I. INTRODUCTION

2.1 This Chapter contains a history of accident compensation together with a description of the current arrangements in New South Wales for compensating accident victims. In moving away from the laissez-faire philosophy of the nineteenth century, two major trends in accident compensation have emerged. These are:

• the expansion of the class of injured people entitled to receive compensation for their disability or incapacity; and
• the emergence of more sophisticated mechanisms for shifting financial ability for providing compensation from the individual who caused the injury, to the community, or at least sections of the community.

In describing current compensation arrangements we refer not only to the common law negligence action and to statutory compensation schemes, but also to the social security system financed and administered by the Commonwealth Government While the system is not specifically concerned with compensating accident victims, it does provide income maintenance and additional assistance to some victims not entitled to receive or awaiting compensation and others whose compensation has proved inadequate.

II. HISTORICAL BACKGROUND

A. The Common Law

1. Negligence as a Basis for Compensation

2.2 In its early stages the common law imposed liability on individuals responsible for causing harm regardless of whether the harmful act was intentional or unintentional. ¹ The main concern was causation, that is, the connection between the plaintiff victim’s injury and the defendant wrongdoers act.

2.3 The principles of the early common law were appropriate in a predominantly agricultural community in which entrepreneurial activities were rare and the risks of accidental death and injury were relatively low. But the emergence of the machine age and concentrated urban populations dramatically increased the rate of accidental death and injury, especially in work and transport accidents. These new risks highlighted the weaknesses of the common law and suggested that a fresh approach was needed.

2.4 An answer was found in the embryonic negligence action, which struck a balance between the conflicting demands of an expanding industrialised society. Viewed in historical perspective, the development of the modern negligence action restricted the liability of those who caused injury, rather than expanded it. The law responded both to the perceived need to encourage individual initiative and the desirability of compensating individuals who had sustained injury as the result of another person’s activities. The principle of “no liability without fault” was a product of the laissez-faire philosophy of the time, since it provided for the loss to be “ shifted” from the victim only in cases where the person causing it was deemed culpable.

2.5 These principles of liability could be justified on grounds of social morality, since liability depended on showing that the defendant had failed to exercise reasonable care (that is, that he or she was negligent) over a matter which was within his or her own control. This was reinforced by the fact that the fault principle evolved before the widespread availability of liability insurance, at a time when the individual wrongdoer was normally obliged to pay compensation from his or her own pocket liability could be justified as a means of exacting retribution from a negligent defendant and as a device for deterring careless behaviour. ² The justification became more difficult to sustain as the ambit of negligence expanded and became divorced from moral culpability. ³

2.6 Preference for the concept of negligence, although understandable, was not inevitable. In the second half of the nineteenth century, the courts applied a principle of “strict liability” to certain high risk activities. ⁴ Under this principle a person conducting a dangerous enterprise was liable to a person injured as a result, regardless of whether negligence could be proved. Strict liability was consistent with an individualistic approach because it wis based on the view that a person should pav for the costs to others inevitably associated with undertaking a highly dangerous activity. ⁵ Given the innovation and extent of judicial law-making in the nineteenth century, it would not have been altogether surprising had the courts extended strict liability to such inherently dangerous areas as the workplace or the highway. But the concept of negligence proved the more appealing and the courts declined the opportunity. Indeed, the danger of the roads was used as an argument to support the view that people using them accepted the inherent risk of injury unless another’s negligence could be proved. ⁶

2. Restrictions on the Common Law Negligence Action

2.7 The common law negligence action denied compensation to those who could not prove that the injury had been caused by a defendants failure to take reasonable care. Even where negligence could be proved, the law developed additional rules which prevented many injured people from recovering damages, which included:

• the long-standing rule that one spouse could not sue the other, which applied in negligence actions as it did to any other tort; ⁷
• the principle, established at the beginning of the nineteenth century, that damages could not be recovered for the death of a human being; ⁸
• the immunity of highway authorities from liability for failure to keep highways safe and in good repair; ⁹ and
• the refusal of the courts to award damages in respect of nervous shock ¹⁰ or prenatal injuries. ¹¹

2.8 Perhaps the most restrictive rules were developed in the context of compensation claims resulting from work-related injuries, although some applied elsewhere. Reflecting highly individualistic notions of responsibility, these rules helped to cushion the entrepreneur against any serious addition to his or her overhead costs. They have been described as the unholy trinity”: ¹²

• the defence of contributory negligence which defeated the worker s claim totally if the injury was partly the result of his or her own carelessness;
• the defence of voluntary assumption of risk which applied if the injury was the result of risks inherent in the work even if the worker effectively had no choice about the work to be performed; and
• the doctrine of common employment which denied compensation where the injury was caused by the negligence of a fellow worker for whom the employer would otherwise have been liable. ¹³

B. Expanded Compensation Arrangements

2.9 While the common law limited the ability of accident victims to recover compensation by choosing negligence rather than strict liability as the principal basis for compensation (paragraph 2.6), there has been a consistent trend towards expansion of the compensation system over a period of a century or more. Sometimes the expansion has been achieved by judicial innovations. On other occasions the legislature has intervened, either to establish new compensation schemes, such as the workers’ compensation system, or to remove restrictions on the scope of the common law negligence action. In at least one instance it has been the product of a combination of legislative change and judicial initiative. The willingness of courts and legislatures to expand the class of accident victims entitled to compensation has been prompted by a range of factors which clearly include the greater opportunities available to defendants, through insurance and other arrangements, to spread the cost of compensation to the community at large. We return to this aspect of the compensation system in paragraphs 2.17-2.23.

1. The Negligence Action

2.10 Legislative interventions which removed some of the restrictions on the common law negligence action included:

• Lord Campbell’s Act 1846 (Fatal Accidents Act 1846 (UK)), which permitted close relatives of a deceased person to claim damages for loss of material support, where that person’s death was caused by the negligence of the defendant; the English precedent was followed in New South Wales in 1847¹⁴ and eventually adopted throughout Australia;
• the modification¹⁵ and subsequent abolition¹⁶ of the doctrine of common employment, one of the “unholy trinity” (paragraph 2.8);
• the abolition of the contributory negligence defence and its replacement with a statutory rule under which damages were reduced in proportion to the plaintiffs share of responsibility for the accident causing his or her injury;¹⁷ and
• the abolition of the rule preventing one spouse from suing the other, initially in cases of motor vehicle accidents¹⁸ but more recently for all purposes.¹⁹

2.11 The courts, too, were prepared to modify some restrictive rules. This became evident an early stage in relation to the principles which precluded injured workers from bringing negligence claims against their employers. For example, the concept of voluntary assumption of risk (paragraph 2.8) was redefined to prevent it applying to a worker merely because he or she undertook work knowing that there was a risk of injury. ²⁰ This took account of the fact that ordinarily the worker was not in a position to exercise a choice about the work to be performed and thus could hardly be said to have consented to the risk of injury. ²¹ Later the courts changed their attitude towards claims for nervous shock and permitted such claims to be brought. ²² In the landmark decision in Donoghue v. Stevenson, ²³ in which the House of Lords laid the foundations for the modern law of negligence, the scope of the duty to take reasonable case for the safety of another person was expanded and the opportunity created for continuing innovation by the courts. ²⁴

2.12 One consequence of the broad approach taken in Donoghue v. Stevenson was the gradual relaxation of the requirements that had to be satisfied in order to establish liability in negligence. Not only did the courts become more receptive to enlarging the scope of the duty to take care, but the rules governing the kind of damage for which the defendant was responsible were also relaxed. ²⁵ Most important of all the concept of negligence itself was applied generously. The standard of reasonable care, by which the defendant s conduct was measured, was inherently flexible and, in the hands of a judge or jury charged with the responsibility of applying the standard, likely to be influenced by considerations outside the formal legal rules. A jury, or judge, faced with a seriously maimed plaintiff and a defendant who was insured ²⁶ could be more readily persuaded that the defendant had failed to exercise the required degree of care. ²⁷ Thus, in practice, the plaintiff s task of making out a claim against the defendant in negligence tended to be easier than the formal rules governing liability would suggest. ²⁸

2. Statutory Compensation Schemes

2.13 Concurrently with the expansion of the common law negligence action, legislatures both in Australia and overseas have established new schemes to compensate accident victims. These have operated on a no-fault basis, in the sense that the entitlement of the injured person to claim compensation arises independently of his or her ability to prove that someone else was at fault for the accident which caused the injury. The statutory schemes, at least in Australia, have generally functioned alongside the common law negligence action although the benefits provided to accident victims are not usually cumulative. The schemes may be funded by contributions from particular classes of people such as employers or owners of motor vehicles, from potential beneficiaries such as participants in a particular activity, or from general taxation revenues.

