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Where am I now? Lawlink > Law Reform Commission > Publications > Deferred Assessment of Damages for Personal Injuries and Interim Payments During the Period of Postponement of Assessment and on the Relevance of Remarriage or Prospects of Remarriage in an Action Under Lord Campbell's Act
Working Paper 2 (1969)
Deferred Assessment of Damages for Personal Injuries and Interim Payments During the Period of Postponement of Assessment and on the Relevance of Remarriage or Prospects of Remarriage in an Action Under Lord Campbell's Act
The common law
“The corollary of the proposition that damages for prospective loss resulting from a single cause of action may be recovered in one action is the proposition that such damages must be recovered in one action once and for all”. (Mayne and McGregor on Damages, 12th Ed. at page 199). “In 1701 in the case of Fitter v. Veal (12 Mod. 543) or Fetter v. Beale (1 Salk. 11) or Ferrer v. Beale (1 Lord Raym. 692) the plaintiff after recovering damages for assault and battery discovered that his injuries were more serious than had been supposed. He sought to bring a fresh action for the fresh damage. It was held, however, that he had but one cause of action which had been extinguished by the judgment in the former case. That principle has never since been doubted. It has been applied daily in countless actions for damages for personal injuries. In each case the judge assesses the damages once and for all, with the knowledge that the plaintiff can get no further damages for all the possible traumatic consequences, such as arthritis or epilepsy which may occur in the years to come.” (per Lord Pearce in Cartledge v. E. Jopling & Sons Ltd. 1963 A.C. 758 at p. 780). Damages are assessed in a single lump sum.
The problem of medical imponderables
In Thurston v. Todd (83 W.N. (Pt. 1.) 335) Mr. Justice Asprey, sitting without a jury, had the unenviable task of assessing the damages to be paid to a young lady who, at the age of sixteen years, received a dislocation of the neck which rendered her almost completely quadriplegic. His Honour’s findings of fact included that it was to be expected that she would require the care of two fully trained nurses, a day nurse and a night nurse, for the rest of her life. His Honour further found that her life span had been shortened. His Honour concluded his judgment with these comments:
“I cannot part with this case without remarking that it is a matter of great regret to me that a tribunal, called upon to make awards of damages in cases such as the present, is not empowered by the law to deal with many aspects of the award of damages on a periodical basis and one which is subject to a right of review in the future. Without such powers, any tribunal, placed as I am in the present case, proceeds to its verdict in the dark, forced to speculate as best it can into the far, unknown future, and compelled, as events may well turn out, either within a brief period or at the end of a long span of yeas, to risk injustice to one party or the other.” (At pages 344-5)
In Krogh and Anor. v. Krogh (Supreme Court - 25th November, 1966 - unreported) Mr Justice Taylor, sitting without a jury, assessed the damages in a case where at the age of three years and nine months a boy received severe brain injuries. At the time of the hearing the plaintiff was eight years and ten months of age. It was clear that the plaintiff’s intellectual capacity was severely impaired and that he would be very restricted in the types of work that there would be able to do. His Honour found also that there was a risk that epilepsy would develop. His Honour stated:
“What the plaintiff’s future will be I do not know and I cannot know. I must assess the damages on the evidence of these witnesses which I accept, but still this leaves a very large element of conjecture in the assessment of his future …. I cannot leave this case without drawing attention to how completely inadequate the present system of awarding damages in a case such as this is. I have to determine the amount now, when it will be at least another seven or eight years before any certain statements can be made about the plaintiff’s mental capacity in the future. What ought to be done in a case such as this is to direct payment now of all the medical and hospital expenses, to provide such sum of money as may be necessary for any care or special teaching that would benefit this plaintiff: for his case to be reviewed by a panel of doctors when he is fourteen or fifteen years of age, and, if no certainty can be arrived at then, weekly maintenance provided for the plaintiff until there can be some certainty to enable the final damages to be calculated.”
In McWilliams v. McWlilliams (87 W. N. (Pt. 1.) 6), Mr Justice Moffitt had to consider whether or not to approve a lump sum settlement of damages in favour of a mongoloid child who as the result of injuries sustained in a motor vehicle accident had become a paraplegic and who, in addition, had sustained grave spinal injuries upon which possible surgical remedy had not been attempted to the date of trial because of the grave mortality risk involved. The child clearly required specialised treatment which she might, or might not receive without charge in an institution. The expectation of life of the child was uncertain. His Honour stated:
“This case demonstrates, if ever a case does, in my view, the completely unsatisfactory state of the compensation laws of this State, which permits the compensation for an injury to be given in the form of a lump sum and nothing else …. It is obvious that the only sensible compensation law to cover such a case would be to provide for some periodic payments, subject to the child being properly looked after in the proper place and proper manner so that all needs were fully met and in the end nobody makes a profit out of the child’s misfortune.” (at page 10).
In all but the simplest of cases in which damages are sought for personal injury, matters of uncertainty exist, at the time of assessment, as to how the plaintiff will be affected in the future by the injuries which he has received. Even where the plaintiff’s medical condition has stabilised the problem remains of assessing the extent to which the plaintiff’s future earnings will be reduced by reason of his continuing bodily disabilities. It cannot be expected of the court that accurate and precise calculation can be made. No one can be certain as to what, in say fifteen years’ time, will be the general state of the economy, let alone what will be the working opportunities in that economy for a partially disabled person. As to all such matters of doubt the court must look into the future as best it can making, once and for all, an assessment of damages which is unlikely precisely to do justice between the parties for the simple reason that it is impossible to be entirely accurate in a prediction as to the relevant future circumstances. Nevertheless, the Commission considers that, with few exceptions, the courts are able to make an assessment of damages which does achieve, substantially, justice between the parties even if this is achieved by what has been described as “rationalised empiricism” (per Windeyer J. in Skeleton v. Collins 39 A.L.J.R. 480 at p.497).
It is where the court is, on the evidence available, forced to speculate on some issue, of fundamental significance, as to the plaintiff’s medical future that the wealth of experience of the Judge cannot afford a reasonable safeguard against an assessment of damages which turns out to be grossly unjust either to the plaintiff or to the defendant. It is with such cases that this working paper is principally concerned.
The advantages of the common law rule
The criticisms that have been directed to the common law rule that damages for bodily injuries are to be assessed, once and for all, in a lump sum should not be permitted to obscure the fact that some real advantages flow from it in the majority of cases. There are advantages to the community as a whole and also advantages to the injured persons.
From the point of view of the community as a whole there is truth in the old maxim that it is in the public interest that litigation be brought to finality. Limits must be placed upon the frequency with which an injured person may have recourse to the courts in order to ensure accuracy in the assessment of damages appropriate to the injuries which he has sustained and the consequences of those injuries. No community, to take an extreme example, could maintain a system of law which enables a person with an injured knee to come back for more damages every time his knee aches on a cold night. The provision, at public expense, of judges, court officials and court facilities is part of the cost of assessing damages. There is a tendency to overlook this. There are many demands which the needs of injured persons properly make upon public resources. There is, for example, room for improvement in the provision of facilities for rehabilitation training. It would not be in the interests of injured persons, generally, for public expenditure upon the provision of judicial machinery to become disproportionate.
The cost of litigation extends far beyond provision by the state of courts and of the other judicial machinery for the determination of litigation. That this cost is high, even under the present system, is illustrated by the last Annual Review of the Government Insurance Office, which asserts that between 15% and 20% of the total paid out in claims has been absorbed in legal costs, despite the fact that 95% of claims are disposed of by negotiation without resorting to a determination by the court of the appropriate damages. If the common law principle of once and for all lump sum assessment of damages were abandoned, and a system involving assessments and reviews from time to time substituted, the cost of litigation (including the cost of compliance with the orders as to payment) would increase. It is true that in virtually all cases in which damages are sought for personal injuries, the cost of litigation is borne by an insurer and not by the wrongdoer personally. Ultimately, however, almost all the burden is borne by the public through the payment of insurance premiums.
There are advantages to the injured person himself in the present system of once and for all lump sum assessment of damages. Both medical and legal experience in this State confirms the therapeutic value of the lump sum award. In the meeting of the Medico Legal Society held on 25th September 1968 a senior counsel who practices extensively in personal injury cases expressed the widely held view in these words:
“The therapeutic value of a lump sum award can hardly be exaggerated. It encourages the recipient to turn his back on his past problems and with the sum that he has in hand to make some constructive approach to the future. If on the other hand his financial position is dependent upon the maintenance of his disability then this is likely to be perpetuated whether it be of a physical or mental character.” The possibility of court applications occurring from time to time for an indefinite future is a very poor climates within which to achieve rehabilitation of an injured person to the maximum extent which the nature of his physical disabilities permits.
A further benefit to the injured person is that the present principles of assessment furnish him with a capital sum which, in many cases, would be sufficient to establish him in some profitable activity. The average injured person, however, is poorly equipped to use a capital sum to its best advantage and, all too often, it is not so used.
The limited scope of this working paper
It is not the purpose of this paper to examine generally the merits and defects of the common law system of once and for all lump sum assessment nor generally to consider alternative schemes such as that recommended in the report (transmitted on 13th December, 1967) of the New Zealand Royal Commission of Inquiry (under the Chairmanship of Mr. Justice Woodhouse). A general review of the law of damages relating to personal injury cases involves questions of considerable complexity and much more work requires to be done before any general solution could be recommended on any solid foundation of adequate research. Nevertheless the Commission considers that it is possible to deal with the problem of assessment raised by cases such as Thurston v. Todd (supra), Krogh and Anor. v. Krogh (supra) and McWilliams v. McWilliams (supra) without disturbing the present law in its application to other cases. The approach adopted in this paper is to consider modification of the present law only in so far as this is necessary to deal with such cases, retaining, even for these cases, so much of the present law as is compatible with justice being done. Meanwhile, work is proceeding on the wider problems.
The South Australian Approach
Legislation has been enacted in South Australia which is designed to deal with the problem being considered in this paper. It empowers the Supreme Court of South Australia to enter a declaratory judgement on the issues of liability, to postpone the assessment of damages until the medical prognosis has become reasonably clear (with a maximum period of postponement except in “special circumstances” of four years) and in the meantime to order appropriate interim payments (including periodic payments). The relevant provisions of this legislation (Act No. 21 of 1967) appear as Appendix No. 1 to this working paper.
Representations to the Commission
Through the Press and otherwise the Commission has invited comment upon the proposal that in appropriate cases the assessment of damages be deferred and interim payments made. Detailed submissions have been received from the major insurance interests and the Commission has had the assistance of observations made by members of the New South Wales Bar Association, representatives of the Incorporated Law Institute and by other interested persons. These submissions and observations have been carefully considered together with the views expressed at the meeting, above referred to, of the Medico-Legal Society.
A brief outline of the representations made by the insurance interests is that they stress:
1. The impact which the introduction of any scheme of periodic payments and reviews of such payments would have upon the costs of litigation and the administrative costs of processing claims;
2. That increases in costs would have to be reflected in increased insurance premiums;
3. That the introduction of such a scheme would add to the gravity of the present problem of insurers in assessing their future liabilities in respect of unfinalised claims and in obtaining appropriate re-insurance;
4. That their experience of Workers’ Compensation claims highlights the therapeutic value of the lump sum award;
5. That whilst the present system may result in gross injustice to the injured person in some cases, these cases are very few, and that where there is real doubt on some medical issue the tendency of courts, particularly where damages are assessed by a jury, is to resolve that issue in favour of the injured person.
Nevertheless, all the insurance interests, with the exception of the Government Insurance Office, considered that a scheme along the lines of the South Australian legislation would be acceptable provided that there were adequate safeguards to ensure that the scheme were confined to exceptional cases of the type previously considered in this paper.
