Understanding thresholds and caps in personal injury litigation

Published:: Tuesday 26 July 2022 at 11:48 am

The Wrongs Act 1958 (Vic) (Wrongs Act) is the principal statute in Victoria governing claims for damages for personal injury and death as a result of negligence or fault, in cases other than workplace injuries or transport accidents.¹

This bulletin sets out:

the types of damages that may be awarded to a claimant
the thresholds that must be satisfied for a claimant to recover damages for certain categories of loss
the caps that apply to awards of damages.

What does the Wrongs Act cover?

A wide variety of torts (civil wrongs).
The civil wrongs primarily fall within two main categories: intentional torts² and reckless / negligent conduct.³
Where fault is established, damages may be awarded to the injured party (claimant) in the form of monetary compensation for the injuries sustained.

What types of damages are awarded to a claimant?

Under the Wrongs Act, claimants may be entitled to the following types of damages:

Types of damages	Definition
Economic loss⁴	Damages for: past and/or future loss of earnings or deprivation or impairment of earning capacity loss of expectation of financial support
Non-economic loss⁵ (also known as 'general damages' or 'pain and suffering damages')	Damages for: pain and suffering loss of amenities of life loss of enjoyment of life
Gratuitous attendant care services⁶	Damages to compensate for the voluntary work of third parties who attend to needs created by the injury. This includes nursing, domestic services and other services that aim to alleviate the consequences of an injury.
Loss of claimant's capacity to provide gratuitous care to dependants⁷	Damages to compensate for loss of the claimant's capacity to provide domestic care or services to their dependants.

What restrictions apply to the damages awarded under the Wrongs Act?

The Wrongs Act imposes certain 'thresholds' and 'caps' that limit the compensation that may be awarded in claims for personal injury and death.⁸

Thresholds are minimum requirements that a person must satisfy in order to be entitled to recover damages for certain categories of loss.

Caps are limits on the amount of compensation that may be awarded for certain categories of loss.

What are the Thresholds to claim personal injury damages?

Thresholds act as a 'gateway' that a claimant must satisfy before they may be awarded damages for certain types of loss under the Wrongs Act, as described below:

Type of damages	Threshold
Non-economic loss	In order to recover damages for pain and suffering (non-economic loss), the claimant must establish that they have sustained a 'significant injury'.⁹ Certain types of injuries are deemed 'significant' without requiring further assessment: Loss of a foetus. Loss of a breast. Psychiatric injury due to loss of a child due to injury to the mother, foetus or child before, during or immediately after the birth.¹⁰ For all other injuries, an assessment of the degree of impairment arising from the injury must be made by an 'approved' medical practitioner or the Medical Panel.¹¹ In order to be classified as significant, the injury must satisfy a whole person impairment of: 5% or more for a spinal injury more than 5% for any other physical injury 10% or more for a psychiatric injury.¹²
Gratuitous attendant care services	Damages for gratuitous attendant care services may only be awarded if the services are provided for: at least 6 hours per week; and for a period of at least 6 months.¹³
Loss of capacity to provide gratuitous care to claimant's dependants	A court may only award damages for loss of capacity to provide gratuitous care if satisfied that: the claimant provided the care to the dependant before the time that the liability in respect of which the claim is made arose the claimant's dependants were not, or will not be, capable of providing the care themselves because of: their age; or their physical or mental capacity; and there is a reasonable expectation that, but for the injury to which the damages relate, the gratuitous care would have been provided to the claimant's dependants: for at least 6 hours per week; and for a period of at least 6 consecutive months; and there will be a need for the care to be provided for those hours and time period and that need is reasonable in all the circumstances.¹⁴

What are the caps that apply to claims for personal injury damages?

Caps are the maximum amount of compensation that may be awarded for a particular head (type) of damage. They act as a ceiling or limit to the amount of compensation a claimant can be awarded.

