Schubert, Phil --- "The New Act CTP Scheme: a Loss of Common Law Rights" [2021] PrecedentAULA 10; (2021) 162 Precedent 39

Most people don’t understand, let alone care, about compulsory third party insurance (CTP) until they are involved with it in the relatively rare situation of being injured in an accident. Creating political interest and an impetus to diminish common law rights is therefore a difficult prospect, particularly in a place like Canberra.

After winning the 2016 election, the Barr Labour Government quietly included an allowance in the following year’s budget for a ‘citizens’ jury’ to examine the issue of CTP. This was either because of a sudden renewed short-term government interest in this form of deliberative democracy or a political masterstroke. Previously, the ACT Greens had been disinterested in changes to what was, on balance, a well-functioning and reasonably-priced scheme providing a good level of cover to victims of negligence. However, the Greens were particularly interested in the people being ‘involved’ in democracy, and the citizens’ jury model was a way to undertake a variety of different reviews and reforms.

	Home \| Databases \| WorldLII \| Search \| Feedback Precedent (Australian Lawyers Alliance)

A citizens’ jury was previously conducted in South Australia, in a failed attempt to create public consent to the building of a nuclear waste dump. Broadly, the idea was that if you properly inform a group of thoughtful citizens on the pros and cons of an issue, they might move beyond their preconceived views. The citizens’ jury in South Australia did not approve the nuclear waste dump,^[1] although it may yet be built anyway.

Unfortunately, the ACT jury was comprised of people whose only experience with CTP was paying an annual premium. People with personal experience of motor accidents were specifically excluded, as were lawyers and others working in the sector. Such parties were involved in a steering committee but were not involved in making the actual decisions, and the process was heavily influenced by the facilitators. A cynical observer may say that this was in order to procure a certain outcome. Attempts to educate the jury about real-life client experiences were openly stymied by the facilitators.

An alternative jury was arranged by ALA members to report on the direct experiences of Canberra residents who had been victims of motor accidents. It was found that the existing scheme had served the alternative jury members well, and that it was important to protect access to compensation with the focus of CTP insurance to be on the not-at-fault parties rather than those who had caused an accident. They concluded that a CTP system needs to be nuanced, flexible and humane, and were concerned that a one-size-fits-all approach could leave some parties worse off, but were open to extending some benefits to at-fault drivers.^[2] Their findings were more or less ignored.

After several weekends of hearings and an online ‘hub’ of information that the ALA and the ACT Law Society were not privy to, an actuary put together four possible types of schemes that would include differing levels of cover, including no-fault cover at various price points. Unsurprisingly, the jury of motorists simply picked the cheapest model when prompted.

Legislation was then drafted in broad compliance with the scheme but ultimately did little, if anything, to remedy various pre-existing issues with the scheme that the Law Society and the ALA had been reporting to government about for years, and retained some of the more draconian and unworkable procedural aspects of the Road Transport (Third Party Insurance) Act 2008 (ACT) (the 2008 Act). Despite efforts by a working group of lawyers, including many ALA members, the Labor Government and the Greens took on minimal amendments, and the new Motor Accident Injuries Act 2019 (ACT) (the Act) commenced on 1 February 2020.

The previous scheme was fault-based. Poor drafting meant that a theoretical six-month benefit for no-fault was unavailable in practice. Premium prices were similar to other states although above the average, likely due to the ACT’s higher median wage.