The view expressed other than by insurance interests were generally in favour of such a scheme, although some reservations were apparent in the opinions expressed at the meeting of the Medico-Legal Society, the basis of the principal reservations being:
1. Concern that due regard be paid to the therapeutic value of the lump sum award; and
2. Concern that the courts might be overburdened thus delaying the finalisation of claims in ordinary cases.
Peripheral matters
Representations made to the Commission point to the desirability of it being made clear that the major object of the proposed scheme is not a consideration of reforms directed to any of the following, namely:
1. Any qualification, of general application, of the common law principle that damages be assessed once and for all in a lump sum;
2. The desirability, generally, in actions for damages for bodily injuries, that the issues of liability may be tried separately from the issue of damages, so that the trial on the liability issues may be held while the recollections of witnesses are fresh;
3. The problem that some plaintiffs who obtain a lump sum assessment of damages waste the money they receive;
4. The problem, generally, in actions for bodily injuries of expediting the finalisation of claims - by settlement or otherwise;
5. The problem of providing for injured persons more satisfactory rehabilitation therapy and training;
6. The problem of achieving, generally, in actions for bodily injury a more satisfactory system of reimbursement of hospitals and the medical profession;
7. The problem which exists under the present law, that injured persons may suffer financial hardship between the time of the accident and the time when they receive damages.
The Commission is not, by any means, unconcerned with these matters. Whilst not irrelevant, these issues are, however, peripheral to the present exercise which is concerned with the modification of the law so far as that is necessary to overcome the present unsatisfactory position that the courts are compelled to guess the future on medical issues, of crucial importance to the litigants, in cases where the medical profession itself is unable to offer satisfactory guidance.
Criteria for the application of the special powers of the Supreme Court
The present view of the Commission is that if, generally, the present system for the assessment of damages for personal injuries is to be retained, it is only in exceptional cases that a scheme along the lines of that introduced in South Australia should be available and that any legislation introduced should be specific as to the criteria which must be satisfied before the scheme can be invoked successfully. A provisional drafting of these criteria is as follows:
“(a) the Court is satisfied that the evidence adduced does not enable the Court to determine with reasonable confidence-
(i) whether or not there will be a substantial improvement or deterioration in any physical or mental disability of the plaintiff caused by the wrongful act or omission, or the approximate degree of any such improvement or deterioration, or approximately when any such improvement or deterioration will occur; or
(ii) whether or not the plaintiff will sustain any new physical or mental disability caused by the wrongful act or omission, or approximately the severity of any such new disability, or approximately when any such new disability will be sustained, or approximately the prognosis in respect of any such new disability; or
(iii) whether or not the plaintiff’s life span has been reduced as a result of the wrongful act or omission or approximately the extent of any such reduction; and
(b) the Court is of the opinion that the matter or matters, referred to in paragraph (a) of this section which, on the evidence, the Court is unable to determine with reasonable confidence are, in all the circumstances of the case, of such gravity that there in an exceptional degree of danger that an assessment on the evidence adduced, of damages substantially would fail to do justice between the parties; and
(c) the Court is of the opinion that it is probable that postponing assessment seven years will substantially reduce the danger of an assessment of damages substantially failing to do justice between the parties.”
The provisional drafting provides that an order of the court that the scheme apply be termed a “Postponement of Assessment Declaration.”
Comments upon the criteria proposed
Paragraph (a) limits cases in which a Postponement of Assessment Declaration can be made to those in which there is uncertainty in the medical prognosis. The relevant uncertainty can be as to the prognosis in respect of the existing disability, as to whether a new disability, such as epilepsy, will arise (despite the absence of any present symptom of it), or as to the expectation of the plaintiff’s life.
Paragraph (b) is designed to limit the applicability of the scheme to exceptional cases. It is not sufficient that there is uncertainty in the medical prognosis. In most cases of personal injury there is uncertainty in respect of some aspect of the prognosis. The object of the tentative drafting of paragraph (b) is to indicate that these usual uncertainties are not sufficient to attract the proposed special powers of the court. It is necessary that the uncertainty relates to a matter of such seriousness that, if the court proceeds immediately to an assessment of damages, the risk of gross injustice resulting will be exceptionally high. The usual quadriplegic case and the usual case in which there is a real danger of epilepsy developing satisfy these criteria. The usual broken leg case does not. All the circumstances of the case are relevant. The case of a concert violinist who may have to suffer amputation of part of his left index finger may satisfy the criteria. The case of a right-handed clerk who may have to suffer a like amputation does not.
The period of seven years referred to in draft paragraph (c) is discussed later in this paper.
Supreme Court
The present view of the Commission is that the proposed scheme should be available only in the Supreme Court. Its approach is that if a claim is of such seriousness as to justify the application of the scheme then it is appropriate that the case be tried in the Supreme Court.
Certainty
It does not appear to the Commission that the problem of designing a suitable scheme to remedy the injustice with which this paper is concerned is merely one of conferring upon the Supreme Court powers adequate to make appropriate orders. Litigation in this State is conducted under the adversary system. It is for the parties to the litigation to determine what relief is to be applied for and what orders are to be sought. The function of the court is to determine the relevant issues of fact and law. What these relevant issues are and what declarations or orders are open to be made by the court depend upon the application made. The scheme which the Commission has under consideration recognises, as will hereafter appear, the adversary system. The control of the litigation is not taken away from the parties. It is a corollary to this approach that any satisfactory scheme should be precise as to the principles which the court will apply in determining an application for any declaration or order which may be made pursuant to the scheme. In this regard the scheme under consideration by the Commission differs in approach from the South Australian legislation. The Commission is disposed to the view that so far as the nature of the problems permit the relevant principles which the court is to apply should be stated in any legislation giving effect to the proposed scheme. This applies not only as to whether or not a Postponement of Assessment Declaration is to be made, but also as to what the consequences are to be if such a declaration is made. Each of the parties must make up his own mind as to whether or not he will apply for the declaration.
Interim Payments
The Commission envisages that a Postponement of Assessment Declaration shall be merely a declaration that the scheme shall apply to the action - i.e. that the issues of liability shall be determined, that the assessment of damages shall be postponed in accordance with the provisions of the scheme and that in the meantime the court may order interim payments on account of the damages thereafter to be assessed. This leads to the question of what provisions should be made by the scheme as to interim payments.
The present approach of the Commission is that the court should be empowered, having made a Postponement of Assessment Declaration, to make either an Interim Assessment Declaration or an Interim Relief Declaration.
In cases such as Thurston v. Todd (supra), Krogh and Anor. v. Krogh (supra) and McWilliams v. McWilliams (supra) it would be appropriate for periodic payments to be ordered until such time as it becomes prudent to proceed to an assessment of damages. In such cases an Interim Relief Declaration, dealt with later in this paper, would be appropriate. Provision would be necessary to enable the court, until damages are assessed, to review, as circumstances change, orders which it has made as to payment.
The Commission is disposed, however, to the view that there are cases which call for a different approach. Cases do occur in which it would be prudent to proceed forthwith to assessment of damages were it not for the fact that the medical evidence indicates that there is real risk that the injuries which the plaintiff has sustained will in time result in a major disability of which there is no present symptom. Such cases are illustrated by the following example. A plaintiff has sustained major injuries, including head injuries. The disabilities have stabilised and the case would be ready for assessment of damages were it not that the medical evidence indicates that there is a strong possibility that epilepsy may develop within the next five years. The present view of the Commission is that in such a case it would be appropriate for the court to order payment of a lump sum which takes into account such damage as the plaintiff has suffered apart from the risk that epilepsy will develop. If epilepsy does develop in the course of time the court could then proceed to assess the damages on the basis of this fact instead of a basis of prophecy. It is to deal with cases of this character that an Interim Assessment Declaration, as distinct from an Interim Relief Declaration, is designed.
Interim Assessment Declaration
The principles which the Commission at present considers should be applicable where an Interim Assessment Declaration has been made, appear form the following provisional drafting:
“Where an Interim Assessment Declaration has been made the Court shall order the party liable to pay the damages, when assessed, to pay to the plaintiff such sum as, in the opinion of the Court, is equal to the sum in which damages would be assessed if
(a) the assessment were then made;
(b) the assessment were made on the assumption that in respect of matters of uncertainty referred to in paragraphs (a) and (b) of (the draft section appearing under the sub heading “Criteria for the application of the special powers of the Supreme Court”) it were certain that the outcome would be such as, on the evidence adduced as being a reasonably likely outcome, would entitle the plaintiff to the least damages.”
Comments upon the proposed Interim Assessment Declaration
If the approach of the Commission is accepted, the quantum of the payment ordered pursuant to an Interim Assessment Declaration will be determined by reference to principles of the assessment of damages. It will not be, however, an assessment of the damage which the plaintiff in fact has suffered. It will be an interim payment only. This appears if one considers the case, above referred to, of the potential epileptic. It does not follow in that case that, if epilepsy does not develop, the plaintiff will have received by way of the interim payment an amount appropriate to all the damage which he has sustained. He may well have sustained damage merely from the risk that epilepsy would develop, even though this has not occurred. He may, under medical advice, have restricted his activities and have suffered detriment to his enjoyment of life. He may, in addition, have suffered detriment to his enjoyment of life. He may, in addition, have suffered direct financial loss. For example, the danger that he might experience an epileptic attack may have prevented him engaging in some forms of work.
It follows that even where, in a case in which a lump sum has been paid pursuant to an Interim Assessment Declaration, the feared new disability does not arise, the plaintiff should be entitled to an assessment in due course of his real damages. No doubt there will be cases in which, when the medical position has stabilised, it is apparent that an assessment of the damages would not exceed the interim payment made. As, however, will hereafter appear, the scheme under consideration provides that the damages are not assessed until the court orders that the case proceed to assessment. The plaintiff need not apply for an assessment order. If the defendant obtains such an order, so as to clear its “books” of the claim, the plaintiff can consent to damages being assessed in the same sum as the interim payment.
Property damage
This paper is concerned with the assessment of damages for bodily injury. It frequently happens, however, that the plaintiff seeks to recover also damages for property damage which he has sustained in the accident. The safety of the body and the safety of property are separate interests and, where these separate interests are violated by a single act, separate actions for damages may be brought (Brunsden v. Humprey (1884) 14 Q.B.D. 141). It is often convenient, however, to seek in one action damages in respect of which injured persons seek damages is usually of a relatively minor nature and the Commission is disposed to the view that damages therefore should be recoverable in an action for bodily injury in which a Postponement of Assessment Declaration has been made. The draft scheme makes it clear that the interim payment pursuant to an Interim Assessment Declaration takes into account property damage as well as bodily injury. As will hereafter appear, the scheme also provides that property damage is taken into account in interim payments pursuant to an Interim Relief Declaration. Provision is made for a declaration by the court, in any case in which, at present, section 39 of the Motor Vehicles (Third Party Insurance) Act, 1942 - 1965 would apply upon the obtaining of judgement, as to how much of the interim payment is in respect of the bodily injury.
Interim Relief Declaration
The scheme under consideration provides that where the court makes an Interim Relief Declaration it shall order the party adjudged liable to pay the damages, when assessed, to pay to the plaintiff-
(1) an amount equal to the hospital, medical and like expenses already incurred; and
(2) an amount equal to the plaintiff’s loss, to date, of income.
Credit is given under the scheme, for any payments already made by or on behalf of the wrongdoer - for example, payment of a hospital account by an authorised insurer under the Motor Vehicles (third Party Insurance) Act, 1942 - 1965. A further provision of the scheme is that where an Interim Relief Declaration has been made the wrongdoer shall, until damages are assessed, be liable to pay for any further hospital, medical or like service rendered to the plaintiff and shall make the payments directly to the hospitals etc. concerned.
The difficult question, where an Interim relief declaration has been made, is what monies should be paid to the plaintiff in addition to the payment for him of hospital, medical and like expenses and payment to him of the income already lost.
The plaintiff must be maintained until the damages are assessed.
The present view of the Commission is that it would be inappropriate to apply an arbitrary scale of periodic payments such as that applying to payments under the Workers’ Compensation Act, 1926-1967. The needs of individuals plaintiffs vary greatly. At the same time it is desirable to indicate the principles to be applied in determining the quantum of the payments to be made. It is likely that, if this is not done, the plaintiff’s advisers will be reluctant to apply, in a proper case, for an Interim relief Declaration.
The present approach of the Commission appears from the following provisional drafting:
“(1) Where an Interim Relief Declaration has been made the Court shall order the party liable to pay the damages, when assessed, to pay to the plaintiff such sum or sums, if any, by periodic payments or otherwise, as the Court considers reasonable for the maintenance, until damages are assessed, of the plaintiff and his dependants, if any, and for the relief or mitigation, until damages are assessed, of any physical or mental distress of the plaintiff.
