Many years ago I recall a politician receiving a settlement for damages of $65,000 for a broken arm sustained when falling from a bike. At the time media reports contained little explanation as to the allegations of negligence against the Defendant or how the personal injury settlement was calculated.
The payout of the injury claim at the time attracted considerable publicity and perhaps understandably was seen by some people as being very generous and was used by others as a basis of comparison as to what their own personal injury claim might be worth.
The fact is however that the generosity or otherwise of the settlement could never be known without fully understanding the relevant considerations taken into account in valuing that personal injury claim.
Similarly, the publication on websites by some law firms of settlement amounts for particular injuries, done presumably for marketing purposes, is also unhelpful and meaningless for comparative purposes. The fact is that no two cases are the same and a whole range of factors must be taken into account when assessing damages, which even for identical injuries, can result in different amounts of compensation.
This article is written principally to assist injured Claimants to better understand some of these factors if suing for compensation (damages) in Victoria for injuries arising out of TAC Claims, WorkCover claims, medical negligence claims and public liability claims.
For a Claimant this is one of the most important questions asked of a personal injury lawyer. The answer will require the lawyer to have a complete knowledge of all issues and evidence and to consider a range of factors which might bear upon the assessment of the injury claim. It’s a question which generally cannot be answered with any real accuracy at a first appointment, when all relevant information may be unknown.
The factors to be considered when assessing a claim are many and varied and beyond the scope of this article to list comprehensively. Instead I intend to deal with some of the factors which are typically taken into account when assessing damages to illustrate why there can be differences in awards of personal injury compensation even for cases involving similar injury.
Broadly the considerations which affect the pay out to an injured person in a damages claim will depend on: -
-the evidence, particularly of the consequences of the injury upon the person;
-the common law developed by Court decisions over time;
-law enacted by Parliament.
At its most fundamental, the effects of the injury, in terms of causing pain, suffering, loss of enjoyment of life and loss of earnings consequences, need to be judged on a case- by-case basis, with reference to their impact on the particular individual. Identical injuries will have different consequences because each individual is different.
1.The loss of an index finger, for example, may have profound consequences for a concert pianist which would not be the same for a merchant banker.
2.The Claimant’s age will be important. For example, a catastrophic personal injury resulting in paraplegia for a person in their early 20’s will be more significant than if sustained by someone in their 70’s, although for both the injury would be devastating.
3.A back injury may prevent or restrict a previously very active person from engaging in a wide range of domestic, social and recreational activities. An individual with an inactive lifestyle might not be so badly affected.
The degree of severity and permanency of the injury will be an important consideration in judging pain, suffering and loss of earnings consequences. Is there scope for improvement or deterioration? What are the ongoing medical treatment and medication requirements? Are the adverse consequences complained of consistent with the injury?
The answer may depend on medical opinion which may differ between doctors. On behalf of the Defendant, surveillance might be arranged and the film arising there from may become a relevant consideration.
If a personal injury claim is made for loss of earnings, further issues need to be considered.
Does the injury cause a total or partial loss of earning capacity? The answer may depend on the Plaintiff’s evidence and also upon vocational and medical opinion as to whether the Plaintiff can undertake pre-injury employment or some other form of suitable employment with or without retraining.
If not for injury, what was the Plaintiff’s likely future earning capacity? The answer will include an assessment of the Plaintiff’s pre-injury earnings history and consideration of any other factors which might have otherwise impacted (either favourably or unfavourably) on the Plaintiff’s earning capacity.
The nature of the Plaintiff’s pre-injury occupation might be relevant in determining how long the Plaintiff may have worked without injury. For example, it may be that a 50 year old bricklayer would not have worked in that occupation to normal retirement age because of the physical demands of the occupation and as such, future loss of earning capacity might be calculated to a lesser age. Similarly, there may be occupations of a type or circumstances which suggest that the Plaintiff, without injury, would have continued to work beyond normal retirement age.
Medical conditions, unrelated to the compensable personal injury, may also need to be considered. For example, a serious shoulder injury sustained at work might prevent a 40 year old labourer from returning to any form of employment but the medical records may indicate that the injured worker had other health problems which would have likely adversely impacted his earning capacity even without the shoulder injury.
