The Federal Government's "review" of the law of negligence - The aim of the review was to limit liability and the quantum of damages evolving from personal injury and death.

The Federal Government’s “review” of the law of negligence was conducted in June 2002, by the Ipp committee, as a result of the recent insurance crisis. The aim of the review was to limit liability and the quantum of damages evolving from personal injury and death. This was the consequence of numerous factors including the September 11 terrorists attack on New York, a cyclical hardening of global insurance markets, and in Australia the collapse of HIH insurance. These factors lead to alarming increases in insurance premiums, and in some cases the inability to obtain coverage at all.

The controversial recommendations proposed by the Ipp committee’s review of negligence, which aim to limit liability, I believe, should be implemented. The recommendations of the Ipp committee differed in several aspects from the common law’s position on the law of negligence which states that it is a basic human right to recover full compensation for negligence . As Justice Deane said in Jaensch v Coffey “the general underlying notion of liability in negligence is “a general public sediment of moral wrongdoing for which the offender must pay. Professor Alan Fels believed the recommendations proposed by the Ipp report favoured the campaign of the insurance industry and removes extensive common law rights of injured persons resulting in negligent defendants escaping liability. I am opposed to the view of Professor Alan Fels, as restricting the availability of insurance to the public will result in widespread harm for local communities throughout the country.

The unpredictability of the law, the ease with which plaintiffs succeed and the generosity of courts in awarding damages, have resulted in increasing insurance premiums. Throughout the country, the increased premiums have resulted in the absence of insurance or the availability of insurance only at unaffordable rates which has adversely affected many aspects of community life. Small local authorities, especially in rural areas, that have been unable to obtain public liability insurance, have closed roads. This has resulted in some areas people having to undertake detours of long distances, sometimes in excess of 100 kilometres , to reach neighbouring communities or individuals. Rural hospitals, that cannot obtain insurance at affordable rates have shut down completely. Other hospitals, including urban hospitals, experience huge trouble in providing important facilities to patients. Numerous school’s and kindergartens have been forced to closed and many others are unable to offer to services they wish to provide. Numerous community events have been forced to be cancelled, ranging from local fairs and sporting events. The basic core of community life is been harmed. There is a need, therefore, to implement reforms that will more adequately balance the interests of plaintiffs against those of the wider community. This is why I believe changes had to be made to the law of negligence, and the recommendations of the Ipp committee needed to be implemented.

A important factor for the ease with which plaintiffs have been able to succeed in claims for negligence is the Wyong Shire Council v Shirt "undemanding" standard of care. In Wyong Shire Council v Shirt, a risk of injury is foreseeable unless it is "far fetched or fanciful". The Ipp committee recommended that this be changed. The view of the committee was, it cannot be negligent to fail to take precautions against a risk of harm unless that risk can be described as "not insignificant”. The proposed change would mean the standard of care would be reduced to a level ...

This is a preview of the whole essay

The committee viewed the major problem in the law of causation is that known as "evidentiary gaps". That is, gaps in proving that the harm or all the harm was caused by the negligence of the defendant. The problem of an evidentiary gap has been dealt with in Bennett v Minister for Community Welfare, here Gaudron J. said, "generally speaking, if an injury occurs within an area of foreseeable risk, then in the absence of evidence that the breach had no effect or that the injury would have occurred even if the duty had been performed, it will be taken that the breach of the common law duty of care caused or materially contributed to the injury". The view of Gaudron J. places the burden of proof of causation on to the defendant. This view adopted has the capability to dramatically expand liability for negligence. The problem with this approach is that it has been applied to cases where there is no evidentiary gap (general cases), and whether there is an excuse to allow the plaintiff not to satisfy the requirement’s of the "but for" test. This method has led to the relaxing the requirements for causation. The committee recommended that legislation should be implemented, so that the plaintiff must prove any fact relevant to causation on the balance of probabilities. Other recommendations of the committee were that negligence must be a necessary condition of the harm, it will be sufficient to establish that negligence materially contributed to the harm and also it will be relevant to consider on a subjective basis, what the plaintiff would have done if the defendant had not been negligent. The recommendations of the committee on the issue of causation, should result in it being more difficult for plaintiff’s to prove causation and hence prove negligence.