2.14 Not surprisingly, industrial accidents provided the stimulus for the first statutory no-fault accident compensation schemes. In 1897 a Conservative Government in the United Kingdom passed the first workmen’s Compensation Act, following the example of Bismarck’s Germany. ²⁹ This Act applied only to hazardous industries, and provided weekly compensation independently of proof of fault, not exceeding 50 per cent of pre-accident earnings and subject to a maximum. A similar approach was adopted in the first New South Wales legislation on this subject, ³⁰ passed in 1910. Over the years, often as a result of union pressure, the benefits provided under the workers’ compensation legislation have been increased substantially. ³¹ We briefly deal with the current legislation later in this Chapter (paragraphs 2.37-2.45).

2.15 No-fault compensation schemes have been created for other categories of accident victims, although the benefits are usually less generous than those available to victims of work accidents. In New South Wales, for example, a criminal injuries compensation scheme has operated since 1968, ³² and a sporting injuries scheme, providing benefits to participants injured in the course of organised sporting activities, was established in 1978 (paragraphs 2.47-2.5 1). Three Australian jurisdictions have adopted no-fault schemes providing limited benefits to motor vehicle accident victims (Chapter 4). In all cases the overriding consideration has been the desire to provide compensation even if limited in scope, to injured people who would otherwise have no claim to compensation (or, in the case of criminal injuries, no real possibility of recovering from the wrongdoer).

3. The Action for Breach of Statutory Duty

2.16 just as industrial accidents were the catalyst for the first statutory no-fault schemes (paragraph 2.14), they also generated an increasing amount of legislation aimed at ensuring minimum standards of industrial safety. Statutes and regulations imposed obligations on factory owners and other employers to implement and maintain a wide variety of measures aimed at improving working conditions and reducing risk, for example, the fencing of dangerous machinery. The consequence of a breach was normally a fine or other criminal penalty, but the courts grafted onto these criminal offences a right to damages when the statutory, requirements were not met. This became known as the action for breach of statutory duty ³³ and because the statutory standards were often stated in absolute terms it operated effectively as a tort of strict liability. In addition it is no longer subject in New South Wales to the defences of contributory negligence ³⁴ or voluntary assumption of risk. ³⁵ However, for reasons that are not entirely convincing, ³⁶ outside the area of industrial accidents the general principle has been that a breach of statute does not of itself entitle the person injured as a result to succeed in a claim for damages. For example, breach of a traffic regulation is at most evidence of a failure to exercise reasonable care in a negligence action. ³⁷

C. Distribution of Losses

1. Spreading the Risk

2.17 The expansion of the scope of the common law negligence action and the parallel development of no-fault schemes were influenced by the fact that the person responsible for the accident did not necessarily have to bear the cost of paying compensation personally. It is no coincidence that the common law negligence action expanded most markedly in areas such as work accidents, where the defendant was able to pass on the cost of compensation to others and thus ensure that the burden was shared evenly among a large class. Within the limits of a competitive market, it was open to employers engaged in business to charge marginally more for their goods and services to cover the cost of claims by injured workers (or by injured consumers). Passing the cost along the chain of production was not the only method of loss distribution. The increasing availability of liability insurance presented a different means of spreading the cost. By paying the premium on an insurance policy, employers or owners of motor vehicles contributed to a fund from which compensation was available to pay for the consequences of the negligence of any one of them. Thus insurance relieved the defendant of the liability to pay compensation out of his or her own pocket and spread the cost among all those taking out the same class of insurance.

2.18 The earliest policies were taken out by firms owning horse-drawn vehicles, which sought indemnity against liability for injury caused to “third parties”. ³⁸ After the enactment in England of the Employers’ Liability Act 1880, which limited the availability of the defence of common employment, employers began to insure against the consequences of liability for negligence causing harm to employees and third parties. The expansion of the railway industry contributed further to the popularity of liability insurance. ³⁹ Although early workers’ compensation legislation did not oblige employers to insure, it was expected that employers in practice would take out insurance against their new liability. In New South Wales, the passing of the Workmen’s Compensation Act, 1910, resulted in the incorporation by the New South Wales Chamber of Manufacturers of the Manufacturers’ Mutual Accident Indemnity Association Limited ⁴⁰ which offered liability insurance to employers.

2. Compulsory Insurance

2.19 As liability insurance became increasingly common the desirability of protecting injured people against the insolvency of the uninsured became apparent. The New South Wales Workers’ Compensation Act, 1926, like workers’ compensation legislation elsewhere, imposed a compulsory insurance requirement on employers to cover liability for compensation payments under the Act, although at the time the legislation was introduced, there was considerable debate as to whether insurance should be under written by private insurance companies, or a government run insurance body. ⁴¹ In New South Wales, as in all other States employers are also required to take out insurance against their potential common law liability to employees. ⁴²

2.20 It was 16 years after the introduction of compulsory insurance in workers’ compensation that the need for it in the area of road accidents was acknowledged. The rising toll of death and injury on the roads resulted in the introduction of compulsory third party insurance to ensure that plaintiffs were protected against the impecuniosity of defendants. ⁴³ All motor vehicle owners were required to insure with an authorised insurer against the liability of the owner or driver of the vehicle to a person (“the third party”) Injured by the use of the vehicle. Thus, a person injured in a road accident was protected against the possibility that someone held “at fault” for the accident would not have the resources to pay damages.⁴⁴ The legislation protects the injured person even where the defendant has failed to insure, or where the plaintiff is injured by an unidentified person. In these circumstances the legislation provides for proceedings to be brought against a “nominal defendant’ and damages are paid out of money provided by authorised insurers from compulsory third party premiums. In relation to other transport accidents, the major statutory authorities in New South Wales, such as the Urban Transit Authority and the State Rail Authority, are self-insurers: that is, they make compensation payments out of their own resources and carry the risk of liability themselves.

2.21 In some countries, compulsory insurance has spread beyond work-related injuries and road accidents. Thus, for example, in England, liability insurance is compulsory in respect of nuclear installations, dangerous wild animals, riding establishments and oil pollution from merchant ships. ⁴⁵

2.22 One effect of compulsory insurance is to protect an injured plaintiff against risk that the defendant will prove to be insolvent or, at best, have assets which fall well short of the damages award. The sometimes devastating effect which little or no insurance can have outside those areas covered by compulsory insurance was recently illustrated in a case in which parents of a six year old boy were held liable in negligence for their failure to exercise proper control over their son who poured petrol over another boy and set him alight in a backyard shed. ⁴⁶ The other boy suffered shocking burns especially to his face and was still undergoing extensive plastic surgery at the time of the trial 10 years after the accident. A judgment of $713,500 was awarded against the defendant parents, but the father was unemployed and relied on sickness benefits. Any attempt to enforce the judgment against their assets would do little effectively to compensate the plaintiff and would certainly impoverish the defendants. The defendants were insured against public risk but the extent of the insurance cover was uncertain and at most would amount to $100,000, which was insufficient to cover even the continuing medical costs of the plaintiff. ⁴⁷

2.23 In practice a system of compulsory insurance relieves the individual wrongdoer (or other person liable to pay compensation) of the obligation to meet a compensation award from his or her own resources, thereby avoiding consequences of the kind described in the previous paragraph. This has very important implications when considering the justification for the continued application of the fault principle which underlies the common law negligence action. These issues are explored further in Chapter 3.