(2) In determining what sum or sums, if any, it shall order, pursuant to subsection one of this section, to be paid the Court shall take into account, in addition to other relevant matters-
(a) the earning capacity, if any, of the plaintiff; and
(b) what would have been the standard of living of the plaintiff and his dependants, if any, if the bodily injury had not been sustained by the plaintiff.”
The present view of the Commission is that these maintenance payments should not, subject to legislation of the Commonwealth, be liable to attachment.
The draft scheme provides that, in addition to all the payments previously mentioned, the court shall order the wrongdoer to pay to the plaintiff an amount equal to the damages which, if assessment of damages were then made, would be assessed in respect of damage to property.
Comments upon the proposed Interim Relief Declaration
In the provisional drafting of the provisions relating to the maintenance of the plaintiff and of his dependants, the Commission has sought to avoid inflexibility. A rigid formula would not be appropriate to all cases. A person without dependants, confined indefinitely to hospital, may need little beyond the payment, which the scheme elsewhere provides, of his hospital and medical expenses. A quadriplegic, living at his home and having dependants, has very different needs. The needs of a plaintiff who is liable to lose his home if he fails to keep up the mortgage repayments may be different from those of a plaintiff whose home is not mortgaged. A plaintiff confined to a wheel chair may have need for a lump sum to cover the cost of substituting a ramp for a set of steps.
Whilst the Commission has sought, in the provisional drafting, to ensure that the powers of the court are flexible, the drafting is intended, nevertheless, to give guidance as to the principles to be applied. What the standard of living would have been, if the plaintiff had not been injured, is to be taken into account. The normal domestic expenses of the high income earner usually are greater than those of the low income earner. A plaintiff should not be placed in the position of having to sell his assets in order to maintain, until he receives damages, the standard of living of his household. The court is to take into account, also, the earning capacity, if any, of the plaintiff. Interim payments are not designed to give incentive to an injured person to refrain from seeking to rehabilitate himself.
Comments upon the proposal as to payment of future hospital, medical and like expenses
The provisional drafting appearing in Appendix No 2 indicates the present approach of the Commission as to provisions which would be appropriate to implement the proposals as to the liability of the wrongdoer, where an Interim Relief Declaration has been made, to pay, until damages are assessed, indebtedness incurred for hospital, medical and like services.
It will be apparent that the provisional drafting is substantially an adoption of provisions of the Workers’ Compensation Act. The Commission is disposed to adopt this course for the following reasons:
(a) the procedure under that Act appears to have worked well in workers’ compensation cases; and
(b) insurers, hospitals, doctors etc. are experienced with the procedure.
The scheme contains provisions as to enforcing payment and as to the determination of any dispute in respect of an account.
Rehabilitation expenses
The Commission is conscious of the desirability that injured persons receive prompt and adequate training, where appropriate, to enable them to take their places in society as fully as the nature of their disabilities permits, including their places as income earners. To some extent the cost of such training, where an Interim Relief Declaration has been made will be met by the proposed provisions in respect of hospital, medical and like expenses. Not all rehabilitation training, however, would come within the scope of those provisions. The scheme under consideration provides that where an Interim Relief Declaration is made the court may approve of any proposed expenditure for rehabilitation purposes and order the wrongdoer to pay therefor in addition to hospital, medical and like expenses.
Apportionment in the case of contributory negligence
The scheme contemplates that before any orders are made pursuant to an Interim Assessment Declaration or an Interim Relief declaration, the liability issues will have been determined. These issues include not only the liability of the defendant to the plaintiff, and, where there are third party proceedings, the third party issues, but also the extent to which the plaintiff’s damages, when assessed, are to be reduced, having regard to any contributory negligence of the plaintiff. The question arises, therefore, as to what effect, if any, a finding of the court that the plaintiff’s damages when assessed are to be reduced by reason of contributory negligence shall have as to the making of interim payment orders pursuant to an Interim Assessment Declaration or to an Interim Relief Declaration.
The present view of the Commission is that the lump sum interim payment made pursuant to an Interim Assessment Declaration should suffer reduction to the same extent as it has been declared that the damages, when assessed, shall be reduced.
The present view, however, of the Commission is that the interim payments (other than in respect of property damage) ordered pursuant to an Interim Relief Declaration should not be subject to reduction because of contributory negligence by the plaintiff. The amounts which the court orders to be paid under an Interim Relief Declaration represent, substantially, what the plaintiff must have to meet his needs until the damages are assessed.
A provision that the interim payments made pursuant to an Interim Relief Declaration are not subject to a reduction for contributory negligence does not imply that the position of the plaintiff will be the same as it would have been if he had not been in part responsible for the accident. The damages, when assessed, will be liable to the reduction. It is merely the interim payments made on account of the damages which will not be so subject.
Problem of workers’ compensation
The complication exists that a plaintiff in whose favour monies are ordered to be paid pursuant to an Interim Assessment Declaration or an Interim Relief Declaration may have received compensation under the Workers’ Compensation Act, 1926-1967. The inter-relationship of rights under that Act and of rights under the scheme under consideration by the Commission requires attention.
Present law as to the interrelationship of workers’ compensation and damages
It is convenient briefly to state the relevant salient features of the interrelationship between the rights under the Workers’ Compensation Act and the right to damages at law where assessment takes place under the present once and for all lump sum system.
The rights of the injured person and the adjustment to be made between workers’ compensation payments and damages are different, where the tort causing the injury is that of the employer (or of someone for whose tort the employer is liable), from what they are where the tort is that of someone for whom the employer is not liable. In this paper a tortfeasor for whose tort the employer is not liable is termed a “third party tortfeasor”.
Where the injured person has obtained workers’ compensation he may recover damages from the employer where the employer has been guilty of a tort which occasioned the injury. Where, however, the injured person obtains judgement against his employer in the action for damages “he shall not be entitled to any compensation under this Act (the Workers’ Compensation Act, 1926-1967) other than compensation paid to him before such judgement” (s.63 (2)). Section 63 (5) provides that “where judgement is obtained against the employer independently of this Act in respect of the injury any payments by way of compensation under this Act in respect of the injury … shall be, to the extent of such payments, a satisfaction of the judgement.”
The right of the injured person, who has received workers’ compensation, to proceed against a third party tortfeasor to recover damages at law is dealt with in section 64 of the Workers’ Compensation Act. Section 64 (1) (a) provides that “a worker may take proceedings both against that person (the third party tortfeasor) to recover damages and against any person liable to pay compensation under this Act for such compensation, but shall not be entitled to retain both damages and compensation. If the worker recovers firstly compensation and secondly such damages he shall be liable to repay to his employer out of such damages the amount of compensation which the employer has paid in respect of the workers’ injury under this Act, and the worker shall not be entitled to any further compensation. If the worker firstly recovers such damages he shall not be entitled to recover compensation under this Act.” Recovery of damages in this provision means more than a mere obtaining of judgement. “Recovery for the purpose of such a provision as this means receipt of monies” (per Lathan, C.J. in Smith v. Commonwealth Oil Refineries Limited 60 C.L.R. 141 at p. 147).
The Workers’ Compensation Act affords to an employer who has paid workers’ compensation rights against the third party tortfeasor. Section 64 (1) (b) provides that “if a worker has recovered compensation under this Act the person by whom the compensation was paid shall be entitled to be indemnified by the person so liable to pay damages as aforesaid (the third party tortfeasor)”. This provision is directed to the adjustment of the burden as between the employer and the third party tortfeasor in the event of the injured person, who has received workers’ compensation, not proceeding against the third party tortfeasor for damages. The provision does not apply to the case where the injured person has recovered damages against the third party tortfeasor (Watson v. Newcastle Corporation 106 C.L.R. 426). What, however, is the position if the employer, who has paid compensation, recovers the amount of his payment from the third party tortfeasor, pursuant to section 64 (1) (b), and thereafter the injured person obtains judgement for damages against the third party tortfeasor? Unless some specific provision were made, the third party tortfeasor would be mulcted twice. Specific provision is made by section 64 (1) (c). It provides that “if the worker subsequently obtains judgement for damages against the person who has paid under such indemnity, such payment under the indemnity shall be, to the extent of the amount of such payment, a satisfaction of the judgement for damages.”
Present law as to the adjustments to be made in respect of workers’ compensation where damages are reduced because of contributory negligence
Section 10 (1) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 sets forth a number of provisos to the rule that where the plaintiff has been guilty of contributory negligence the damages recoverable shall “be reduced to such extent as the Court thinks just and equitable ..
Proviso (c) states that “where any payments made to the claimant by way of compensation take effect pursuant to section 63 (5) of the Workers’ Compensation Act, 1926-1965, as a satisfaction of the judgment obtained by him against his employer, such payments shall be reduced to the same extent as the damages recoverable by him and shall be satisfaction of the judgment to such reduced extent only.” Thus, if the worker obtains from his employer $1,000 workers’ compensation and then obtains judgment against the employer for $3,000, the damages having been reduced by one half in consequences of contributory negligence the judgment for $3,000 would be satisfied as to $500, being one half of $1,000 which the injured person had already received as workers’ compensation.
Proviso (d) states that “where the claimant is liable to repay compensation to his employer pursuant to paragraph (a) of subsection one of section sixty-four of the Workers’ Compensation Act, 1926-1965, the amount of compensation so repayable shall be reduced to the same extent as the damages recoverable by him.” Thus, if the injured person receives $1,000 workers’ compensation from his employer and thereafter recovers $3,000 damages against a third party tortfeasor, the amount of the damages having been reduced by one half because of contributory negligence of the injured person, the injured person would be liable to pay back to the employer out of the damage recovered, not $1,000 but only half of it - that is, $500.
Proviso (e) states that “where the cost of any medical or hospital treatment or ambulance service for which the claimant’s employer incurs liability under section 10 of the Workers’ Compensation Act 1926-1965, remains unpaid at the time the claimant recovers damages the claimant’s liability in respect of such cost shall as between himself and his employer be reduced to the same extent as his damages and huis employer shall notwithstanding the recovery of such damages and the provisions of paragraph (a) of sub-section one of section sixty-four of the Workers’ Compensation Act, 1926-1965, remain liable to pay to him the balance of such cost under section 10 of the said Act.” The operation of this proviso is illustrated by the following example. The injured person obtains payment of $1,000 from his employer as workers’ compensation. Thereafter he recovers $3,000 damages against the third party tortfeasor, the damages having been reduced by one half because of contributory negligence. At the time of the verdict there is unpaid $100 for medical treatment. The employer should have paid this under section 10 of the Workers’ Compensation Act. The damages having been reduced by one half, the plaintiff recovers from the third party tortfeasor in respect of these medical expenses only $50. Were it not for proviso (e), the plaintiff, once he had received payment of damages from the third party tortfeasor, would have no right to recover from the employer any part of the $100 which the employer should have paid. This is because section 64 (1) (a) provides that where the plaintiff has recovered the damages from the third party tortfeasor he “shall not be entitled to any further compensation”. The effect of proviso (e) is that, notwithstanding that he has recovered damages from the third party tortfeasor, the plaintiff can recover from the employer the amount of the medical expenses which the employer has failed to pay reduced by the same proportion as the plaintiff’s damages have been reduced in his action against the third party tortfeasor. Thus, in the example being considered, the employer, notwithstanding the recovery by the plaintiff of damages from the third party tortfeasor, would remain liable to pay to the plaintiff $50, being one half of the $100 which the employer had failed to pay. The end result is the same as it would have been if the employer had not failed to pay the $100.
It is only in respect of medical and like expenses that section 10 of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 makes special provision to cover the case where the employer has failed to pay $100 which became due as weekly compensation under section 9 or section 11 of the Workers’ Compensation Act, the employer, in the event of the injured person recovering damages against the third party tortfeasor, would be relieved from liability to pay any part of that sum.
Section 10 of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 gives rise to a number of problems. It is not, however, the purpose of this paper to consider whether, generally, amendments to the section are desirable. The problem relevant to this paper is the adaption of the provisions of the scheme for interim payments to the existing law, including that section. Nevertheless the Commission considers that in one respect, to which this paper now turns, a general amendment to section 10 may be desirable. This general amendment would facilitate the adapting of the scheme.
