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 QC, 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;
4. any related matter.

1.2 This reference was prompted by inquiries from the Chief Justice of New South Wales, the Honourable A M Gleeson AO, to the Attorney General, as to whether a court should have the discretion to award provisional damages in personal injury and other matters. This paper only considers the award of provisional damages in personal injury matters.

What are Provisional Damages?

1.3 An award of provisional damages is available in England and Wales. Section 32A of the Supreme Court Act 1981 provides for such an award in circumstances where there is

... an action for damages for personal injuries in which there is proved or admitted to be a chance that at some definite or indefinite time in the future, the injured person will, as a result of the act or omission which gave rise to the cause of action, develop some serious disease or suffer some serious deterioration in his physical or mental condition.¹

1.4 In essence, a provisional damage scheme departs from the traditional “once and for all” common law lump sum assessment for damages in personal injury matters, by not requiring the court to speculate on future contingencies. Rather, the court may award damages on an interim or provisional basis and allow the plaintiff to have that position reviewed if the specified disease or deterioration occurs. It is not a scheme that departs from the general rule that permits a plaintiff who has suffered damage to recover only once. Rather, it is intended to aid a plaintiff whose full measure of damages may not be apparent at the time of trial.

Previous Commission Reports

1.5 In the Commission’s view, fault based, common law lump sum compensation for an injured plaintiff is not the most satisfactory means of “placing an injured plaintiff in the same position as if he had not sustained the injuries”.² The Commission has previously recommended alternatives to lump sum compensation, first in a 1969 Working Paper on The Deferred Assessment of Damages (WP 2) and later in a 1984 Report on A Transport Accidents Scheme (LRC 43).

1.6 The 1969 Working Paper proposed a scheme which contemplated the postponement of damages where there was a chance of improvement or deterioration, in a plaintiff’s condition, for a seven year period, with provision for interim payments to the plaintiff. These proposals were never implemented and no substantive work was done on this subject matter until the Commission received the Accident Compensation Reference in 1981. The Report, Accident Compensation: A Transport Accidents Scheme for New South Wales (LRC 43, 1984), recommended the replacement of the common law negligence action in respect of transport accidents occurring in New South Wales, and the creation of a scheme providing a range of benefits to injured accident victims on a no-fault basis.

1.7 The recommendations made by the Commission, substantially formed the basis for the Transport Accidents Compensation Act 1987. However this accident compensation scheme was repealed by the Motor Accidents Act 1988. This Act, restored the right to bring common law actions for damages arising out of motor vehicle accidents, but reduced this right by limiting benefits for minor injuries, abolishing small claims for general damages and introducing a stricter claims assessment procedure.

1.8 The Commission does not resile from the recommendations put forward in its 1984 Report. It considers there are significant shortcomings with the current personal injury compensation system in New South Wales. However, in considering the scope of a reference on provisional damages the Commission has assumed the existing scheme will remain in its present form for the foreseeable future.

Other recent developments

1.9 The Commission has had regard to the Personal Injury Damages Bill 1991 (NSW)³ which was introduced in Parliament on 1 May 1991. The Bill is modelled on the Motor Accidents Act 1988 and essentially seeks to replace the common law in the personal injury area, and if enacted would significantly affect the operation of a provisional damages scheme. The interaction between the Bill and a scheme of provisional damages is set out in Chapter 3. Due to the similarities between the Bill and the Motor Accidents Act the same issues would affect a provisional damages scheme under the Motor Accidents Act.

1.10 The purpose of this paper is to generate comment and suggestions from interested parties as to whether a provisional damages scheme is a desirable addition to the current method of assessment of damages for personal injury in New South Wales. The views expressed in this paper do not represent the Commission’s final views.

1. Supreme Court Act 1981 s32A (1).

2. Per Gibbs CJ and Wilson J, Todorovic v Waller (1981) 150 CLR 403 at 412.

3. A copy of the Bill is found in Appendix A to this paper.