Tort law in Australia is the body of precedents and, to a lesser extent, legislation, that together define the operation of tort law in Australia. A tort is a civil wrong, other than a breach of contract. Tort law is a way in which the law can interfere with relationships between private individuals to correct a form of conduct or wrong. A large number of torts exist, and they generally derive their legal status from the common law. Since a court can define an existing tort or even recognise new ones through the common law, tort law is sometimes regarded as limitless and adaptable to modern circumstances.
Generally, torts are not defined within specific statute or legislation and have evolved through judge-made law, or common law. However, each state has also created statutes to override the common law, especially in the areas of negligence, personal injuries and defamation.
Australian tort law is heavily influenced by the common law in other countries, principally the United Kingdom, by virtue of Australia's colonial heritage. However, this has since been modified by statutes such as the various state's Civil Liabilities Acts In addition,There is also a strong and recent trend for the Australian High Court to cite with approval many principles from the United States. However, as the High Court noted:
The history of this country and of the common law makes it inevitable and desirable that the courts of this country will continue to obtain assistance and guidance from the learning and reasoning of...other great common law courts. Subject, perhaps, to the special position of decisions of the House of Lords given in the period in which appeals lay from this country to the Privy Council, the precedents of other legal systems are not binding and are useful only to the degree of the persuasiveness of their reasoning.[1]
There are some sharp distinctions in torts between the UK and Australia:
Another example of statutory modification of torts is the various Limitation of Actions Acts, which prescribe time limits within which litigation must be commenced, and extinguishing the cause of action (the legal basis for the claim) after the period lapses. The rationale of limitation periods was elucidated by McHugh J:[2]
As a general rule, the limitation period on:
Major changes were made to negligence laws in a number of states from 2002 after the media reported a 'public liability crisis' - ballooning insurance premiums and a threat to 'publicly beneficial' activities like sporting events.
Recently the changes have attracted strong criticism, with consumer groups and respected legal officers such as judges saying the pendulum has swung too far the other way, risking public safety and providing inadequate compensation for serious injuries.
The insurance industry points out that the changes have reduced claims, but has been unable to demonstrate a reduction in premiums.
The changes have effectively made it impossible in many states to litigate for anything but extremely serious injuries (in N.S.W, an injury must be deemed worthy of requiring a payment of more than $57,675[6]).
This has been criticised by senior legal officers, because it effectively gives "people the right to be negligent and injure someone up to a given level before they become liable."[7]
Punitive damages have been completely eliminated in some states. Major restrictions have been placed on all other payments, including for pain and suffering. A cap has also been placed on payments.
If a person is injured, in essence the party that injured them only has to 'cover their expenses', because payments can now only be awarded for:
unless the claim for non-economic damages is over a certain limit (in N.S.W, 15% of the new maximum payment of $384,500: that is, around $57,675)[8].
No other payment - such as for pain and suffering - can be made unless that threshold is reached.
This means that, even though an injury might normally be so severe as to require a payment for pain and suffering of over $50,000, such an injury would only require the payment of lost wages and medical bills. No other compensation can be paid. That includes any payment for pain and suffering.
This has been criticised on the basis that:
In many cases, the amount of any pay-out might be quite small compared to the cost to government bodies and corporations of preventing injuries.[9]. In other words, government agencies and corporations might make decisions that endanger public safety similar to that claimed about the 'Ford Pinto fuel tank controversy': it would be more economically rational to allow substandard work even if it endangered the public, because only substantial injuries can be litigated.
Justice Spigelman has said:
"The introduction of a requirement that a person be subject to fifteen percent of whole of body impairment – that percentage is lower in some states – before being able to recover general damages has been the subject of controversy. It does mean that some people who are quite seriously injured are not able to sue at all. More than any other factor I envisage this restriction will be seen as much too restrictive."[10]
The Chief Justice of Queensland, Paul de Jersey AC, said the laws have "brought about marked erosion of a fundamental right to adequate compensation" for injury and that the critical issue now is "the need for active reconsideration of whether the so-called reforms have proven justified, or should be wound back" (February 2006 address to the Australian Lawyers Alliance).[11]
The Australian Lawyers Alliance, the Law Council of Australia and the Tort Reform Institute have called for reviews or repeal of Civil Liability laws. The Insurance Reform Association has called for an inquiry into the conduct of insurers and their manipulation of the "Insurance Crisis".
In 2007, Justice Ipp, the main author of the report that recommended the changes said:
“Certain of the statutory barriers that plaintiffs now face are inordinately high. ... Small claims for personal injuries are a thing of the past. Establishing liability in connection with recreational activities has become difficult. Stringent caps on damages and costs penalties make most plaintiffs think twice before suing. Public authorities are given a host of novel and powerful defences that are in conflict with the notion that the Crown and government authorities should be treated before the law in the same way as an ordinary citizen. It is difficult to accept that public sentiment will allow all these changes to remain long-term features of the law.”