Type of damages	Cap that applies to the damages awarded
Economic loss	The maximum amount of damages that may be awarded for each week of lost earnings is three (3) times the average weekly earnings as at the date damages are awarded.¹⁵
Non-economic loss	The maximum amount of damages that can be awarded for non-economic loss (pain and suffering) is capped to a statutory amount indexed on 1 July each year. For the financial year 2021-2022, the maximum amount is $644,640.¹⁶
Gratuitous Attendant Care Services	If gratuitous attendant care services are provided for: 40 hours per week or more, the amount of damages that may be awarded for the services must not exceed average weekly Victorian employee earnings as at the date damages are awarded. less than 40 hours per week, the amount of damages that may be awarded per hour for the services, must not exceed one fortieth of average weekly Victorian employee earnings as at the date damages are awarded.¹⁷
Loss of capacity to provide gratuitous care to claimant's dependants	If the court is satisfied that a claimant would have provided gratuitous care to their dependant(s) for: 40 hours per week or more, the amount of damages that may be awarded for the services must not exceed average weekly Victorian employee earnings less than 40 hours per week, the amount of damages that may be awarded per hour for the services, must not exceed one fortieth of average weekly Victorian employee earnings.¹⁸

What claims are excluded from the operation of the caps and thresholds?

Some types of claims are excluded from the operation of the caps and thresholds including claims where the fault concerned is, or relates to, an intentional act done with intent to cause death or injury, or that is sexual assault or other sexual misconduct.¹⁹

Publication footnotes

Wrongs Act 1958 (Vic)

Contact our team

Sara Dennis, Assistant Victorian Government Solicitor, Litigation and Dispute Resolution
Phone: 0408 902 128
Email: sara.dennis@vgso.vic.gov.au

Jess Swanwick, Lead Counsel
Phone: 0409 321 928
Email: jess.swanwick@vgso.vic.gov.au

Jennifer Sirca, Lead Counsel
Phone: 0408 279 108
Email: jennifer.sirca@vgso.vic.gov.au

Alison Kingston, Lead Counsel
Phone: 0408 861 189
Email: alison.kingston@vgso.vic.gov.au

Elizabeth Morris, Managing Principal Solicitor
Phone: 0498 664 276
Email: elizabeth.morris@vgso.vic.gov.au

This information has been prepared by Tatjana Frei, Sam Mullaly, Elizabeth Morris, Clare Cheesewright and Jess Swanwick.

This information is of a general nature only and does not convey or contain legal advice. If you would like to obtain legal advice in relation to any matter discussed on this page, please contact us.

Footnotes

¹ Separate legislative schemes have been established for managing compensation claims workplace injuries and transport accidents in Victoria. See the Workplace Injury Rehabilitation Compensation Act 2013 (workplace injuries) and the Transport Accident Act 1986 (transport accidents).

² An intentional tort is where an individual or entity purposely engages in conduct that causes injury or damage to another. This includes assault, battery, false imprisonment, conversion, intentional infliction of emotional distress, fraud, trespass and defamation.

³ Negligence cases involve a breach of duty of care that has resulted in harm and damage. Common examples of negligence claims include slips or falls in public places, and harm arising as a result of medical treatment.

⁴ Wrongs Act, s 28F.

⁵ Wrongs Act, ss 28B, 28G, 28HA.

⁶ Wrongs Act, ss 28IA; See also Griffiths v Kerkemeyer [1977] HCA 45.

⁷ Wrongs Act, ss 28ID.

⁸ Wrongs Act 1958 (Vic) (Wrongs Act), Parts VB and VBA.

⁹ Wrongs Act, s 28LE.

¹⁰ Wrongs Act, s 28LF(c)-(d).

¹¹ Wrongs Act, Part VBA Div 3, 5. The respondent may waive the requirement for a plaintiff to obtain an assessment of the degree of impairment, see Wrongs Act, s 28LO.

¹² Wrongs Act, ss 28LB, 28LF(a).

¹³ Wrongs Act, ss 28IA.

¹⁴ Wrongs Act, ss 28ID.

¹⁵ Wrongs Act, s 28F.

¹⁶ Wrongs Act, ss 28G, 28H. Pursuant to section 28HAAB, the amount specified in section 28G is equivalent to the amount provided by the Workplace Injury Rehabilitation and Compensation Act 2013 for the purposes of section 340(b)(ii) of that Act (limitation on awards of damages for pain and suffering).

¹⁷ Wrongs Act, s 28IB.

¹⁸ Wrongs Act, s 28IE.

¹⁹ Wrongs Act, ss 28C, 28LC.

Law & justice

Updated 28 July 2022