Proposed amendment to section 10 of the Law Reform (Miscellaneous Provisions) Act, 1965-1968
Provisos (d) and (e) to section 10 (1) of the Act do, as above indicated, make express provision as to how cases falling within section 64 (1) (a) of the Workers’ Compensation Act are affected by a reduction in the damages recovered by the plaintiff from the third party tortfeasor. None of the provisos, however, is directed to the effect of a reduction of damages upon cases falling within section 64 (1) (b) and section 64 (1) (c) of the Workers’ Compensation Act.
It will be recalled that section 64 (1) (b) is directed to the case where the employer has paid workers’ compensation, but the injured person has not recovered damages against the third party tortfeasor, and that it provides that in such case the employer “shall be entitled to be indemnified by the person so liable to pay damages as aforesaid”. Section 10 of the Law Reform (Miscellaneous Provisions) act, 1965-1968 provides, inter alia, that “where any person suffers damage as a result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage”. Accordingly, an employer will be entitled under section 64 (1) (b) to indemnity from the third party tortfeasor in respect of the payments of workers’ compensation which have been made, notwithstanding any contributory negligence on the part of the person injured. Section 10 provides for a reduction of the damages which the injured person can recover, but it is not directed to any reduction in the extent of the indemnity which the employer is entitled to receive from the third party tortfeasor. Thus, for example, if the employer has paid $1,000 compensation he will be entitled to obtain from the third party tortfeasor the whole of the $1,000 notwithstanding that the injured person has been guilty of such contributory negligence that in an action by him against the third party tortfeasor his damages would be reduced by half. What, however, if the injured person, after the employer has been reimbursed in full his $1,000, recovers damages from the third party tortfeasor? This is covered by section 64 (1) (c). The “payment under the indemnity shall be, to the extent of the amount of such payment, a satisfaction of the judgment or damages”. Thus, in the example given, the judgement which the injured person obtains against the third party tortfeasor the obligation of the injured person would have been to relay to his employer not $1,000 but only $500, being the amount of the workers’ compensation reduced to the same extent (one half) as the plaintiff has suffered reduction in the damages recoverable. The present view of the Commission is that, an incidental provision of the scheme for interim payments should be that a new proviso should be added to section 10 (1) of the Law Reform (Miscellaneous Provisions) Act 1965-1968, to the following effect:
“(f) Where, before the claimant obtains judgment for damages reduced in accordance with this section, the person against whom he obtains the judgment has made payment to the employer of the claimant pursuant to the entitlement to indemnity conferred by section 64 (1) (b) of the Workers’ Compensation Act, 1926-1967, the payment shall, notwithstanding section 64 (1) (c) of that Act be a satisfaction of the judgment to the amount of the payment reduced to the same extent as the damages, and, notwithstanding section 64 (1) (b) of that Act, the employer shall be liable to repay to the person against whom the claimant recovered the judgment the balance of the amount of the payment.” Thus, in the example considered above, the judgment obtained by the injured person against the third party tortfeasor would be satisfied to the extent of $500. The employer would be liable to repay to the tortfeasor the balance, namely $500, of the $1,000 which the third party tortfeasor has paid to the employer pursuant to section 64 (1) (b) of the Workers’ Compensation Act. The ultimate financial position of the injured person, the third party tortfeasor and the employer is thereby made the same as it would have been if the complication had not been introduced that the employer enforced against the third party tortfeasor the right to indemnity under section 64 (1) (b).
The difficulties which arises from the fact that the Law reform (Miscellaneous Provisions) Act, 1965-1968 does not contain any provision modify the effect of the application of section 10 of that Act in cases falling under section 64 (1) (b) and section 64 (1) (c) of the Workers’ Compensation Act are further discussed in Appendix No 3 to this paper.
Interim payment and workers’ compensation - Generally
The present view of the Commission is that it is impracticable to have payments under the Workers’ Compensation Act and payments under an Interim Assessment Declaration, or an Interim Relief Declaration, proceeding concurrently.
The Commission considers that an appropriate course is to provide that an interim payment shall, for the purposes of section 63 and 64 of the Workers’ Compensation Act, have the same effect as damages.
In section 63 of that Act the obtaining of an order for an interim payment will have the same effect as the obtaining of judgment for damages. The plaintiff will not be entitled to workers’ compensation beyond that already received (reduced pursuant to section 10 (1) (c) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, where applicable) will be a satisfaction pro tanto of the interim payment ordered.
In section 64 of the Workers’ Compensation Act the receiving of payment under the order for interim payment will be equivalent to a recovery of damages. Accordingly, the plaintiff (subject to section 10 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968) will not be entitled to workers’ compensation received (reduced pursuant to section 10 (1) (d) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, where applicable).
If the employer has already been recouped by the third party tortfeasor in respect of the workers' compensation payments the order for interim payment will be satisfied to the extent of the payment by the tortfeasor to the employer (reduced in accordance with the proposed new proviso (f) to section 10 (1), where applicable).
The intention of the above approach is not only that workers’ compensation payments shall be terminated (subject to section 19 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968) but also that, so far as practicable, all financial adjustments which, in respect of workers’ compensation, are necessary (as between the injured person, the employer and the third party tortfeasor) shall take place immediately and shall not be deferred until damages are assessed. This raises the question as to what modifications, if any, are required to the interim payments scheme (where the injured person has received workers’ compensation) so as to facilitate the making of the adjustments.
Interim Assessments Declaration and workers’ compensation
The Commission, at this stage of its deliberations, does not consider that any modification is necessary of the provisions of the draft scheme as to the payment to be ordered pursuant to an Interim Assessment Declaration.
Interim Relief Declaration and workers’ compensation
It will be recalled that, unless the plaintiff has received workers’ compensation, the effect of orders for interim payment made pursuant to an Interim Relief Declaration, apart from any order in respect of property damage, is that the plaintiff’s loss of income, to date, is made good; that the expenses which have been incurred for hospital, medical and like expenses are met; and that, until damages are assessed, the plaintiff and his dependants are maintained and his further hospital, medical and like expenses and expenses for rehabilitation training are paid. The present approach of the Commission is that (subject to qualifications which will be discussed below) such modifications should be made to the scheme, in its application in the case where the plaintiff has received workers’ compensation, as would place the plaintiff, after the necessary adjustments have been made pertaining to workers’ compensation, in substantially the same financial position as that in which he would have been had he not received the workers’ compensation.
As has already been indicated, two of the principles upon which the draft scheme is based are, firstly, that an order for interim payment shall terminate rights under the Workers’ Compensation Act, 1926-1967, and, secondly, that the financial adjustments necessary because of the receipt of workers’ compensation shall be finalised at the time of the interim order and shall not be deferred until damages are assessed. There is a third principle. It is that the funds necessary to make, in full, the financial adjustments shall be furnished by the orders for interim payment, other than the orders in respect of maintenance and future expenses), the interim payments in respect of maintenance and future expenses must be applied towards finalising the adjustments as to workers’ compensation. The plaintiff could find himself so placed if the interim payments ordered were those which, as previously indicated, are to be made in cases in which the plaintiff has not received workers’ compensation. A typical example would be:
| Compensation paid under s.10 of the Workers’ Compensation Act | $300 | |
| Order for interim payment in respect of medical expenses | | $300 |
| Compensation received under ss. 9 and 11 of that Act | $1000 | |
| Order for interim payment in respect of loss of income | | $1500 |
| Compensation received under s.16 of that Act | $1200 | |
| Deficiency in interim payments | | $700 |
| | | |
| | $2500 | $2500 |
It is necessary, where the plaintiff has received workers’ compensation, that special provision be made as to the interim payments to be ordered (other than the interim payments in respect of maintenance and future expenses). The scheme under consideration by the Commission does make special provision.
The first step in the special provision made is that the draft scheme provides that where an Interim Relief Declaration has been made the court shall order payment, by the person adjudged liable in damages, of a sum equal to the amount which, pursuant to the Workers’ Compensation Act, will be in satisfaction of the orders for interim payments or which, pursuant to that Act, he will have to repay to the employer. The amount so ordered to be paid will confer no direct benefit upon the plaintiff. The plaintiff, however, will, before the making of orders pursuant to the Interim Relief Declaration, have received the workers’ compensation are to be taken into account.
It is necessary to consider the nature of the workers’ compensation payments. They are made up, other than in respect of damage to property, of one or more of the following:
(a) weekly compensation payments under sections 9 or 11 of the Workers’ Compensation Act;
(b) payment of medical and like expenses under section 10 of that Act;
(c) a lump sum payment under section 16 of that Act (which provides a scale of the lump sums payable in respect of specified injuries, in addition to weekly compensation and medical and like expenses);
(d) a lump sum under section 15 of that Act (in redemption of the liability of the employer to pay weekly compensation).
Of the payments above analysed which go to make up the total of the workers’ compensation which a plaintiff may have received before the making of an Interim Relief Declaration, payments under section 9, section 11 or section 15 are, viewed broadly, directed to compensation in respect of the loss of earnings which the plaintiff has suffered (and, in the case of section 15, such loss for the future).
If the plaintiff had not received workers’ compensation the order for interim payment would have included payment to him of the amount of his loss, to date, of earnings. The approach of the Commission, where the plaintiff has received workers’ compensation, is that in so far as the total of any payments under section 9, 11 and 15 is less than the actual loss of earnings to the date of the making of the orders pursuant to the Interim Relief Declaration, the person adjudged liable to pay to the plaintiff damages, when assessed, should be ordered to pay to him the amount of the deficiency (in addition to the payment above referred to from which the plaintiff derives no direct benefit).
In most cases the plaintiff will have had his medical and like expenses paid for him under section 10 of the Workers’ Compensation Act. The usual result, therefore, of the Commission’s proposals, as stated to this point, would be that, the plaintiff’s medical and like expenses, to date, would have been paid and the person adjudged liable would be ordered, pursuant to the Interim Relief Declaration, to make such payment as would finally adjust the position as to workers’ compensation and also such amount as would be necessary to make up the plaintiff’s loss of earnings, to the date of the order, after taking into consideration so much of the workers’ compensation already paid as is directed towards compensation for loss of earnings. The plaintiff, if the proposals of the Commission were to stop at this point, might well be better off until damages are assessed than if he had not received workers’ compensation. He would retain any monies paid pursuant to section 16 of that Act. He would retain also any payment received under section 15 of that Act, save to the extent that the payment under section 15 were taken into account in determining what amount, if any, would be paid under the interim order in respect of actual loss of earnings. The present view of the Commission is that these further benefits should not be subject to repayment and should not be taken into account in reduction of any amount which the person adjudged liable would otherwise be ordered to pat pursuant to the Interim Relief Declaration. The plaintiff would not, when damages are assessed, be in a better financial position than an injured person who has not received workers’ compensation payments. He would end up in the same position. He merely would have received some payments sooner. This is an advantage which a person entitled to workers’ compensation already enjoys where damages are assessed under the present system. The Commission does not consider that it is inappropriate for this advantage to be retained under the interim payments scheme.
A matter which complicates the approach of the Commission is that the employer may not have paid, in full, the medical and like expenses which the plaintiff has incurred. Further, where damages are reduced because of contributory negligence, there is an exception to the general rule that the receipt of damages disentitles the plaintiff to any further workers’ compensation. Pursuant to section 10 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, the employer will, in some circumstances, remain liable to a reduced extent, in respect of medical and like expenses which he should have paid under section 10 of the Workers’ Compensation Act. These complications must be taken into account.
This paper now proceeds to a consideration of the problem of devising a formula which would give effect to the intentions of the Commission. For the sake of clarity, separate consideration will be given to a formula appropriate in each, respectively, of the following situations, namely -
(a) the party adjudged liable to pay the damages, when assessed, is the person who paid the workers’ compensation;
(b) the person adjudged liable to pay the damages, when assessed, is a third party tortfeasor;
(c) the party adjudged liable to pay the damages, when assessed, is a third party tortfeasor who has already fully indemnified the person who has paid the workers’ compensation.
