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Trade Practices Amendment (Personal Injuries and Death) Bill (No. 2) 2004

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2002 — 2004

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

 

Trade Practices Amendment (Personal Injuries and Death) Bill (No 2) 2004

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Revenue and Assistant Treasurer, Senator the Hon Helen Coonan)

 



 



 

Table of Contents

Outline ............................................................................................................. 1

Financial Impact Statement ............................................................................. 3

Regulation Impact Statement .......................................................................... 4

Notes on Individual Clauses .......................................................................... 20

 



 

1

Trade Practices Amendment (Personal Injuries and Death) Bill (No 2) 2004

Outline

1.1          In July 2002 the Commonwealth appointed a panel of experts to review the law of negligence (the Review).

1.2          The Review terms of reference noted that the award of damages for personal injuries had become unaffordable and unsustainable as the principal source of compensation for those injured through the fault of another.  It was desirable to examine a method for the reform of the common law with the objective of limiting liability and quantum of damages arising from personal injury and death.

1.3          The Review was requested to consider a number of areas, in particular, the interaction of the Trade Practices Act 1974 (TPA) with the law of negligence.  The Review was asked to develop and evaluate options for amendments to the TPA that would prevent individuals commencing actions in reliance on the TPA in order to recover compensation for personal injuries and death.

1.4          The Review’s recommendations were formulated to ensure that the TPA could not be used to undermine any State and Territory laws in relation to claims for damages for personal injuries or death.  Significant steps have already been taken at the State and Territory level to improve the affordability and availability of insurance.

1.5          This Bill is the second tranche of the amendments forming the Commonwealth’s response to the Review’s recommendations in relation to reform of the TPA.  The purpose of the Bill is to ensure that a nationally consistent approach is taken so that limitation periods and constraints on damages arising from personal injury or death apply consistently across the country.

1.6          The TPA allows a person to claim damages for any loss, including personal injuries or death, flowing from unconscionable conduct (Part IVA), a contravention of the product safety and information provisions (Division 1A of Part V), a supply by a manufacturer or importer of unsatisfactory consumer goods (Division 2A of Part V) or a supply by a manufacturer or importer of defective goods (Part VA).

1.7          This Bill will amend the TPA to provide that the rules relating to limitation of actions and quantum of damages recommended by the Review, apply to any claim for personal injuries or death brought under Part IVA in the form of an unconscionable conduct claim, Part V Division 1A, Part V Division 2A or Part VA.



 

2

Financial Impact Statement

2.1               This Bill will have no significant financial impact.  However, the reforms to the law of negligence made by States and Territories will have some impacts on the Commonwealth.



 

3

Regulation Impact Statement

Background

3.1          At the May 2002 Ministerial meeting on Public Liability Insurance, Commonwealth, State and Territory Ministers agreed to a range of measures to address the cost and availability of public liability insurance.  These measures included the establishment of a panel of experts to review the law of negligence (the Review).  The purpose of the Review was to assist governments to address the issue of increasing premiums for, and reduced availability of, public liability insurance.

3.2          In July 2002, the Commonwealth announced the members of the panel for the Review (the Honourable Justice David Ipp, Professor Peter Cane, Associate Professor Don Sheldon and Mr Ian Macintosh).  Amongst other things, the Review’s terms of reference required it to consider:

·        the application, effectiveness and operation of common law principles applied in negligence to limit liability arising from personal injuries or death;

·        principled options to limit liability and quantum of awards for damages; and

·        options to limit claims for negligence to within three years of the date of the event.

3.3          In addition, the Review was asked to consider the interaction of the Trade Practices Act 1974 (TPA) with the common law principles applied in negligence (particularly with respect to waivers and the voluntary assumption of risk).  In undertaking this task the Review was asked to develop and evaluate options for amendments to the TPA to prevent individuals commencing actions in reliance on the TPA, including actions for misleading and deceptive conduct, in order to recover compensation for personal injuries and death.

3.4          The Review presented two reports to Government, an initial report in September 2002 and a final report in October 2002 (‘the Report’).  These reports are available on the Treasury website .

3.5          The Review recommended a number of changes to the TPA.

Recommendation 17

3.6          The Act should be amended to provide that the rules relating to limitation of actions and quantum of damages recommended in this Report, apply to any claim for negligently caused personal injury or death brought under Part IVA in the form of an unconscionable conduct claim.

Recommendation 21

3.7          The Act should be amended to provide that the rules relating to limitation of actions and quantum of damages recommended in this Report apply to any claim for negligently caused personal injury or death brought under Part V Div 1A, Part V Div 2A and Part VA.

3.8          By contrast to Division 1 of Part V, the Review noted that Parliament had intended that these Parts of the Act were intended to give protection to individuals who suffer personal injury and death.  The Review’s objective was to ensure that these Parts of the TPA would not be used to undermine State and Territory civil liability reforms.

Ministerial meetings on Public Liability Insurance

3.9          At the November 2002 Ministerial meeting on Public Liability Insurance, Ministers agreed on a package of reforms implementing key recommendations of the Report.  They agreed that the key Review recommendations that go to establishing liability should be implemented on a nationally consistent basis and each jurisdiction agreed to introduce the necessary legislation as a matter of priority.

3.10      At this meeting, the Commonwealth confirmed that it would amend the TPA to support reforms that are nationally consistent.  In areas where national consistency cannot be achieved, Ministers agreed to examine options for amending the TPA to ensure that State and Territory legislation will not be compromised.  These commitments were noted at the December 2002 meeting of the Council of Australian Governments.

3.11      The first tranche of the Commonwealth’s response to the Report recommendations are included in the Trade Practices Amendment (Personal Injuries and Death) Bill 2003.  This Bill was introduced into Parliament on 27 March 2003.  The Bill prevents individuals and the ACCC (in a representative capacity) from bringing actions for damages for personal injuries or death resulting from a contravention of Division 1 of Part V of the TPA.

3.12      At the April 2003 Ministerial meeting the Commonwealth advised that a further tranche of amendments to the TPA would be introduced in response to the recommendations of the Review.  These amendments would underpin State and Territory amendments to damages and limitations periods in relation to Parts IVA, Division 1A of Part V, Division 2A of Part V and Part VA.

PricewaterhouseCoopers’ analysis of Review recommendations

3.13      In November 2002, PricewaterhouseCooper’s (PWC) (at the request of the Insurance Issues Working Group of Heads of Treasury) conducted an actuarial assessment of the Review recommendations.  The PWC Report noted that the majority of the Review recommendations were not easily costed, either because suitable data is not collected or is collected in a form that is not amenable to statistical analysis.

3.14      The PWC Report estimates the benefits of the implementation of the Review’s recommendations for rules on quantum of damages to be a reduction in the cost of public liability claims by 14.7 per cent.  This comprises an approximate 19.6 per cent reduction in personal injury claims cost, with no reduction in property damage claim cost.

3.15      All other things being equal, the PWC Report estimated that these reductions in claims costs may translate into corresponding reduction in insurers’ premiums of around 13.5 per cent on average (subject to a number of factors including the adequacy of current premiums and prospects of windfall gains).