III. THE CURRENT COMPENSATION SYSTEM IN NEW SOUTH WALES

2.24 The four major components of the current accident compensation system in New South Wales, which are described briefly in this section, are:

• the common law negligence action which requires proof of fault, but aims to provide “full” compensation in the form of a once-and-for-all lump sum payment for economic and non-economic loss suffered by the victim or his or her family;
• the workers’ compensation system which provides no-fault compensation for economic loss (with limited benefits for non-economic loss), in the form of periodic payments and (sometimes) lump sums, for most work-related injuries and diseases;
• limited statutory schemes, such as the criminal injuries and sporting injuries schemes; and
• the social security system which provides income maintenance payments, usually through sickness benefits or the invalid pension, to people incapacitated through injury who cannot support themselves.

Social security benefits are included in this description because they are the major source of assistance for many accident victims, including some who have previously received other forms of compensation which have proved inadequate. (paragraph 2.1).

A. The Common Law Negligence Action

1. Liability

2.25 In order to succeed in proceedings for damages for personal injuries in a common law negligence action, the injured party (usually the plaintiff must show that the other party (usually the defendant) owed him or her a duty of care, that the injury arose out of a failure on the defendants part to take reasonable care, and that the injury was not too remote a consequence of the breach. ⁴⁸ True to its origins and its name, the negligence action still depends upon fault in the form of a failure to take reasonable care. In principle, the outcome of a negligence action should not be affected by the fact that a defendant is insured against liability, whether voluntarily or compulsorily. ⁴⁹ However, knowledge of the existence of insurance has encouraged some judges and juries to impose a more rigorous standard on the defendant than if he or she had been left personally to bear the full cost of compensation.

2.26 For the purpose of proving negligence, “reasonable care” is the degree of care that a reasonable person would have taken in all the circumstances of the case. This standard does not usually take into account the personal characteristics of the particular defendant, such as inexperience or physical disability. Thus a person who has acted to the best of his or her ability may be adjudged as negligent if the conduct falls to measure up to the standard expected of a reasonable person. But an accident victim who is unable to establish that the accident was caused by the defendants negligence is not entitled to common law damages, even though he or she may not be to blame for the accident. For example, a motor cyclist who is travelling at an apparently safe speed and is injured when the cycle skids on a slippery road, would not normally succeed in a common law negligence action. ⁵⁰

2.27 We have also referred to the statutory modification of the common law rule that the plaintiff’s contributory negligence constituted a complete defence to a common law negligence action (paragraph 2.10). Since 1965 in New South Wales, where a person is injured ‘dent in circumstances in which that person’s partly to blame, damages are reduced in an accordance with his or her share of the responsibility. ⁵¹ For example, in a collision occurring at an intersection, the court may decide that both drivers were equally responsible for the accident. If both drivers are injured the damages to which they would otherwise be entitled ill be reduced by 50 per cent, and each will bear the remainder of their own loss. This principle is not confined to cases where the injured person is partly to blame for the accident itself, but extends to situations where he or she failed to take precautions which might have avoided or minimised its consequences. Damages have been reduced where a plaintiff failed to take a precaution such as wearing a seat belt ⁵² or a crash-helmet, ⁵³ which would have made the injury less severe.

2.28 Apart from the necessity to prove that the defendant was at fault, the scope of the common law negligence action is limited by rules which have survived the expansionist tendencies of the last century. One example is the immunity of highway authorities for loss caused by their failure to keep the highway in good repair. ⁵⁴ Another concerns the defence of voluntary assumption of risk. While the application of the defence to claims arising out of work accidents has been minimised (paragraph 2.11), the defence may prevent an action by a passenger against a negligent driver, where the passenger knew of the drivers reduced capacity to exercise the ordinary standard of care, perhaps because of inexperience ⁵⁵ or the effects of alcohol. ⁵⁶

2. Damages

2.29 Common law damages for personal injury take the form of a lump sum which is awarded “once-and-for-all” to cover both past and future losses. The fundamental principles governing the assessment of damages in personal injury cases were recently restated by the High Court.

In the first place, a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries. Secondly, damages for one cause of action must be recovered once and forever, and (in the absence of any statutory exception) must be awarded as a lump sum; the court cannot order a defendant to make periodic payments to the plaintiff. Thirdly, the court has no concern with the manner in which the plaintiff uses the sum awarded to him: the plaintiff is free to do what he likes with it. ⁵⁷

2.30 Damages are divided between economic and non-economic loss. Economic loss is made up of those consequences of the injury which have a monetary equivalent and includes lost earning capacity and hospital, medical and related expenses. Where a person is compensated for lost earning capacity while in hospital, the proportion of hospital expenses representing board and lodging as well as “saving” on other expenses such as fares are deducted from the damages. ⁵⁸ In addition to medical expenses, damages may include the value of nursing services gratuitously rendered by family members and friends. ⁵⁹ Non-economic loss has no real monetary equivalent. It includes pain and suffering, loss of amenities and enjoyment of life and loss of expectation of life. Since the major component of non-economic loss is the conscious experience of the loss, only a small amount can be awarded where the plaintiff has been rendered unconscious. ⁶⁰ Later Chapters contain more detailed discussion of relevant aspects of the assessment of damages. ⁶¹ What follows is an explanation of the principal factors affecting the calculation of future economic loss for purposes of a once-and-for-all lump sum award.

Reduction for Vicissitudes

2.31 Damages for lost earning capacity are assessed on the basis of expected loss of earnings for the period of incapacity for work or, if the incapacity is total and permanent, for the estimated pre-accident earning life of the plaintiff. ⁶² The damages are calculated on expected net earnings after tax ⁶³ and are further reduced for so-called “vicissitudes” or “contingencies” of life. For example, a deduction of 15 per cent is often made from the lump sum calculated for future loss of earning capacity to take account of the risk that future earnings may have been terminated by death sickness or unemployment. Alternatively, the court may reduce the estimated working life of the injured person in recognition of the possibility that the working life of the injured person might have been shorter than anticipated. The practice of making deductions for contingencies means that if the plaintiff actually suffers the whole of the anticipated loss, he or she will not receive “full compensation”. ⁶⁴

Discount Rate

2.32 Because the compensation is paid as a single lump sum, the total amount calculated for future economic loss must be “capitalised”. This means that the court must arrive at a sum which will yield, in capital and interest, the amount required to cover the future loss. What has to be determined is the “present equivalent” of the estimated future loss. ⁶⁵ The rate used in making this calculation is called the “discount rate”. In establishing a discount rate of 3 per cent in 1981, the High Court noted that:

This rate is intended to make an appropriate allowance for inflation, for future changes in rates of wages generally or of prices, and for tax (either actual or notional) upon income investment of the Sum awarded. No further allowance should be made for these matters. ⁶⁶

This statement ended a period of speculation and wide differences in the practice of State courts. These differences were of very great significance, since even small changes in the discount rate can lead to substantial variations in the lump sum award. For example, the lump sum equivalent of $400 per week over a period of 25 years is $521,800 if a discount rate of 0 per cent is applied, $368,900 if the rate is 3 per cent, and $301,500 if the rate is 5 per cent. Although the High Court has ended speculation, there is still a substantial body of opinion, both Judicial and non-judicial, which regards a discount rate of 3 per cent as too high (that is, unfavourable to the plaintiff. ⁶⁷ In 1984 the discount rate was increased by statute in New South Wales to 5 per cent for motor vehicle cases. ⁶⁸

