Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Trade Practices Amendment (Personal Injuries and Death) Bill 2004. This bill was originally introduced and debated prior to the 2004 election. When this legislation was considered in the previous parliament, Labor and the minor parties combined in this chamber to amend it. Unfortunately, the amendments were not accepted by the government and the bill lapsed. Labor believes that the rationale for those amendments still stands, and I will return to that point later in my remarks.

The bill arises from the panel of experts’ review of the law of negligence conducted by Justice Ipp back in 2002. Justice Ipp’s review was initiated following widespread community concern about skyrocketing public liability insurance premiums. Public activities and events were put into jeopardy because affordable insurance cover was simply not available. Justice Ipp developed a set of recommendations designed to reduce claims costs and put downward pressure on insurance premiums. In response, all states and territories introduced tort law reforms to bring claims costs under control. Evidence now is beginning to emerge that these reforms have improved the availability and affordability of public liability insurance. Labor has consistently stressed the need for Commonwealth action to support the efforts of the state and territory governments to reduce public liability premiums.

In the previous parliament, Labor supported amendments to taxation laws to facilitate structured settlements which reduce costs to insurers. Labor also backed the principle that the TPA needed to be amended to allow people who engage in high-risk recreational activities to be able to waive their rights to sue. In addition, Labor endorsed legislation to remove the personal liability of volunteers performing work for the Commonwealth. The Ipp review recommended that the Commonwealth should ensure that reforms to the law of negligence at the state level should not be undermined by the practice of forum shopping by litigants—that is, claims that cannot be pursued at state law should not be the basis of an action under Commonwealth law.

Since 2002, Labor has supported appropriate amendments to the Trade Practices Act to ensure that public liability claims costs did not blow out on another front following state tort law reform. However, the opposition has always argued that the need to reduce insurance premiums which threaten the viability of community events must be balanced against the rights of injured consumers. This bill fails to strike that balance. A number of provisions of the Trade Practices Act can give rise to an action for personal injury damages. This bill is concerned with actions under part V division 1. The key provision in this part of the TPA is section 52, which prohibits corporations from engaging in misleading and deceptive conduct. Other provisions of the TPA which can give rise to an action for personal injury damages include part IVA, which deals with unconscionable conduct, and part VA, which imposes liability on manufacturers or importers of defective goods.

Labor is concerned that the government has adopted an inconsistent approach to addressing the potential for forum shopping. Where personal injury or death is caused by misleading and deceptive conduct, this bill seeks to abolish the rights of both individuals and the ACCC acting in a representative capacity to recover damages. In contrast, where an action for personal injury damages is based on other provisions of the TPA, such as for unconscionable conduct, damages will still be available. In 2004, the parliament established a new compensation regime in part VIB to apply to personal injury damages claims arising under the TPA. Labor supported this legislation. Part VIB imposes limitation periods, caps and minimum thresholds for damages to eliminate small and trivial claims.

This compensation regime is broadly consistent with the limitations on negligence actions which have been imposed by state and territory law. The regime does not, however, apply to all actions for personal injury arising under the TPA. While it applies to personal injury cases arising from unconscionable conduct or the sale of defective goods, it does not cover actions for misleading and deceptive conduct. In the last parliament, the opposition argued that the capping regime in part VIB should be extended to cover these cases. Labor remains convinced that this is the best course of action. There is no need to completely abolish long established consumer rights.

In the two years since this legislation was first proposed there has been no evidence of an explosion in TPA claims where plaintiffs have been seeking to get around state law. When this matter was first presented to the parliament back in 2003, Labor sought to have the matter considered by a Senate committee. The committee examined the government’s claims about the impact of this bill on consumers. The government has argued that consumers will not be adversely affected by the removal of the right to seek damages for misleading and deceptive conduct, because damages for negligence will still be available under state law. However, the Senate Economics Legislation Committee was presented with a number of scenarios where consumers would have no remedy available to them if this bill was passed. One possible example cited related to a case involving a defective drug where the defendants destroy or ‘lose’ test results. In such a situation, plaintiffs would lack the crucial evidence needed to make out a negligence claim. Labor believes that this bill has the potential to undermine the culture of care that has developed in Australia since the enactment of the TPA. As a consequence, consumers may be exposed to a greater risk of injury.

During the committee’s hearings, the Law Council noted that the prohibition on misleading and deceptive conduct in section 52 of the act has led to general improvements in community safety and cautioned against restricting its scope. The consumer watchdog, the ACCC, also strongly opposed amending the TPA to remove liability for personal injury under section 52. The ACCC’s argument was based principally on literature known as the economics of accidents. Simply stated, this analysis suggests that liability for the cost of accidents should be assigned to the party that could most easily and cheaply take the actions needed to minimise the risk of an accident.