3.16      The PWC Report notes that these findings are very uncertain and are relative to the pre 30 June 2001 public liability environment.  They also rely on jurisdictions adopting all the Review recommendations at the same time.  While such an outcome is unlikely, adoption of the recommendations by a majority of the larger States would be expected to deliver significant savings.  NSW has already introduced amendments consistent with the Review’s recommendations on quantum of damages.  The PWC Report is available on the Treasury website .

Issues raised by State and Territory implementation of Review recommendations

3.17      States and Territories have indicated a commitment to implementing the key recommendations of the Review.  However, the process of implementation of the key recommendations by States and Territories has lead to significant differences emerging in relation to the rules relating to quantum of damages and limitation of actions.  (A table setting out some of the differences between States and Territories is included at Attachment A).  It is likely that some differences between jurisdictions in relation to quantum of damages and limitations of actions will continue for sometime.

3.18      The Commonwealth wants to encourage the States and Territories to move towards a nationally consistent position on these matters.  Having regard to the differences that currently exist, it has been difficult to formulate the Commonwealth’s approach that will achieve the full potential of the reduction in the cost for business at the same time as providing a nationally consistent response to Review recommendations.

3.19      Maintaining the status quo in relation to damages and limitations for these Parts of the TPA would not achieve national consistency on this matter.  Further, it could in fact undermine State and Territory civil liability reform by providing an alternative right of action to claim unlimited damages for personal injuries or death under these Parts of the TPA.

3.20      If the Commonwealth were not to introduce the recommendations of the Review in relation to rules relating to quantum of damages and limitation of actions into relevant Parts of the TPA, in some cases it would mean that the TPA would undermine State and Territory law in these areas.  This may create advantages for some plaintiffs under the TPA.  More significantly any differences between the TPA and State and Territory law would have a direct influence on the cost and availability of public liability insurance.

3.21      Allowing the TPA to undermine State and Territory civil liability reforms may also impose an indirect, but substantial, financial cost in that it would prevent the benefits of State and Territory civil liability reforms from being achieved.  The principle benefit to business of these reforms is to assist in delivering affordable public liability insurance by reducing pressure on insurance premiums.



Policy objectives

3.22      The Commonwealth’s three policy objectives are:

·        to address the issue of increasing premiums for, and reduced availability of public liability insurance

·        to encourage nationally consistent reform of the law of negligence by State and Territory Governments, and

·        to ensure that limitation periods and constraints on damages for personal injuries and death claims apply consistently across the country.

Options for implementation of Review recommendations

3.23      Against the background of diverse State and Territory responses to implementation of Review recommendations, it has be e n difficult to formulate an optimal approach that will achieve the full potential of the reduction in the cost for business at the same time as providing a nationally consistent response to Review recommendations.

3.24      The Commonwealth has considered two possible approaches for the implementation of the Review’s recommendations in relation to Part IVA, Division 1A of Part V, Division 2A of Part V and Part VA of the TPA.

Option 1 — Introduce caps and limitation periods in Part IVA, Division 1A of Part V, Division 2A of Part V and Part VA of the TPA.

3.25      The Commonwealth could amend these Parts of the TPA (Part IVA, Division 1A of Part V, Division 2A of Part V and Part VA) to introduce constraints on damages and limitation periods consistent with the Review’s recommendations on these matters.

Option 2 — Link to State and Territory civil liability laws

3.26      The Commonwealth could amend these Parts of the TPA to provide that the rules relating to quantum of damages and limitation of actions for personal injury or death be determined in accordance with relevant State and Territory civil liability laws.  This would involve:

(a)     characterizing claims for personal injuries and death under the relevant provisions as actions in negligence for choice of law purposes;

(b)     disapplying the existing relevant provisions setting time limits to the extent an action to which they apply seeks damages for personal injury and death;

(c)     making it clear the law of the relevant State or Territory (applying choice of law rules) governs matters such as quantum of damages and limitation of actions under the relevant Parts of the TPA.

3.27      This approach would ensure that these Parts of the TPA are linked to relevant State and Territory civil liability reforms.  Any contravention of these Parts of the TPA that does not involve a claim for personal injuries would not be affected by these reforms.  All other remedies for conduct in contravention of these Parts of the TPA would remain.

Impact Analysis

Impact Group Identification

3.28      Groups likely to be affected by the proposed reforms include (1) Government (2) Business (as insurers and businesses as purchasers of insurance) and (3) the Community (as plaintiffs and purchasers of insurance).  An assessment of the costs and benefits for these identified impact groups is set out below.

Option 1 — Introduce caps and limitation periods in Part IVA, Division 1A of Part V, Division 2A of Part V and Part VA.

Benefits for Government

3.29      This option would involve a more straightforward legal change to these Parts of the TPA.  It would be less complicated than the amendment required for Option 2.  This option would present a national position under these Parts of the TPA in relation to quantum of damages and limitation periods.  It may also have the effect of placing some pressure on States and Territories to agree to nationally consistent reforms.

3.30      This option would present a clear position on limitation periods and quantum under the TPA.  This increased certainty may attract insurers back into the domestic insurance market.  This may reduce premiums.

Benefits for Business

3.31      This option would provide clarity in the text of these Parts of the TPA in relation to quantum of damages and limitation periods by setting a benchmark at the Commonwealth level.  In addition, by encouraging nationally consistent reforms this option may result in compliance cost savings for business by reducing the divergence between various legislative regimes.

3.32      As potential exposures under these Parts of the TPA will be certain, this option may make it easier for insurers to set premiums.  However, full benefits are contingent upon States and Territories enacting nationally consistent reforms.

Benefits for the Community

3.33      This option would constrain the ability of plaintiffs to undermine State and Territory liability reforms in relation to quantum of damages and limited actions, though to a lesser extent than option 2.  By constraining the ability of State and Territory reforms to be undermined, this option may reduce the potential for businesses to withdraw from the provision of goods and services due to inadequate insurance cover.

Costs for Government

3.34      This option may produce some forum shopping in cases in relation to quantum of damages and limitation periods due to Commonwealth law being more favourable than State and Territory law. However, as noted above, this option would encourage the States and Territories to enact nationally consistent reforms.  This option may also lead to some increases for the Commonwealth in social security, Medicare and related expenditure.  However, it seems unlikely that as a result of these reforms plaintiffs will be left without an appropriate right of action.  Thus, any increased expenditure by the Commonwealth government on social security, Medicare and related expenditure is not expected to be significant.

Costs for Business

3.35      This option could produce costs for business in obtaining and assessing information in relation to the amendments to these parts of the TPA and in developing or modifying business plans and risk management strategies.  This option may require business to make an assessment of these parts of the TPA as well as the requirements of the States and Territories prior to the determination of premiums.  These costs are not likely to be significant.

Costs for Community

3.36      This option may increase some plaintiff’s legal expenses due to the need to assess claims under these parts of the TPA and potential claims under relevant State and Territory law. However this will be a cost of both policy options.

3.37      This option may mean that in some cases plaintiffs recover a reduced quantum of damages and will be subject to shorter limitation periods.  However, this is a cost of the policy.  This cost must be balanced against the community benefits of reduced premiums and increased availability of public liability insurance.