Consumer groups contend the following consequences have resulted:[13]
They say an economic effect of Civil Liability laws is to transfer of the financial burden of reckless conduct from the at-fault party and its insurer to the victim. It is also argued that the exemption of reckless enterprises from having to pay the true cost of injuries they cause amounts to a subsidy of those businesses.[13]
The aggregate of Australian insurance profits since the introduction of Civil Liability laws has exceeded $15 billion. In August 2007, QBE posted an annualised profit of $1.84 billion.[14] Suncorp posted an annual record profit of $1.064 billion after-tax for the year to the end of June 2007.[15] IAG booked profit of over $552 million[16] compared to $759 million for the 2006 year.[17]
Shortly after the reforms were introduced, there was a drop of about 30% in the number of civil cases in Australian courts at the District/County Court level, according to statistics published for in 2002-03 by the Productivity Commission. In N.S.W, where the reforms began, the drop in District Court cases over that time was 56%.[18]
Civil Liability laws are claimed to have eliminated 70-80% of Australian personal injury claims payments on business and household insurance policies.[13]. Whilst as a result of Civil Liability Laws there has unquestionably been a substantial decrease in personal injury tort claims since 2002 (and numbers will continue to dwindle as pre-2002 causes of action pass their limitation periods), insurance premiums have continued to rise.
This and the perceived threat to public safety posed by the lack of penalties for anything but extremely serious injuries, has led to renewed calls for reversal of recent "reform" in the area, particularly from plaintiff's lawyers, consumer groups and others outside the insurance lobby, who perceive that valid claims are unable to succeed, that the new regime imposes unfair additional costs on claimants and other detriments.
The "reforms"[19] have created notable controversy, because they were brought about following a concerted public relations and political lobbying campaign by insurance interests who claimed that there was a generalised 'litigation explosion' or 'litigation crisis' involving civil damages claims. Since this time, however, the Law Council of Australia has shown that there was no significant increase in the amount of personal injury court action in the years leading up to the Ipp Report.[20]
Since "reform" by the Civil Liability Acts (caused by the Ipp Report), all three of the component parts above have been substantially modified, although much of the legislation is yet to be properly tested in appellate courts. The primary changes made by the Civil Liability Acts (resulting from the Ipp Report) also apply to professional liability for personal injury, and serve to undermine the ratio decidendi of the High Court in 'Rogers v Whitaker', (for example in Qld by eliminating the High Court's requirement to disclose risks of particular concern to the individual patient rather than just the reasonably likely risks) in regard to negligent failure to advise, while reinstating the 'Bolam Test' in cases of negligent professional treatment.
In particular, there is anecdotal evidence that the Civil Liability Act 2002 (NSW) led as much as 10% of NSW barristers to allow their practising certificate to lapse. This is said to have occurred because, without negligence claims to litigate, barristers actively sought out other briefs in areas such as criminal law. Subsequently, there was a saturation of barristers in the most profitable areas of the law. Moreover, some barristers lacked sufficient experience in other areas to be effective counsel, and therefore sought to use their skills in other areas.
Negligence is a cause of action generally broken down into four component parts:
In 2002 the following factors affected the profitability of Australian insurers:[21]
These factors provided upward pressure on premiums. Insurers also claimed that the personal injury compensation payments relating to motor accident, workplace and public liability insurance policies were becoming unaffordable.[22]
This contention gained wide media and government support and the term "Insurance Crisis" was coined to describe conditions in the insurance market. No evidence was produced then or since that personal injury compensation claim payments had contributed to the "Insurance Crisis". Indeed some commentators described the crisis as "at best unproved and at worst self-serving rhetoric".[23]
The Commonwealth, State and Territory governments appointed panel of "experts" to review the law of negligence. It included a surgeon and a rural mayor. The panel was chaired by Justice David Ipp, a judge of the New South Wales Court of Appeal. The Review's primary purpose was to address the public view of escalating, "unsustainable" public liability insurance premiums and damages awards for those injured through another's fault."
The Terms of Reference for the panel's review were as follows:
The award of damages for personal injury has become unaffordable and unsustainable as the principal source of compensation for those injured through the fault of another. It is desirable to examine a method for the reform of the common law with the objective of limiting liability and quantum of damages arising from personal injury and death.
The assumptions in the Terms of Reference have been criticised by pro-consumer groups who assert that they were unsubstantiated and that insurers manipulated the "Insurance Crisis" to create hysteria among the public and panic legislators into making laws that had been on their wish list for decades.[13] In its report released in October 2002, the panel proposed wide-ranging changes to limit:[24]
The report and its recommendations were criticised by:
The final Ipp report ...repeats and aggravates earlier errors... in a mistake even a first year student of economics would recognise... Precluding lawsuits where the underlying grievances are legitimate is merely a way of making relatively poor people worse off. - Henry Ergas, economist, Canberra
The Ipp Panel has been asked to make recommendations regarding further limits on compensation for those injured through negligence. But we have still not seen any proof that negligence laws are the cause of the insurers' problems, and that cutting entitlements will improve the situation. There is still no evidence to show that cutting the compensation of injured citizens will reduce or contain insurance premiums. - Rob Davis, President, Australian Plaintiff Lawyers Association (APLA)
The lack of competition in the Australian insurance market following the demise of HIH has seen predatory insurers slugging businesses, even those with no prior claims, with exorbitant premiums. Insurers are asking that they should be virtually claim proof but still want to collect huge premiums. The changes they want would leave individuals and families to suffer the consequences of reckless conduct while their profits will go through the roof. - Civil Justice Foundation
The Commission, in light of the lack of empirical data at present on the so-called 'litigation explosion' and associated claims ... recommends that caution should be exercised in implementing significant policy and other changes to address the situation. - The Australian Competition and Consumer Commission (ACCC)
An article in the Australian Financial Review of 11 November 2002 stated "[t]he report displays an alarming lack of insight into the economic and social issues concerning legal liability for reckless conduct. It contains many 'unfounded inferences' and 'recommendations are thrown around with little or no assessment of their consequences...".