I will outline some of the significant points made by the ACCC in relation to the effect of the government’s proposal to abolish consumer rights in this bill. The ACCC noted that section 52 of the TPA provides an important incentive for business to behave fairly and to have regard for consumers’ safety. Without the availability of this important remedy, the standard of behaviour that consumers are entitled to expect may break down. This is a very significant concern. Furthermore, the commission has noted that limiting the scope of section 52 is economically inefficient. This is because it forces consumers to incur greater search costs in order to determine which suppliers are reliable. Finally, the ACCC has argued that removing liability for misleading and deceptive conduct which causes personal injury actually damages the competitive process. It allows firms that engage in misleading and deceptive practices to win customers at the expense of those who play by the rules.

Given this evidence from the ACCC, why is the government intent on eliminating an important consumer protection provision? The government has placed a lot of emphasis on the fact that section 52 is a strict liability provision. This means that the intent of a company that misleads and deceives is not relevant in determining liability under the act. Consequently, the government asserts that it is easier to bring an action under the TPA as there is no requirement to prove fault, as is required in negligence cases. Labor does not accept this argument. The fact is that section 52 of the Trade Practices Act has been a strict liability provision since 1974. As the Law Council told the Senate committee, if it were significantly easier to bring an action for personal injury under section 52 rather than for negligence, it would have been used in many more cases.

Provided that the quantum of damages available under the TPA is broadly consistent with the amount available under state or territory law, there is no reason to believe that the availability of a TPA remedy will drive forum shopping. Companies that engage in misleading and deceptive conduct which causes personal injury or death should not be excused of responsibility for their actions. As the ACCC’s Jennifer McNeill told the Senate committee:

In a situation where a business misleads or deceives a consumer and the consumer suffers damage ... the commission thinks that, as a matter of principle, they should be held accountable and liable for that damage, irrespective of intention.

McNeill said that this was because:

... it is much more within the control of the business involved whether and how the representations are made; it is not within the control of the consumer whether and how the representations are made.

The danger of forum shopping, which this bill seeks to address, can be dealt with in a better way. All that needs to be done is to ensure that plaintiffs are unable to recover damages under Commonwealth law that exceed those available under state and territory law.

During the committee stage of this bill, Labor will move amendments to ensure that the capping regime in part VIB of the TPA also applies to actions commenced for a breach of section 52. This will remove the economic incentive for forum shopping while maintaining a fundamental consumer protection provision of the TPA. Labor’s approach is a practical one. We support action to bring claims costs under control and put downward pressure on premiums. At the same time a balanced approach is required. This bill must be amended so that the rights of people who have suffered injury as a result of misleading and deceptive behaviour are not eliminated. Labor believes that this is the only fair way to deal with this issue.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I, too, rise to speak on the Trade Practices Amendment (Personal Injuries and Death) Bill 2004. This is the latest in a long run of bills attempting to attend to this area of tort law and of trade practices law. The amendments in the bill relate to part V division 1 of the Trade Practices Act. Part V division 1 of the Trade Practices Act contains key consumer protection measures, the most commonly used ones being those that deal with misleading and deceptive conduct and false and misleading representations.

The Bills Digest No. 170 of 31 May 2005 had some concluding comments which well captured the nature of discussion on the bill. They said:

The amendments in this Bill implement Recommendation 19 of the negligence review, 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.

These amendments reduce consumer rights under the TPA. These 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.

The insurance crisis has abated and some may therefore argue that these amendments are unnecessary. Those who support these amendments suggest however that premium pricing may again increase if the reforms to negligence laws are undermined by claimants relying on other avenues of legal redress such as Part V Division 1 of the TPA.

The Bill is also a reminder of the broader policy issues at play and in particular whether the review of the laws of negligence has achieved the correct balance between premium affordability and access to compensation for those who are injured. This question is particularly pressing given the fact that the review that led to the overhaul of the country’s personal injury laws was completed within such a very short period of time and was a reaction to a crisis in the insurance market.

Missing in that conclusion is what should be the strongest criticism of all of this sort of legislation—that is, that it is built on assertion. It is built on assertion about the consequences to maintaining a provision in law which has identifiably not been abused. There is no record whatsoever that this provision in the Trade Practices Act has ever been abused and there is no credibility to the assertion that it will be abused. The departments are bound to say, ‘Such and such a case did such and such a thing.’ I am talking about wholesale, universal, systemic abuse. It just has not happened.