For each situation the formula considered is as to what the court should order the wrongdoer to pay pursuant to an Interim Relief Declaration in addition to payments for maintenance, for future medical and like attention and rehabilitation training and for property damage.
This paper will then consider a composite formula intended to cover all combinations of circumstances.
Formula for Interim payments pursuant to an Interim Relief Declaration where workers’ compensation has been paid by the party adjudged liable
The following formula would seem to be appropriate.
“X (1) The Court shall order the party adjudged liable to pay the damages, when assessed, to pay to the plaintiff a sum equal to the sum which would be the extent to which, if the Interim Relief Declaration had not been made and the plaintiff obtained forthwith judgment for damages exceeding the total of the payments made under the Workers’ Compensation Act, 1926-1967, the judgment for damages would be satisfied, pursuant to section 63(5) of that Act (as affected, where applicable, by section 10 (1) (c) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968), by the payments made under the Workers’ Compensation Act, 1926-1967.
(2) Where the total of any payments made under section 9, 19, 11, 15 or 17C of the Workers’ Compensation Act, 1926-1967, is less than the total of medical expenses (as defined in section of this Act) and the plaintiff’s loss of earnings to the time of the making of the order, the Court shall order the party adjudged liable to pay the damages, when assessed to pay to the plaintiff (in addition to any sum ordered to be paid pursuant to subsection one of this section) a sum equal to the difference between those totals.”
It will be recalled that section 9 and 11 of the Workers’ Compensation Act are concerned with weekly compensation for loss of earning capacity. Section 15 is concerned with a lump sum redemption of liability to pay weekly compensation. Section 10 is concerned with payment of hospital, medical and like expenses. Section 17C applies sections 9, 10, 11 and 15 to bush fire fighters.
It may be helpful to give some examples of how the formula would work out in practice:
Example 1. The plaintiff has received $2,000 in workers’ compensation payments made up as to $1,500 by payments under section 9 and 11 and as to $500 by payments under section 10. The actual wage loss of the plaintiff is $2,250. On the liability issues the court declares, inter alia, that the damages, when assessed, shall be reduced by half, pursuant to section 10 of the Law Reform (Miscellaneous Provisions) Act, 1965-1968. The court then proceeds to make a Postponement of Assessment Declaration and an Interim Relief Declaration. The orders for payment which the court would then make pursuant to the Interim Relief Declaration are as follows:
Section X (1): $1,000 (half of $2,000).
Section X (2) : $750 ($2,000 workers’ compensation received under section 9, 10 and 11 of the Workers’ Compensation Act is less than $2,750 which is the total of medical expenses, $500, and actual loss of wages $2,250. The difference between the totals is $750).
The plaintiff would end up with $750 in his pocket from the interim orders (as the $1,000 automatically would be offset as a satisfaction of the order for interim payment). However, he has already received $2,000 workers’ compensation payments. The total in his pocket, therefore, would be $2,750. $2,750 is the same sum as he would have received under the interim orders which would have been made if he had not received any workers’ compensation. In that event he would have received $2,750 made up of the $500 for medical expenses and the $2,250 being his actual wage loss.
Example 2. The facts are as in Example 1 save that the employer has paid only $300 of the $500 which he should have paid under section 10 of the Workers’ Compensation Act. The interim payments which would be ordered are:
Section X (1): $900 (one half of $1,800 workers’ compensation in fact paid).
Section X (2): $950 ($1,800 workers’ compensation received under sections 9, 10 and 11 of the Workers’ Compensation Act is less than $2,750 being the total of medical expenses $500, and actual loss of wages $2,250. The difference between the totals is $950).
The plaintiff would receive in this example $200 more under Section X (2) than he would received in Example 1. However, he has outstanding an indebtedness for $200 being the amount of the underpayment by the defendant of medical expenses pursuant to section 10 of the workers’ Compensation Act.
Example 3. The facts are the same as in Example 1, save that the plaintiff has received an additional $4,000 workers’ compensation (making a total of $6,000 in all). This additional $4,000 was made up of $1,000 (section 16) and $3,000 (section 15 redemption). The interim payments which the court would order are:
Section X (1): $3,000 (one half of $6,000).
Section X (2): $Nil. ($5,000 being the total workers’ compensation under section 9, 10, 11 and 15 of the Workers’ Compensation Act is more than $2,750 which is the total of the medical expenses and actual loss of wages).
In this example the plaintiff has already received in workers’ compensation payments, full payment of his medical expenses (section 10) and, in addition, total payments under section 9 and 11 and 15 which exceed his actual wage loss. Accordingly he would get no interim payment under Section X (2).
It will be recalled that the scheme under consideration by the Commission involves that when damages are assessed, the damages are satisfied to the extent of all payments which have been made pursuant to order for interim payment. The ultimate financial position will be the same, when damages are assessed, irrespective of what interim payments have been ordered.
Formula for interim payments pursuant to an Interim Relief Declaration where workers’ compensation has been paid but the person adjudged liable is a third party tortfeasor
The following formula would seem to be appropriate:
“Y (1) The Court shall order the party adjudged liable to pay the damages, when assessed, to pay to the plaintiff a sum equal to the sum which, if the Interim Relief Declaration had not been made and the plaintiff recovered forthwith damages exceeding the total of payments made under the Workers’ Compensation Act, 1926-1967, the plaintiff would be liable, pursuant to section 64 (1) (a) of that Act (as affected, where applicable, by section 10 (1) (d) of the Law Reform (Miscellaneous Provisions)Act, 1965-1968), to repay to the person who made the payments under the workers’ Compensation Act, 1926-1967.
(2) Where the total of payments made under sections 9, 10, 11, 15 or 17C of the Workers’ Compensation Act, 1926-1967 and of any payment which, pursuant to section 10 (1) (e) of the Law Reform (Miscellaneous Provisions)Act, 1965-1968, the person who paid the workers’ compensation shall remain liable to make to the plaintiff is less than the total of the medical expenses (as defined in section of this Act) and of the plaintiff’s loss of earnings to the time of the making of the order, the court shall order the party adjudged liable to pay the damages, when assessed, to pay to the plaintiff (in addition to any sum ordered to be paid pursuant to subsection one of this section) a sum equal to the difference between those totals.”
The operation of draft section Y may be illustrated by the following example which may be contrasted with Example 2 in the operation of draft section X. The example is that the plaintiff has received $1,800 workers’ compensation made up of $1,800 workers’ compensation made up of $1,500 under sections 9 and 11 and 4300 under section 10. The employer has failed to pay an additional $200 which was due under section 10 (for medical and like expenses). The actual wage loss is $2,250. The court declares that the damages, when assessed, shall be reduced by one half. Payments ordered pursuant to section Y would be as follows:
Section Y (2) : $850 (the total of $1,800 workers’ compensation received under section 9, 10 and 11 and of $100 which the employer remains liable to pay under section 10 (1) (e) of the Law Reform Act is less than the total of the medical expenses, $500, and the actual loss of wages $2,250. The difference between the two totals is $850).
Comparing this example and Example 2 of the operation of draft Section X it will be observed that the plaintiff would receive $100 less under the interim orders. However, his employer would remain liable, under section 10 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 to pay $100 to him (one half of the unpaid medical expenses). He therefore would end up in the same financial position.
Formula for interim payments pursuant to an Interim Relief Declaration where the third party tortfeasor adjudged liable has fully indemnified the person who paid workers’ compensation
The following formula would seem to be appropriate:
“Z (1) The Court shall order the party liable to pay the damages, when assessed, to pay to the plaintiff a sum equal to the sum which would be equal to the extent to which, if the Interim Relief Declaration had not been made and the plaintiff obtained forthwith judgment for damages exceeding the total of the payments made under the Workers’ Compensation Act, 1926-1967, the judgment for damages would be satisfied, pursuant to section 64 (1) (c) of that Act (as affected, where applicable, by section 10 (1) (f) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968), by the payment made pursuant to section 64 (1) (b) of the Workers’ Compensation Act 1926-1967.
(2) Where the total of payments made under sections 9, 10, 11, 15 or 17C of the Workers’ Compensation Act, 1926-1967 and of any payment which, pursuant to section 10 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, the person who paid the workers' compensation shall remain liable to make to the plaintiff is less than the total of the medical expenses (as defined in section of this Act) and of the plaintiff’s loss of earnings to the time of the making of the order, the court shall order the party adjudged liable to pay the damages when assessed, to pay to the plaintiff (in addition to any sum ordered to be paid pursuant to subsection one of this section) a sum equal to the difference between those totals.”
The reference to section 10 (1) (f) of the Law Reform (Miscellaneous Provisions) Act is to the new proviso, previously discussed in this paper, which the Commission, at the present stage of its deliberations, considers should be added to section 10 (1) of that Act.
Composite formula for interim payments pursuant to an Interim Relief Declaration where the plaintiff has received workers’ compensation
The formulae already considered can be combined into a single formula. The following formula would seem appropriate.
“(1) The Court shall order the party adjudged liable to pay the damages, when assessed, to pay to the plaintiff a sum which, if the Interim Order had not been made and the plaintiff obtained forthwith judgment for damages exceeding the total of the payments made under the Workers’ Compensation Act, 1926-1967 and forthwith recovered those damages, would be equal to the total of:
(a) a sum equal to the sum, if any, which would be the extent to which the judgment for damages would be satisfied, pursuant to section 63 (5) of that Act (as affected where applicable, by section 10 (1) (c) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968), by the payments made under the Workers’ Compensation Act, 1926-1967; and
(b) a sum equal to the sum, if any, which the plaintiff would be liable, pursuant to section 64 (1) (a) of the Workers’ Compensation Act, 1926-1967, (as affected, when applicable by section 10 (1) (d) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968), to repay to the person who made the payment under the Workers’ Compensation Act, 1926-1967; and
(c) a sum equal to the sum, if any, which would be the extent to which the judgment for damages would be satisfied, pursuant to section 64 (1) (c) of the Workers’ Compensation Act, 1926-1967 (as affected, where applicable, by section 10 (1) (f) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968), by any payments made pursuant to section 64 (1) (b) of the Workers’ Compensation Act, 1926-1967.
(2) Where the total of any payments made under sections 9, 10, 11, 15 or 17C of the Workers’ Compensation Act, 1926-1967 and of any payments which, pursuant to section 10 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, the person who paid the workers’ compensation shall remain liable to make to the plaintiff is less than the total of the medical expenses (as defined in section of this Act) and of the plaintiff’s loss of earnings to the time of the making of the order, the Court shall order the party adjudged liable to pay the damages, when assessed, to pay to the plaintiff (in addition to any sum ordered to be paid pursuant to subsection one of this section) a sum equals to the difference between the totals.”
In addition, the party adjudged liable in damages would be obliged, as in cases in which the plaintiff has not received workers’ compensation, to make payments for property damage (reduced in accordance with section 10 (1) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, where applicable) and to make payments also for maintenance and for future medical and like attention and rehabilitation training.
Comments upon the composite formula
An advantage of such a composite formula is that it covers a case which does not entirely fall within one of the three classes previously considered. For example, it covers the case where an action for damages is against a third party tortfeasor who has partly indemnified the employer in respect of the workers’ compensation payments but has not done so fully.
A further advantage of the composite formula is that it does not pre-suppose a choice between two possible constructions of section 10 (1) (e) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968. In the analysis of that section made to this point in this paper, it has been assumed that section 10 (1) (e) applies only where the action by the plaintiff is against a third party tortfeasor. That this is so appears to be indicated by the specific reference to section 64 (1) (a) of the Workers’ Compensation Act, 1926-1967, and the use of the expression “the recovery of damages” which is apt in respect of section 63 of the Workers’ Compensation Act in which the crucial matter is not the recovery of damages but the obtaining of judgment for damages. It is, however, a fairly arguable construction of section 10 (1) (e) that, despite these indications, it extends to a case where the action for damages is against the person who has paid the workers’ compensation. Whatever be the correct construction the composite formula would be appropriate.
