Negligence: The Last Outpost of the Welfare State (Summary)
NEGLIGENCE: THE LAST OUTPOST OF THE WELFARE STATE
SUMMARY OF AN ADDRESS
BY THE HONOURABLE J J SPIGELMAN AC
CHIEF JUSTICE OF NEW SOUTH WALES
TO THE JUDICIAL CONFERENCE OF AUSTRALIA
COLLOQUIUM 2002
IN LAUNCESTON ON SATURDAY, 27 APRIL 2002
In many respects the law of negligence is the last outpost of the welfare state. Notwithstanding that the system is based on a finding of fault, the practical operation of the law of negligence suggests that an element of welfare state paternalism, driven by compassion, may well exist. Furthermore, on some occasions there may have been inadequate weight to the principle that an individual should take responsibility for his or her own actions.
From the 1960’s to the 1990’s, a long-term trend of judicial decision making can be discerned by which liability and damages expanded. However, that trend has, in recent years, been decisively stopped and reversed. There is now a significant body of recent High Court decisions, and an even larger body of intermediate court of appeal decisions, which find in favour of defendants, when the opposite decision would have been made if the long-term trend had continued.
Over the years there were a large number of comments by judges criticising the previous trend and advocating its reversal.
For many years, the judiciary was regarded as too conservative and pro-defendant. Various statutes extended liability to situations that would be denied at common law. Commencing about twenty years ago, the process appears to have been reversed. Judges came to be regarded as too pro-plaintiff. Throughout Australia, statutes restricted the scope of liability at common law in major areas of conduct including motor vehicle accidents and industrial accidents and, in New South Wales last year, in medical negligence cases. Similar change is now in prospect with respect to public liability insurance.
It is sometimes said that legislatures should not interfere with common law rights. That does not always recognise the degree to which, as a matter of practical significance, past amendments of the common law by statute have expanded the range of liability. What many regard as “common law rights” are, in fact, statutory rights which abolished common law restrictions.
In the three major legislative schemes limiting common law actions – for motor vehicles, industrial accidents and medical negligence – the New South Wales Parliament has adopted a variety of different provisions as the basis upon which liability can be established and damages calculated. There is no discernable principle lying behind these differences. Persons who suffer injuries in the three different ways are subject to quite different caps and thresholds and different heads of damages can be recovered in different ways.
The primary reason for the creation of such differences is that all of the schemes – and presumably the public liability insurance scheme now in prospect – have been determined by the need to control or reduce insurance premiums in each of the different contexts. The primary source of the ideas about the changes has been insurance underwriters seeking to limit claims (and therefore premiums) or the equivalent perspective of a public instrumentality responsible for a government-backed scheme. The reforms are underwriter driven.
In my opinion, in the long run, it is quite likely that the significant differences in compensation based on how an injury occurs, rather than the need for compensation, will create resentment in the community. Why should compensation be fundamentally different depending on whether injury occurred in a car or in a car park or at work or on the operating table or in a public swimming pool or at a supermarket? It will be very hard to retain a sense of fairness for the system as a whole. This is an inevitable result of underwriter driver reform.
There is an alternative model for legislative intervention, which I call ‘principle driven reform’, and which is equally capable of restricting liability and damages in accordance with the application of universally applicable principles. Changes to the present law have been articulated by judges, members of the legal profession and legal academics. Judgments that have been overruled and, dissenting judgments often contain useful insights. These sources identify a wide range of changes which could, cumulatively, achieve the apparent objective of reducing the total amount of resources that the community is required to make available for purposes of compensation.
Changes based on principle could include the following:
- Changing the test of foreseeability of risk so that it excludes a broader area than risks that are “far fetched or fanciful”.
- Establishing that the remoteness of a risk is always pertinent when determining whether a duty has been breached.
- Restricting the circumstances in which one person must guard against the failure of another to take care for their own safety.
- Re-introducing the test for professional standards, the effect of which was that it is not open for a court to find a standard medical practice to be negligent.
- Consider the introduction of a form of proportionate liability for property damage or pure economic loss, so that a defendant who is only partially responsible for the damage does not have to bear the whole of the loss when some other person is insolvent.
- Reconsider the circumstances in which offsetting benefits, such as the returns from private insurance or superannuation entitlements based on employer contributions, are taken into account by way of reducing damages otherwise payable.
- Reduce death benefits for relatives, in the same way as damages would be reduced for a plaintiff who had survived, when the deceased has been guilty of contributory negligence.
- Limit the amount recoverable for economic loss so that higher earners are required to take out their own insurance for loss of income above this level.
- Reconsider the basis on which damages are payable for gratuitous services, to which interest is attached, perhaps by exempting from such damages services which would have been provided even if there had been no accident.
- Reduce the interest payable on damages in those States where, in recent times, they have been between 4 and 6 percentage points above that of other States.
- Increase the discount rate used to determine the present value of future losses above the rate determined by the High Court in 1981.
The cumulative effect of some or all of such changes would be to achieve the objective, now apparently widely held, of reducing the total amount that the community must make available for the purposes of compensation by insurance premiums, insurance company returns and taxes.
Such changes can probably not be adopted on the urgent time scale which appears to be driving the current decision making process. However, changes of the character I have identified may make it possible to alter some aspects of the special regimes adopted for motor vehicles, industrial accidents, medical negligence and, in prospect, public liability, so that the kinds of differences and anomalies that have arisen through an underwriter driven reform process are eventually removed. Such an approach would, in my opinion, achieve the result now sought to be achieved in a manner more likely to be regarded in the long term as fair and therefore to receive broad community acceptance.
[The full text of this address is available on the NSW Supreme Court website www.lawlink.nsw.gov.au/sc].
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