20 September 2007
Key Points:
The wave of personal injury law reform has hit different States differently, increasing the risk of forum shopping with resulting inconsistencies, uncertainties and potentially greater costs.
"(A)lthough all Australian jurisdictions have enacted legislation sharing a similar general objective, there are significant differences between the laws of the several jurisdictions. This has resulted in a reduction of the earlier relative uniformity of the law of torts as emanating from this court. This country now faces the real prospect of a "crazy quilt" of tort legislation, akin to that existing in the United States".
Justice Kirby in Harriton v Stephens (2006) 226 CLR 52 at 94
It seems common sense doesn't it? The laws of the different States and Territories of Australia and federally should be uniform. A person suffering an injury as a result of a defective product in one part of the country should have the same rights and entitlement to compensation, if any, as another person elsewhere.
Unfortunately, however, this is not the case. Following recent civil liability reforms, different jurisdictions have different provisions relating to both liability and how compensation should be calculated. The result is what Justice Kirby refers to as a "crazy quilt". A crazy quilt is a conglomeration of randomly pieced fabrics often with embroidered embellishments. By definition there is no planned design in shape, arrangement of colour or use of materials. It seems an apt comparison with Australian product liability law.
As plaintiff lawyers seek to maximise the compensation recovered for their client, the effect will be to encourage forum shopping, that is, when litigation is commenced in a jurisdiction with laws thought most likely to favour a plaintiff.
Consumers' rights under the Trade Practices Act
Two parts of the Trade Practices Act 1974 (Cth) ("TPA") give consumers rights against manufacturers of defective products. Part V Division 2A and Part VA impose "strict liability", that is, fault is not relevant. In the former, the issue for determination is whether the goods were fit for their intended purpose, or were of merchantable quality. In the latter, a plaintiff must prove that the goods were not as safe as persons generally are entitled to expect.
Parallel provisions to Part V Division 2A exist in some state laws (New South Wales and the Northern Territory) but not others. Part VA has not been replicated in any state legislation.
Until last year, product liability claims involving a failure to warn could allege misleading and deceptive conduct under the TPA. The Trade Practices Amendment (Personal Injuries and Death) Act 2006 (Cth), however, provides that such a cause of action is no longer available in personal injury claims. An exception is provided if the death or personal injury results from smoking or other use of tobacco products.
Negligence
Product liability claims in Australia have historically been based upon the law of negligence.
As a part of the civil liability reforms, some States have undertaken a partial codification process of the law. There are now provisions in some States (but not all) that a person will not be negligent in failing to take precautions against harm unless the risk was foreseeable, the risk was not insignificant, and a reasonable person would have taken those precautions. In determining what precautions should have been taken, the relevant factors to be taken into account include
While the thrust of these amendments is to be welcomed by manufacturers and insurers, again, regrettably, the exact wording of the provisions differs between jurisdictions.
Damages
Inconsistent implementation of civil liability reforms has introduced further complexities into Australian product liability law. For example, while the right to aggravated and exemplary damages in common law personal injury claims has been extinguished in some States (such as New South Wales) and under the TPA, they are available in others (such as Western Australia).
Some jurisdictions have also introduced limitations in relation to the recovery of compensation.
While the underlying idea will seem inherently sound to manufacturers and insurers, the lack of uniformity in its implementation is not.
In New South Wales and under the TPA, damages are not payable for disability below 15 percent of the most extreme case. Victoria similarly has a percentage threshold test of 5 percent in the case of injury other than psychiatric injuries and 10 percent for psychiatric injuries. In Queensland, there is no threshold to compensation and injuries are assessed on a "100 point scale" and by reference to similar injuries in prior proceedings. The other States and Territories also adopt varying approaches.
All Australian jurisdictions have introduced a cap on damages for lost earnings in relation to personal injury. This cap is set at three times the average weekly wage in all state jurisdictions except South Australia (which has a total amount cap). Under the TPA, however, the cap is two times the average weekly wage. Further, the average weekly wage varies in each jurisdiction.
This means that a plaintiff suffering identical injuries will receive different amounts of compensation depending upon what law applies to the claim. In the case of a person injured early in their working life, it can result in a difference in compensation of more than $500,000.
Conclusion
After six years of operation, aspects of the civil law reforms are coming under legislative, judicial, and popular criticism.
This is especially true of reforming legislation that goes beyond the recommendations of the "Review of the Law of Negligence." In commenting upon such legislation, Justice Ipp, the author of the Review, recently stated: "It is difficult to accept that public sentiment will allow all these changes to remain long-term features of the law." The "pendulum of negligence" he argues, is once more moving towards the advantage of plaintiffs. This sentiment has also been echoed by the Honorable JJ Spigelman, Chief Justice of New South Wales.
Plaintiffs have different rights depending upon where the wrong occurs and what cause of action applies, even for the same injury. Whatever the intentions underlying the civil liability reforms, they have been inconsistently implemented into the laws of the Commonwealth, States and Territories.
The inconsistencies between the laws of the various jurisdictions also mean that, depending upon the jurisdiction where the wrong occurs, consumers injured in different states have different rights. At the very least, such complexities will give rise to what insurers refer to as "friction costs" increasing the cost of product liability litigation in the future. At worst, it will encourage "forum shopping", which the Australian High Court has thought important to discourage.
Interested in reading more? See Jocelyn's article with Luke Nottage, "Happy 15th Birthday, Part VA TPA! Australia's Product Liability Morass", here.
For further information, please contact Jocelyn Kellam and Colin Loveday.
