Jason Lettice was feeling a little ill.
Jason had been boozing (heavily) with his mates on a footpath on a bridge in Musellwellbrook. Suddenly, Jason felt he could hold his booze down no more. He announced to his friends that he was going to spew. He ran fast across the road to the footpath opposite and leaned over the rail. But instead of spewing he fell over the side and toppled 10 metres into a life of paraplegia in a wheelchair.
He sued the Musellwellbrook Shire and the State of NSW for all the usual things – negligence, not having a high enough rail, not protecting idiots against themselves and so on.
And he won. Of course. And the ratepayers and taxpayers – via the shire’s insurers — were expected to cough up (pardon me).
Mrs Ghantous was walking along a footpath in Hawkesbury. The footpath was a little worn. She stepped on the side of path, so part of her foot was on concrete and part on dirt. She fell and injured herself badly. She sued for all of the usual things – negligence, not keeping the footpath like a bowling green, not protecting pedestrians from their own failure to look where they are treading.
And she won. Of course. And the ratepayers and taxpayers – via Hawkesbury City Council — were expected to fall over themselves (pardon me) in handing her a lot of money.
More of these cases anon.
This month the Corra Linn Fly Fishing and Casting Association in Tasmania Club has been snagged with a threefold increase in its public liability insurance for its fly-fishing classes. Someone could lose and eye. The association might go under.
Thirlmere, in NSW, has an annual steam festival. Hitherto it has paid $120 a year to Wollondily Council for public liability insurance. This year the festival is threatened because the premium has busted the boiler to $2500.
Evandale, in Tasmania, has an annual Penny Farthing Championship. But the public liability premium will puncture this year’s event because it has blown out to $10,000.
The Lake Illawarra waterskiing championship has been blown out of the water with a $50,000 bill for public liability insurance. Cirkus Elixir cannot afford a $2000 premium for its public-liability safety net.
Thorpdale in Victoria has an annual potato festival. It is now blighted with a 1000 per cent insurance premium increase.
Each of these events are small gasps diligently reported by the local press – from which I stole most of the dreadful puns. But taken as a trend they are fabric-of-society ripping stuff. Small business is suffering, too, with similar rises in premiums.
Who is to blame? The insurance companies blame the lawyers (almost as easy a target as the media). The lawyers blame the insurance companies.
The Minister for Small Business, Joe Hockey, has sided with small business – any impost on them needs a scapegoat and he has picked the legal profession. There is to be a federal-state-territory conference this month on the blow-out of public-liability premiums. It will be a timely event.
So have claims blown out? Are there more claims because the legal profession has gone ambulance chasing? Or is the insurance industry exaggerating? This week saw the release of some official figures which indicate that the insurance industry has been a bit naughty in this. The insurers and politicians have blamed the lawyers, but the lawyers (on this isolated occasion) are not all to blame. And the insurers have joined every tin-pot third-world oppressor in riding the paranoia arising out of September 11 to justify themselves.
Figures issued by the Australian Prudential Regulation Authority put a hole in the insurance industry’s assertions. There has been no significant increase in the number of claims, the number of outstanding claims, the cost of claims or the estimated cost of future claims for public liability. In fact, on many measures there has been a decrease. Yes, a decrease in insurance exposure to and pay-outs of public liability claims.
So why the big screams about lawyers chasing ambulances and courts awarding ill-gotten gains to ill-deserving plaintiffs? Well bring on the inquiry.
The graphs show the picture. The figures for 2000-2001 are the most recent by APRA. The percentage change you have to calculate yourself.
The figures show pay-outs fell from $664.2 million in 199-00 to $525.4 million in 2000-01 – a drop of 21 per cent. The estimated cost of future claims fell more than half a billion dollars. The outstanding claims fell by 20 per cent.
Yet the premiums skyrocket – particularly for the little shows (from Thirlmere and the like). I think they are business the insurers would happily do without – they are a nuisance like pensioners with the big banks. The trouble is the pensioner can keep money under the bed; little shows must be insured because the legal doctrine of vicarious liability means the organisers would be personally liable and lose their houses. No-one would volunteer to organise any community event.
Now, what about the two cases mentioned at the beginning of this article? Aren’t they typical of the courts’ foolishness in dishing out money to richly undeserving cases. No. Both went on appeal.
In the leaning-over-the-bridge case, Justice Roddy Meagher found for the council which had been accused of negligence for failing to warn. Meagher said, “”I find this an extraordinary allegation. What would the notice have said? “Please be careful when expectorating over the bridge . . . ? And in how many languages should the notice be repeated? What steps should be taken to bring the content of such a notice to the attention of those whose intake of alcohol has deprived them of both the ability to read and the ability to comprehend?”
Obviously, not all judges are fools.
And as for the footpath, the judges of the High Court said a footpath is not to be judged on the standards of a bowling green. People often have to walk over uneven ground. They have to look down at where they place their feet. Justice Michael Kirby said, Mrs Ghantous’s mishap “”was simply an accident”.
Fewer cases are going to court. The Productivity Commission has tracked an average 4 per cent reduction in cases. Sure, the costs of the lawyers are horrifying, so many are frightened off. But some insurers are getting smart.
Canberra personal-injury lawyer Pat Worthy points to a protocol with the NRMA where damages are quantified in detail and if not accepted are paid into court. If the injured person gets less, they have to pay all the costs.
Speculative no-win, no-costs cases cost law firms too much, but where there is a solid claim lawyers do no-win, no-fee work. Insurers often spend too much resisting legitimate claims. Worthy makes no excuse for pursuing people’s rights to sue.
The Insurance Council of Australia says the most recent figures must be treated cautiously because they do not included HIH, which did not file returns after December 2000.
Even so, the percentage increases in premiums for some of the people who have squealed seem to be more about making up for past losses rather than future claims. Australian insurance companies have made underwriting losses for eight years in a row. They make their profits through investments.
The insurance council says it is not pushing for any particular measures at next month’s meeting. It wants a uniform response – not states going it alone.
However, all the talk is targeted at capping or cutting compensation. It can be dangerous talk if you are the victim – innocently swimming laps went a lout jumps on you and puts you in a wheel chair, or if the barbecue at a school fete is tipped over by some fool burning your hands so you cannot practice your profession, or leaves a manhole uncovered so you fall in and cannot work, or play football or ski ever again.