Option 2 — Link to State and Territory civil liability laws

Benefits for Government

3.38      This option may be a clear statement that matters of quantum of damages and rules relating to limitation of action are to be determined in accordance with State and Territory law.  However, the Commonwealth would not be exposed to any risk that a claim for personal injuries or death under these Parts of the TPA would undermine State and Territory law in matters of quantum of damages and limitations of action.

Benefits for Business

3.39      This option would ensure that actions under the TPA do not undermine State and Territory law in relation to quantum of damages and limitation of actions.  This option would also ensure that benefits of State and Territory civil liability reforms are available for business generally.  The possible benefits of these reforms are set out in the PWC Report.

3.40      This option may make it easier for insurers to set premiums as insurers would be able to set public liability premiums by reference to quantum and limitation periods under State and Territory law, without regard to the TPA.  This option could assist insurers with the formulation of appropriate risk management strategies as it removes a potential variable in relation to the quantum of damages and limitation of actions.

Benefits for the Community

3.41      This option may reduce pressure on insurers to increase insurance premiums and thereby ensure that adequate insurance protection is available for consumers.  This option may allow the community to take maximum advantage of State and Territory civil liability reforms.  This option may benefit the community as it may reduce the potential for businesses to withdraw from the provision of goods and services due to inadequate insurance cover.

3.42      This option should remove the need for plaintiffs to assess differences in the rules relating to quantum of damages and limitations of action in different jurisdictions.  This option should lead to a reduction of plaintiffs’ legal fees.

Costs for Government

3.43      This option does not present a nationally consistent position in relation to quantum of damages and limitations of actions under these Parts of the TPA. 

3.44      This option may also mean that the content of some Parts of the TPA will be determined by State and Territory law.

3.45      This option may lead to some increases for the Commonwealth in social security, Medicare and related expenditure.  Having regard to current jurisprudence, it seems unlikely that as a result of these reforms plaintiffs will be left without an appropriate right of action.  Thus, any increased expenditure by the Commonwealth government on social security, Medicare and related expenditure is not expected to be significant.

Costs for Business

3.46      This option may produce costs for business (in particular insurers) in obtaining and assessing information in relation to the amendments to these Parts of the TPA and in developing or modifying business plans and risk management strategies.  These costs are unlikely to be significant or ongoing.

3.47      There are also likely to be costs to insurers in obtaining and assessing information on the amendments to these Parts of the TPA and in modifying assessments of risk which may flow into premium calculations.

Costs for the Community

3.48      This option may mean that in some cases plaintiffs recover a reduced quantum of damages and will be subject to shorter limitation periods.  However, this is a cost of the policy.  This cost must be balanced against the community benefits of reduced premiums and increased availability of public liability insurance.

Consultation Process

3.49      The Review had the benefit of consultations with, and received submissions from senior judges, leading barristers, academics, the ACCC and persons and organisations from all around Australia.  The names of persons and organisations participating in the Review’s consultation process are listed in the Report.

3.50      State and Territory Governments and officials, other Commonwealth agencies and the Insurance Council of Australia were consulted on the implementation of these recommendations.

3.51      The Insurance Council of Australia noted in a submission to Treasury that it was crucial for the overall tort reform program that the TPA be amended to ensure that an injured person achieves no better outcome than would have occurred if a claim had been brought under common law or under a State and Territory law.  The Insurance Council of Australia accepted that there is some variation between the States and Territories in terms of levels of damages that can be awarded, but that has essentially been the case in any event.  The Insurance Council of Australia called for amendments which ensure that damages for personal injuries under the TPA are consistent with damages available at common law in the jurisdiction in which the TPA proceedings are brought.

Recommendation

3.52      Option 2 would provide a clear statement that matters relating to the rules for the quantum of damages and limitation of actions are matters of State and Territory law.  This may in some cases make it easier for insurers to set premiums.

3.53      Option 1 would provide greater certainty for insurers as to exposures under the TPA and this may encourage insurers back into the market place, thereby placing downward pressure on insurance premiums.  However, unlike option 2, option 1 has the additional benefit of putting pressure on the States and Territories to enact nationally consistent reforms.  Option 1 provides a national benchmark on these matters.  As not yet all States and Territories have enacted reforms this benefit is considered to be significant.  On this basis, it is considered that the potential overall benefits of option 1 exceed the benefits of option 2.  Accordingly, it is recommended that the Commonwealth follow option 1 in relation to the proposed reforms to be included in the Trade Practices Amendment (Personal Injuries and Death) Bill (No 2) 2004.

3.54      It is recommended t hat:

·        The TPA be amended so that to the extent an action for damages arising from personal injuries or death are sought in an action under the TPA (relating to a contravention of the unconscionable conduct provisions (Part IVA), a contravention of the product safety and information provisions (Division 1A of Part V), a supply by a manufacturer or importer of unsatisfactory consumer goods (Division 2A of Part V) or a supply by a manufacturer or importer of defective goods (Part VA)), the action is subject to a nationally consistent approach so that limitation periods and constraints on damages arising from personal injury or death apply consistently across the country.

Monitoring and review

3.55      At the May 2002 Ministerial meeting on Public Liability Insurance, the Commonwealth announced that the ACCC would monitor the impact of these reforms.

3.56      In July 2002 the Parliamentary Secretary to the Treasurer requested the ACCC to monitor costs and premiums in the public liability and the professional indemnity sectors of the insurance market on a 6 monthly basis over the next two years.  In particular, the ACCC was asked to give consideration to the impact on insurance premiums resulting from measures taken by governments to reduce and contain legal costs and to improve the data available for insurers to evaluate and price risk.  To the extent possible, the ACCC’s monitoring will inform the assessment of the impact of the changes introduced by these reforms.

 



Attachment A

Ipp Review

NSW

Vic

Qld

WA

SA

Tas

ACT

NT

General damages: cap

 

L

P

L

L

L

L

A

L

$250,000 *

$384,500**

$371,380**

$250,000

If damages assessment < $38,000* then max. award is $24,500; if damages assessment is < $50,500* but >= $36,500* then max. award $36,500

$241,500*

If amount assessed is >$4000* and <$20,000 then damages awarded = 1.25 x (amount assessed — $4000*) otherwise damages are amount assessed.

Deductible threshold graded between $12,000 and $20,000.

$250,000 or, if injury assessment is = 85% impairment, $350,000

General damages: threshold

 

L

L

N

L

L

L

A

L

15% of a most extreme case

15% of a most extreme case

10% impairment for psychiatric injury; otherwise 5% impairment; exemptions for loss of foetus during pregnancy, loss of a breast or sexual abuse

 

$12,500 deductible tapering out at $50,500*

7 days impairment or $2,750* medical costs

No damages if amount assessed is <$4,000*

 

No damages if impairment <5%; sliding scale 5%-15%

 

Ipp Review

NSW

Vic

Qld

WA

SA

Tas

ACT

NT

Economic loss: cap

 

L

L

L

L

L

L

L

L

2 x FTOTE (Aus)

3 x TE (all; NSW) #

3 x TE (all; Vic) #

3 x FTOTE (all; Qld) ##

3 x FTTE (all; WA) #

$2.2m in total *

4.25 x FTOTE (all; Aus) #

3 x FTOTE (m; ACT)

3 x FTOTE (all; NT) ###

Discount rate

 

L

L

L

L

L

L

 

L

3%

5%

5%

5%

6%

5%

7%

3% (default)