The new scheme, similar to other jurisdictions, is a no-fault scheme in which anyone involved in a motor accident can obtain death, income, and treatment and care benefits.^[3] Claims must be made within 13 weeks of the accident.^[4]

For persons with injuries assessed as at least 5 per cent whole person impairment (WPI), a small lump sum payment can also be accessed.^[5] Statutory benefits are time-limited, similar to other jurisdictions, and insurers are given significant power to determine what they choose to support. Administrative disputes can be litigated in the ACT Civil and Administrative Tribunal however regulated fees for lawyers – presently capped at $2,000 inclusive of GST, filing fee and disbursements – mean that the commerciality of such actions is difficult. There have been no published decisions to date.^[6]

There is no access to common law damages, except where a claimant has been assessed by a panel doctor, arranged by the insurer from an authorised independent medical examination (IME) provider,^[7] as having 10 per cent or higher WPI.^[8] This threshold is similar but slightly less restrictive than in NSW, where the requirement is more than 10 per cent WPI. The only common law damages are past and future economic loss, past and future treatment, and general damages – termed quality of life damages – per a schedule linked to the WPI assessment.^[9] These scheduled damages are a fraction of the common law equivalents,^[10] despite the possibility of a court increasing the award by up to 20 per cent if the WPI assessment did not take into account a particular injury or effect on the claimant’s life.^[11] This approach differs to awards of non-economic loss in NSW, where claims assessors are free to make awards once the threshold has been met with a cap of $590,000^[12] and these awards usually exceed $100,000 by default.

Drastically cutting back general damages for victims of negligence is one of the harsher aspects of this scheme and means the tortfeasor also has an avenue to compensation. The following are examples of the scheduled damages payable:

	No-fault scheme	Common law
WPI assessment (%)	Quality of life benefits ($)^[13]	Quality of life damages payable ($)	Maximum allowable with 20% increase ($)
5	7,000	0	N/A
10	17,500	25,000	30,000
15	29,750	42,500	51,000
21	42,000	60,000	72,000
51	126,000	180,000	216,000
100	350,000	500,000	600,000

Disputes can only be litigated in court after the compulsory conference and mandatory final offer stages have been completed.^[14] These requirements were carried over from the 2008 Act and left largely undisturbed, despite their history of creating significant uncertainty and dispute. In practice, disputes for the few matters that do reach court will be simplified, given the only remaining heads of damage at play are economic loss and out-of-pocket expenses.

For common law matters that exceed the threshold, lawyers can charge legal fees in the usual course and party/party costs are recoverable per the court scale.^[15] Fees charged are to be reported to the regulator.^[16] Care Inc, a community financial counselling and legal service, was awarded a tender to provide a free defined benefit information service.

Under the previous scheme there were around 1,000 claims each year. The ALA understands that in the first six months of operation, approximately 80 claims were made under the new scheme, representing a drop in claim numbers of more than 80 per cent. This may be explained by the current pandemic; that local firms are no longer advertising for CTP claims; or because potential claimants do not see the likely benefits outweighing the effort of making a claim.

Despite significantly lower scheme costs as a result of this low participation, whether premiums are set to drop significantly in the short term remains to be seen.

2020 has brought a lot of changes to our lives. However, rolling out a new motor accident injuries scheme will not change the number of Canberrans involved in motor accidents. The new system places huge responsibility on insurers to do the right thing, notwithstanding that the system is skewed in their favour and that access to justice for aggrieved claimants is reduced. The fact that the 2008 Act lasted only 11 years gives some hope that there may be future impetus for review and a reversion to better access to common law rights while still maintaining some degree of no-fault cover.

Phil Schubert is a director of Blumers Personal Injury Lawyers based in Canberra. He has practised in personal injury since 2008, predominantly in the ACT and NSW. EMAIL phil@blumers.com.au.

^[10] WPI was irrelevant in calculating damages in the ACT up until now. However, in Franklin v Blick [2014] ACTSC 273, it was noted that the plaintiff’s WPI was 19 per cent and he was awarded $150,000. For reference, 19 per cent under the MAIA would equate to $56,500.

^[14] Ibid, ss258 and 267.

^[15] Ibid, s284.

^[16] Motor Accident Injuries (Insurer Information Collection) Regulation 2020.

AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.austlii.edu.au/au/journals/PrecedentAULA/2021/10.html

Precedent (Australian Lawyers Alliance)

Schubert, Phil --- "The New Act CTP Scheme: a Loss of Common Law Rights" [2021] PrecedentAULA 10; (2021) 162 Precedent 39