Additional Benefits

2.33 The principle that damages awarded to the plaintiff must return him or her as far as possible to his or her pre-accident position is qualified by the refusal of the courts to set-off, in calculating damages for economic loss, certain benefits conferred on the plaintiff as a result of the injury. These include pensions, ⁶⁹ ex gratia payments ⁷⁰ and proceeds of accident insurance policies. ⁷¹ However, payments by way of sick pay ⁷² and unemployment benefits, ⁷³ have been set-off. The reason given for not setting off benefits, such as pensions, is that they were intended to be enjoyed whether or not the damages claim was successful. It has therefore been suggested that in order to avoid double compensation, express provision should be made in the relevant legislation requiring repayment of benefits where the injured party succeeds in recovering compensation, as is now the case with sickness benefits. ⁷⁴

3. Wrongful Death Claims

2.34 Where a person is killed as the result of another person’s negligence, certain members of the family of the deceased may bring an action for damages under the Compensation to Relatives Act, 1897 (paragraph 2.10). The award of damages is based on the loss of material support caused by the death. The support may have been in the form of the financial contribution of a family breadwinner, the value of which is normally assessed by reference to the proportion of the deceased’s earning capacity applied to the maintenance of the family. Alternatively, support may take the form of household services and other unpaid work supplied by a homemaker. ⁷⁵ In a claim under the Compensation to Relatives Act, the contributory negligence of the deceased does not affect the amount of damages recoverable. ⁷⁶

4. Loss of Consortium

2.35 Until recently in New South Wales, a husband had a common law right against a person who wrongfully injured his wife for the loss of his wife’s consortium. This action included compensation payable to the husband for the wife’s loss of ability to provide him with household services, as well as compensation for the loss of her society and assistance. ⁷⁷ The wife had no corresponding right. ⁷⁸ The action has been attacked as archaic and discriminatory and was abolished by statute in New South Wales 1984. ⁷⁹ At common law only limited damages can be recovered by a injured person for the loss of his or her capacity to render services to others. ⁸⁰ Consequently the abolition of the action for loss of consortium, while desirable in itself, has removed the principal means available at common law by which the immediate family of an accident victim could be compensated for loss of household support previously provided by that person.

5. Summary

2.36 In summary, the main features of the common law negligence action are:

• the injured person is entitled to damages only if he or she can establish that the injury was caused by the defendant s fault that is, by a failure to take reasonable care for the safety of the injured person;
• damages are reduced to the extent that the plaintiff, through his or her contributory negligence, was to blame for the accident;
• damages are assessed in the form of a lump sum and are awarded on a once-and-for-all basis;
• damages are designed, in theory, to provide “full” compensation for both the economic loss and non pecuniary loss sustained by the injured person; and
• claims may be made by dependent relatives of a person killed as the result of another person’s negligence.

B. Workers’ Compensation

2.37 Legislation in all Australian States provides compensation, on a no-fault basis, to injured workers and the families of workers who have been killed in work-related accidents or accidents occurring on specified journeys including journeys between the worker’s residence and work place. ⁸¹ Compensation is also provided for work-related disease. It is compulsory for employers to insure against their liability to compensate injured workers under workers’ compensation legislation ⁸² and a large number of insurance companies are authorised to write workers’ compensation insurance. A number of large employers act as self-insurers. Workers injured outside working hours or on journeys not covered by the legislation and most self-employed people, are not protected. They may, however, be able to recover damages in a common law negligence action.

2.38 The form of compensation varies from State to State, with New South Wales providing comparatively generous benefits. ⁸³ In New South Wales, compensation includes:

• payment of medical, hospital rehabilitation and related expenses;
• periodic compensation for lost wages;
• lump sum compensation provided in accordance with a statutory table, for specified injuries, regardless of the effect of those injuries on earnings; and
• lump sum compensation to the dependents of a worker who is killed, together with periodic payments to the dependent children of the worker until they reach 16 years or, if they are students, 21 years.

2.39 In the case of total incapacity, the injured worker is entitled to receive compensation at the relevant award rate for his or her occupation for a period not exceeding 26 weeks. ⁸⁴ This may not necessarily amount to “full compensation” since the worker’s earnings may have exceeded the award rate, and payments for overtime or shiftwork are not included. If the worker remains incapacitated for work for longer than the 26 week period, he or she receives a periodic payment which is subject to maximum and minimum limits and, in practice, is usually considerably below and unrelated to the worker’s pre-accident earnings. ⁸⁵ The amount paid includes a component for any dependent spouse and children and payments are indexed. ⁸⁶ If the worker is permanently disabled, periodic payments continue until death and unlike some jurisdictions, New South Wales imposes no dollar limit on the total amount payable. In addition to periodic payments, the worker is entitled to a lump sum as compensation for any injury which is specified in the statutory table. ⁸⁷ Thus, for example, a worker losing an arm will be entitled to a lump sum payment whether or not the loss of the arm has affected his or her earning capacity.

2.40 An important feature of the workers’ compensation system concerns the employer’s ability for a partially incapacitated worker. The New South Wales Workers’ Compensation Act, 1926, imposes the responsibility on the employer of providing suitable employment (light duties) for an injured employee partially incapacitated for work. ⁸⁸ If the employer falls to provide suitable employment the worker is deemed to be totally incapacitated and is to be compensated accordingly. This provision is of particular significance in times of high unemployment, since large numbers of partially incapacitated workers, who cannot be offered light duties, are deemed to be totally incapacitated for compensation purposes.

2.41 Although the legislation contemplates that medical and related expenses will be covered as they arise, and that compensation for lost earnings will be provided on a periodic basis, it also enables an employer (with the consent of the worker and subject to the approval of the Workers’ Compensation Commission) to pav a lump sum in place of the whole or any part of the liability to make weekly payments or to meet the worker’s medical and related expenses. This procedure is known as “redemption”. ⁸⁹ An application for redemption may be made while the worker is receiving weekly payments, or in settlement of a disputed claim. It may also be used to extinguish any potential common law rights the worker may have. In New South Wales in recent years the use of redemptions has increased markedly. ⁹⁰

2.42 The administration of the workers’ compensation systems in Australia differs quite considerably among the various jurisdictions. Some, for example, have moved from a multi-insurer to a single-insurer system, and the use made of non-legal personnel, such as medical boards varies. ⁹¹ In New South Wales a large number of licensed insurers operate in the field while some employers act as self-insurers. Disputes are determined by a court, the Workers’ Compensation Commission, employing familiar adversary procedures. In the past the Workers’ Compensation Commission has discharged both judicial and administrative functions, the latter including the licensing of insurers, the management of certain funds and the conduct of rehabilitation programs. Legislation has recently been enacted which, among other things, separates the two. ⁹² Judicial functions are to be allocated to a new Compensation Court while the administrative functions will become the responsibility of a State Compensation Board. The legislation is expected to be proclaimed early in 1985 and the separation of functions will become effective from the date of proclamation.

2.43 A worker who is entitled to workers’ compensation may also bring a common law negligence action for damages against his or her employer, or against a third party who has negligently caused the injury. The Workers’ Compensation Act, 1926, preserves the workers common law rights, but contains provisions preventing the worker from recovering double compensation for the same injury. ⁹³ Once a worker receives common law damages, he or she cannot revert to the workers’ compensation system for the same incapacity if the common law damages prove inadequate.

2.44 A transport accident injury, which is the subject of this Report, may come within the workers’ compensation system. A worker who is injured in a transport accident will be entitled to claim workers’ compensation if:

• the accident occurred in the course of his or her employment; or
• in the course of a journey (such as to or from work) covered by the Workers’ Compensation Act.