5%

Interest rate: limited application

 

L

L

L

N

L

N

N

L

Pre-judgement interest is not to be included in awards for non-economic loss

Pre-judgement interest is not to be included in awards for non-economic loss

5%

Pre-judgement interest is not to be included in awards for general damages

 

Pre-judgement interest is not to be included in awards for non-economic loss

 

 

Interest is not to be included in awards for non-pecuniary loss or gratuitous services



 

Ipp Review

NSW

Vic

Qld

WA

SA

Tas

ACT

NT

Gratuitous care: cap

 

L

L

N

L

L

N

N

L

FTOTE (all; Aus) or 1/40 x FTOTE (all; Aus) per hour

TE (all; NSW) # per week or 1/40 x TE (all; NSW) # per hour

TE (all; Vic) # per week or 1/40 x TE (all; Vic) # per hour

 

TE (all; WA) # or 1/40 x TE (all; WA) # per hour

4 x AWE in total

 

 

FTOTE (all; NT) # or 1/40 FTOTE (all; NT) # per hour

Gratuitous care: threshold

 

L

L

L

L

N

N

N

L

6 hours per week and 6 months

6 hours per week and 6 months

6 hours per week and 6 months

6 hours per week and 6 months

$5,000*

 

 

 

6 hours per week and 6 months

* = indexed

 ** = reviewed annually

 TE = average weekly all employees total earnings

 FTTE = average weekly full-time adult total earnings

 FTOTE = average weekly full-time adult ordinary time earnings

 m = male persons

 all = all persons

 # = unadjusted; most recent quarter

 ## = seasonally adjusted; average of last 4 quarters

 ### = as published before 1 January each year

 L = Legislated

 A = Announced

 P = In parliament

 N = Not agreed

 



 

Ipp Review

NSW

Vic

Qld

WA

SA

Tas

ACT

NT

Limitation period: adults

3 years from date of discoverability.

3 years from date of discoverability.

3 years from date of discoverability.

3 years from date of accrual. Notice of claim must be given within 9 months of incident (or first evidence of symptoms) and 1 month of consulting lawyer.

6 years from date of accrual.

3 years from date of accrual.

3 years from date of accrual.

6 years from date of accrual.

3 years from date of accrual.

Rec. 24

s50C Limitation Act 1969

s27D Limitation of Actions Act 1958

s11 Limitation of Actions Act 1974 & s9 Personal Injuries Proceedings Act 2002

s38 Limitations Act 1935

s36 Limitation of Actions Act 1936

s5 Limitation Act 1974

s11 Limitations of Actions Act 1958

s12 Limitation Act



 

Ipp Review

NSW

Vic

Qld

WA

SA

Tas

ACT

NT

Limitation period: minors & other legal incapacity

Limitation period is suspended for the period of legal incapacity. A minor is only under a legal incapacity if they do not have a capable parent or guardian. If victim was a minor injured by a close relative, the limitation period ends 3 years from the later of the date when the victim turns 25 or the date of discoverability.

Limitation period is suspended for the period of legal incapacity. A minor is only under a legal incapacity if they do not have a capable parent or guardian. If victim was a minor injured by a close relative, the limitation period ends 3 years from the later of the date when the victim turns 25 or the date of discoverability.

Limitation period is suspended for the period of legal incapacity. A minor is only under a legal incapacity if they do not have a capable parent or guardian. If victim was a minor injured by a close relative, the limitation period ends 3 years from the later of the date when the victim turns 25 or the date of discoverability.

Limitation period ends 6 years after the earlier of either the death of the victim or at the end of the period of legal incapacity.

Limitation period ends 3 years after the end of the period of legal incapacity.

Limitation period is suspended for the period of legal incapacity.

6 years from date of accrual or, where the victim was a minor not in the custody of a parent at the time of accrual, the limitation period is suspended until the end of the period of legal incapacity.

Limitation period is suspended for the period of legal incapacity and ends 3 years after the earlier of either the death of the victim or at the end of the period of legal incapacity.

Limitation period is suspended for the period of legal incapacity and ends 3 years after the earlier of either the death of the victim or at the end of the period of legal incapacity.

Rec. 25

s50E & s50F Limitation Act 1969

s27E & s27I-s27J Limitation of Actions Act 1958

s29 Limitation of Actions Act 1974

s40 Limitation Act 1935

s45 Limitations of Actions Act 1936

s26 Limitation Act 1974

s30 Limitation Act 1985

s36 Limitation Act 1981



 

4

Notes on Individual Clauses

Clause 1 — Short title

4.1          This clause provides the short title by which the Act may be cited.

Clause 2 — Commencement

4.2          This clause provides that this Act will commence on the day on which this Act receives Royal Assent.

Clause 3 — Schedule(s)

4.3       This clause makes it clear that the Trade Practices Act 1974 (being the only Act specified in Schedule 1) is amended or repealed as set out in the Schedule, and that any other item in the Schedule has effect according to its terms.

Schedule 1 — Amendments

4.4       Schedule 1 inserts a number of items that will amend the Trade Practices Act 1974 .

Item 1 - Subsection 4 (1)

4.5       Item 1 inserts a definition for personal injury into subsection 4 (1) of the Trade Practices Act 1974 .  This definition of personal injury is based upon section 5 of the Civil Liability Ac 2002 NSW.  This definition makes it clear that the meaning of personal injury has (except in section 68B) the meaning affected by the new section 4KA.

Item 2 — After section 4K

4.6          Item 2 inserts a new section 4KA after section 4K.  The new section 4KA inserts a definition of personal injury into the Act.  The definition of personal includes pre-natal injury, impairment of a person’s physical or mental condition or disease.  It does not include an impairment of a person’s mental condition unless the impairment consists of a recognised psychiatric illness.

Item 3 — At the end of subsection 74J (3)

4.7       Item 3 inserts a note at the end of subsection 74J (3).  Section 74J establishes time limits for the commencement of actions arising under Division 2A of Part V.  This note makes it clear that the operation of Part VIB restricts awards of compensation for death or personal injury, and sets out time limits for commencing actions for compensation for death or personal injury.

Item 4 — At the end of Division 2A of Part V

4.8       Item 4 inserts a new section 74M at the end of Division 2A of Part V.  Section 74M makes it clear that Division 2A of Part V has effect subject to the operation of Part VIB.

Item 5 — At the end of subsection 75AO(2)

4.9          Item 5 inserts a note at the end of subsection 75AO (2).  Section 75AO establishes time limits for the commencement of actions arising under Part VA.  This note makes it clear that the operation of Part VIB restricts awards of compensation for death or personal injury, and sets out time limits for commencing actions for compensation for death or personal injury.

Item 6 — At the end of subsection 82 (2)

4.10    Item 6 inserts a note at the end of subsection 82(2).  This note makes it clear that the operation of Part VIB restricts awards of compensation for death or personal injury, and sets out time limits for commencing actions for compensation for death or personal injury.

Item 7 — At the end of subsection 87(6)

4.11      Item 7 inserts a note at the end of subsection 87(6).  This note makes it clear that the operation of Part VIB restricts awards of compensation for death or personal injury, and sets out time limits for commencing actions for compensation for death or personal injury.

