Practices Amendment (Personal Injuries and Death) Bill
Date Introduced: 27 March
1-3 commence on the day that the Act receives Royal Assent and
Schedule 1 commences 28 days after Royal
The purpose of
this Bill is to amend the Trade Practices Act 1974 (TPA) to
prevent individuals recovering damages for personal injury and
death where there has been a contravention of Part V Division 1 of
A review of the law of negligence in Australia
(chaired by Justice David Ipp) was announced by the Government on
30 May 2002.(1) The amendments contained within the Bill
give effect to Recommendation 19 of the Review of the Law of
Negligence Report (Ipp Report) which states that:
The TPA should be amended to prevent individuals
bringing action for damages for personal injury and death under
Part V Div I.(2)
The review of the law of negligence was
commissioned as a way of developing strategies to respond to the
highly publicised insurance crisis occurring in Australia. When
announced, the review received widespread support due to the fact
that it was imperative that action be taken to solve some of the
problems plaguing the market for public liability insurance in
Public liability insurance is described by the
Productivity Commission as insurance that:
protects individuals, businesses and organisations
against financial risk of legal liability to third parties for
death or injury, loss or damage to property, or pure economic loss,
in areas not covered by workers compensation, motor vehicle
compulsory third party (CTP), professional indemnity or product
liability. The situations where such liability can arise are many
In March 2002, the Trowbridge consulting
report noted that the insurance crisis was impacting most
significantly on community events, sporting events, tourism and
leisure operations, the retail industry and local non government
community groups that operate under the umbrella of local
government.(4) The report stated that these groups were
particularly experiencing problems in obtaining affordable public
liability insurance.(5) The report also stated that
anecdotal evidence revealed that premium increases of 20% were
routine, 100% not uncommon and 500-1000% had
Much has been written regarding the source of
the insurance market problems. The collapse of HIH insurance,
terrorist bombings on 11 September 2001, unwise business practices
by insurance companies and a poor investment environment have been
just some of the identified causes of the crisis. An escalation in
the number and size of personal injury claims have also been
identified as key contributors to the problem.
Unfortunately, it has been difficult to fully
understand the cause of the crisis due to shortages in the
availability of accurate and comprehensive statistics on point. It
could be suggested that the insurance market, like other markets,
has peaks and troughs and that the current market conditions merely
form a part of this cycle.
The Trowbridge consulting report however noted
The nature of the crisis is that there are fewer
insurers than ever before accepting the business and these insurers
are generally charging much higher prices than previously and are
also being very selective in their acceptance of risks.
While this phenomenon can be regarded as the peak
(or trough) of an insurance market cycle, it is nevertheless to
persist for another year or two at least unless there is some
external stimulus to or intervention in the
Accordingly, the negligence review was
announced. In a recent article published in the Australian Bar
Review, the chair of the negligence review, Justice David Ipp, set
out one of the key practical arguments as to why negligence laws
needed to be reviewed:
There is no conclusive evidence that the state of
the law of negligence bears any responsibility for this situation
[the insurance crisis]. But the fact is that insurance companies
are not prepared to provide the necessary insurance (or are only
prepared to provide it at unaffordable rates), because of the
unpredictability of the law, the ease with which plaintiffs succeed
and the generosity of courts in awarding damages. There is evidence
to suggest that the insurance crisis is at least partly
attributable to the conduct of certain insurance companies but that
is not to say that the state of the law of negligence has not
contributed to the current state of affairs.(8)
It is interesting to note that Justice Ipp
acknowledged that insurance companies were at least partly to blame
for the insurance crisis. Justice Ipp has also clearly stated that
it was insurance company dissatisfaction with negligence laws that
was one of the triggers for the review. Without intervention, the
crisis would continue.
The Minister for Revenue and the Assistant
Treasurer, Senator the Hon. Helen Coonan, has also drawn clear
links between problems with the legal system, the insurance crisis
and the need for Government intervention.
In the University of New South Wales Law
Coonan wrote that:
a widely held view that the current problems in the insurance
market are due in large part to the operation of the legal system.
It is clear that the broader community is dissatisfied with the
seemingly random nature of court awards. There is also a strong
perception that an increasing culture of blame has emerged within
our society. This has led individuals to seek redress through the
legal system where in similar circumstances in the past, the
individual would have been more prepared to assume responsibility
for the consequences of their own actions.(9)
to this, Senator Coonan issued
a press release stating that:
strong community support for actions by Governments at all levels
to ensure our system of compensating injuries is balanced and does
not contribute to a culture of blame.(10)
the negligence review was announced it was given the express task
of analysing the current legal arrangements and developing a method
for limiting awards of damages for personal injury. The review s
terms of reference stated that:
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.(11)
was considered that this would go towards easing the pressure on
insurance companies to charge excessive premiums for public
outcomes of the negligence review were drawn together in the Ipp
Report and this report recommended significant changes to the law
of negligence in Australia. The Ipp Report suggested that the
rules relating to key areas of negligence law, namely standard of
care, causation and remoteness of damage, should be amended, the
effect being to make it more difficult to establish
negligence.(12) The report also recommended that rules
relating to damages awards needed to be modified, and for example
suggested that a cap on general damages be put in
Responses to the Ipp Report
Henry Ergas, from Network Economic Consulting
Group, in an article in the Australian Financial Review wrote
Ipp report] remains a firmly fact-free document, failing to
establish whether a problem exists and if so what it is
Committee s own explanation is an astonishing admission of hubris
in the face of ignorance: that due to a dearth of hard evidence its
recommendations are based primarily on the collective sense of
fairness of its members.(14)
Despite this criticism, all States and
Territories have seen the need for law reform and have enacted
legislation implementing a range of the recommendations contained
within the Ipp report.
