in Victoria's personal injuries legislation, most of which is covered by the Wrongs Act 1958, although some is covered by the Transport Accident Act 1986 and the Workers Compensation Act 1958.

The government has implemented the recommendations of the report, which we support as they remove unreasonable and unfair barriers that have led to legitimate claims being denied or undercompensated. It is worth quoting from the VCEC report's description of the Wrongs Act. It reads:

The Wrongs Act imposes several major limits on access to compensation for economic and non-economic loss arising from personal injury and death in Victoria, as a result of negligence.

In broad terms these main limitations are monetary limits or caps on damages for personal injury or death for both economic and non-economic loss; impairment thresholds for eligibility to claim damages for non-economic loss; a fixed discount rate to be applied to lump sum damages awarded for future economic loss and expenses; and limitations on damages for gratuitous attendant care and the loss of capacity to care for dependants.

As Mr Rich-Phillips said, it is a very thorough report into the act and makes some very sensible recommendations, most of which the government is picking up in this bill. For example, reducing the threshold of impairment to 5 per cent or more rather than greater than 5 per cent will enable Victorians with spinal injuries to access compensation for non-economic loss. It will lower the threshold for claimants with psychiatric injuries to 10 per cent or more rather than greater than 10 per cent. As Mr Rich-Phillips mentioned, that does not sound like much of a change, but in fact it is quite a substantial change in the practicalities of how this would be calculated under the act. In effect it lowers those thresholds quite substantially even though it does not sound like it does.

The bill increases the amount of damages that can be awarded for pain and suffering from the current cap of $371 380 to $577 050, which will bring it into line with the workers compensation scheme and will match further indexation of this amount under the Wrongs Act with equivalent indexation arrangements that exist in the workers compensation scheme. Carers and parents who are injured will be given limited entitlement to damages for their loss of capacity to care for their dependants.

There are some areas that the Law Institute of Victoria identified further reform was needed. This information was supplied by the law institute in its submission to the VCEC inquiry. These areas concern threshold levels for pain and suffering, damages for physical impairments and expanding the class of payments for significant injury claims, which I will talk about later in my contribution.

In the second-reading speech the Special Minister of State outlined that in 2002 and 2003 significant reforms were made to the personal injury laws in Victoria as part of a nationwide tort law reform project in the wake of the collapse of HIH Insurance in 2001, which I think most of us here will remember. The reforms were designed to restrict some common-law rights to compensation for negligence in order to reduce the liability of insurers to damages, with the aim of relieving pressure on insurance premiums and ensuring the availability of insurance to claimants. However, there were concerns that these reforms have disproportionately affected the rights of claimants to access damages, and some deserving claimants have been denied compensation. Hence the VCEC inquiry.

Under clause 5 the bill provides that the maximum amount available is three times the amount of average weekly earnings as at the date of the award for each week of the period of loss of earnings. The court will not be required to disregard any amount. This amendment implements the VCEC recommendation to address inconsistencies in the current act. The bill will increase the maximum amount of damages for non-economic loss and changes the method by which that amount is indexed into the future. As I mentioned, the figures regarding the changes are in the bill. This amount will be indexed annually, using the all groups consumer price index for Melbourne from the previous year, which is published by the Australian Bureau of Statistics. These amendments reflect the recommendation that there is no reason for differences in the maximum cost of damages which can be awarded to claimants for non-economic loss between workplace injuries and personal injuries.

Clause 4 of the bill expands the definition of dependants to include unborn children, and in clause 8, in addition to expanding the definition of dependants, the bill also confers upon the court the power to award damages for loss of capacity to provide gratuitous care to dependants. A court can award these damages if it is satisfied that the claimant provided care before the accident and the dependants are unable to care for themselves because of their age or physical or mental incapacity. It also provides other limitations, and I will not go into the detail with regard to that particular provision.

The current threshold for whole-of-person impairment for non-economic loss is greater than 5 per cent, and the bill will change that to 5 per cent or more which, although it does not sound like much, is actually quite a change.