Item 8 — At the end of Part VI

4.12      Item 8 inserts section 87CAA at the end of Part VI.  Section 87CAA provides that the provisions of Part VI (Enforcement and Remedies) have effect subject to Part VIB.

Item 9 — Before Part VII

4.13    Item 9 inserts Part VIB ‘Claims for damages or compensation for death or personal injury’ before Part VII of the Act.  Part VIB responds to recommendations 17 and 21 of the Review, which suggested a number of changes to the TPA.

4.14    In addition to recommendations 17 and 21 in relation to the TPA, the Review made a number of recommendations on limitation of actions and quantum of damages .  The Commonwealth wants to encourage the States and Territories to move towards a nationally consistent position in relation to limitation of actions and quantum of damages.

4.15      Having regard to the differences that currently exist between States and Territories on these matters, the Commonwealth has decided to amend the TPA to ensure that limitation periods and constraints on damages arising from personal injury apply consistently across the country in relation to actions for damages for death or personal injury under Part IVA, Div 1A of Part V, Div 2A of Part V and Part VA.

4.16      Part VIB will incorporate relevant and appropriate Review recommendations on limitation of actions and quantum of damages into relevant Parts of the TPA. 

4.17      Part VIB has seven Divisions.

a.          Division 1 — Introduction

b.         Division 2 — Limitation periods.  This Division sets out the limitation periods for claims for personal injury damages in proceedings subject to Part VIB.

c.          Division 3 ¾ Limits on personal injury damages for non-economic loss.  This Division restricts the amount of personal injury damages recoverable for non-economic loss in proceedings subject to Part VIB.

d.         Division 4 — Limits on personal injury damages for loss of earning capacity.  This Division restricts the amount of personal injury damages recoverable for loss of earning capacity in proceedings subject to Part VIB.

e.          Division 5 — Limits on personal injury damages for gratuitous attendant care services.  This Division restricts the amount of personal injury damages recoverable for gratuitous attendant care services for the plaintiff in proceedings subject to Part VIB.

f.          Division 6 — Other limits on personal injury damages.  This Division restricts the amount of personal injury damages recoverable in proceedings subject to Part VIB in respect of economic loss, superannuation entitlements, exemplary and aggravated damages and interest on damages.

g.         Division 7 — Structured settlements .  This Division sets out that the power of the court in proceedings subject to Part VIB extends to approving an award of personal injury damages in the form of a structured settlement.

Division 1 — Introduction

Section 87D Definitions

4.1          Section 87D introduces a number of defined terms.  These definitions apply in proceedings subject to Part VIB, unless a contrary intention appears in Part VIB.

4.2          Most of the terms introduced by Section 87D are defined separately within subsections of Part VIB.

4.3          The definitions included in the body of section 87D are:

i.           a capable parent or guardian of a minor is a person who is parent or guardian of the minor and who is not under a disability.

ii.         an incapacitated person means a person incapable of or substantially impeded in managing their affairs in relation to proceedings under this Act.  This could arise due to disease, impairment, lawful or unlawful restraint, or warlike operations.

iii.       a minor is a person under 18.

iv.       non-economic loss means any one or more of pain and suffering, loss of amenities of life, loss of expectation of life and disfigurement.

v.         personal injury damages means damages or compensation for loss or damage that is or results from death of or personal injury to a person.

vi.       a plaintiff in relation to a proceeding means a person on whose behalf the Australian Competition and Consumer Commission commences a representative action under section 75AO or paragraph 87(1A)(b).  In all other cases it means the person by whom the proceeding is brought, however that person is described, and

vii.     quarter means a period of 3 months ending on 31 March, 30 June, 30 September or 31 December.

Section 87E Proceedings to which this Part applies

4.1       Section 87E makes it clear that the arrangements introduced by Part VIB apply to proceedings relating to unconscionable conduct (Part IVA), proceedings relating to a contravention of the product safety and information provisions (Division 1A of Part V), proceedings relating to a supply by a manufacturer or importer of unsatisfactory consumer goods (Division 2A of Part V) and proceedings in relation to a supply by a manufacturer or importer of defective goods (Part VA) in relation to which the plaintiff is seeking an award of personal injury damages.

Division 2 — Limitation periods

4.2          Division 2 sets out the limitation periods for claims for personal injury damages awarded in a proceeding subject to Part VIB.  The Division introduces the concept of a limitation period and long- stop period that are set out in Recommendation 24 of the Review.

Section 87F Basic Rule

4.3          Section 87F introduces the new basic rule for limitation periods.  Subsection 87F(1) provides that the court must not award personal injury damages in proceedings subject to Part VIB if the proceedings are commenced after the end of the period of 3 years after the date of discoverability for the death or injury to which the personal injury damages relates or after the end of the long-stop period for that death or injury.

4.4          Subsection 87F (2) includes a diagram to show when the operation of Division 2 will prevent an award of personal injury damages in proceedings subject to Part VIB.

Section 87G Date of Discoverability

4.5       Section 87G explains how to determine the date of discoverability.  Subsection 8 7G (1) provides that the date of discoverability is the first date when the plaintiff in the proceedings knows or ought to know (1) that the death or personal injury has occurred (2) that the death or personal injury was attributable to a contravention of the Act and (3) that in the case of a personal injury, the injury was significant enough to justify bringing an action.

4.6       Subsection 87G (2) sets out for the purposes of subsection 87G (1) what will amount to constructive knowledge. The plaintiff will be taken to know a fact if the plaintiff would have ascertained that fact had the plaintiff taken all reasonable steps before the date in question to ascertain that fact.

4.7       Subsection 87G (3) provides that a court may have regard to the plaintiff’s conduct (both oral and written statements) in order to determine what a plaintiff knows or ought to have known.

4.8       Subsection 87G(4) provides that if a plaintiff is a minor, then facts that a capable parent or guardian know or ought to have known are for the purposes of subsection 87G (1) to be treated as facts that the plaintiff knows or ought to know.

4.9       Subsection 87G (5) provides that if the plaintiff is an incapacitated person and that person has a guardian under a relevant State or Territory law then facts that the guardian ought to have known are taken for the purposes of subsection 87G(1) to be facts that the plaintiff knows or ought to know.

4.10    Subsection 87G (6) provides for the survival of actions in relation to proceedings subject to Part VIB.  Review recommendation 26 suggested that principles in relation to limitation periods should apply to an action brought by the personal representative of a deceased person acting as such.

4.11    Subsection 87G (6) provides that if an action is brought by the personal representative of a deceased person acting as such, the limitation period is to begin at the earliest of the following times:

(a)   when the deceased first knew or should have known of the date of discoverability, if that knowledge was acquired more than 3 years before death;

(b)   when the personal representative was appointed, if he or she had the necessary knowledge at that time of all the matters referred to in paragraphs 87G (1)(a), (b), and (c); or

(c)   when the personal representative first acquired or ought to have acquired that knowledge of matters referred to in paragraphs 87 G (1) (a), (b), and (c), if he or she acquired knowledge of these matters after being appointed.

Section 87H Long-stop period

4.12    Section 87H introduces and defines the term long-stop period.  Subsection 87H(1) provides that the long-stop period for the death or injury of a person is the period of 12 years following the act or omission alleged to have caused the death or injury, unless this period is extended by the court.

