I have just returned from the trip of a lifetime travelling around the US for the past month. We had the most amazing time ticking off a number of bucket list adventures including San Francisco, Disneyland, Universal Studios and the Kennedy Space Centre. I am not going to hit you with holiday photo spam apart from this one with the amazing pineapple smoothie in a pineapple in Honolulu. How awesome is that!
One thing I did not do is meet up with the local personal injuries lawyers or “trial lawyers” as they are known in the US. Every time I drove past one, I was tempted to drop in and see if anyone was interested in a general discussion comparing our different compensation systems. Perhaps it is just as well I did not. Escaping the law for the past month has really re-invigorated me for the year ahead.
However, I do have a Bachelor of Arts with a major in comparative government and I tutored in US Public Policy at Uni so I found the cultural experience of “liability” in the US very interesting. There is only so much you can understand about a system of law from general discussion with non lawyers. Many people make decisions about risk assessments and the extent of their “liability” based on ill informed advice even from their own insurers. Nonetheless, culture does inform the way in which individuals and organisations behave whether or not it is based in a sound understanding of the law.
Many people have spoken to me about a fear that Queensland is “heading the same way as America” in terms of a culture of vexatious litigation. Conversely, our clients can be disappointed that the amount of their claims do not compare to the enormous claims they read about in media reports – usually from the US.
While I certainly do not profess a detailed knowledge of US law, there are two important distinctions between the capacity for Claimants in Queensland to claim compensation for personal injuries and the capacity of their American counterparts. Namely:-
- Medical cost;
- Punitive damages.
With few exceptions, Queensland law is a compensatory system. Claimants are awarded damages for the amount of their loss. The amount of damages recovered is rarely increased to punish the Respondent for its negligence. In the US, “punitive” damages are awarded to provide a deterrent against a Respondent failing to exercise reasonable care. The political and cultural background to this difference is that the Australian law has always put a greater emphasis on government regulation to provide a deterrent against dangerous behaviour. The American aversion to government regulation and interference has led to a situation where it is incumbent on individuals to take steps to ensure safety standards are improved for the future.
Medical costs in the US are substantially higher than Australia and even life saving medical treatment is not available universally. Claimants in both the US and Queensland are entitled to recover their past and future medical expenses as part of their claims but the difference in the expenses goes some way to explaining overall damages in the US being higher.
Large awards for damages increase the cost of insurance. Ironically, the higher insurance costs for doctors in the US feeds into higher medical costs which in turn leads to larger awards for damages. If insurance becomes prohibitive then businesses cannot provide services or they provide the services without insurance. There is no compulsory requirement for third party car insurance in the US.
The upward pressure on insurance and problems with recovering damages against uninsured Defendants places pressure on governments to reform the law.
When we visited family in Florida who were running horse riding lessons and training, I was interested to see this sign.
They explained that the advice from their insurer was that the sign must be displayed in the barn and that all participants had to sign an acknowledgment that they had read it. If they had those things then the Court had denied liability to anyone suffering a horse related injury even in cases of gross negligence.
In contrast, Section 19 of Queensland’s Civil Liability Act provides as follows:-
(1)A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an obvious risk of a dangerous recreational activity engaged in by the person suffering harm.
(2)This section applies whether or not the person suffering harm was aware of the risk.
However, Section 13(5) clarifies:-
To remove any doubt, it is declared that a risk from a thing, including a living thing, is not an obvious risk if the risk is created because of a failure on the part of a person to properly operate, maintain, replace, prepare or care for the thing, unless the failure itself is an obvious risk.Examples for subsection (5)—
1A motorised go-cart that appears to be in good condition may create a risk to a user of the go-cart that is not an obvious risk if its frame has been damaged or cracked in a way that is not obvious.
2A bungee cord that appears to be in good condition may create a risk to a user of the bungee cord that is not an obvious risk if it is used after the time the manufacturer of the bungee cord recommends its replacement or it is used in circumstances contrary to the manufacturer’s recommendation.
There have been few decisions in Queensland about what activities will be defined as “dangerous recreational activities” but the equivalent legislation in New South Wales has been interpreted as extending to horse riding in some circumstances (eg Watson v Meyer [2012] NSWDC 36).
Unlike the Florida legislation, there is no obligation on the operator of a horse riding facility to provide any notification of obvious risks. However, the operator can still be liable if it has failed to properly operate, prepare or care for the horse or the track upon which the horse will be ridden. For example, if a horse is known by the operator to be unwell or agitated but this is not obvious to the rider, the operator may be liable for providing that particular horse to the rider. In most cases of gross negligence, there will be evidence of the operator failing to operate, prepare or care for the horse, the equipment or the track.
There is a deep contradiction in the effect of this example of American law. On the one hand, the political/cultural emphasis on the rights and obligations of individuals has led to a free market approach to safety standards. On the other hand, large awards of damages and lower uptakes of insurance has led to a greater level of government intervention to reduce the impact of litigation.
We can be rightly proud of the delicate balance that has been struck in Queensland due to the careful application of common law principles by our Courts. While Claimants may not benefit from the windfall of enormous punitive awards of damages, we all benefit from government regulation of safety standards that is proactive rather than reactive. Those same Claimants have had their rights to compensatory damages preserved by the Courts ensuring the viability of insurance.
Next time arguments arise about “tort reform”, please remember that Queensland legislation and the common law has not and will not follow the same path as US law.