implementing reforms consistent with those set down in the Ipp
report, the media release for the Premier of New South Wales,
stated the following:
range of community groups, charities and organisation from across
NSW including Coffs Harbour s Big Banana, the Cobar pool and the
NSW Farmers Association have endorsed the State Government s public
Premier of NSW, Mr Bob Carr in a major address to the State
Parliament outlined the overwhelming community support for reforms
reforms will reinstate personal responsibility, reduce the culture
of blame and avoid the Americanisation of the NSW Legal
reforms mean we can all continue to enjoy the simple pleasures such
as swimming at the beach and community shows and
recently, the Premier of Victoria, clearly demonstrated his
Government s support for the recommendations when he made the
following statement regarding legislation introduced into the
Victorian Parliament giving effect to some of the Ipp report s
payouts and worldwide pressure on the insurance industry have
created an environment of unaffordable premiums which all states
have had to address.
premiums are becoming unaffordable not just for doctors, but for
tourism operators, small business and community and sporting
associations like pony clubs and local football clubs .
We have a
responsibility to strike the right balance between protecting
people s rights and ensuring a viable insurance
V Division 1 of the TPA contains key consumer protection measures,
the most commonly used ones being those that deal with misleading
and deceptive conduct (section 52) and false and misleading
representations (section 53). Examples of other provisions in Part
V Division 1 of the TPA include those provisions that deal with
bait advertising (section 56), harassment and coercion (section 60)
and pyramid selling (section 61).
provisions in Part V Division 1 of the Act are breached, a person
may recover damages for any loss they have suffered as a result of
a contravention of the provision.(17) In addition,
consumers may seek injunctive relief,(18) non-punitive
orders,(19) punitive orders,(20) and remedial
Australian Competition and Consumer Commission (ACCC) may take
legal proceedings (representative actions) on behalf of a person
who has suffered loss where any of the provisions in Part V
Division 1 are breached.(22)
Criminal proceedings may also be
brought against persons who have breached any of the requirements
(other than section 52) in Part V Division 1 of the Act. Section 52
is not a criminal offence.
V Division 1 of the TPA is also replicated by all the States and
Territories in their own consumer protection
This Bill gives effect to Recommendation 19 of
the Ipp report which states that:
should be amended to prevent individuals bringing action for
damages for personal injury and death under Part V Div
Ipp Report has argued that Part V Division 1 of the TPA must be
amended to prevent individuals bringing actions for personal injury
and death under this part of the Act. The report argues that this
change is necessary so that one of the key objectives of the
negligence review (that is to limit liability and quantum of
damages pay outs), is not undermined by plaintiffs relying on the
TPA to recover damages where damages could not be recovered in
Ipp Report explained the need for legislative change to the TPA in
the following way:
reforms that we are proposing in this Report are adopted, it will
become more difficult for plaintiffs to succeed in claims based on
negligence. Some may not succeed at all and others may only succeed
to a lesser extent. Lawyers will inevitably search for different
causes of action on which to base the same claims. Provisions of
the TPA will provide an obvious target for this search. What has so
far been a rarity may become commonplace, unless steps are taken to
prevent this from occurring.(23)
Accordingly, the Bill proposes to amend the TPA so that
individuals will be unable to recover damages under the TPA from a
defendant whose conduct breaches Part V Division 1 of the TPA and
causes personal injury or death. The Bill also proposes that the ACCC s powers
to bring representative actions on behalf of individuals to recover
damages for personal injury and death be removed.
Despite these amendments, consumers
will still have a range of remedies for breaches of Part V Division
1. An individual will still be able to recover damages for economic
loss suffered as a result of conduct that breaches Part V Division
1 of the Act. Similarly the ACCC will be able to bring
representative actions on behalf of individuals to recover damages
for economic loss.
addition, criminal proceedings may be brought if a person suffers
personal injury or dies as a result of conduct in breach of Part V
Division 1 (other than section 52) of the TPA. A court may also
issue an injunction, or make punitive or non-punitive orders where
the provisions have been breached and this leads to personal injury
from the need to ensure that the Ipp Report objectives are not
undermined, the Ipp Report has also argued that it is not
appropriate to recover damages for personal injury and death under
Part V Division 1 of the Act as fault is not an element in the
provisions in this part of the Act. In relation to section 52 the
report has stated that:
s52, however, the plaintiff can succeed merely by proving that the
statement was misleading or deceptive, even if the defendant made
the statement with the utmost care and with complete
Ipp Report has suggested that a party should have to prove fault on
the part of the defendant before being able to receive
Ipp Report also argued that when Parliament enacted Part V Division
1, it did not envisage that plaintiffs would institute proceedings,
under that part, to recover damages for personal injury or
death.(25) Therefore implementation of Recommendation 19
of the Ipp report would not alter the policy objective of Part V
Division 1 of the Act.