Despite widespread criticism, the recommendations were largely adopted by Australian state governments.[25] The Federal Government also responded by closing "loopholes" which allowed plaintiffs to turn to federal consumer protection legislation to recover compensation where that was barred, or made less attractive, by the states' "reforms".[26]
In the case ABC v Lenah Games Meats in 2001, the High Court of Australia left open the possibility for development of a tort of invasion of privacy. The Court stated that it did not want to decide the matter at that time and only one member, Justice Callinan, gave any indication that such a tort may be acceptable [1]. It held that Victoria Park Racing v Taylor did not inhibit the development of privacy law in Australia.
Since ABC v Lenah Game Meats, the question of whether the breach of privacy was a valid cause of action has been entertained in at least two states. The most adventurous decision is arguably that of the District Court of Queensland in Grosse v Purvis [2003] QDC 151, in which Judge Skoien awarded damages for invasion of privacy. Conversely, the existence of the tort was questioned by Justice Gillard of the Supreme Court of Victoria in Giller v Procopets [2004] VSC 113, in which the Court doubted that the law had 'developed to the point where the law in Australia recognises an action for breach of privacy' (Giller v Procopets at para 181).
Both of these cases were settled out of court and, as a result, will not proceed to appeal. Until this tort receives the attention of an Australian appellate court, the precedential value of Grosse and Giller is limited.
Since 2006, all Australian states have adopted uniform defamation laws. One of the major and most discussed changes concerned defences to publication of defamatory statements. After the reforms, defendants can defend a defamation case on the basis of truth alone (i.e. their comments were true). Prior to the legislative changes, a number of states (including New South Wales and Tasmania) required that comments be both true, and in the public interest or public benefit, to be protected.
Other changes created by the new uniform defamation laws include limits on the maximum payout available, limitation periods for defamation, and formal recognition to any apologies made by the wrongful party.
A Wrongful life claim is one in which a child plaintiff brings an action against a doctor who negligently diagnosed the plaintiff's mother. Usually, the doctor failed to diagnose rubella during the first trimester, for which there is no cure and which will inevitably cause profound disabilities in the unborn child. Had the mother been correctly diagnosed, she would have exercised her legal right to abortion.
In May 2006, the majority of the High Court of Australia rejected wrongful life, refusing to accept that life can be considered a compensable harm. This means that children who are born disabled as a result of a doctor's (admitted) negligence cannot claim damages.[27] Parents are able to pursue 'wrongful birth' claims if the child (disabled or not) is the outcome of a negligently performed sterilisation procedure. (see Cattanach v Melchior). However, post Civil Liability Act, they cannot recover the costs of raising the child in New South Wales.[28]
Tort law occupies much of the time of the various Magistrates', Local, District and County Courts and a substantial proportion of the time of the Supreme Courts of each of the states and territories. In addition, there are numerous specialist tribunals dealing with workers' compensation and other cases. Road accident victims are far more likely to make claims and receive tort compensation than any other group. This predominance is due not so much to the law of torts, but the fact that liability insurance is compulsory by statute in all Australian states.
Since the common law evolves slowly, legislative intervention has been necessary to keep torts in pace with social needs. The Workmen's Compensation legislation from 1897 is the most potent example of the necessity of tort reform. The combination of (a) increased risks for workers during industrialisation, and; (b) the refusal by common law courts to place the costs of workplace accidents on employers; forced parliaments to redress the defects and shift the costs of industrial accidents back to employers.[29] Legislation such as the Trade Practices Act 1974 and the state Fair Trading Acts also impinged upon the traditional tort rules in commercial and property areas.
From the early 1980s legislative intervention attempted to reduce the high volume of litigation involving motor vehicle and industrial accidents. Parallel to the rise of Thatcherism in the United Kingdom, in all Australian states common law torts were significantly modified. Speedy "no fault" compensation was made available to workers and victims of motor vehicle accidents.
Since 2002 there has been an acceleration of legislative change, driven by a perceived crisis in the price and availability of insurance, which was largely blamed on the law of negligence. The issue became charged politically, reinforced by the direct liability of government and its role as a re-insurer of last resort. New South Wales, the most litigious state,[30][31][32] had commenced legislative change prior to 2002. Following the collapse of HIH Insurance and the related escalation in insurance premiums in public liability and medical negligence, the NSW proposals were adopted more widely throughout Australia. More on the Ipp panel, its report, the "Insurance Crisis" and Civil Liability laws above.
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