If the worker has a common law action against the person at fault for the accident, the workers’ compensation payments will be deducted from the common law award or settlement.

2.45 In summary, workers’ compensation differs from a common law negligence action in several respects.

• Injured workers, or their families in the case of death, are entitled to compensation regardless of proof of fault.
• Unlike common law damages, workers’ compensation is calculated by reference to statutory formulae. Generally speaking, the scheme is not designed to provide “full” compensation. Compensation is more generous for short-term than for long-term incapacity.
• Compensation for loss of earnings is provided in the form of indexed periodic payments, although the right to receive periodic payments may be, and often is, redeemed by payment of a lump sum.
• Compensation for non-economic loss is provided by way of a “table of maims” which applies to particular kinds of permanent physical disability.
• In the case of a worker’s death, lump sum payments are made to the surviving dependents, in combination with periodic payments for dependent children. Where there are no dependents, funeral expenses only are payable.
• The system is funded by compulsory premiums which employers pay authorised private insurers, and by the direct payment of compensation costs by self-insurers.

C. Limited Statutory Schemes

2.46 The statutory compensation schemes in force in New South Wales, other than the workers’ compensation system, are not directly relevant to the arrangements for transport accident victims. None the less it is appropriate to refer briefly to the specific schemes adopted in New South Wales.

1. Criminal Injuries Compensation

2.47 Injuries deliberately inflicted in the course of criminal conduct are not usually regarded as “accidents”. Yet from the victim’s point of view, they are “unlooked-for mishaps”, capable of being described for legal purposes as “injuries suffered by accident”. ⁹⁴ Criminal injuries schemes operate in all Australian States including New South Wales where the major statutory scheme was established by the Criminal Injuries Compensation Act, 1967. ⁹⁵

2.48 Since 1900 courts in New South Wales have had power under the Crimes Act to order a convicted offender to pay compensation to any “aggrieved person” for personal injury (which includes pregnancy and nervous shock) and property loss caused by commission of the offence. ⁹⁶ The maximum amount for which compensation can be awarded is $20,000 (August 1984). Under the Criminal Injuries Compensation Act 1967, which has provided a model for legislation in three other States, an “aggrieved person” (the victim or the family of a deceased person) who has obtained a compensation order against a convicted offender may apply to the Government for payment of the sum specified in the order. Even if the alleged offender is acquitted, the court has a discretion to grant a certificate stating the amount of compensation that would have been awarded had the accused been convicted. The State Treasury has a discretion as to the amount if any, to be paid to the aggrieved person whether or not the offender has been convicted. ⁹⁷

2.49 One obvious gap in the statutory scheme is that a person injured through criminal violence can receive no compensation if the alleged offender is not apprehended or brought to trial. To remedy this deficiency, an administrative scheme operates under which the victim may apply for payments, similar to those that would have been available under the statutory scheme. The police investigate claims of this kind, since no court proceedings are involved. The administrative scheme is described as the “Ex Gratia Scheme”. This is somewhat misleading as payments under both schemes are technically made by the State ex gratia. The same maximum of $20,000 currently applies.

2. Sporting Injuries

2.50 In New South Wales, the Sporting Injuries Insurance Act, 1978, estiblished a scheme⁹⁸ designed to provide no-fault benefits to people involved in organised sport on either an amateur or professional basis. An applicant for benefits must be a registered player of a Sporting Organisation who has suffered or contracted a personal injury or disease whilst participating in an authorised sporting activity. The injury must fall within a list of “compensable injuries”, which include the permanent loss of various functions or use of parts of the body. ⁹⁹ A maximum amount is recoverable for each type of loss with a set additional amount payable for quadriplegia and paraplegia. Where the person is over 18 and the injury results in death a benefit of $37,500 is payable to the legal personal representative of the deceased with $1,500 added for each surviving dependent child (August 1984). In some cases, there is a payment to cover funeral expenses. The overall maximum for injuries from one incident is currently $90,000. The scheme is funded by premiums collected from individuals or incorporated or unincorporated associations which have been declared “sporting organisations” under the Act. ¹⁰⁰

2.51 Recent amendments to the Sporting Injuries Insurance Act ¹⁰¹ have extended the benefits available under the sporting injuries scheme to schoolchildren injured in school sporting or athletic activities and people participating in sporting, athletic and recreational activities promoted by the Department of Leisure, Sport and Tourism. This supplementary scheme, when it comes into effect, will be financed out of consolidated revenue and in most respects, including benefits, it resembles the principal scheme. One difference is in relation to death benefits. Under the supplementary scheme payment of the $37,500 is conditional on there being at least one person who was wholly or partly dependent for support on the deceased immediately before the death occurred. ¹⁰² In addition, where a person entitled to benefit under the supplementary scheme recovers damages independently of the Act, including the proceeds of a contractor insurance or assurance, for the same injury or death for which benefits under the supplementary scheme are payable, any benefits already recovered are repayable out of the damages and no further benefits are recoverable. ¹⁰³

D. The Social Security System

2.52 The social security system provides a “safety net” for people who, for a variety of reasons, are unable to support themselves. The system provides benefits to a much wider range of people than those who have been incapacitated as the result of injury. Nonetheless, social security pensions and benefits are of considerable importance to accident victims and indeed, as the Pearson Commission commented in England, are the “biggest single source of compensation”. ¹⁰⁴ There are many ways in which accident victims or their families may come into contact with the social security system (otherwise than by claiming universal benefits such as non-means-tested allowances and pensions). These include cases where an incapacitated accident victim:

• is not entitled to compensation in a common law action or under any statutory scheme;
• has instituted a claim for compensation which has not been resolved;
• has been awarded compensation in respect of the incapacity, but the award has proved inadequate (perhaps because it was insufficient in the first place or not properly managed by the accident victim); and
• has been awarded compensation and, while the award has not necessarily proved inadequate, has arranged his or her own affairs to maximise entitlement to social security.

In addition the family of a deceased accident victim may be reliant on social security payments, such as the widow’s pension, for their support.

2.53 This section briefly outlines the major pensions and benefits of special relevance to accident victims. These include:

• the invalid pension, sickness benefits; and
• unemployment benefits.
• Reference is also made to the Commonwealth Rehabilitation Service.

1. Invalid Pensions

2.54 In order to receive an invalid pension a person must be over the age of 16 and “permanently incapacitated for work” or permanently blind. ¹⁰⁵ The Social Security Act 1947 (Cth) requires the degree of permanent incapacity to be not less than 85 per cent. ¹⁰⁶ The criteria to be taken into account in determining whether a person is not less than 85 per cent incapacitated have caused considerable difficulty. ¹⁰⁷

2.55 The base rate for the invalid pension varies according to whether the recipient is single or married, and is indexed by reference to the Consumer Price Index, with adjustments being made in May and November each year. ¹⁰⁸ Extra amounts are paid if the invalid pensioner has children, or dependent full-time students. ¹⁰⁹ The base rate is at subsistence level only. Payment of the invalid pension is subject to a means test which is currently assessed on family income, although the Commonwealth Government has taken action to introduce an assets test. ¹¹⁰ Since the means test is based on family income a person who is incapacitated, and whose spouse is in paid employment, will not usually receive the invalid pension. ¹¹¹

2.56 The Act provides that an invalid pension shall not be granted to any person if he or she:

... has an enforceable claim against any person, under any law or contract for adequate compensation in respect of his permanent incapacity or permanent blindness. ¹¹²

This provision has not been applied where the injured person has commenced a common law negligence action. ¹¹³ Consequently, the fact that an injured person has commenced an action for damages will not disqualify him or her from receiving an invalid pension. Where the person has a pending claim for workers’ compensation it is not clear whether the legislation disentitles him or her from an invalid pension. ¹¹⁴ In practice, the Department of Social Security normally pays sickness benefits, rather than an invalid pension to people awaiting resolution of a workers’ compensation claim, in part because the legislation enables sickness benefits to be recovered after the claim is completed (paragraph 2.60). It appears that receipt of a lump sum, whether by way of common law damages or workers’ compensation is not a barrier to receipt of the invalid pension, ¹¹⁵ although, of course, the means test will apply to any income earned by way of interest on the lump sum. Thus an injured person may receive a substantial lump sum damages award and nevertheless be entitled to receive the invalid pension.