Plaintiff’s right to discontinue
Where a plaintiff obtains in the Supreme Court a verdict for damages, then, as the law now stands, he cannot be complied to have judgment entered nor can the defendant, except possibly by leave of the court, enter judgment pursuant to the verdict. (Robinson v Peat 76 W. N. 594; cf. Buckmaster v. Metropolitan Portland Cement Ltd. 77 W. N. 102 and Leal v. Pymble Golf Club Ltd. 80 W. N. 184).This enables a plaintiff who has received workers’ compensation to repent his decision to seek damages and to continue to receive the benefit of workers’ compensation. As previously indicated, the present approach of the Commission involves that the coming into operation of an order for an interim payment pursuant to an Interim Assessment Declaration or an Interim Relief Declaration would have the same effect as entry of judgment for damages. The present view of the Commission, accordingly, is that such as interim order should not take effect until the expiration of say fourteen days after the making of it, within which time the plaintiff would be at liberty to discontinue the action under penalty as to costs. The Commission does not consider that the plaintiff should have an unlimited time within which to make up his mind as to whether the attractions of damages outweigh those of workers’ compensation.
Variation of orders made pursuant to an Interim Relief Declaration
This paper now leaves the problems raised by workers’ compensation and proceeds with general matters.
The needs of the plaintiff, and other relevant circumstances, are likely to change between the time when interim payment orders are made pursuant to an Interim Relief Declaration and the time when damages are assessed. The scheme under consideration by the Commission empowers the court, on the application of a party, to make further orders in respect of maintenance or rehabilitation training and to discharge or vary orders in respect of maintenance or rehabilitation training. Safeguards against a multiplicity of applications seem desirable. These are discussed later in this paper.
Order that damages be assessed
The draft scheme provides that where a Postponement of Assessment Declaration has been made, the assessment of damages shall be postponed until the court orders that assessment take place. There are three criteria, stated in the draft scheme, for the making of an order that damages be assessed. These criteria are:
(1) That seven years have elapsed since the Postponement of Assessment Declaration came into operation; or for a period exceeding a further twelve months would not be just between the parties; or
(2) That postponement of the assessment of damages for a period exceeding a further twelve months would not be just between the parties; or
(3) That there no longer exists exceptionally grave danger that an assessment of damages substantially would fail to do justice between the parties.
Observations on proposed criteria for an order that damages be assessed
The period of seven years referred to in the first of the proposed criteria has been selected (subject to further consideration) in the light of experience as to the medical evidence frequently encountered in cases in which it is envisaged that, if the Commission’s recommendations are accepted, would be cases in which a Postponement of Assessment Declaration is likely to be made - if sought. If a plaintiff, for example, is going to become epileptic he usually will show symptoms of epilepsy within the seven year period. If a quadriplegic survives seven years without a medical crisis occurring, then this, in the experience of the Commission as to usual medical evidence, is of great assistance in prognosis. Under the draft scheme moreover, the period of seven years, which the Commission has selected, commences not from the date of the accident, but from the time when the Postponement of Assessment Declaration comes into operation. No doubt not all the circumstances can be envisaged. The commission considers however, that the assessment of damages should not be postponed indefinitely. It is in the public interest that litigation be brought to finality.
The South Australian legislation provides a time limit (subject to “special circumstances”) of four years. The present view of the Commission is that a four year time limit is too short to enable, in a high proportion of cases, the medical future to unfold with reasonable certainty.
The seven year time limit specified in the draft scheme is not an automatic limit. It is not proposed that the court is to proceed to assessment of damages of its own motion. One of the parties will have to apply for an order that the damages be assessed. The court, therefore, will not be placed in the position of being forced to proceed to an assessment of damages where it would be in the interests of all parties that the assessment be further postponed.
The second criterion is designed to minimise the possibility of the scheme under consideration by the Commission doing injustice to the party liable to pay the damages, when assessed. The need for a criteria such as that proposed is illustrated by the possibility that it may become apparent, in case in which interim payments are being made pursuant to an Interim Relief Declaration, that unless the interim payments are terminated by a fairly prompt assessment of damages, the damages, when eventually assessed, will be less than the total of the interim payments. Such a case, in view of the provisions of section 10 of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, is not a remote possibility.
The third criterion is directed to the case where the original basis for the making of the Postponement of Assessment Declaration has ceased to exist.
Assessment of damages
The scheme under consideration by the Commission provides that the court, when assessing the damages, determines what amounts have already been paid by the wrongdoer pursuant to the Interim Assessment Declaration or the Interim Relief Declaration and that the amount so paid shall be in satisfaction pro tanto of the damages as assessed. It is, obviously, unlikely that the damages assessed will be less than any amount paid under an Interim Assessment Declaration. It is also unlikely that the damages, as assessed, will be less than payments made under the Interim Relief Declaration - although this could occur, particularly where the defendant has been tardy in applying for an order that damages be assessed. The Commission, however, is not disposed to recommend that the plaintiff should be liable to refund to the defendant any monies paid pursuant to either an Interim Assessment Declaration or an Interim Relief Declaration.
The problems which arise where the plaintiff dies before the assessment of damages are discussed later in this paper.
Extent of recognition of a right of the plaintiff to select his own remedy
The Commission is not disposed to the view that a plaintiff who has brought an action for damages for personal injuries should have an absolute right to have, against the wishes of the defendant, damages assessed under the present once and for all, lump sum system. The scales of justice should not be overlooked that an immediate assessment of damages in the case, say, of a quadriplegic, may do gross injustice to the defendant. The Commission considers, therefore, that the court should have power to make a Postponement of Assessment Declaration, on the application of the defendant, even though this is against the will of the plaintiff. Likewise, where a Postponement of Assessment Declaration has been made, the court should not, in the present view of the Commission, be bound to accede to an application by the plaintiff for an order that the damages be assessed. However, the Commission does not favour any limitation, upon the right of the plaintiff to select the form of relief, which is not necessary to prevent injustice to the defendant. Accordingly, whilst the Commission is disposed to the view that the scheme should provide that a Postponement of Assessment Declaration can be made against the will of the plaintiff, it is presently of the view that, where such a Declaration has been made, the plaintiff should be entitled, as of right, to an Interim Assessment Declaration in preference to an Interim Relief Declaration. This right to select an Interim Assessment Declaration would not work injustice to the defendant. If the plaintiff prefers to obtain a lump sum payment, effect should be given to that preference. The Commission is not unmindful of the therapeutic value, previously discussed, of a lump sum.
On the other hand the Commission is not disposed to consider that the plaintiff should have the right to select an Interim Relief Declaration in preference to an Interim Assessment Declaration. The Commission’s present view is that unless the plaintiff has selected an Interim Assessment Declaration it should lie in the discretion of the court as to which is the appropriate declaration. It must be recognised that the ultimate cost of the litigation to the defendant (including cost of the administrative burdens) is likely to be significantly greater where an Interim Relief Declaration is made than where an Interim Assessment Declaration is made. This would be a proper matter for the court to take into account in determining whether to make an Interim Relief Declaration. The Commission, moreover, is mindful of the fact that there may be cases in which it is clear that it would be unwise on therapeutic grounds for the plaintiff to receive any encouragement, by receipt of periodic maintenance, to nurture his complaints. If a plaintiff, for example, has clearly failed to make any effort to rehabilitate himself and is suffering from “litigation neurosis”, the court may well consider that the making of an Interim Relief Declaration rather than an Interim Assessment Declaration would be ill-advised. The Commission inclines to the view that the discretion of the court, where the plaintiff has not applied for an Interim Assessment Declaration, as to whether to make an Interim Relief Declaration should not be fettered. The Commission considers that the exercise of this discretion is one best determined by the wealth of experience of the court and not one as to which it would be prudent for an attempt to be made, in legislation, to specify what factors would be relevant for consideration by the court. The factors are legion.
Infants and incapable persons
In this paper “infant” means a person who is below the age of majority for the purpose of court proceedings.
The Commission considers that a plaintiff who is an infant or who is an incapable should not be entitled as of right to an Interim Assessment Declaration in preference to an Interim Relief Declaration. The draft scheme requires that the approval of the court be obtained.
Declarations and orders by consent
The Commission has given consideration as to what declaration and orders, if any, the parties should be entitled to have made by consent and without the adducting of evidence in support of the application. The present view of the Commission is that the parties should be entitled at any stage of the proceedings to have made by consent any such declaration or order as could be made, under the scheme under consideration, if the application therefor were supported by appropriate evidence. The approach of the Commission is that no costs should be incurred unnecessarily. The draft scheme will enable the parties to obtain, by consent, declarations and orders even before the determination of the liability issues. Where any declaration or order is made before determination of the liability issues, it will be subject to the plaintiff’s succeeding in establishing the liability of one or more of the defendants to pay the damages, when assessed.
The Commission does not consider that its proposals as to declarations and orders by consent will lead to a Postponement of Assessment Declaration being made in inappropriate cases. The real defendant, in virtually all cases will be an experienced insurer who will not agree lightly to forego the advantages conferred by the once and for all lump sum system of assessment.
The consent provisions above referred to should not, in the present view of the Commission, apply where the plaintiff is an infant or an incapable person. The draft scheme requires that in such cases the approval of the court to the consent declaration or order proposed, is necessary.
The course of the first hearing
The scheme, as at present envisaged by the Commission, involves that unless, before the proceedings come on for hearing a Postponement of Assessment Declaration has been made, the plaintiff will proceed to the hearing not knowing whether or not the court will be prepared to make the declaration. The plaintiff will therefore need to be ready to adduce all the evidence required for an immediate assessment of damages on a lump sum, once and for all basis. The scheme contemplates that when the evidence, including the evidence as to damages, has been closed the court determines the liability issues (unless the plaintiff has already obtained interlocutory judgment), then determines the application for a Postponement of Assessment Declaration (unless the declaration has already been made) and, if it refuses that application, then proceeds forthwith to an assessment of the damages. If the court grants the application for a Postponement of Assessment Declaration (or if the declaration was made before the hearing) the court then proceeds to make either an Interim Assessment or an Interim Relief Declaration (unless such a declaration was made before the hearing) and to make interim orders for payment pursuant thereto.
The scheme provides that the court may receive such further evidence as may be relevant to the determination of whether the appropriate declaration is an Interim Assessment Declaration or an Interim Relief Declaration and to the determination of what interim orders for payment should be made.
The liability issues
As previously indicated, the scheme envisages that the determination of the liability issues shall involve the determination by declaratory judgment of all issue as to liability which normally would be determined at a trial in which damages are to be assessed on the once and for all basis. These issues include the extent, if any, by which any damages, when assessed, shall be reduced pursuant to section 10 of the Law Reform (Miscellaneous Provisions) Act 1965-1968 and, also, any third-party issues.
The consequences, in respect of interim payments, of the making of a declaration that damages, when assessed, shall be reduced under section 10 of the Law Reform (Miscellaneous Provisions) Act, 1965-1968, have been dealt with previously in this paper. The position, under the draft scheme, as to liability declared in respect of a third party is that the third party is to contribute, in respect of any interim payments, to the same extent as he will be obliged to contribute to the payment of damages, when assessed.
Respective functions of the Judge and the jury
In most cases in which damages are sought for personal injuries, other than injuries sustained in a motor vehicle accident, the trial is had before a Judge sitting with a jury. The Commission has considered the question of whether it is practicable to retain trial by jury in cases in which a Postponement of Assessment Declaration has been made or is being sought.
The present view of the Commission is that trial by jury can be retained in cases in which a Postponement of Assessment Declaration has been made, or is being sought, but that specific provisions are desirable to specify the respective functions of the Judge and of the jury. The Commission is disposed to the view that the role of the jury should be limited to the determination of the liability issues and the assessment of damages in cases in which after the determination of the liability issues, the Judge refuses to make a Postponement of Assessment Declaration. The draft scheme provides that the grant or refusal of that declaration the jury is to be discharged and thereafter all matters are to be determined by the Judge sitting without a jury - including the assessment of damages in due course. It will become apparent from matters discussed later in this paper that the eventual assessment of damages, in cases where interim payments have been made, will involve features not presented in an assessment of damages in ordinary cases and the present view of the Commission is that the assessment would not be one suitable to be made by a jury.