4.13    Subsection 87H (2) provides that a court must not extend the long-stop period by more than 3 years beyond the date of discoverability for the death or injury.

4.14    Subsection 87H (3) provides that when a court is considering whether to extend the long-stop period it must have regard to the justice of the case and in particular have regard to each of the following matters:

(a)   whether the passage of time has prejudiced a fair trial;

(b)   the nature and extent of the person’s loss;

(c)   the nature of the defendant’s conduct alleged to have caused the death or injury;

(d)   the nature of the defendant’s conduct since the alleged act or omission.

Section 87J The effect of minority or incapacity

4.15      Section 87J introduces the notion of suspending the limitation period, as proposed by Review recommendation 25.  The Review suggested that the running of a limitation period should be suspended during any period during which the plaintiff has been a minor and not in the custody of a capable parent or guardian or an incapacitated person.

4.16      Section 87J provides that in working out whether the period of discoverability or the long-stop period has expired the court is to disregard two periods of time.

4.17      The first period is the time during which the plaintiff has been a minor who is not in the custody of a capable parent or guardian (Section 87J(a)).  The second period is the time during which the person is an incapacitated person in respect of whom there is no guardian and no other person to manage all or part of the person’s estate under a law State or Territory relating to the protection of incapacitated persons (Section 87(J)(b)).

Section 87K The effect of close relationships

4.18      Section 87K introduces the concept of a close relationship and sets out the effect that a close relationship will have on the limitation period, long-stop period and the date of discoverability in a proceeding subject to Part VIB.  It follows Review recommendation 25.

4.19      Subsection 87K (1) provides that where a parent, guardian or person in a close relationship with a minor (‘the victim’) is the potential defendant/respondent and it is necessary to work out whether the period of 3 years after the date of discoverability or the long- stop period has expired, any period before the victim turns 25 years of age and if the victim dies before turning 25 years of age any period before death, is to be disregarded.

4.20      Subsection 87K (2) defines close relationship for the purpose of this subparagraph 87K(1)(b)(ii). A person is in a close relationship with a parent or guardian of a victim if the person’s relationship with that parent or guardian is such that the person might influence the parent or guardian not to bring a claim on a victim’s behalf or the victim might be unwilling to disclose to the parent or guardian the conduct or events on which the claim would be based.

Division 3 — Limits on personal injury damages for non-economic loss

4.21      Division 3 establishes tariffs for general damages, a cap for the award of general damages and a threshold for the award of general damages.  Division 3 also establishes the manner in which all fixed monetary amounts are to be indexed.  The arrangements in Division 3 follow Recommendations 46, 47, 48 and 61 of the Review and will apply to the award of personal injury damages in proceedings subject to Part VIB.

Section 87L Limits on damages for non-economic loss

4.22      Section 87L provides that in proceedings subject to Part VIB a court must not award personal injury damages for non-economic loss in excess of an amount permitted under Division 3.

Section 87M Maximum amount of damages for non-economic loss

4.23      Section 87M establishes the maximum amount of damages for non-economic loss.  This approach is consistent with Review recommendation 48.

4.24      Subsection 87M (1) provides that the maximum amount of damages for non-economic loss that can be awarded by a court must not be in excess of $250 000.  This maximum amount is to apply during the year in which Part VIB commences.  During any later year, this maximum amount is to be indexed by consumer price index on an annual basis.

4.25      Paragraph 87M(1)(b) includes a formula to determine the maximum amount of damages for non-economic loss that can be awarded by a court in proceedings subject to Part VIB during any year other than the year in which Part VIB commences.

4.26      The formula involves multiplying the previous maximum amount of damages by the current September CPI number divided by the previous September CPI number.

4.27      The current September CPI number is the index number for the quarter ending on 30 September in the year immediately preceding that later year (the later year being a year other than the year in which Part VIB commences).

4.28      The previous maximum amount is the maximum amount of damages for non- economic loss during the year immediately preceeding that later year (being a year other than the year in which Part VIB commences).

4.29      The previous September CPI number is the index number for the quarter ending on 30 September referred to in the definition of current September CPI number.

4.30      Subsection 87M (2) provides that if any amount worked out under paragraph 87M (1) (b) is a multiple of $5 (but not a multiple of $10) the amount should be rounded up to the nearest multiple of $10.

4.31      Subsection 87M (3) provides that section 87M does not affect the operation of section 86AA.  Section 86AA sets out the limit on the jurisdiction of Federal Magistrates Court in proceedings under section 82.

Section 87N Index Numbers

4.32      Section 87N establishes how references to fixed monetary amounts in proceedings subject to Part VIB can be indexed, when necessary, to the consumer price index (CPI).  The requirement for indexation of fixed monetary amounts to the CPI is consistent with Review recommendation 61.

4.33      Subsection 87N (1) provides that the index number is the All Groups Consumer Price Index Number.  This number is the weighted average of the 8 Australian Capital Cities and is published in respect of each quarterly period by the Australian Statistician.

4.34      Subsection 87N (2) provides that where the Australian Statistician has published or publishes an indexed number in substitution for an indexed number previously published, the later index number is disregarded for the purposes of this section.  This arrangement is subject to the provisions of subsection 87N (3).

4.35      Subsection 87N (3) provides that where the Australian Statistician has changed or changes the reference base for the CPI, then for the purpose of section 87N after any change to the reference base took place or takes place, it is only necessary to consider the index numbers published in terms of the new reference base.

4.36      Subsection 87N (4) provides that for the purpose of section 87N the Australian Statistician is to be determined in accordance with the Australian Bureau of Statistics Act 1975 .

Section 87P Most extreme cases

4.37      Section 87P introduces the concept of the most extreme case in relation to the award of damages for non-economic loss in proceedings subject to Part VIB.  This concept was discussed in the Review Report and followed in Review recommendation 47.  The Review recommended the adoption of a threshold for general damages in terms of 15 percent of a most extreme case (see paragraphs 13.39 to 13.47).

4.38      Subsection 87P (1) provides that in proceedings subject to Part VIB a court can not award the maximum amount of personal injury damages for non-economic loss except in the most extreme case.

4.39      Subsection 87P (2) provides that a most extreme case is a case in which the plaintiff suffers non-economic loss of the gravest conceivable kind.

Section 87Q Cases of 33 per cent or more (but not 100 per cent) of a most extreme case

4.40      Section 87Q provides for phasing in the award of damages for non-economic loss above the threshold in proceedings subject to Part VIB.  This approach is consistent with section 16 of the Civil Liability Act NSW 2002.

4.41      Subsection 87Q (1) provides that if the non-economic loss the plaintiff suffers is at least 33 per cent, but less than 100 per cent, of a most extreme case, the court must not award as personal injury damages for non- economic loss an amount that exceeds the applicable percentage of the maximum amount of damages for non- economic loss.

4.42      Subsection 87Q (2) provides that the applicable percentage is the extent of the non- economic loss the plaintiff suffers but expressed as a percentage of the most extreme case.

Section 87R Cases of 15 per cent or more (but less than 33 per cent) of a most extreme case

4.43      Section 87R also makes provision for the phasing in the award of damages for non-economic loss.  Section 87R includes a table which identifies the severity of the non-economic loss (as a proportion of a most extreme case) from 15 per cent to 32 per cent and indicates the percentage of damages for non-economic loss (as a proportion of the maximum amount of damages for non-economic loss).  This approach is also used in section 16 of the Civil Liability Act 2002 .

