The award of $32 million to actor Jon Blake last week reveals again some of the defects in the systems of compensating people for traffic-accident injuries in Australia.
Blake was made a quadriplegic in December 1986 when he crashed after swerving to miss a car parked on the wrong side of the road with its lights off near Port Augusta. The judge awarded him $29 million for future economic loss.
There’s a fistful of defects. First, it has taken nine years for the case to be decided and there will be further delay pending appeals. Second, the accident happened in South Australia, yet the case was decided in NSW. Third, this is a huge amount of money … well beyond the costs of nursing a quadriplegic for life. Fourth, compensation was in a lump.
Clearly no amount of money will compensate someone for catastrophic injury, but compensation should be put in context. Blake’s award reveals a 19th century individualist approach divorced from the public and welfare elements of compensation. The judge said Blake was entitled to compensation for future economic loss. He treated the case like a commercial one … damages would be assessed according to commercial loss. He said Blake had a 15 per cent chance of Mel Gibsonesque superstardom; 35 of considerable success and 25 of moderate success as an actor. And he assessed his future economic loss at $29 million. It was a bit like a damages award for breach of a multi-million-dollar contract between commercial entities. Aside from the crystal-ball gazing, there is no account of where the money is coming from.
Road-accident compensation schemes are funded by all motorists. Ultimately they will pay for the commercial top-up of Blake’s award with higher premiums. While damages should reflect likely future earnings, there should be a limit, especially when dealing with ephemeral qualities like stardom. The law should look more to the cost of giving the injured person a reasonably good life in the circumstances with nursing and technological aids and look less to commercial compensation for economic loss. The top $25 million of Blake’s award is meaningless in this context. It is money that will ultimately go to friends and relatives.
Further, the award would have been based upon only an estimate of Blake’s life expectancy. But if he died tomorrow, his relatives would inherit an undeserved windfall. Equally, in ordinary cases, victims who live longer than expected can run out of money. This is a problem with all lump-sum awards.
Lump-sum awards have other problems. You need to wait until injuries stabilise before quantifying damages. But in that time the injured person has no support unless the insurance company (like the NRMA) sees the sense in paying out some costs. But some insurance companies do not. Further, there is less incentive to go back to work because damages increase with economic loss. Further, if after the award the injury gets worse (or better) you have a corresponding unjust under- or over-payment.
Lastly, Blake took his action in NSW, rather than where the accident happened because under South Australian law he would have got far lower damages. This is called forum shopping. You pick the best jurisdiction and sue there if you can. In car-accident cases, plaintiffs often have several options according to where the cars were registered, the place of the accident or the residence of the parties. The law on where one can sue and which law applies is quite complex. Sometimes, for example, a NSW court might find itself applying Victorian or ACT law in some circumstances.
Some states give generous damages but only to those who can show someone else is at fault. Other states give damages, but less generously, to all people injured on the roads. It is quite unsatisfactory that, in one nation, such radically different outcomes can result according to the mere chance of where the accident took place, what number plates were attached to the car or where someone happens to live.
Ultimately, road-accident insurance is funded by the broad mass of the Australian public, it would be more sensible if extreme cases … like Blake on one hand or the uncompensated quadriplegic who crashes as a result of a bee sting, on the other … were smoothed out.