The review recommended that the standard of care for professionals generally is to be determined by reference to what could be reasonably expected of a person professing the skill at the date of the alleged negligence. In respect of malpractice claims, the committee viewed that there needed to be a change to the standard of care applicable to a medical practitioner. A medical practitioner will not be negligent if the treatment provided was in accordance with an opinion widely held by a significant number of respected practitioners in the field, unless the opinion is irrational. This recommendation is basically an extension to the Bolam test with a more limited role for the court. This recommendation was aimed at preventing reliance being placed on localised practices that are removed from conventional professional activities, would filter out personalised opinions and ensure that the applicable belief is soundly based. This, it was thought, would be a far more reliable test than Bolam. These recommendations by the committee are aimed at reducing the number of instances in which a medical practitioner has acted negligently in giving treatment. This was the result of the relative ease at which plaintiff’s were receiving compensation in this area. The committee also recommended limits on the time period for doctors to be notified of potential claims and medical practitioners would be subject to a duty to inform, both proactively and reactively on the basis that they must take reasonable care to provide such information as to enable the patient as to whether or not to undergo treatment.

There is grave concern by government as to the frequency and nature of claims against public authorities. It has been recognised that there are two classes that cause problems. The first class involves those claims based on an alleged failure to take care to make a place controlled by the authority, reasonably safe for users. The problem that arises is that usually the authority will have a small budget available for making the recognised area safe for users. Predominately the authority will make decisions in good faith about the allocation of the budget. There was believed to be a view, particularly by local councils that the law of negligence is being applied in a way as to allow decisions, made in good faith about the allocation of scarce resources, to provide the basis for findings of liability against public authority. This was harming the ability of public authorities to carry out their duties in the interest of the public.
The second class of case is where public authorities' decisions, based on political, economic, social or environmental policy, are threatened. Claims of this nature often revolve around large amounts of money. The committee believed it was undesirable that the issues raised by these types of cases can result in negligence actions.

The committee recommended that legislation should be implemented, so that a policy decision based on financial, economic, political or social factors should not be used to enhance a decision that the defendant was negligent, unless the finding was so unreasonable that no reasonable public functionary in the defendant's position could have made it.

The parliament of The New South Wales has gone further than the committee’s recommendation in limiting the potential liability of public authorities for negligence. It has embraced the policy defence related to the allocation of resources. But it has also said that, in general, no action will lie against a public authority for breach of a statutory duty unless the conduct of the authority was at a extreme level of unreasonableness.

The committee recommended a threshold for general damages based on 15% of a most extreme case and a cap of $250,000. The South Australian legislature has placed a cap on general damages of $241,500 and an overall cap of $2.2 million on the total amount for loss of earning capacity. The committee recommended a cap on damages for loss of earning capacity of twice average full time weekly earnings. This recommendation was based on the fact that only 2.4% of Australian employees earn more than twice average weekly earnings and the Ipp committee viewed that those who fell into the higher earning class could reasonably be expected to protect themselves against the effects of the proposed cap by insuring against loss of income.

Damages for gratuitous services were a problem area for the committee. Damages for gratuitous services on average comprise about 25% of the total award in claims for more than $500,000. Many believe plaintiffs were able to achieve damages for gratuitous services far too easily. The committee believed there was no need to abolish claims for gratuitous services, as this would result in plaintiff’s retaining professional carers to provide the services and may result in an increase in the total damages paid. However, the committee believed there needed to be a limit placed on such these types of claims. The panel recommended caps of gratuitous services based on average weekly earnings and also recommended a threshold on the basis that damages for gratuitous services should not be recoverable unless such services have been provided or it is likely that they will be provided for more than six hours per week and for more than six successive months.

In concluding, the Ipp report contained numerous recommendations on the law of negligence, as a result of rising insurance premiums. The aim of the recommendations was to “limit liability and the quantum of damages evolving from personal injury and death”. Many believed, including Professor Alan Fels that the recommendations put forward by the committee were anti-consumer, in that they promoted the interests of narrowly focused groups (insurance companies) at the expense of ordinary people, in that plaintiff’s will not be compensated for the negligence of wrongdoers.

However, I disagree with this view and believe the recommendations made were for the benefit of the wider community. Reform, in this instance was necessary in order to ensure insurance is made available and affordable to communities throughout Australia. Without these reforms, there would be widespread devastation to individuals and communities who would have been unable to obtain insurance. I believe the proposed recommendations still ensure plaintiff’s will be compensated sufficiently for negligent acts, while at the same time averting a potential disaster which would have been caused in the absence of insurance to both individuals and the community.