Section 87S Cases of less that 15 per cent of a most extreme case

4.44      Section 87S introduces a threshold for the award of damages for non-economic loss.  This is consistent with Review recommendation 47.  Section 87S provides that a court must not award personal injury damages for non-economic loss if the non economic loss the plaintiff suffers is less than 15 per cent of a most extreme case.

Section 87T Referring to earlier decisions on non-economic loss

4.45      Section 87T follows Review recommendation 46.  The Review recommended that in assessing damages, a court may refer to decisions in earlier cases for the purpose of establishing the appropriate award in the case before it.  In addition, counsel should be able to bring to the court’s attention awards of general damages in earlier cases.

4.46      Subsection 87T(1) provides that a court may, in determining personal injury damages for non-economic loss, refer to earlier decisions of courts for the purpose of establishing the appropriate award in proceedings subject to Part VIB.

4.47      Subsection 87T (2) provides that for the purpose of referring to earlier decisions on non- economic loss, the parties to the proceedings subject to Part VIB may bring to the court’s attention awards in earlier decisions.

4.48      Subsection 87T (3) provides that section 87T does not affect the rules for determination of other damages or compensation.

Division 4 — Limits on personal injury damages for loss of earning capacity

4.49    Division 4 introduces a cap on personal injury damages for loss of earning capacity, consistent with Review recommendation 49.  The Review recommended that there should be a cap on general damages for loss of earning capacity of twice average full-time adult ordinary time earnings.

Section 87U Personal injury damages for loss of earning capacity

4.50      Section 87U provides a court must in personal injury damages proceedings subject to Part VIB which involve claims for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or future economic loss due to the deprivation or impairment of earning capacity, or the loss of expectation of financial support, disregard the plaintiff’s gross weekly earnings that during any quarter would (but for the personal injury or death) exceed the following two amounts:

(1)   if at the time the award was made the amount of average weekly earnings for the quarter was ascertainable, an amount that is twice the amount of average weekly earning for the quarter; or

(2)   if at the time the award was made the amount of average weekly earnings for the quarter was not ascertainable or the award was made during or before the start of the quarter, an amount that is twice the amount of average weekly earnings for the quarter that at the time the award was made was the most recent quarter for which the amount of average weekly earnings was ascertainable.

Section 87V Average weekly earnings

4.51      Subsection 87V (1) provides that average weekly earnings for a quarter means the amount (a) published by the Australian Statistician as the average weekly earnings for all employees (total earnings, seasonally adjusted) for the reference period in that quarter or (b) if the Australian Statistician fails or ceases to publish the amount referred to in paragraph 87V (1)(a) — the amount determined in the manner specified in the regulations.

4.52      Subsection 87V (2) provides that regulations made for the purposes of paragraph 87(1)(b) may specify matters by reference to which an amount is to be determined.

4.53      Subsection 87V (3) provides that in section 87V a reference period in a quarter is the period described by the Australian Statistician as the pay period ending on or before a specified day that is the third Friday of the middle month of that quarter.

Division 5 — Limits on personal injury damages for gratuitous attendant care services.

4.54      Division 5 establishes limits on personal injury damages for gratuitous attendant care services and limits on damages for loss of the capacity to care for others.  Division 5 reflects Review recommendations 51 and 52.

Section 87W Personal injury damages for gratuitous attendant care services for the plaintiff

4.55      Section 87W establishes the thresholds and caps for the award of personal injury damages for gratuitous attendant care services for the plaintiff under proceedings subject to Part VIB.

4.56      Subsection 87W (1) provides that a court must not in proceedings subject to Part VIB make an award as personal injury damages for gratuitous attendant care services for the plaintiff an amount except in accordance with Section 87W.

4.57      Subsection 87W (2) provides that to make an award a court must be satisfied of the existence of five matters in relation to section 87W.  These matters are (a) there is (or was) a reasonable need for the gratuitous attendant care services to be provided (b) the need has arisen (or arose) solely because of personal injury to which the personal injury damages award relate (c) the gratuitous attendant care services would not be (or would not have been) provided to the plaintiff but for the injury (d) the gratuitous attendant care services are provided (or are to be provided) for at least 6 hours per week and (e) the gratuitous attendant care services are provided (or are to be provided) over a period of at least 6 months.

4.58      Subsection 87W (3) provides how a court is to determine an award of personal injury damages for gratuitous attendant care services for the plaintiff during a quarter for which, at the time the award was made, the amount of average weekly earnings was ascertainable .  In this situation, the court must not make an award of personal injury damages for the gratuitous attendant care services if the services were provided for at least 40 hours per week — an amount that exceeds average weekly earnings for that quarter; or if the services were provided for less than 40 hours per week — an amount per hour that exceeds 1/40 of average weekly earnings for that quarter.

4.59      Subsection 87W (4) sets out how a court is to determine an award of personal injury damages for gratuitous attendant care services provided to the plaintiff during a quarter for which, at the time the award was made, the amount of average weekly earnings was not ascertainable or the services are to be provided after the award is made.  In either situation, the court must not make an award of personal injury damages if the services were provided for at least 40 hours per week — an amount per week that exceeds average weekly earnings for that quarter that at the time the award was made was the most recent quarter for which the amount of average weekly earnings was ascertainable.  If the services were provided for less than 40 hours per week — the court must not make an award of personal injury damages for an amount per hour that exceeds 1/40 of average weekly earnings for that quarter.

4.60      Subsection 87W (5) provides that gratuitous attendant care services are services that one person provides to another person that are of a domestic nature or relate to nursing or aim to alleviate the consequences of a personal injury and for which the other person has not paid or is not liable to pay.

Section 87X Personal Injury damages for loss of plaintiffs’ capacity to provide gratuitious attendant care services

4.61      Section 87X establishes thresholds and caps for the award of damages for gratuitous attendant care services provided by the plaintiff to other persons.

4.62    Subsection 87X (1) provides that a court must not in a proceedings subject to Part VIB, award personal injury damages for loss of the plaintiff’s capacity to provided gratuitous attendant care services to other persons except in accordance with section 87X.

4.63      Subsection 87X (2) provides that the court must be satisfied of the existence of two matters when awarding damages for loss of the plaintiff’s capacity to provide gratuitous attendant care services.  The first matter is that prior to the plaintiff’s loss of capacity to provide the services the plaintiff had provided the services for at least 6 hours per week and over a period of at least 6 months.  The second matter is that the other person would have been entitled, if the plaintiff had died as a result of the contravention of the Trade Practices Act 1974 to which the award relates, to recover damages under a law of a State or Territory for loss of the plaintiff’s services.

4.64      Subsection 87X (3) sets out how a court is to determine an award of personal injury damages for loss of the plaintiff’s capacity to provide gratuitous attendant care services for a quarter for during which the amount of average weekly earnings was ascertainable.  In this situation, the court must not make an award of personal injury damages for the services if the services would have been provided for at least 40 hours per week (an amount per week that exceeds average weekly earnings for that quarter) and if the services would have been provided for less than 40 hours per week (an amount per hour that exceeds 1/40 of average weekly earnings for that quarter).

