A GAP IN THE LAW OF NEW SOUTH WALES?
5.1 The discussion of various statutory provisions in Chapter 3 indicates that, while provisional damages have been made available for claims before the Dust Diseases Tribunal, they have not been generally provided for in New South Wales. This gap has been filled in England by s 32A of the Supreme Court Act 1981 (Eng) and O 37 r 7-10 of the Rules of the Supreme Court. The assessment of damages can also be postponed in South Australia under s 30b of the Supreme Court Act 1935 (SA).
5.2 While neither the Supreme Court Act 1970 (NSW) nor the Supreme Court Rules 1970 (NSW) expressly provide for the award of provisional damages in the Supreme Court, there is still a theoretical possibility that the powers of the Court as they stand could produce a similar outcome. This could be achieved by assessing damages for all but the specified chance and then relying on substantial interim damages pending the deferred assessment. Such an outcome would rely on the Court’s power to determine separately the questions of liability and damages,1 to adjourn the trial for the assessment of damages2 and to award interim damages under Part 5 Division 2 of the Supreme Court Act. Thus, in Bulovec v Mealing3 the matter was adjourned indefinitely “until the plaintiff’s condition stabilised to the extent where a proper prognosis can be given”. The result is supported by comments of Justice Handley in Pettersen v Bacha.4
5.3 In the Commission’s view, it is unsatisfactory to rely on these powers to achieve a provisional damages regime. First, s 76E, despite its potentially broad reach, is clearly intended to be a temporary measure. Secondly, the indefinite or even extended deferral of the assessment of damages cannot be preferred over a scheme which provides a greater degree of finality by means of an assessment of damages with the option of returning on the occurrence of a specified chance event. This chapter will, therefore, focus on the possibility of an express introduction of provisional damages in New South Wales.
PROPOSAL FOR PROVISIONAL DAMAGES
The arguments
5.4 The argument in favour of the introduction of provisional damages is simply that they will achieve greater justice in appropriate cases by avoiding the possibility of under-compensation. The Commission recognises the limited nature of provisional damages. We believe that wider concerns regarding uncertainty with respect to awards of damages should be dealt with by extensive examination of structured settlements and periodic payments.
5.5 Summarised, the arguments against the introduction of provisional damages, which were outlined in the Discussion Paper,5 are:
- the additional costs which will be incurred by all parties, including insurers, under such a scheme;
- the financial uncertainty which will exist for a defendant, awaiting an assessment of damages;
- the possibility that a defendant may become bankrupt or insolvent and thereby deny a plaintiff his or her entitlement; and
- the negative effects that protracted litigation may have on the parties in general and on the recovery of the plaintiff in particular.
PRIMARY RECOMMENDATIONS
5.6 The Commission recognises that the arguments for and against the introduction of provisional damages are finely balanced. However, there are a limited number of cases which would clearly benefit from the availability of provisional damages, and which could not be adequately dealt with by the provisions currently available in New South Wales. The Commission has, therefore, come to the view that provisional damages should be made available to provide for greater certainty with respect to the exceptional cases envisaged.
5.7 Consideration has been given to the possibility of extending provisional damages to cover losses other than those arising from personal injury. This might, for example, include commercial matters where the extent of the damage is subject to an event which may occur, such as the possible failure of a component of machinery. The Commission is of the view that there is currently no demonstrated need for such an extension.
5.8 The Commission is also of the view that the English provisions6 and s 11A of the Dust Diseases Tribunal Act 1989 (NSW) should, generally, provide the model for provisional damages in New South Wales. Draft legislation is appended to this Report.
Other recommendations
Coverage
5.9 Application to Motor Accidents Act and Workers Compensation Act. Section 76H of the Supreme Court Act 1970 (NSW) expressly excludes the operation of Part 5 Division 2 in situations where the Motor Accidents Act applies. This is because the Motor Accidents Act already makes provision for interim payments.7 However, there is no reason to exclude provisional damages from situations in which the Motor Accidents Act applies. The sections of the Motor Accidents Act which modify the common law of damages make no provision for the award of provisional damages. There is similarly no reason for excluding provisional damages with respect to injuries to which the Workers Compensation Act applies.
5.10 Application to District Court and Local Courts. Most claims for provisional damages will, no doubt, be brought in the Supreme Court. However, the Commission can see no arguments against making provisional damages available in the District Court. It is possible that, even with the Court’s jurisdictional limit (currently $250,000), a plaintiff could receive otherwise minor injuries, yet still be subject to the possibility of a more serious injury arising at a later date. The damages for this serious injury could fall under the jurisdictional limit of the District Court. In England provisional damages have been made available in the County Courts by s 51 of the County Courts Act 1984 (Eng) and O 22 r 6A of the County Court Rules. The Local Courts’ jurisdictional limit for matters involving recovery of damages8 is such that a provisional damages regime would be of little or no practical relevance in the Local Courts.
More than one application
5.11 The award of further damages should be final, subject to the judge at that application granting a further right to the plaintiff to return on the occurrence of further specified deterioration arising from the same injury. The Commission’s view is that this recommendation achieves a balance between fairness to the plaintiff and the need for finality in assessment. Cases in which more than one application is necessary should be rare.9
Time limits
5.12 Order 37 rule 8(2) of the English Rules of Court provides that the Court may specify the period within which the plaintiff may make an application under an award of provisional damages. The Law Society of New South Wales has submitted that the entitlement to make an application for provisional damages should only end with the plaintiff’s death.10 The Commission generally supports the view of the Law Society but recognises that there may conceivably be circumstances where a court would wish to set a fixed period.