The Australian Democrats stridently, again, oppose the amendments in this bill because they further curtail the rights of people who have suffered an injury from pursuing legal action for damages for pain and suffering arising from their injuries. The government’s argument has been that unless it takes these steps there will be an increase in litigation to the level of countries like the United States and that insurance premiums will again rise exponentially. The government argues that this is the only way to curtail litigation: by taking away a person’s right to it. These proposed changes to the legislation have been achieved through successful lobbying from the insurance companies and through an overhasty response to a crisis to which the government has now doggedly stuck. In every state of Australia the large insurance companies did push tort law reform and were successful, even in the face of opposition from plaintiff lawyer groups, which they painted as greedy and bloodsucking. Some insurance companies and some plaintiff lawyers might indeed be greedy and bloodsucking, but certainly not all are. We need insurance companies and we need plaintiff lawyers, and we need to find a balance between their vested interests.

This legislation does not provide that balance and nor do its predecessors. Plaintiff lawyer groups were attempting to retain the rights of injured people to bring actions for damages while the insurance companies were attempting to maintain their profit margins and to keep their businesses as viable as possible. This amending bill has been introduced because there is a suggestion that people who have lost the opportunity to pursue damages claims under tort law will now use section 52 of the Trade Practices Act to bring actions to recover damages. The government argues that if this particular amendment is not passed there will be a flood of actions pursuant to section 52. There is no evidence to support this contention.

The Law Council of Australia made a submission to the Senate Economics Legislation Committee on 5 August 2003 which dealt with this issue at that time. At that time it identified nine cases where action had been taken pursuant to section 52 of the Trade Practices Act. It said: ‘None of these cases would appear to be frivolous. The council notes that the apparent volume of claims overall in this area could not be described as excessive given that the Trade Practices Act has been in force for almost thirty years.’ In his second reading speech, Mr Brough stated that this amendment was ‘to assist governments to formulate a consistent approach to the problems of rising premiums and reduced availability of public liability insurance’. This point was reiterated in Senator Minchin’s second reading speech. That was the argument that state governments also ran with in respect of changes to a plaintiff’s right to action for damages arising from negligence. Of course, there is vested interest always in these things because governments themselves are subject to those actions. However, the premiums have continued to rise and sections of the community have now lost their right to compensation commensurate with the injury done to them. This is typical of this government—decrease rights, decrease access to justice; increase obligation, increase your liability for action taken against you by the state.

In general, the Democrats support the rights of aggrieved parties to take claims for damages and compensation to the courts and for those matters to be decided by the courts. While we support necessary restraints on ambulance chasers and excessive litigation, the so-called reforms in this area have gone far too far, and we have consistently opposed them. The argument was that, if there were a limit to common-law actions, then insurance premiums would be reduced, the number of claims would drop and genuine complainants would survive. Claims have dropped, insurance profits have risen significantly, premiums remain high and cover is more difficult for small organisations to get than ever. There is no indication as to why these further changes should reduce insurance premiums and it further and unnecessarily limits the ability of injured people to bring an action.

A panel of experts reviewed the law of negligence in Australia after a ministerial meeting on public liability insurance in 2002. The panel recommended the changes so that the law at state and federal levels would be consistent. However, although the Hon. Minister Brough states that this consistency will be achieved by the passage of these amendments to the Trade Practices Act, it should be pointed out they will not. These changes are styled upon the New South Wales legislation. Not all states have followed the New South Wales legislation, and consistency will therefore not be achieved as has been asserted. According to the government, these measures are being introduced so that the Trade Practices Act cannot be used to undermine state and territory civil liability tort reforms. As far as any inconsistency remains, they can be used to do just that.

I also point out that, in the government’s anxious desire to keep the insurance industry contented, they appear to have completely overlooked the impact this legislation will have on future budgets. Generally the payouts made by the courts include provision for the ongoing care of an injured person calculated at the cost of the care and the number of years they are likely to require the care. Courts will no longer have to do these long and complicated sums because the injured people are now forced to rely exclusively on Centrelink and Medicare payments for the rest of their lives. So, in aggregate, what this bill does, as do the other bills, is to transfer liability from the insurance companies to the taxpayer.

I would like to point out some other points which, instead of simplifying matters and taking them out of the hands of lawyers, appear to increase the likelihood of litigation. In particular, the calculation of the date of discoverability is rather open ended. It is three years except in those circumstances where it is up to 12 years. There is certainly an attempt at specificity. However, it appears to open up avenues for long, drawn-out litigation processes to determine whether or not a person can bring an action. This takes time, money and energy, which an injured person may not wish to expend, so there will be a reduction in litigation, as the government wants, but also a reduction in real justice. In the case of some injuries, three years is a very short period of time. The current proposed time limit will put off people who may have a legitimate claim but not sufficient funds from pursuing it. That is not justice; that is intimidation.

I concede that this aspect does not apply to smoking related diseases, but I do believe there are other conditions which may have a long gestation period. The Democrats support the notion that people can bring actions against tobacco companies. Tobacco companies were well aware by at least the 1960s of the scientific evidence which showed the link between smoking and lung, throat and mouth cancer, but they continued to promote smoking as part of a healthy, trendy lifestyle. However, the limitation period and the calculation of the limitation period proposed in this legislation appear to create opportunities for lawyers rather than certainty for plaintiffs.