2.57 Some injured people invest their lump sum so that it produces little or no income, in order to qualify for the invalid pension. Yet others may become reliant on the pension because their lump sum is exhausted or because its income is insufficient to maintain them. ¹¹⁶ This involves double compensation, in the sense that the injured person receives support from both the social security and the compensation systems. By contrast with the position concerning invalid pensions, the legislation governing sickness benefits contains special provisions designed to prevent double compensation from occurring (paragraph 2.60).

2. Sickness Benefits

2.58 An applicant for sickness benefits is required to satisfy the Director-General of Social Services that

... throughout the relevant period, he was incapacitated for work by reason of sickness or accident (being an incapacity of a temporary nature) and that he has thereby suffered a loss of salary, wages or other income. ¹¹⁷

Usually sickness benefits are payable seven days after the date of incapacity for work. Adult sickness beneficiaries receive similar amounts to those payable to invalid pensioners, but are subjected to a more rigorous means test. ¹¹⁸

2.59 Sickness benefits are frequently paid while an injured person is awaiting receipt of common law damages or workers’ compensation. Since August 1982, however, a new Division in the Act ¹¹⁹ has regulated the interaction between sickness benefits and compensation. The purpose of the Division is to prevent double compensation and to relieve the Commonwealth of the burden of providing social security in cases where the injured person has been compensated for the injury. The Division is applicable to amounts received by way of common law damages, workers’ compensation, and compensation provided under limited statutory schemes. ¹²⁰

2.60 A person who is receiving sickness benefits, or who has been paid sickness benefits in the past, in respect of a particular incapacity, is required to notify the Department if he or she receives compensation for that incapacity. ¹²¹ In these circumstances, the Director-General may refuse a claim for sickness benefits or cancel the benefits. In addition, elaborate provisions enable recovery of an amount equal to the whole or part of sickness benefits paid in the past, either from the recipient of compensation, the person liable to pay compensation or his or her insurer. Difficulties may arise in determining the amount of the repayment which should be made where compensation is provided in a lump sum, intended to cover both past and future earnings loss, or where the lump sum includes a component for non-economic loss. It may be argued that not all the compensation received relates to the incapacity for which sickness benefits were paid. ¹²² Where a person settles a common law claim, or obtains a redemption under the workers’ compensation system it is customary to obtain information from the Department of Social Security on the amount to be repaid, and negotiations between litigants take this factor into account. Where a lump sum is received, and the recipient later applies for sickness benefits, benefits may be refused until, in the Department’s opinion. the period of future income loss, covered in the lump sum, has expired.

3. Unemployment Benefits and Sheltered Employment Allowances

2.61 A person who has been partially incapacitated, but has recovered sufficiently to resume work, may apply for unemployment benefits if he or she is willing to undertake suitable work, but such work cannot be found. ¹²³ The fact that a person has received compensation will not disentitle him or her to unemployment benefits although, of course, the means test applies to any income of the individual and spouse. In addition, the Act provides for the payment of a sheltered employment allowance to people who are employed in a sheltered workshop and would otherwise be eligible for a pension or benefit. ¹²⁴ People in an approved activity centre or adult training centre are currently paid an “incentive” allowance of $10 per week which is not means tested. ¹²⁵ The sheltered employment allowance and incentive allowance are paid instead of supplementary assistance.

4. Services and Fringe Benefits for Social Security Recipients

2.62 In addition to income maintenance payments, social security recipients may be eligible for various concessions and health care benefits. For instance, a pensioner whose income falls below a certain level ¹²⁶ is entitled to a Pensioner Health Benefits card and other Commonwealth concessions. These entitle the holder to optometrical hearing, and pharmaceutical concessions. The holder is also entitled to various “fringe benefits”, such as transport concessions, reductions in council and water rates, telephone rentals and costs associated with other utilities. Some of these concessions also apply to sickness and a limited range of unemployment beneficiaries. ¹²⁷ Again, a person who has received compensation in the past may be entitled to fringe benefits provided he or she satisfies the means test.

5. Commonwealth Rehabilitation Service

2.63 The Department of Social Security is responsible for the administration of the Commonwealth Rehabilitation Service. The Service provides treatment and training for people suffering from mental or physical disabilities which constitute a substantial handicap in undertaking employment, or which prevent them living “an independent life”. ¹²⁸ A person receiving treatment continues to be entitled to an invalid pension or sickness benefit, but may also receive a training allowance. Where a person who has been given treatment or training later receives compensation in respect of the disability, he or she maybe required to pay for the cost of treatment or training. ¹²⁹ Alternatively, the cost of the treatment or training may be recovered directly from the person liable to pay compensation.

6. Summary

2.64 The main characteristics of the Australian social security system are as follows.

• The system operates as a “safety net”, providing pensions and benefits to people unable to support themselves. Payments are means tested.
• In general, pensions and benefits are payable regardless of the cause of incapacity, although applicants have to show that they suffer from a particular disability such as unemployment, temporary sickness or permanent invalidity, old age or widowhood.
• Accident victims who satisfy eligibility criteria may be entitled to social security, whether or not they have previously received compensation. This may involve “double compensation” for the same loss.
• Pensions and benefits are generally fixed at subsistence level and are not designed to compensate fully for “losses” suffered by the recipient.
• Income maintenance payments are made on a periodic basis. Support is also provided in the form of services.
• The system is funded from general taxation revenue.

IV. SUMMARY

2.65 This Chapter describes the development of the common law negligence action to its now dominant position in the compensation system, especially in transport accidents. The modern law of negligence has been marked by the gradual removal of a number of earlier limitations to recovery. This expansion of liability has been encouraged by the development of third party insurance and other mechanisms for shifting the loss from the individual wrongdoer to the community in general, or at least a significant part of it. In the case of motor vehicles, third party insurance has been compulsory in New South Wales since 1942 and, as a result, the cost of compensating motor vehicle accident victims, who establish a right to damages, is borne by all registered motor vehicle owners in the form of third party premiums. The authorities responsible for the provision of public transport services act as self-insurers and meet the cost of compensating accident victims out of their own revenue. This cost is reflected in the price paid by the community for the use of public transport or in taxation In areas outside transport accidents, no-fault schemes provide compensation up to certain limits. The most important of these is workers’ compensation which, in the case of a transport accident in the course of employment or on a journey to or from work, provides no-fault compensation to the injured worker. Limited no-fault schemes operate in New South Wales in the areas of criminal and sporting injuries. Finally, social security supplies a safety net for accident victims not in receipt of other forms of compensation, in the form of pensions and benefits based on need.

2.66 While some attempts have been made to integrate the various compensation systems, this has not been done systematically and there is considerable overlap and inconsistency of approach. Compensation systems other than the common law negligence action play an important, although limited role, in compensating transport accident victims. This is true particularly of the workers’ compensation system (in relation to course of employment and journey accidents) and the social security system (by providing a safety net based on needs). Nonetheless an evaluation of the existing compensation system for transport accident victims must centre on the common law negligence action.

