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28th Jul 2022
A rapidly evolving area of law with ‘far-reaching consequences'
The Australian Lawyers Alliance (ALA) is opposed to no-fault schemes, which award compensation regardless of whether the person who caused the accident was at fault. We also oppose welfare-based compensation schemes, in which accident victims are forced to rely on social security payments, and are denied a right of redress before the courts. As a mechanism for dispensing compensation, common law is superior to these alternatives for four reasons.
First, a victim’s entitlement to compensation under common law is calculated according to their loss: the compensation should be sufficient to restore them to the position in which they would have been, to the extent that it is possible, had the accident not occurred. Empirical studies have demonstrated that no-fault and welfare-based schemes fail to provide anywhere near adequate levels of compensation. As a result, these schemes leave injured people out of pocket, dependent on governments and family members. Where those injuries are caused because someone else has done wrong, this is unfair.
Second, common law deters people engaging in conduct that poses an unreasonable risk of injury to others. By requiring wrongdoers to pay compensation to those whom they intentionally or negligently injure, the common law performs an important social and regulatory function: encouraging the adoption of reasonable safeguards to protect others. Especially for governments and corporations —which typically obey only the imperative of their own bottom line —common law provides an economic incentive to avoid injury or damage to others. It should be cheaper to control risk than to pay out damages, and common law damages helps to achieve this. No-fault or welfare-based systems of compensation simply remove this regulatory effect.
Third, the common law system of awarding compensation discharges is essential in revealing latent risks to society. Because the common law mechanism involves a causal analysis of the injury or damage, it assesses the adequacy of existing safety precautions and risk of injury. No-fault and welfare-based schemes do not analyse why injuries occur, and thus do not expose public hazards to analysis, scrutiny and regulation.
Fourth, no-fault and welfare-based schemes are inflexible, ‘one-size-fits-all’, statutory systems that do not treat people according to their individual needs and circumstances. Consequently, they often give rise to unfair outcomes, even though people might be treated the same. The common law system of awarding compensation commensurate with the injury suffered, which has been developed over hundreds of years, is far more flexible, and can be adapted to suit the needs of the injured individual.
The ALA will always support the justice, flexibility and transparency of common law solutions to compensation issues over alternatives that are based on the cheaper or faster outcomes of inflexible statutory schemes.