Under the draft scheme, the course of the hearing in the case where liability has not been admitted and no declaration has been made before the hearing is as follows. The jury is empanelled to determine all issues. The evidence is adduced in the ordinary way on all issues - including damages. Upon the close of the evidence counsel address on the liability issues only. The Judge directs the jury only upon those issues and charges them to determine those issues. While the jury are considering their verdict on the liability issues the Judge hears the application for a Postponement of Assessment Declaration but does not formally give his ruling. When the jury returns and gives its verdict on the liability issues the Judge formally gives his ruling on the application for the Declaration. If he grants the application, he discharges the jury and continues with the hearing. If the Judge refuses the application counsel address on the issue of damages, the jury are directed by the Judge on those issues in the ordinary way and the verdict of the jury in taken.
The comment could be made that it is unreasonable to require that the evidence as to damages be adduced before the jury has determined the issues as to liability. The Commission does not consider that this would be a waste of the jury’s time. The evidence as to damages is often of considerable assistance to a tribunal of fact in determining the veracity of the plaintiff.
Where a Postponement of Assessment Declaration been made before the hearing the jury is empanelled to determine only the issues of liability. In this event the jury is deprived of the assistance of hearing the evidence as to damages. It is, however, only by consent that a Postponement of Assessment Declaration can, under the draft scheme, be made before the hearing. If a party considers that it would be in his interests for the jury to hear the evidence as to damages, then no doubt he will take this into consideration in deciding whether or not to consent to the declaration being made before the hearing.
Where liability has been admitted before the hearing but no declaration has been made the jury is empanelled only to assess the damages. If, at the close of evidence the Judge makes a Postponement of Assessment Declaration, the jury is not required to give any verdict and is discharged. However, the percentage of accident claims which come on for hearing in the Supreme Court and in which this combination of circumstances will occur will be a very small percentage of the total of accident claims.
Safeguards against an excessive number of applications
The scheme under consideration empowers the court to make at this time of the Interim Assessment Declaration or the Interim Relief Declaration, and at any time thereafter, an order specifying a period within which, unless the plaintiff has died or the parties consent, no application for an order that damages be assessed may be made without the leave of the court. The draft scheme also empowers the court, at the time of ordering any interim payment under an Interim Relief Declaration and at any time thereafter, to make an order specifying a period within which no application may be made, without the leave of the court, or the consent of the parties, for variation of the interim payment order or for the making of a further order for interim payment.
Prior evidence
The scheme under consideration envisages that the Judge who made the Postponement of Assessment Declaration will not necessarily be the presiding Judge in respect of subsequent applications or the assessment of damages. Any Judge of the court may preside. The Commission is disposed to the view that, subject to relevance, all prior testimony in the proceedings should be evidence in the determination of any application and in the assessment of damages. The draft scheme makes provision enabling a party to require the attendance for cross-examination of witness whose earlier testimony is to be relied upon. Provisions is made also to enable the earlier testimony to be relied upon, despite the non-attendance of the witness, in cases where the witness is dead or it is not reasonably practicable for him to attend because of bodily infirmity or other reasonable cause.
Issue estoppel
The Commission has given consideration to the question of whether the making of a Postponement of Assessment Declaration, an Interim Assessment Declaration, or an Interim Relief Declaration, or any orders in respect of interim payments, or an order that damages be assessed should give rise to any issue estoppel. The Commission is disposed to the view that the scheme should provide that no issue estoppel, in regard to damages, shall arise in such cases. The basis for making the declarations and orders (other than an order that damages be assessed) is that the medical position is so uncertain that it would be unjust to proceed, at the time of the making of them, to an assessment of damages. The declarations and orders (including an order that damages be assessed). are not designed to be a final determination of the rights of the parties. Moreover, as will hereinafter appear, the Commission is disposed to the view that it is desirable that the right of appeal from the declarations and orders above referred to be limited. The foregoing matters lead to the view that it is undesirable that any issue estoppel should be permitted to arise in regard to damages. The draft scheme implements this view.
Restrictions on appeal
In designing the scheme discussed in this paper the Commission has endeavoured not at any time to lose sight of the fact that, in the relatively few cases to which the scheme would be applied, some of the advantages of the present system of assessment of damages would be lost. The costs incurred would be greater, and the finalising of the plaintiff’s claim would be delayed. The Commission considers that care should be taken to ensure that, so far as it is consistent with the fundamental objectives of the scheme, the costs and the number of applications to the court are kept at a minimum. In the present view of the Commission this approach leads to the conclusion that there should be no unrestricted right of appeal other than from the declarations made on the liability issues and the assessment, when made, of damages. The declarations and orders made by the court other than those just mentioned are of an interim character. They do not finally determine the rights of the parties. Any error made will not either increase or decrease the total amount which the plaintiff will eventually receive. The Commission is disposed to the view that the best course would be to provide that from declarations and orders (other than declarations as to the liability issues and the assessment, when made, of damages) an appeal shall not lie to the Court of Appeal except by the leave of that court. Such a provision would enable the appellate courts to rule on matters of principle affecting the general operation of the scheme, whilst inhibiting appeals in other cases.
Appeals to the High Court
The scheme under consideration provides that the determination of the court on the liability issues is a final declaratory judgment. It is not, however, within the province of the Parliament of New South Wales to alter the meaning of the word “interlocutory” where used in section 35 (1) (a) of the Judiciary Act 1903-1966 (Commonwealth). The possibility does exist that it will be held that the declaratory judgment on the purposes of section 35 of that Act. If this occurs then the leave or the special leave of the High Court will be necessary in order that an appeal may be had to that court against the declaratory judgment. Further, 0.70 R.26 of the High Court Rules provides that: “An interlocutory order or rule on which there has been no appeal does not operate so as to bar or prejudice the court in its appellate jurisdiction from giving such decision upon an appeal as is just.” A determination that the declaratory judgment on the liability issues is “an interlocutory order or rule” could give rise to difficulties. The Commission considers, however, that it is proper to anticipate that, if such difficulties arise, the High Court will not permit injustice to ensure.
Death of the plaintiff
As previously pointed out in this paper, the complication exists that a plaintiff, in whose favour an Interim Assessment Declaration or an Interim Relief Declaration has been made, may die before an order is made that the damages be assessed and assessment takes place pursuant to that order. This would pose two problems. The first is as to what effect the death of the plaintiff is to have upon the making of interim payments for “maintenance” pursuant to an Interim Relief Declaration. The second is as to what effect the death is to have upon the assessment of damages.
As to the first problem the present view of the Commission is that “maintenance” payments should cease to accrue due after the plaintiff’s death. Before considering the approach of the Commission to the second problem, it may be helpful to state briefly the principal features of the present law where death results from the injuries sustained.
Where, during his lifetime, an injured person has obtained, against the tortfeasor, judgment for damages and thereafter dies as a result of the injuries which he received, no further liability in damages is incurred by the tortfeasor. No action lies under the Law Reform (Miscellaneous Provisions) Act, 1944-1962, (hereafter referred to as the Law Reform Act) for the benefit of the estate. At the time of his death the injured person did not have “vested in him” a cause of action against the tortfeasor (s.2 (1), Law Reform (Miscellaneous Provisions) Act, 1944-1962). The cause of action, which he did have, merged in the judgment. For the same reason, no action lies under the Compensation to Relatives Act, 1897-1953 (hereafter referred to as Lord Campbell's Act), for the benefit of dependants of the deceased (see Mayne and McGregor on Damages, twelfth edition, page 805).
The position is otherwise where, although the injured person has commenced, during his lifetime, an action against the tortfeasor, he dies before the action proceeds to judgment. The cause of action has not merged in any judgment. The cause of action survives the death of the plaintiff and his personal representative can continue the action for the benefit of the estate and recover damages limited in accordance with section 2 (2) of the Law Reform Act. Further, of the wife or husband or any brother, sister, half brother, half-sister, parent or child of the plaintiff suffers financial loss resulting from the death of the plaintiff, an action for damages lies against the tortfeasor under Lord Campbell’s Act.
The measure of total damages recoverable, however, in an action under the Law Reform Act and in an action under Lord Campbell’s Act is not the same as the measure of damages which the plaintiff could have recovered, but for his death, in the action brought by him in his lifetime.
In neither the action under the Law Reform Act nor the action under Lord Campbell’s Act are damages recoverable for the injuries which the injured person sustained, for his pain and suffering, for the impairment which he endured to the amenities of life, or for curtailment of his expectation of life. Such damages would have been recoverable, had the injured person not died, in the action which he commenced in his lifetime.
The measure is different, also, as to the damages recoverable in respect of loss occasioned by the fact, if such it be, that if the injured person had not died prematurely he would probably have continued to earn monies until his retirement in the ordinary course of events. It now has been established by the High Court that it is the law in Australia that in an action brought by the injured person, and determined in his lifetime damages for the plaintiff’s life expectancy was before he was injured (Skelton v. Collins 39 A.L.J.R. 480). The relevant period is not limited to the date when it is anticipated that, because his life expectancy has been curtailed by the accident, he will die prematurely. The “loss years” are taken into account. “An assessment should, of course, take into account the vicissitudes and uncertainties of life and also the fact that if the plaintiff had survived for the full period it would have been necessary for him to maintain himself out of his own earnings …” (Skeleton v. Collins, supra, per Taylor J. at p.491). It may not be finally settled whether in assessing damages in an action under the Law Reform Act, consequent upon the death of an injured person, any regard is to be had to what the injured person would have been capable of earning after the time when he died prematurely. In Skeleton v. Collins (supra) Mr. Justice Taylor stated that “in the case where an action is brought, not by the injured person himself, but, upon his death, by his legal personal representative for the benefit of his estate, the damages would be assessed having regard to the gain, if any which would have accrued to the deceased from his future probable earnings after taking into account the expenditure which he would have incurred, if he had survived, in maintaining himself and his dependants, if any.” (at page 488). Prior to this dictum it was a widely held view that no regard could be had to what would have been the gain to the injured person from his earings during the lost years; (see, for example, Sellick v. De Young 1955 S.A.S.R. 191). It suffices, for the purposes of this paper, to regard the dictum of Mr. Justice Taylor as the final exposition of the law. Applying the law so declared it is clear that, where the injured person left dependants, the damages recovered under this head would be minimal. The discounting factor is not what the injured person would have spent on his own maintenance, as is the discounting factor in an action by the injured person which is determined in his lifetime. It is what the injured person would have spent on the maintenance of his dependants as well as of himself. It is clear that much greater damages in respect of loss of earning capacity during the “lost years” are likely to be obtained in an action determined in the lifetime of the injured person that in an action brought under Lord Campbell’s Act. The measure of damages under that Act is limited, however, to any financial loss to the dependants resulting from the death, after taking into account any financial gain resulting from the death by reason of the testamentary dispositions of the deceased as to his assets (including damages or the right to damages under the Law Reform Act), or otherwise resulting from the death (save as to proceeds of life policies, payment out of superannuation funds, Commonwealth pensions and certain other benefits excepted by s. 3 (3) of the Act or otherwise treated as collateral). The injured person moreover may not have left any dependant. If he did leave a dependant, the value of the dependancy may have been comparatively small. In any event if the injured person had not died he could not spend, out of his earnings, more on the maintenance of his dependants than what would be left after maintaining himself out of those earnings.
The foregoing brief analysis of the present law leads to the conclusion that, if the injured person is going to die as a result of the injuries, the total damages which the tortfeasor will be liable to pay are likely to be substantially less if the injured person does not recover damages in his lifetime than they would have been if the damages had been assessed in his lifetime with foreknowledge as to when we would die. This conclusion, however, is subject to two qualifications. A minor qualification is that if damages are assessed after death they include the funeral and tombstone or headstone expenses (s.3 (2) of the Lord Campbell’s Act; s.2 (2) (c) of the Law Reform Act). A more substantial qualification is that if the injured person has been guilty or contributory negligence, the damages assessed before death will suffer a “just and equitable” reduction whereas the position, in assessment after death, is that although damages assessed under the Law Reform Act will suffer a like reduction, no reduction will be made in the damages assessed under Lord Campbell’s Act (s.10 Law Reform (Miscellaneous Provisions) Act. 1965-1968).
The general view expressed by the members of the legal profession who have given to the Commission the benefit of their comments has been that where, in an action in which the assessment of damages has been postponed and interim payments have been made on account of the damages thereafter to be assessed, the plaintiff dies, an action should lie under Lord Campbell’s Act. The Commission has given anxious consideration to this possible approach but it is disposed to the view that it is not the best solution.