would seem that the proposed amendments to Part V Division 1 do
reduce the level of protection to consumers. Part V Division 1 sets
down standards of conduct that the legislature has considered must
be adhered to by corporations that engage in trading and commercial
activities with consumers. For example, in relation to section 52
the Federal Court has stated that:
52 is a comprehensive provision of wide impact, which does not
adopt the language of any common law cause of action. It does not
purport to create liability at all; rather it establishes a norm of
those standards of conduct are not adhered to and an individual
suffers loss, a corporation will be required to compensate the
individual consumer who has suffered the loss. If the amendments
proposed in this Bill proceed and Part V Division 1 of the
TPA is breached, consumers will be unable to recover damages for
personal injury and death under the TPA. The Ipp Report does point
to the fact that plaintiffs have rarely relied upon Part V Division
1 to recover damages(27) but does acknowledge that it is
a possible avenue for redress. Clearly therefore consumers rights
to seek protection and redress under the TPA are
a policy perspective, the Bill also raises interesting questions
about having different standards in place for different forms of
loss under the TPA (ie economic loss versus loss for personal
injury or death).
South Wales has
amended its consumer protection legislation that replicates Part V
Division 1, to implement Recommendation 19 of the Ipp Report. Some
other jurisdictions (such as South Australian and Queensland) are
looking to also implement this Recommendation and have indicated
that they are waiting for the Commonwealth to pass the amendments
in this Bill before proceeding with their amendments.
The amendments to the TPA are contained within
The main amendment is item 2of the Bill which
inserts a proposed sub-section 82(1A) into the
TPA which states that a person cannot recover damages for a
contravention of Part V Division 1 where the loss or damage is or
results from death or personal injury.
Sub-sections 87(1) and (1A) of the TPA give
the court power to make remedial orders for conduct covered by
several parts of the TPA including Part V, Consumer Protection.
Existing sub-section 87(1B) gives the ACCC power to bring
representative actions on behalf of individuals who have suffered
loss or damage as a result of conduct in contravention of several
parts of the TPA including Part V.
Items 3-5 amend sub-sections
87(1) and (1A) and insert proposed subsection 87(1AB) into the TPA
to ensure that individuals cannot commence proceedings and the ACCC
cannot bring representative actions to recover damages for loss due
to personal injury or death under section 87 of the Act.
The amendments in
this Bill implement Recommendation 19 of the Ipp
Report, so that individuals will be prevented from recovering
damages for personal injury and death brought about by a breach of
Part V Division 1 of the TPA.
Arguably these amendments reduce
consumer rights to redress under the TPA. The amendments do,
however, close a loophole in the law that has the potential to
undermine the Ipp Report s recommendations and hence the Government
s policy response to the insurance crisis.
Liability Meeting Makes
Significant Progress , Media
Release, Senator the Hon. Helen Coonan, Minister for
Revenue and Assistant Treasurer, 30 May 2002.
Review of the Law of Negligence Final
Report, Canberra, September 2002, p.6
Public Liability Claims
Management Research Report, December 2002, p. xiii.
Public Liability Insurance;
Analysis for Meeting of Ministers 27 March 2002, 26 March 2002, p. 30.
Ibid p. 30.
Ibid p. 28.
Ibid p. i.
Justice David Ipp, Negligence Where lies the future?
Australian Bar Review (2003) 23 p. 159.
Hon Helen Coonan, Insurance Premiums and Law Reform
Affordable Cover and the Role of Government , The University of New
South Wales Law Journal vol 25, No 3 2002.
Minister Welcomes Final
Negligence Review Report , Media Release,
Senator Hon Helen Coonan, Minister for Revenue and Assistant
Treasurer, 2 October
Review of the Law of Negligence Final
Report, op cit.
Recommendations 28 and 29,
ibid. p 10-12.
Recommendation 48, ibid p.
Ipp report: long on
notions, short on facts , The Australian Financial
Strong community response
to public liablity reforms , News Release, Premier of New
South Wales Australia, September 4 2002.
Government to protect
access to insurance for all , Medial Release, the
Hon. Steve Bracks, Premier of Victoria,
section 82 TPA.
section 80 TPA.
section 86C TPA.
section 86D TPA.
section 87 TPA.
section 87 TPA.
Review of the Law of Negligence Final
Report, op cit,
Ibid, p. 76.
Ibid, p. 73.
Brown v Jam Factory Pty Ltd
(1981) FLR 340 at
Review of the Law of
cit, p. 74; when making this assertion the report made particular
reference to section 52 TPA.
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