1. CHS Fifoot, History and Sources of the Common Law: Tort and Contract (1949), ch 9.

2. J G Fleming, The Law of Torts (6th ed. 1981), pp.6-7.

3. J G Fleming, “The Role of Negligence in Modern Tort Law” (1967) 53 Virginia Law Review 815.

4. An assortment of early actions based on this idea are collected in Rylands v Fletcher (1866) LR 1 Ex. 265, (1868) LR 3 HL 330.

5. J G Fleming, An Introduction to the Law of Torts (1967), ch.8.

6. Rylands v Fletcher (1866) LR 1 Ex. 265, at p.286, per Blackburn J.

7. This was justified on the theological ground that husband and wife were one and that a person could not sue himself or herself. The social justification was that litigation between spouses would encourage marital disharmony,.

8. Baker v Bolton (1808) 1 Camp. 493;. The consequence of this rule is that a family left destitute through the death of the breadwinner had no recourse even against the person whose negligence had caused the death.

9. Russell v. Men of Devon (1788) 2 TR 667. For a more recent example of immunity. See Searle v. Wallbank [1947] AC 341 where it was decided that landowners were not liable for injuries caused by straying stock.

10. Victorian Railways Commissioners v. Coultas (1888) 13 App. Cas. 222.

11. Walker v. Great Northern Railway Co. of Ireland (1891) 28 LR Ir.69.

12. See note 3 above, at p.818.

13. As a general rule an employer was liable to a third person for injury done to that person by an employee acting in the course of employment.

14. Fatal Accidents Compensation Act, 1847, later replaced by Compensation to Relatives Act, 1897.

15. Employers’ Liability Act 1880 (UK). Damages were limited to the equivalent of three years loss of earnings.

16. In England the doctrine was not abolished until 1948: Law Reform (Personal Injuries) Act 1948. In New South Wales abolition came in 1926: Workers’ Compensation Act, 1926, s.65.

17. Law Reform (Contributory Negligence) Act 1945 (UK): Law Reform (Miscellaneous Provisions) Act. 1965.

18. Section 16 of the Married Persons (Property and Torts) Act, 1901 was amended to this effect in 1964: Law Reform (Married Persons) Act, 1964, s.2.

19. Family Law Act 1975 (Cth.), s.119.

20. Smith v. Charles Baker & Sons [1891] AC 325.

21. Bowater v. Rowley Regis Corporation [1944] KB 476.

22. Dulieu v. White & Sons [1901] 2 KB 669. In New South Wales statutory provision has now been made for recovery of damages for injury arising from nervous shock: Law Reform (Miscellaneous Provisions) Act 1944, part III.

23. [1932] AC 562. The issue concerned the liability of manufacturer for negligently, caused injury to the consumer of the product.

24. Pre-natal injury has more recently been held compensable: Watt v. Rama [1972] VR 353.

25. These are the rules governing “remoteness of damage”: Overseas Tankship (UK) Ltd. v. The Miller Steamship Co. Pty. [1967] AC 617.

26. Strictly the availability, of insurance wis not to be disclosed in the proceedings but its existence was often Common knowledge, especially where insurance was compulsory.

27. The flexibility could of course operate in the opposite direction if the tribunal of fact (whether judge or jury) was especially sympathetic towards the defendant: see note 2 above, p.117.

28. A A Ehrenzweig, Negligence Without Fault (1951).

29. P S Atiyah, Accidents, Compensation and the Law (3rd ed. 1980), pp. 360- 366; H. Luntz, A D Hambly and R Haves, Torts: Cases and Commentary (1980), para.1.3.01.

30. G Cass, Workers’ Benefit or Employers’ Burden: A History of Workers’ Compensation New South Wales 1880-1926 (unpublished thesis, University of Sydney, 1982), pp.89-91.

31. C P Mills, Modification of the Workers’ Compensation System (unpublished Commission document, 1981), pp.31ff, 57ff.

32. While criminal injuries, generally speaking, are deliberately inflicted, from the victim’s point of view, they can be described as accidental injuries.

33. See generally, H H Glass, M H McHugh and F M Douglas, The Liability of Employers (2nd ed. 1979). esp. ch.8.

34. Although early High Court authorities took the view that contributory negligence was not a defence to an action for breach of statutory duty, Bourke v. Butterfield and Lewis Ltd. (1926) 38 CLR 354, they were overruled in Piro v. W. Foster & Co. Ltd. (1943) 68 CLR 313, in which the defence is upheld. However, that decision was abrogated almost immediately in New South Wales by the Statutory Duties (Contributory Negligence) Act, 1945.

35. Wheeler v. New Merton Board Mills Ltd. [1913] 2 KB 669.

36. See W L Morison, C S Phegan and C Sappideen, Cases on Torts (5th ed. 1981), ch.15, esp. pp.806-817.

37. Abela v, Giew (1965) 65 SR (NSW) 485; Strohfeldt v. Francis [1968] 1 NSWR 251.

38. The pioneer in issuing policies was the London and Provincial Carriage Insurance Co. Ltd., which in 1875 issued policies covering liability for use of horse-drawn vehicles.

39. A G M Batten and W A Dinsdale, Public Liability Insurance (1967), ch.1.

40. See note 30 above, pp.94-95. The company is now Manufacturers Mutual Insurance Limited.

41. Id., p.100ff.

42. Workers’ Compensation Act 1926, s.18. Unlike the situation in some other States, insurance must provide coverage unlimited as to amount. The Act provides for employers to be licensed as self-insurers (see para.2.42 below) if they meet certain conditions: s.18(1A).

43. Motor Vehicle (Third Party Insurance) Act, 1942. The cover was originally limited. For background, see New South Wales Parliamentary Debates, Legislative Assembly, 23 April 1942, p.3004. Mr O’Sullivan, Minister for Transport, introducing the Motor Vehicles (Third Party) Insurance Bill, 1942,

44. Id., 29 April 1942, p.3085. Mr O’Sullivan, Minister for Transport, second reading of the Motor Vehicles (Third Party) Insurance Bill, 1942.

45. Pearson Report, vol.1, para.120.

46. Maklouf v. Tannous, 2 August 1984, Supreme Court of New South Wales, Cantor J.

47. Sydney Morning Herald, 4 August (1984, p.5; Sunday Telegraph, 5 August 1984, p.8.

48. For more detailed exposition of the three elements of duty of care, breach of duty and remoteness of damage, see note 2 above, chs.7-9; H Luntz, A D Hambly and R Hayes, note 29 above, chs.2-5; and note 36 above, chs.7-9.

49. Davie v. New Merton Board Mills Ltd. [1959] AC 604, at p.627; Lister v. Romford Ice & Cold Storage Co. Ltd. [1957] AC 555, at p.572.

50. The cyclist might be able to maintain an action if the condition of the road was due, for example, to oil which had been carelessly spilled from a tanker.

51. Law Reform (Miscellaneous Provisions) Act 1965.

52. Froom v. Butcher [1976] QB 286.

53. O’Connell v. Jackson [1972] 1 QB 270.

54. Gorringe v. Transport Commission (Tas.) (1950) 80 CLR 357. In England the nonfeasance rule was abolished in the Highways (Miscellaneous Provisions) Act 1961.

55. Gent-Diver v. Neville (1953) St RQ 1.

56. Insurance Commissioner v. Joyce (1948) 77 CLR 39; Roggenkamp v. Bennett (1950) 80 CLR 292. Australian courts have refused to accede to the view now taken in England which applies the same limited scope to the defence in passenger/driver cases as is universally applied in industrial accidents: Nettleship v. Weston [1971] 2 QB 691.

57. Todorovic v. Waller (1981) 56 ALJR 59, at p.61, per Gibbs CJ and Wilson J.

58. Sharman v. Evans (1977) 138 CLR 563. This rule applies equally to general damages for future economic loss (see para.2.31 below).

