Injury payouts may be capped at $250,000
Date: October 2 2002


By Linda Morris

Damages awards for pain and suffering would be capped nationwide at $250,000 under a sweeping overhaul of negligence law designed to stem the growth in insurance costs and make it harder for people to sue.

The final report of a panel appointed by the Federal Government to review liability laws also recommends that lawyers be limited in what they can earn from small personal injury cases and that the test be tightened for negligence action.

Councils and other public authorities would be given a new "policy" defence to fight claims for road deaths and injuries arising from potholes and deteriorating highways and footpaths.

This defence would allow them to counter liability claims by arguing that they had acted within budget constraints and with regard to other service requirements.

Thirty-four recommendations by Justice David Ipp and his panel, focusing primarily on limits to personal-injury payouts and claims costs, were presented to the Assistant Treasurer, Helen Coonan, on Monday.

The 254-page report will be considered by state and territory ministers at today's insurance summit in Sydney.

Yesterday, lobbying intensified ahead of the summit with plaintiff lawyers urging the governments to proceed with extreme caution and accusing the insurance industry of blackmail.

"Insurers are returning to profitability without the help of tort reform," the president of the Australian Plaintiff Lawyers Association, Rob Davis, said.

The insurance industry in turn attacked the credibility of an Australian Competition and Consumer Commission report which found insurers would be back in the black for most insurance classes by next year.

The Insurance Council of Australia sent all ministers an analysis which it commissioned suggesting that predicted profit levels had been incorrectly tabulated.

However, in its drive to rein in liability payouts, the review by Justice Ipp urges governments to introduce a uniform cap on claims that goes further than legislation introduced by NSW in April. The Carr Government has already introduced caps and thresholds on general damages, restrictions on legal costs and limits on the way some lawyers can advertise.

For all claims made since March 20, damages for pain and suffering are capped at $350,000 and are not awarded at all for injuries amounting to less than 15 per cent of total incapacity.

Justice Ipp's panel recommends that general damages for personal injury claims be capped at $250,000 in line with limits in the Northern Territory ($250,000) and South Australia ($240,000).

The reforms would only affect calculations of awards for pain and suffering and loss of enjoyment of life and have no effect on money that might be awarded to cover future medical expenses.

The review endorses the principles that individuals must take responsibility for their actions and that they meet the same standards of care for themselves as the courts require of others.

Last year the High Court decided to remove the immunity of highway authorities from liability caused by lack of maintenance.

The Ipp review supports the findings of a NSW parliamentary inquiry last week which endorsed the High Court decision. However, it says the decision has given rise to some unintended consequences and that a new defence needs to be allowed where councils have limited financial resources to prevent road accidents and "trips and slips".

The recommendations of the first and second reports of the Ipp review are designed to form the basis of uniform legislation to be implemented nationally.


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