The same will go for psychiatric injuries, which will change from greater than 10 per cent to 10 per cent or more. This change with respect to spinal injuries is probably the most significant amendment introduced in the legislation. Commentators are saying that it is likely to lead to a noticeable increase in the number of actions that are commenced. The bill will also, under clause 12, confer on the courts a power to stay a proceeding in respect of a claim for damages for non-economic loss in the case were a claimant has not served a certificate of assessment and any other information that is required to accompany the certificate when it is served, so that claimants are not disadvantaged by time limits or time pressures.

The Greens welcome this bill, which is providing a clearer and fairer system for people injured by the negligence of others, while at the same time balancing the need to ensure that public liability and professional indemnity insurance is available and affordable. Stakeholders such as the Law Institute of Victoria also support the intent of the bill in providing consistent personal injuries legislation in Victoria and ensuring that people who are injured in incidents unrelated to transport or the workplace are not unfairly restricted.

In saying that I would say of course that one could be under the impression that there are not anomalies, inconsistencies and inequities existing under the transport accident regime and under the workers compensation regime, particularly with regard to psychiatric injury. I have raised the restrictions on those under both those regimes — or the Greens have raised those particular issues — in this Parliament on several occasions before. That is still an area where reform is needed, particularly given that there are more of these types of psychiatric injuries in the workplace and as a result of accidents under the transport accident scheme than there were perhaps in the past. Unfairly restricting those is an ongoing concern for us.

The Law Institute of Victoria has suggested further reforms in the area of personal injury that it says need to be implemented within the next two to three years. That includes expanding the reduced threshold for non-economic loss of 5 per cent or more that is provided for in this bill for claimants with spinal injuries to all physical injuries. In its submission dated 28 January 2014 to the VCEC inquiry, the law institute stated that the estimated impact on insurance premiums of reducing the threshold would be affordable and equal to or less than the current estimate of 1.8 per cent.

In addition, unlike the WorkCover scheme and the TAC, the injury profile for claimants under the Wrongs Act 1958 is more heavily weighted towards physical injuries other than spinal injuries due to the nature of injuries — for example, medical misadventure, falls and animal attacks. Fractured limbs or internal injuries are more common. The nature of work injuries and motor vehicle injuries are such that there are a large number of spinal injuries. It is not fair to only reduce the threshold for spinal injuries and exclude other physical injuries under the Wrongs Act. Also, persons with non-spinal physical injury of 5 per cent under WorkCover or TAC have significant entitlements to no-fault benefits, including impairment benefits in respect of WorkCover claimants, as well as weekly payments and medical expenses under both schemes.

That is an area where the law institute says the government should be looking to further reform in the future — and the Greens support that. The institute also states in its submission dated 12 September 2013 to the inquiry that there are a limited class of claimants who do not meet the current threshold for significant injury and do not come under the exceptions in the Wrongs Act and are thereby unfairly prejudiced. These claimants include children who suffer traumatic injuries but after months or years in rehabilitation eventually make a recovery, even a substantial recovery; people infected with blood-borne diseases such as hepatitis B or C or HIV; people infected with life-threatening cases of legionnaires disease, often requiring extensive periods of intensive care; people suffering psychologically after the death of a child or an immediate family member in certain circumstances or from a hospital's negligent failure to diagnose or treat an infection or by such a thing as crushing from a defective wall collapsing. We know that there was a tragic example of that only recently in Melbourne. That is another area that the law institute has identified where the government should look at further reform.

We strongly urge the government to consider taking up the suggestions from the Law Institute of Victoria for further reform. I call on the government to commit to a review of the effectiveness of all the amendments that this bill introduces, their financial impact and the cost of insurance claims and insurance premiums, and the ability of injured persons to obtain adequate, fair and just compensation for their injuries under the amendments contained in this bill. I call on the government to conduct that review within 24 to 36 months after the commencement of the provisions contained in this bill. With those comments, the Greens will be supporting the bill.