Date: Fri, 4 Nov 2005 11:08:40 +1100

From: Neil Foster

Subject: UK Compensation Bill Published

Dear Colleagues;

I've been following the social utility debate with great interest. But back on the topic of the new Compensation Bill, as a tort lawyer in NSW I cannot resist the impression that HM Government back in the Old Country have been reading some recent Australian material on responding to the "tort crisis". The NSW Civil Liability Act 2002, like similar legislation in other Australian States, has attempted to "fix up" the rules of liability in negligence as well as imposing limits on the amounts of damages that can be awarded in various cases. There is a provision in s 5B(2) which generally "re-enacts" the so-called "calculus of negligence" followed by Australian courts since Wyong Shire Council v Shirt (1980) 146 CLR 40 but specifically adds the element of "social utility":

(2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things):

(a) the probability that the harm would occur if care were not taken,

(b) the likely seriousness of the harm,

(c) the burden of taking precautions to avoid the risk of harm,

(d) the social utility of the activity that creates the risk of harm.

It is still a little unclear why para 5B(2)(d) has replaced the traditional fourth element of the calculus, "other conflicting responsibilities", but presumably someone thought that this was included with the wider genus of "social utility". The only case that I have seen so far that mention this paragraph is Edwards v Consolidated Broken Hill Ltd [2005] NSWSC 301 at [17] where the judge contented himself with finding that "legitimate commercial activity" had some "social utility" but not enough to find that a duty of care owed to visitor to the company premises had not been breached.

Section 5B is contained in a general Part of the Act, Part 1A, headed "Negligence". This to my eye shares an interesting similarity to Part 1 of the UK Compensation Bill. No, not just because of the word! Because it looks to me like Part 1, while at the moment containing the fairly innocuous provision in s 1 which is probably rightly described as mostly a waste of ink, has the potential for the future to contain all sorts of other interesting provisions from 1A to 1ZZZ adjusting and fiddling with the common law of negligence. If any of you have had any occasion to look at the NSW Act you will know what a "dog's breakfast" it is of provisions which pretend to re-enact the common law but don't, provisions giving complete immunity to operators of "dangerous recreational activities", etc etc. Legislation made up on the run by politicians reacting to the latest "scandal" in the popular press. If colleagues in the UK have a chance to see what a mess the NSW Parliament (and Australian State Parliaments in general) have made of this area they might be more wary about the future. I notice, for example, that in her statement the Parliamentary Secretary of State ominously indicates:

"The Bill forms part of a wider programme of work which is being taken forward across Government, and in partnership with stakeholders, to tackle perceptions that can lead to a disproportionate fear of litigation and risk averse behaviour; to find ways to discourage and resist bad claims; and to improve the system for those with a valid claim for compensation."

Regards

Neil Foster

Neil Foster
Lecturer & LLB Program Convenor
School of Law
Faculty of Business & Law
University of Newcastle
Callaghan NSW 2308
AUSTRALIA
ph 02 4921 7430
fax 02 4921 6931

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