Future loss of earnings are calculated on actuarial tables based on discount rates prescribed by legislation. For TAC and WorkCover claims, the discount rate is 6%. For medical negligence, public liability and other liability claims, the discount rate is 5%. This means, for example, that a 20 year old losing $500 per week to age 65 gets less money for future loss of earnings for a TAC or WorkCover claim than for the same loss if caused by medical negligence. In addition, Victorian legislation provides that a person injured in a transport accident is not permitted to sue for loss of earnings for the first 18 months, whereas the person is so permitted if injured at work or in a public liability situation.
The law also generally requires an appropriate discount to be made for future loss of earning capacity for “vicissitudes of life”. For example, a 40 year old may never work again because of injury and claims total loss of earnings to retirement age: - for say $1,000 per week (being pre-injury earnings) to aged 65. Generally the Courts would discount the amount claimed to take account of “vicissitudes of life” – that is other things might have occurred in that person’s life which may have caused periods of unemployment. Commonly a discount of 15% is made for this possibility but it can be more or less depending on the circumstances of each case.
The total amount of personal injury damages which a person receives will also depend on whether a claim for medical or like expenses can be made. If such damages can be claimed, then there may be a huge variation between claims in the amounts recovered as it will all depend on the particular individual’s treatment and care needs.
Under Victorian Law, for transport accident claims and for work accident claims no claim for damages can be made for medical or like expenses as the legislative schemes are designed, with some qualifications, to provide no fault cover for life. In contrast, medical negligence claims, public liability and other claims in Victoria are regulated by different legislation called the Wrongs Act 1958. Under that Act, an injured person can sue and recover damages for medical and like expenses, subject to proving medical negligence.
The damages for such items can be enormous and in recent years I’ve resolved several medical negligence claims sadly involving children with catastrophic injury where the past and future medical and like expenses (including attentive care, aides, equipment, accommodation and other expenses) have amounted to several million dollars. These sums would not have been payable as damages if that same child had been injured in a transport accident or work accident. This can mean in some cases the total damages payable for Wrongs Act claims will seem disproportionately large compared to damages awarded for TAC or WorkCover claims for similar injuries.
The assessment of the value of an injury claim also involves an appreciation of the overall risks of the litigation. Damages are only awarded if the injury is caused by the Defendant’s negligence. There may be legal issues which put the claim at risk of failing. There may be causation issues – for example whether the alleged negligence was a cause of the claimed injury. There may be issues as to whether the Defendant was in breach of its duty of care. Furthermore, the Defendant may allege that the injury was caused in part as a result of the Plaintiff’s contributory negligence. For example, if at Trial it was held that a Plaintiff was 50% at fault for the occurrence of the injury, then the damages awarded would be reduced by 50%. If at Trial there was a finding of no negligence on the part of the Defendant then no damages whatsoever would be awarded. Inevitably some cases will be stronger than others.
The risks of litigation may be factored into any offer of settlement made prior to Trial on behalf of the Defendant. If, for example, after taking account of all relevant considerations, it was thought by a Defendant that a claim might be valued within the range of say, $100,000 - $150,000 (mid-point $125,000) and the Plaintiff faced a 50/50 prospect of failing altogether with the action, then the Defendant might make an offer prior to Trial of say, $65,000. Whether this was acceptable to the Plaintiff would depend presumably on the legal advice given to the Plaintiff and the Plaintiff’s risk tolerance.
Ultimately, however, in the absence of an out of Court settlement, the quantum of a claim will be determined by a Court and most likely, by a jury, who will bring to bear their own life experiences and value judgements. This can sometimes lead to unpredictable outcomes.
Commercial considerations may also come into play for a personal injury claim. For instance, the Defendant may make a final offer to settle a claim for $80,000. It might be thought the claim is potentially worth up to $100,000 but to proceed to Trial may involve extra legal costs of $15,000 to $20,000 which makes the costs/benefit doubtful.
In preparing a client’s case in a way which will maximise the injury compensation entitlement, it is of vital importance that the personal injury lawyer be fully conversant with all factors that impact upon the quantum of the client’s personal injury claim.
Once all facts are known, an experienced personal injury lawyer should be able to provide a reasonable estimate as to the likely range of damages to which a Claimant should be entitled.
This information is of a general nature only and will not reflect any changes to the law if made after the date of this article. It should not be relied upon as a substitute for discussing your situation with a qualified legal practitioner.