Australia: Tort Law Reform - The Final Chapter

The tort law reform process in Australia is now complete with the commencement of the Trade Practices Amendment (Personal Injuries and Death) Act 2006 (Cth) ("the Amendment Act"). Proceedings for personal injuries and death are no longer permitted under the consumer protection provisions of Part V, Division 1 of the Trade Practices Act 1974 (Cth) ("the TPA"). Part V, Division 1 of the TPA includes section 52 which contains the well-known prohibition on misleading or deceptive conduct.

The commencement of the Amendment Act follows a failed attempt in 2004 to pass identical legislation. The Trade Practices Amendment (Personal Injuries and Death) Bill 2003 was introduced into the House of Representatives in March 2003. In December 2003 the Senate returned the Bill to the House of Representatives and suggested amendments which were rejected by the House. The Bill was returned to the Senate for further consideration, which again returned the Bill to the House insisting on all of its original amendments. The Bill eventually lapsed.

Commencing on 20 April 2006, the Amendment Act represents the final chapter of tort law reforms arising from the recommendations of the Review of the Law of Negligence ("Ipp Report") published in 2002. Since 2002, the Commonwealth and each State and Territory have introduced a range of tort law reforms which clarify some of the principles of negligence and also introduce caps, thresholds and other limitations on the amount and kinds of damages that can be recovered. The reforms include¹:

• The test for foreseeability has been changed from not "far fetched or fanciful" to a more stringent test that the risk be "not insignificant".

• A range of factors have been introduced into the legislation which the court must take into account when determining breach of duty. These factors generally reflect the common law and include probability of harm, seriousness of harm, the burden of taking precautions, the social utility of the activity and precautions that may be required by similar risks.

• The test for causation has been amended to expressly incorporate a normative element, asking whether responsibility for the harm should be imposed on the negligent party.

• Confirmation that the onus is always on the plaintiff to prove any fact relevant to causation.

• In cases of professional negligence, the test has been modified so that the treatment is not negligent if it occurred in accordance with an opinion widely held amongst respected practitioners.

• In cases dealing with foreseeability of mental harm, a "person of normal fortitude" test has been enacted. This test is stricter than the previous common law test.

• An indexed maximum for the recovery of economic loss has been implemented which is usually three times the average weekly earnings.

• An indexed maximum for recovery of general damages has been established.

• The rate of interest that can be awarded on damages has been fixed and in most jurisdictions reduced.

According to the Second Reading Speech, Parliament's intention in introducing the Amendment Act was to ensure that "the TPA [could not] be used to undermine state and territory civil liability reforms".

The Ipp Report was concerned that amendments to State and Territory personal injury laws which limited liability and damages, would encourage creative plaintiffs to circumvent those reforms by relying on Part V, Division 1 of the TPA (specifically section 52, which prohibits misleading or deceptive conduct).

The Amendment Act prevents claimants and their legal representatives from circumventing those reforms by prohibiting any claim for loss or damage resulting from personal injury or death where the action would be based on a contravention of Part V, Division 1 of the TPA. Death or personal injury resulting from smoking or use of tobacco products is expressly exempted from the prohibition.

When it applies, the Amendment Act will mean that a negligence claim for damages resulting from personal injury and death will be determined by the traditional negligence principles, as explained and clarified by the State and Territory tort law reform legislation, and will also be subject to the caps and thresholds on damages contained in that legislation.

The amendments to the TPA only apply to contraventions of the consumer protection provisions that occur after 20 April 2006 (the commencement date of the Amendment Act). For example, any claimant basing an action for personal injury or death on the misleading or deceptive conduct provisions of Part V, Division 1 will still be able to seek damages under the TPA if he or she can demonstrate that the contravening conduct giving rise to the claim occurred before 20 April 2006.

Considering that the purpose of the Amendment Act was to prevent the State and Territory amendments being circumvented, the application of the Amendment Act is curious. Most of the State and Territory amendments apply to proceedings that are commenced (ie. filed) after the relevant legislation commenced, whether or not the injury occurred before the legislation commenced. The disparate commencement provisions of the State and Territory amendments and the Amendment Act mean that plaintiff lawyers will have an incentive to frame a client's case to allege a contravention of the relevant sections of the TPA prior to 20 April 2006.

The Amendment Act represents the final chapter in tort law reform and brings to a close the reform program underscored by the Ipp Report. It will now be interesting to see whether the original aim of the tort law reform process, an attempt to rein in rising insurance premiums, will actually be achieved.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.