BACKGROUND TO THE REFERENCE

1.1 On 28 August 1990 the New South Wales Law Reform Commission received a reference from the then Attorney General, the Honourable John Dowd, to inquire into and report on:

1. the manner of assessment of damages (whether in respect of tort or other breach of duty) in cases where uncertainty exists as to the future conditions or events relevant to the quantum of the plaintiff’s recoverable loss;
2. the desirability of the introduction of a scheme enabling a court to defer the final assessment of damages in order to allow the quantum of loss to be determined more precisely;
3. the form of any such scheme, including consideration of the court’s power to make orders for provisional damages pending final assessment of loss; and
4. any related matter.

1.2 This reference was made following a request by the Chief Justice of New South Wales, the Honourable A M Gleeson AO, that consideration be given to a reference to the Commission on whether provision should be made for orders by the Court for provisional damages in personal injury and other actions.

1.3 The Commission issued a Discussion Paper in January 1992.¹ The focus of the Discussion Paper was provisional damages.² The issues surrounding the introduction of provisional damages in New South Wales were discussed, without reaching a conclusion, and comments were invited on the following issues:

• the suitability of incorporating a scheme of provisional damages into the current common law personal injury system in New South Wales; and
• the suitability of incorporating a scheme of provisional damages under the Personal Injury Damages Bill 1991 (NSW).

The Personal Injury Damages Bill has since lapsed, and is no longer relevant.

1.4 Submissions were received from the Law Society of New South Wales and the Local Court Statute Law Revision Committee, both of which supported the introduction of a system of provisional damages. Ms Anna Lennon, Director of Legal Services, Department of Courts Administration, concluded, on balance, that such a system ought not to be introduced for the reasons outlined in the Discussion Paper.³

1.5 Work on the reference was subsequently suspended due to lack of resources and competing priorities of the Commission. It was then decided, owing to the paucity of relevant material, to await the English Law Commission’s report on the subject which was published in September 1994.⁴ Work recommenced in June 1995 and consultations were held in July with representatives of the insurance industry.⁵ Most of the members of the industry were opposed to the introduction of provisional damages in New South Wales.

COMMENTS ON THE TERMS OF REFERENCE

1.6 Although a general review of the law relating to the assessment of damages could be conducted in accordance with the first item of the terms of reference, the Commission’s inquiry has not been so wide-ranging. It has focused on a consideration of schemes involving interim and provisional damages. The Discussion Paper dealt only with the issue of provisional damages.

1.7 In accordance with the broad scope of the terms of reference, the Commission has not, however, confined its consideration to the assessment of damages for personal injury even though this is the area where the questions arise most clearly.

DEFINITIONS

1.8 It is important to have the terms “interim damages” and “provisional damages” clearly defined as they are not used consistently in the literature. Statutory schemes may incorporate aspects of either or both without drawing a clear distinction.

1.9 For the purposes of this Report, “interim damages” are damages paid to a plaintiff on account of final damages, that is before the assessment of damages has been completed. They are paid primarily to overcome financial difficulties which a plaintiff might experience pending final assessment. They usually cover ongoing out of pocket expenses incurred as a result of the wrong. They are considered most often in relation to personal injury cases.

1.10 By contrast, “provisional damages” are awarded to a plaintiff as part of a final assessment of damages. The award subjects all losses (including future losses) to immediate assessment, except those attributable to the happening of a specified event or condition which would result in further loss to the plaintiff. The plaintiff is given the right to apply to the court for damages in respect of the further loss if the specified event or condition occurs.

FOOTNOTES

1. New South Wales Law Reform Commission, Provisional Damages (Discussion Paper 25, 1992).

2. For definition see para 1.10 below.

3. DP 25 at para 3.10.

4. England and Wales, Law Commission, Structured Settlements and Interim and Provisional Damages (Law Com No 224, 1994).

5. Mr Dallas Booth, Deputy General Manager, Motor Accidents Authority; Ms Isobel Holthause, Senior Corporate Lawyer CTP, NRMA Insurance Ltd; Mr Peter McDonal, CTP Insurance Manager, NRMA; and Mr Ted Williams of the Insurance Council of Australia Ltd.