Interaction with claims under the Law Reform (Miscellaneous Provisions) Act 1944
5.13 The Commission agrees with the English Court of Appeal and the English Law Commission that where the plaintiff dies before a claim is brought for further damages, the plaintiff’s estate may pursue the claim for further damages and the damages recoverable will not be affected by the restrictions on the recoverability of heads of damage under s 2(2) of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW).11 The point should, however, be clarified by an amendment to the Law Reform (Miscellaneous Provisions) Act 1944.
Interaction with claims under the Compensation to Relatives Act 1897
5.14 The Commission also agrees with the recommendation of the English Law Commission that the relationship between awards of provisional damages and dependants’ claims requires legislative clarification.12 The Commission is of the view that where provisional damages are awarded but the plaintiff dies of the specified disease or deterioration before a claim is brought for further damages, dependants’ claims should not, in principle, be excluded under the Compensation to Relatives Act 1897 (NSW) to the extent to which damages in the lost years can be attributed to the specified disease or deterioration and are not already encompassed in the initial damages award.13 Damages should, however, be assessed in any such claim in such a way as prevent overlap between the plaintiff’s claims (including any claims made by the deceased plaintiff’s estate) and the dependants’ claims.
Recommendation 9
An award of provisional damages should not preclude a dependant’s claim under the Compensation to Relatives Act 1897 (NSW) for death attributable to the specified disease or deterioration. The assessment of damages in such a claim should take into account, as the justice of the case may require, any pecuniary loss already awarded to the deceased in respect of the period after his or her death.
Other suggestions
5.15 Consideration has been given to the other concerns discussed by the English Law Commission.14 Generally we have concluded that they are not sufficiently substantive to warrant action.
5.16 The Law Society, which supports the introduction of provisional damages, has suggested that a provisional damages regime should be subject to the following:15
- Awards of Provisional Damages should be available for “chance” cases only.16
- In the event of a Court making an award of Provisional Damages on the basis that there is a chance of a specific event occurring in the future the Court will not make any award for that possibility. Rather it will authorise the plaintiff to return to Court for further assessment of damages in the unlikely event that the condition or disease occurs.
- An award of Provisional Damages must specify the disease or type of deterioration contemplated.
- An award should only be made if the plaintiff specifically claims the relief.
- On making an award the Court should have regard to the fact that:
(a) the defendant is a public authority; or
(b) the defendant is insured in respect of the plaintiff’s claim; or
(c) the defendant’s financial position.17
- The entitlement to make an application for Provisional Damages should only end with the plaintiff’s death.
5.17 The Commission’s proposal for provisional damages concurs with all these suggestions except that which lists matters to which the Court should have regard in making an award. It was noted in the Discussion Paper that, while similar proposals had been made by both the English Law Commission and the Pearson Commission, the proposals were not ultimately included in the English provisions.18 We have come to the conclusion that it is primarily for the plaintiff to assess the risk of making an application for provisional damages against a particular defendant, and it is not the role of the court to pre-empt the plaintiff’s decision. In any event, they are factors which are already relevant to the Court’s overall discretion.
FOOTNOTES
1. Supreme Court Rules Pt 31 r 2.
2. Supreme Court Rules Pt 34 r 4. Part 33 applies to a trial for assessment of damages: Pt 35 r 1(1).
3. NSW SC, CLD 2110/76, Master Sharpe, 20 February 1980, unreported.
4. NSW CA, No CA 40584/94, 9 March 1995, unreported. Compare Hawkins v New Mendip Engineering Ltd [1966] 1 WLR 1341 and Stevens v William Nash Ltd [1966] 1 WLR 1550 where it was envisaged that the assessment of damages would take place within a relatively short period of time.
5. DP 25 at para 3.10.
6. Supreme Court Act 1981 (Eng) s 32A; Rules of the Supreme Court 1965 (Eng) O 37 r 7-10: See para 4.20.
7. Section 45. See para 3.5.
8. Set at $40,000 by s 12(1) of the Local Courts (Civil Claims) Act 1970 (NSW).
9. See para 4.37.
10. See submission of the Law Society of New South Wales reproduced at para 5.16.
11. See para 4.38.
12. See para 4.39.
13. For example, where an award has been made for loss of earnings in the years notionally lost other than by reason of the specified disease or deterioration.
14. See paras 4.27-4.37.
15. Law Society of New South Wales, Submission (20 March 1992) at 4.
16. The Law Society has adopted the terminology of the Law Commission’s report on assessment of damages and personal injury litigation: England and Wales, Law Commission, Report on Personal Injury Litigation: Assessment of Damages (Law Com No 56, 1973). “Chance” cases are defined as cases where the “injury apparent at the trial may in the future be rendered much worse by some catastrophic event”. In such cases it is not certain whether the catastrophic event will occur. Chance cases are seen as different to “forecast” cases, which are illustrated by the example of arthritis: “There may be medical evidence that arthritis will occur in a damaged joint in due course, which will cause a certain degree of disability and pain”: Law Society of New South Wales, Submission (20 March 1992) at 2-3.
17. This mirrors the provisions in s 76E(4) of the Supreme Court Act 1970 (NSW) which deal with interim damages. See RSC O 29 r 11(2) which also deals with interim damages.
18. DP 25 at para 3.6.