59. Griffiths v. Kerkemeyer (1977) 139 CLR 161.

60. Skelton v. Collins (1966) 115 CLR 94.

61. For example, Chapter 10 (attendant care): Chapters 3 and 11 (non-economic loss).

62. Skelton v. Collins (1966) 115 CLR 94.

63. Cullen v. Trappell (1980) 146 CLR 1.

64. But if in the light of subsequent events the discount for contingencies is not sufficient, the plaintiff will be overcompensated. Logically, the possibility of favourable contingencies should be taken into account This would include, for example, the possibility that the deceased would have been employed for longer than anticipated.

65. H. Luntz, Assessment of Damages (2nd ed. 1983), ch.6.

66. A statement made by the Chief justice when judgment was delivered in Todorovic v. Waller (1981) 56 ALJR 59, at p.60. The discount rate has been increased to 5 per cent by statute in Queensland (Common Law Practice Act 1867-1981, s.5) and in New South Wales for the purpose of motor vehicle accidents (Motor Vehicles (Third Party Insurance) Act, 1942, s.35B inserted by Motor Vehicles (Third Party Insurance) Amendment Act, 1984). 67. In Todorovic v. Waller (1981) 56 ALJR 59 the minority preferred no discount rate at all: at p.72, per Stephen J: at p.78, per Murphy J. See also JLR Davis, “Damages for Personal Injury and the Effect of Future Inflation” (1982) 56 Australian Law Journal 168.

68. See note 66 above.

69. National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 CLR 569; Jones v. Gleeson (1965) 39 ALJR 258.

70. Wollington v. State Electricity Commission of Victoria (No. 2) [1980] VR 91.

71. Bradburn v. Great Western Railway Co. (1874) LR. 10 Ex. 1.

72. Graham v. Baker (1961) 106 CLR 340, but some allowance should be made for loss of sick leave credits.

73. Evans v. Muller (1983) 57 ALJR 393.

74. Redding v. Lee (1983) 57 ALJR 393, at p.406, per Murphv J at p.413, per Deane J. For discussion of sickness benefits, see paras.2.58-2.60 below.

75. Rowe v. Scanlan [1969] 1 NSWR 43.

76. Law Reform (Miscellaneous Provisions) Act 1965, s,10(4).

77. Toohey v. Hollier (1955) 92 CLR 618; JR Kealley v. Jones [1979] 1 NSWLR 723.

78. Best v. Samuel Fox & Co. Ltd. [1952] AC 716.

79. Law Reform (Marital Consortium) Act 1984.

80. Burnicle v. Cutelli [1982] 2 NSWLR 26.

81. Workers’ Compensation Act 1926, s.6 (definition of injury), s.7.

82. Id., s. 18.

83. See eg. Department of Social Security, Workers’ Compensation Legislation in Australia 1980 (1981).

84. Workers’ Compensation Act 1926, s.9(1).

85. Id., s.9(1), (2).

86. Id., ss.9(1)(b), 9A.

87. Id., s.16.

88. Id., s.11(2).

89. Id., s.15.

90. Issues Paper, paras.3.50-3.51. The reasons for this increase are discussed below (see paras.8.4-8.12).

91. See eg. Workers’ Compensation Act 1916 (Qld.) which provides for compulsory State insurance. The Workers’ Compensation Board is the monopoly insurer. As regards the use of non-legal personnel, the Workers’ Compensation Board (a statutory board) consists of six members, one of whom is a legally qualified medical practitioner and three who are representatives of employees, employers and the State government Moreover, the Workers’ Compensation Board in Victoria comprises of judicial member and two lay members who represent insurers and workers (Workers’ Compensation Act 1958 (Vic.), s.80).

92. Compensation Court Act, 1984 and four cognate Acts Workers’ Compensation (Amendment) Act 1984; Workers’ Compensation (Brucellosis) Amendment Act 1984, Sporting Injuries Insurance (Workers’ Compensation) Amendment Act, 1984; and Miscellaneous Acts (Workers’ Compensation) Amendment Act, 1984. See also New South Wales Law Reform Commission, Interim Report, Accident Compensation, Workers’ Compensation (Amendment) Bill 1982 and Cognate Bills (1983).

93. Workers’ Compensation Act 1926, s.63.

94. In Weston v. Great Boulder Gold Mines Ltd. (1964) 112 CLR 30, a worker on duty was assaulted by an intruder. The assault was not related to the victim’s work, but arose out of a personal dispute. The High Court held that the worker had suffered “personal injury by accident”.

95. See generally, Australian Law Reform Commission, Sentencing of Federal Offenders (Interim Report No.15, 1980), ch.12.

96. Crimes Act, 1900, ss.417, 554; Fleming v. White [1981] 2 NSWLR 719.

97. Criminal Injuries Compensation Act 1967, s.5(2B).

98. For a discussion of the problems which preceded the establishment of the scheme, see Issues Paper, para.3.74.

99. Sporting Injuries Insurance Act, 1978, s.4(1), schedule 1.

100. Id., s.5.

101. Sporting Injuries Insurance (Amendment) Act. 1984.

102. Sporting Injuries Insurance Act, 1978, s.26(2A).

103. Id., s.35A.

104. Pearson Report, vol.1, para.32.

105. Social Security Act 1947 (Cth.), s.24(1). See also the other requirements in ss.24(1)(b), 25.

106. Id., s.23.

107. Guidelines released by the Minister for Health and Social Security in May 1981 are reproduced in (1981) 1 SSR 7.

108. Social Security Act 1947 (Cth.), s.28A.

109. Id., s.28(1B).

110. Id., s.28(2). In relation to the assets test proposals, see Report of the Panel of Review of Proposed Income and Assets Test (May 1984). The proposals have now been debated in Parliament: see Social Security and Repatriation (Budget Measures and Assets Test) Bill 1984 (Cth.); second reading, Commonwealth Parliamentary Debates, House of Representatives, 5 September 1984, pp.573, 635 and 6 September 1984, p.523. See also Commonwealth Parliamentary Debates, Senate, 10 September 1984, pp.1-12,732.

111. Generally speaking, there is no means test for permanently blind pensioners: Social Security Act 1947 (Cth.), s.28(2AA).

112. Social Security Act 1947 (Cth.), s.25(1)(d).

113. National Insurance Co. of New Zealand Ltd. v. Espagne (1960) 105 CLR 569; Markovic and Director-General of Social Services (1982) 5 SSR 48.

114. See N Seddon and J L R Davis, A Legal Analysis of the Relationship Between the Principal Commonwealth Social Security Benefits and Other Forms of Compensation (unpublished Commission document, 1982), pp.1-10. In some cases, however, the Department has used s.25(1)(d) to deny payment of an invalid pension to persons receiving workers’ compensation: Boak and Director-General of Social Security(1982) 9 SSR 90.

115. Id., N Seddon and J L R Davis, pp.11-15.

116. See eg. Traffic Accident Study, appendix, Case Studies AY, Q.

117. Social Security Act 1947 (Cth.), s.108(1)(c).

118. Id., ss.112, 112AA.

119. Id., division 3A.

120. Id., s.115(2).

121. 0n the matters referred in this para, see id., ss.115A-115 D.

122. For a more detailed discussion of these questions, see N Seddon and J L R Davis, note 114 above, pp.33-50.

123. Social Security Act 1947 (Cth.), s.107.

124. Id., s.133E.

125. Id., s.33JA.

126. The current income limit for fringe benefits and the Pensioner Health Benefits card is $57 per week for a single pensioner, $94 per week for a married pensioner, with an additional $20 per week for each dependent child.

127. The unemployed are entitled to a Health Care card, which does not carry with it the same entitlement to concessions that a Pensioner Health Benefits and offers. Sickness beneficiaries receive a Health Benefits card, which has similar entitlements to a Pensioner Health Benefits card.

128. Social Security Act 1947 (Cth), s.135A.

129. Id., s.135R.