The second class of case is where public authorities' decisions, based on political, economic, social or environmental policy, are threatened. Claims of this nature often revolve around large amounts of money. The committee believed it was undesirable that the issues raised by these types of cases can result in negligence actions.
The committee recommended that legislation should be implemented, so that a policy decision based on financial, economic, political or social factors should not be used to enhance a decision that the defendant was negligent, unless the finding was so unreasonable that no reasonable public functionary in the defendant's position could have made it. The parliament of The New South Wales has gone further than the committee's recommendation in limiting the potential liability of public authorities for negligence.
It has embraced the policy defence related to the allocation of resources. But it has also said that, in general, no action will lie against a public authority for breach of a statutory duty unless the conduct of the authority was at a extreme level of unreasonableness. The committee recommended a threshold for general damages based on 15% of a most extreme case and a cap of $250,000. The South Australian legislature has placed a cap on general damages of $241,500 and an overall cap of $2. 2 million on the total amount for loss of earning capacity.
The committee recommended a cap on damages for loss of earning capacity of twice average full time weekly earnings. This recommendation was based on the fact that only 2. 4% of Australian employees earn more than twice average weekly earnings and the Ipp committee viewed that those who fell into the higher earning class could reasonably be expected to protect themselves against the effects of the proposed cap by insuring against loss of income. Damages for gratuitous services were a problem area for the committee.
Damages for gratuitous services on average comprise about 25% of the total award in claims for more than $500,000. Many believe plaintiffs were able to achieve damages for gratuitous services far too easily. The committee believed there was no need to abolish claims for gratuitous services, as this would result in plaintiff's retaining professional carers to provide the services and may result in an increase in the total damages paid. However, the committee believed there needed to be a limit placed on such these types of claims.
The panel recommended caps of gratuitous services based on average weekly earnings and also recommended a threshold on the basis that damages for gratuitous services should not be recoverable unless such services have been provided or it is likely that they will be provided for more than six hours per week and for more than six successive months. In concluding, the Ipp report contained numerous recommendations on the law of negligence, as a result of rising insurance premiums.
The aim of the recommendations was to "limit liability and the quantum of damages evolving from personal injury and death". Many believed, including Professor Alan Fels that the recommendations put forward by the committee were anti-consumer, in that they promoted the interests of narrowly focused groups (insurance companies) at the expense of ordinary people, in that plaintiff's will not be compensated for the negligence of wrongdoers. However, I disagree with this view and believe the recommendations made were for the benefit of the wider community.
Reform, in this instance was necessary in order to ensure insurance is made available and affordable to communities throughout Australia. Without these reforms, there would be widespread devastation to individuals and communities who would have been unable to obtain insurance. I believe the proposed recommendations still ensure plaintiff's will be compensated sufficiently for negligent acts, while at the same time averting a potential disaster which would have been caused in the absence of insurance to both individuals and the community.