I am also aware of some of the definitions contained in the proposed amendments. The definition of a most extreme case is ‘a case in which the plaintiff suffers non-economic loss of the gravest conceivable kind’. I suggest that this again does not promote certainty in the law and appears simply to create an opportunity for lawyers to offer up different determinations of exactly what the ‘gravest conceivable kind’ really means. It is a matter which is going to be subject to jurisprudence.

It again appears to lend itself to much preliminary examination of issues rather than dealing with the question of the amount of damages that a person can claim for a certain type of injury. The government has reiterated that the purpose of the bill is to reduce insurance premiums. The changes to state legislation were for the same purpose, but there has been no notable reduction in insurance premiums. I certainly have not had constituents ringing me up and saying how wonderful it is that insurance premiums have dropped or that they can get cover for whatever they need, particularly for small not-for-profit organisations. Therefore, there is no reason to suggest that these amendments will achieve any end other than a loss of consumer rights for potential legitimate claimants. They will, in fact, further disadvantage injured Australians and taxpayers, who will now carry the burden of Centrelink and Medicare payments for the injured, which would have been carried by insurance companies through court decisions. For the reasons outlined above, the Australian Democrats oppose this bill, as we have previous bills which have had this intention.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

On behalf of the Australian Greens, I welcome the opportunity to speak on the Trade Practices Amendment (Personal Injuries and Death) Bill 2004, because it deals with a very serious issue—namely, the right of those who have suffered injury or death caused by products made by companies or corporations to gain help, redress or compensation from the courts. These amendments reduce consumer rights under the Trade Practices Act.

At its core, with the exception of tobacco products, this bill prohibits people from being awarded payment of damages for death or injury under part V, division 1, of the Trade Practices Act as it currently stands. A glance at the act reveals that part V is headed ‘Consumer Protection’, whilst division 1 is titled ‘Unfair practices’. If this bill is implemented, people will not be able to take action if, for example, death or inquiry has resulted from misleading or deceptive conduct or false or misleading representation. Will companies be able to get away with misleading and deceptive conduct or false or misleading representation that causes death or injury, while people have no rights to take action? This bill strips these protections, which I believe were once one of the envies of the world, from the act and renders them useless. The Senate will be endorsing the removal of consumer protection and enshrining unfair practices. I believe this is unfair and disgraceful.

The Senate should query why tobacco products remain outside this amendment. I do not want you to think that we think that they should not be, but why not other products? Many other products will gain full statutory immunity. What about the many and various claims of new technologies—for example, genetically modified products, particularly in foods? We do not know at the moment what impacts these will have. We also do not know what claims will be made about these products. There are claims now about how much healthier we are all going to be.

Why is the government so concerned about tobacco products and not the raft of other dangerous products? I believe this is policy making on the run. This bill, as has already been highlighted, had its genesis in 2002 with the review of the law of negligence in Australia undertaken by a committee chaired by Justice David Ipp. The final report of the committee was presented in September 2002. The justice and his committee were forced to work with terms of reference that can only be described as narrow. For instance, they were asked to develop and evaluate:

... options for amendments to the Trade Practices Act to prevent individuals commencing actions in reliance on the Trade Practices Act, including actions for misleading and deceptive conduct, to recover compensation for personal injury and death.

This legislation is the result of a fundamentally predetermined report. The Greens are opposed to this bill because it makes it harder for plaintiffs or injured people to successfully sue corporations or companies when those very same corporations or companies caused injury or death.

While we agree that high insurance premiums are a problem for the community—and I have dealt with this on many occasions, having worked for a long time for non-government organisations—we do not believe that undermining consumer rights is the answer. In fact, this bill makes it easier for corporations to avoid liability. That is a very significant outcome of the legislation before us, and I believe it is patently wrong. What kind of message does this give to corporations which make faulty goods—life jackets that do not float, cars that explode, blenders that electrocute or drugs that deform? The message is that it does not matter if you use deceptive language or if a product has an adverse outcome for the community. We believe that this legislation should be opposed. We do not support the reduction of consumer rights. We believe that we should be protecting and improving consumer protection in this country. We agree with other senators who have spoken on this legislation. Previously we have opposed this legislation; we oppose it now.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

I would like to thank all the speakers who have participated in this important debate today, which deals with the Trade Practices Amendment (Personal Injuries and Death) Bill 2004. The bill is a final plank in the program of tort law reforms pursued by both the Commonwealth and state governments over the past few years. These reforms will benefit all Australians by making insurance more affordable and available. A number of speakers have touched on this. A great deal of research has gone into this. The expert panel which was chaired by Justice Ipp has been mentioned. This bill will implement recommendations 19 and 20 of the review of the law of negligence. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.