4.65      Subsection 87X (4) sets out how a court is to determine an award of personal injury damages for loss of the plaintiff’s gratuitous attendant care services during a quarter for which the average weekly earnings was not ascertainable or where the plaintiff would have provided the services after the time the award was made.  In either situation, the court must not make an award as personal injury damages for the services if the services were provided for at least 40 hours per week an amount per week that exceeds average weekly earnings for that quarter (that at the time the award was made was the most quarter for which the amount of average weekly earnings was ascertainable). Alternatively, if the services were provided for less than 40 hours per week — an amount per hour that exceeds 1/40 of average weekly earnings for that quarter.

Division 6 — Other limits on personal injury damages

4.66    Division 6 introduces other limits on the award of personal injury damages, consistent with Review recommendations 53, 54, 58 and 60.  These recommendations relate to discount rates, the award of pre-judgement interest, superannuation contributions, exemplary and aggravated damages.

Section 87Y Damages for future economic loss- discount rate

4.67      Review recommendation 53 provided that the discount rate to be used in calculating damages awards for future economic loss in cases of personal injury and death should be 3 per cent.  However, as noted at the May 2002 Ministerial Meeting on Public Liability Insurance, most jurisdictions have adopted a discount rate of 5 per cent.  The rate of 5 per cent is also applied by section 87Y.

4.68      Subsection 87Y (1) provides that the present value to be applied to any lump sum component of an award of personal injury damages for proceedings subject to Part VIB where there is a claim for future economic loss of any kind is to be determined by applying a discount rate of the percentage prescribed by the regulations or if no percentage is prescribed — a discount rate of 5 per cent.

4.69      Subsection 87Y (2) provides that a regulation made for the purposes of section 87Y does not take effect before the end of a period of 6 months.  In the case where the regulation is laid before each House of the Parliament under paragraph 48(1)(c) of the Acts Interpretation Act 1901 on the same day, the 6 months period starts on that day.  In the case where the regulation is laid before each House of the Parliament under paragraph 48(1)(c) on different days, the 6 month period starts on the later of those two days.

4.70      Subsection 87Y (3) provides that this section does not affect any other law relating to the discounting of sums awarded as damages or compensation.

Section 87Z Damages for loss of superannuation entitlements

4.71      Section 87Z introduces an arrangement for calculation of damages for loss of superannuation entitlements.  This approach is consistent with Review recommendation 58, that the damages for loss of employer superannuation contributions should be calculated as a percentage of the damages awarded for loss of earning capacity.  Any percentage should be the minimum level of the employers’ compulsory contributions required under the Superannuation Guarantee (Administration) Act 1992 .

4.72      Section 87Z establishes a cap for damages for superannuation contributions.  The section provides a formula for determining the maximum amount of personal injury damages that a court may award for economic loss in a proceeding subject to Part VIB, due to the loss of employer superannuation contributions.  This formula requires the superannuation percentage to be multiplied by the damages for earnings loss.

4.73      Superannuation percentage is defined as the highest employer’s charge percentage for a quarter under section 19 of the Superannuation Guarantee (Administration) Act 1992.

4.74      Damages for earnings loss are defined as the personal injury damages payable under proceedings subject to Part VIB for any past economic loss due to loss of earnings or the deprivation or impairment of earning capacity and any future economic loss due to the deprivation or impairment of earning capacity on which the entitlement to those contributions is based.

Section 87ZA Interest on damages

4.75      Section 87ZA sets out the rate of pre-judgment interest to be applied to proceedings subject under Part VIB. Review recommendation 54 proposed that pre-judgement interest not be awarded on damages for non-economic loss.  However, the 10 year Commonwealth bond rate was discussed and adopted at the 30 May 2002 Ministerial Meeting on Public Liability Insurance.

4.76      Subsection 87ZA (1) provides that a court must not, in proceedings subject to Part VIB, order a payment of interest on personal injury damages for non-economic loss, damages for gratuitous attendant care services for the plaintiff or for loss of plaintiff’s capacity to provide gratuitous attendant care services to other persons.

4.77      Subsection 87ZA (2) provides that if in a proceeding subject to Part VIB, a court is satisfied that interest is payable on personal injury damages of another kind, the rate of interest to be used in working out the interest is the rate of interest prescribed by the regulations.  In cases where no rate is prescribed, the rate should be the 10 year benchmark bond rate on the day which the court determines the personal injury damages.

4.78      Subsection 87ZA (3) provides that section 87ZA does not affect the payment of interest on a debt under a judgment or order of a court.

4.79      Subsection 87ZA (4) defines the ‘10-year benchmark bond rate’ and ‘business day’ for the purposes of section 87ZA.

4.80      The 10-year benchmark bond rate is defined to cover two scenarios.  If the day occurs on or after 1 March in a particular year and before 1 September in that year — the Commonwealth benchmark bond rate as published by the Reserve Bank of Australia in the Reserve Bank of Australia Bulletin (however described) and applying on the first business day of January in that year.  In other cases, the Commonwealth Government 10-year benchmark rate as published on the first business day of July in the preceeding year.

4.81      Business day is defined to cover a day other than a Saturday, a Sunday or a public or bank holiday in any State, the Australian Capital Territory or the Northern Territory.

Section 87ZB Exemplary and aggravated damages

4.82      Section 87ZB follows Review recommendation 60, abolishing the award of exemplary and aggravated damages.

4.83      Subsection 87ZB (1) provides that a court must not, in proceedings subject to Part VIB, award exemplary damages or aggravated damages in respect of death or personal injury.

4.84      Subsection 87ZB (2) makes it that this section does not affect court powers in relation to exemplary damages or aggravated damages otherwise in respect of death or personal injury or in proceedings not subject to Part VIB.

Division 7 — Structured Settlements

4.85      Division 7 establishes that the court has the power, on the application of the parties, to approve an award of personal injury damages in the form of a structured settlement in proceedings subject to Part VIB.  This responds to Review recommendation 57, which noted that a court should be able on the application of the parties to a claim, make an order in the terms of a structured settlement or approving of a structured settlement even though the payment of damages is not in the form of a lump sum award of damages.

Section 87ZC Court may make orders under section 87 for structured settlements

4.86      Subsection 87ZC (1) provides that in proceedings subject to Part VIB, a court may, on the application of the parties, make an order under section 87 approving a structured settlement, or the terms of a structured settlement, even though the payment of damages is not in the form of a lump sum award of damages.

4.87      Subsection 87ZC (2) provides that section 87ZC does not limit the powers of a court to make an order under section 87 in a proceedings that is not subject to Part IVB.

4.88      Subsection 87ZC (3) defines structured settlement as an agreement that provides for the payment of all or part of an award of damages in the form of periodic payments funded by an annuity or other agreed means.

Item 10 — Section 87D

4.89      Item 10 will renumber section 87D (Part VII Authorisations and notifications in respect of restrictive trade practices) as section 87ZD.

Item 11 — Application

4.90      Item 11 makes it clear that the amendments made by Schedule 1 (other than item 10) apply to contraventions of Part IVA, of Division 1A or 2A of Part V, or Part VA of the Trade Practices Act 1974 that occur after the schedule commences.