It would be unjust to the tortfeasor for the law to provide, in such a case, that no only shall the dependants have an action under Lord Campbell’s Act, but the damages in the personal injuries action shall be assessed for the benefit of the estate on the measure applicable to an assessment before death. In the light of the decision in Skeleton v. Collins (supra) it is clear that the tortfeasor would, at least where the injured person has not left his estate to his dependants, be exposed to a double liability in respect of what the injured person would have earned during the lost years.
If, after the death of a plaintiff in whose action an Interim Assessment Declaration or an Interim Relief Declaration has been made, an action under Lord Campbell’s Act were to lie, it would be necessary to limit the measure of damages in the personal injuries action. A possible solution is to provide that, as the plaintiff has died before the damages have been assessed, the measure of damages in the personal injuries action shall be that provided by the Law Reform Act. There are objections, which to the Commission seem cogent, to the adoption of this possible solution. It would mean that no damages would be paid for the bodily injuries which the plaintiff sustained, for his pain and suffering, for the impairment which he endured to the amenities of life or for the curtailment of his expectation of life. In cases for which the deferred assessment of damages scheme would be applicable, for example, quadriplegic cases, damages under these heads are likely to be substantial.
The Commission is disposed to the view that the limitations which the Law Reform Act imposes upon the measure of damages are not apt to the circumstances which are likely to arise in cases in which the postponement of assessment scheme has been applied. The provisions of the Law Reform Act are directed principally to cases in which the injured person dies relatively short. In most cases of death following an accident, the death occurs fairly quickly. If this does not happen and the injured person commences an action for damages then, under the present law, the action proceeds to assessment of damages without any scheme for postponement of the assessment being applied; and if the damages are assessed before the plaintiff dies, no action lies under the Law Reform Act. The position, when the postponement of assessment scheme has been applied, but the plaintiff dies before damages are assessed, is likely to be very different. Where, for example, the scheme has been applied to the case of a quadriplegic, the quadriplegic may die seven or more years after the accident, yet before damages are assessed. Should the tortfeasor be relieved, because the plaintiff in this case has died from liability to pat any damages for pain and suffering loss of amenities, etc? The present view of the Commission is that he should not.
There is a further reason why it may well be considered that it would be inappropriate to apply the provisions of the Law Reform Act. In cases to which the Law Reform Act at present applies the injured person will not have received, before his death, any of the damages to which he would have been entitled if the damages had been assessed before his death. In that event it is debatable whether to allow, for the benefit of his estate, “recovery for non-pecuniary losses, like pain and suffering, physical disfigurement or loss of expectation of life. All of these are in a sense personal to the victim and do not represent a loss to the estate, comparable to a wrecked car or the cost of his medical and funeral expenses. And although, as a general proposition, recovery in a survival action is measured by loss not to the estate, but to the deceased, it is widely felt to be against sound policy to confer on the estate what in effect would be a windfall.” (Fleming, The Law of Torts, third edition, p.697). The Law Reform Act does not allow such recovery. The position, however, is likely to be very different where an Interim Assessment Declaration or an Interim Relief Declaration has been made but the plaintiff dies before damages are assessed in the action. Although the damages have not been assessed he may well have received in his lifetime, substantial interim payments on account of the damages to be assessed. Indeed, particularly in the case where an interim payment has been ordered pursuant to an Interim Assessment Declaration, he may have received, in his lifetime, all that he would ever have become entitled to receive upon an assessment of damages which took into account disfigurement, pain and suffering and the other heads of non-pecuniary loss.
The Commission, for the reasons advanced, does not favour, where the plaintiff dies after the making of an Interim Assessment Declaration, the application of the Law Reform Act and Lord Campbell’s Act. The present view of the Commission is that the action should continue to assessment, for the benefit of the estate, the measure of damages being that which applies in assessment made before death. The measure of damages should be the same as it would have been if, in lieu of making the Interim Assessment Declaration or the Interim Relief Declaration, the court had proceeded to assess the damages. The measure should not change in consequence of medical uncertainties having made it imprudent, at the time when the declaration was made (or, if made before the hearing of the liability issues, it came into operation), for the court to proceed, in the ordinary way, to assess damages. The Commission’s approach does not mean, of course, that the quantum of damages assessed, as distinct from the measure of damages, would not be affected by the plaintiff’s death. Where damages are assessed before death the period of life remaining to the plaintiff is a relevant factor - for example, as to the proper amount to award for pain and suffering. Where damages are assessed after death, the relevance of the plaintiff’s life span will be the same, if the Commission’s approach is adopted, although the court will have the assistance of knowing the precise date of death. A convenient formula appropriate to give effect to the Commission’s present approach would appear to be that where, in an action in which an Interim Assessment Declaration or an Interim Relief Declaration has come into operation, the plaintiff dies before the damages are assessed, the damages shall be assessed in such sum as that in which they would have been assessed if the assessment had taken place immediately before the death of the plaintiff but with fore-knowledge as to when he would die.
Compensation to Relative Act, 1897-1953
To this point, this paper has been concerned only with assessment of damages where the action was commenced during the lifetime of the injured person. The question arises, however, as to whether the problems of assessing damages in actions brought under the Compensation to Relatives Act, 1897-1953 (Lord Campbell’s Act) indicate the desirability of a similar approach being made in actions under that Act. The Commission has considered this question and its present view is that the scheme should not be extended so as to include such actions.
The damages recoverable in an action under Lord Campbell’s Act are “restricted … to damages for the loss of the pecuniary benefit arising from the relationship which would be derived from the continuance of life. In short, the measure recoverable by a dependant is what is called the value of the dependancy”. (Mayne and McGregor on Damages 12th Ed. p.687). This assessment involves taking into account many factors, such as what was the life expectancy of the person who has died, whether the marriage was likely to be stable, how generous the deceased would have been to the dependants had he not been killed and what were his economic prospects. Obviously, there is ample scope for error. As to none of the factors above listed, however, would it be of much assistance to the court for the assessment of damages to be postponed in order to see how things turn out. The principal actor is dead.
One of the factors, not listed above, which the court must take into account, in diminution of the damages which would otherwise be awarded, is the possibility that the bereaved spouse will remarry. Only time will tell whether remarriage will take place. Under the present law the court must assess what the prospects are as to remarriage. Usually, the only assistance which the court has is the physical attractiveness or otherwise of the spouse, the pleasantness or otherwise of the temperament of the spouse, a denial by the spouse of any intention to remarry, a speculation as to how for the marriage prospects will be enhanced by the fact that the spouse will have money because of the damages awarded, and knowledge of the number and ages of the children, if any, of the marriage. The court, moreover, sees the plaintiff only in the formal atmosphere of the courtroom, when he or she is under stress and this may lead to a false impression being created. The task of the court would be easier if the law imposed upon the bereaved spouse a duty to remarry if the opportunity present itself. The law does not do so. At least to that extent the law does not invade the privacy of the life of the spouse. It is quite clear that the law requires the tribunal of fact to determine a matter as to which even the wisdom of Solomon would be totally inadequate.
The present law presents in its turn several undesirable consequences. Some of these are:
1. No matter how lucidly the trial judge explains to the average jury the present law and the duty of the jury to find in accordance with the law, the jury, in practice, almost invariably appears to make no discount whatever for the possibility that the widow may remarry. The explanation may in part be that the jury finds it impossible to assess fairly what reduction ought to be made and therefore makes no reduction. It may well be however, that the more basic reason is that, no matter what the law may provide, the average jury takes the view that whether or not the widow will remarry is a personal matter for her and that it is no concern of the wrongdoer whatever. Certainly at least some juries may take the view that it would be utterly wrong if economic pressure to remarry were to be exerted upon the widow by reducing her damages on the basis that she might remarry. Whether or not these are the explanations of the conduct of juries, it is clear that juries are loathe to apply the present law.
2. The widow is discouraged from turning her back on the past, so far as her grief permits and making what may be perfectly proper and desirable social adjustments. She is likely to be advised by her solicitor that if, pending the trial, she were to form any friendship which might be thought to indicate a possibility of her remarriage, the result may well be that his friendship will come to the knowledge of the insurer and be used at the trial as an argument for the reduction of damages which would otherwise be awarded. Indeed she may even be advised that her actions before the trial may come under the scrutiny of some investigator employed by the insurer to report upon her conduct. The Commission earlier in this paper has referred to the need for the rehabilitation of injured persons. It is perhaps reasonable to suggest that the social adjustment of bereaved persons is also a matter of public interest.
3. It does happen occasionally that in the sometimes lengthy period which elapses between the date of death and the date of the trial the widow does wish to remarry. Clearly it is in the community interest that she does remarry, particularly where there are young children and possibly, also, there is financial hardship pending damages being received. Under the present law, what is the widow to do? Is she to eagerly grasp the prospect of remarriage and all that it means for herself and her children and thereby forego most of the damages which otherwise would be awarded? Or what?
The Commission does not favour the approach that the difficulty of assessing the prospects of remarriage should be overcome, at least in part, by empowering the court to order that the assessment of damages be deferred; nor did such an approach recommend itself to any of the experienced legal practitioners who gave to the Commission the benefit of their opinions. The Commission, at the present stage of its deliberations, favours the bolder course of making the remarriage, or possibility of remarriage, of the widow an irrelevant consideration. It may be argued in opposition to this view that the making of remarriage or the possibility of remarriage an irrelevant consideration would be inconsistent with the theoretical basis of claims for damages under the Act, namely that (subject to the many statutory exceptions already existing - s.3 (3)), they should do no more than compensate the dependants for the actual pecuniary loss sustained. The Commission considers that there are at least two replies to such an argument. The first is that in respect of the factor of possible remarriage the courts, in most cases, cannot do more than guess. They cannot make an accurate assessment no matter how much, in theory, such an assessment ought to be made. The risk of gross injustice is acute. The Commission considers that it must be remembered that “laws exist not for the scientific satisfaction of the legal mind but for the convenience of the lay people” (Holmes & Pollock Letters, Vol 1, p.8). The second answer is that the verdicts given by juries are a clear indication that the present law does not accord with the conscience of the community. It may be thought to be generally true that a law which offends the sense of decency and fair play of the community is ripe for reconsideration. The present New South Wales Act was taken from the Fatal Accidents Act 1846 of the United Kingdom (Lord Campbell’s Act). Times have changed.
The Commission believes that its tentative proposal that remarriage, or the possibility of remarriage, be made irrelevant would have far less impact upon the damages awarded overall in actions under Lord Campbell’s Act than a mere comparison between the proposal and the theory of the present law would suggest. By and large juries do not apply the present law. Whilst, of course, Judges, sitting without a jury, do apply the law, their approach cannot be uninfluenced by the knowledge of the gross injustice that would result to a widow if a substantial reduction were made but she did not remarry, or by the knowledge of the approach of juries, or by the virtual impossibility, in most cases, of discharging with any precision the burden which the law places upon them. The reductions made by Judges sitting alone tend to be quite modest.
It has already been indicated that the Commission favours making not merely the possibility of remarriage irrelevant but also remarriage before the hearing. The Commission can see no public interest in saying to the widow that if she remarries before the trial she will get no damages but that if she remarries the day following the trial she will get damages which will not be subject to reduction because of her intention to remarry. The public interest is rather that if she is going to remarry it is better that the law place no obstacle in her path.
The foregoing observations have illustrated the position as it appears to the Commission to be by reference to the position of the widow. Substantially the same considerations apply to a widower. It is, for example, in the public interest that a widower left with small children should not be discouraged from remarriage. The Commission is disposed to extend the benefit of the reform to widowers.
The Commission tentatively considers that remarriage of a bereaved spouse should be made an irrelevant consideration for any purpose in the assessment of damages. Its present view is that if remarriage is not to affect the damages to which a widow or widower, as the case may be, is entitled, it should not affect the damages to which any other dependant is entitled. The prospect, for example, that a widow might remarry, should not be a factor to diminish the damages to which a child of the deceased is entitled.
Generally
The tentative proposals set forth in this paper may involve questions of government policy. The paper however, is not directed to any consideration of what government policy ought to be. It is directed only to an examination of the legal problems.
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