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5.14 Claimants Pursuing Common Law Action

Section 389 of the MRCA provides that a member or former member to whom PI compensation is payable, but who has not been paid any PI compensation, can institute an action for damages against the Commonwealth or a potentially liable member at common law.  The action is taken ‘in respect of a service injury or disease’.  It is not the permanent impairment assessment that a person may take action against, but a single condition as distinct from other accepted conditions.   

Commencing common law action

Once the member has elected to commence common law action, the choice is irrevocable and no PI compensation is payable after the date that this choice is made.  The amount of damages at common law is restricted to a maximum of $110,000 and is not indexed.  This amount is for pain and suffering (non-economic loss) only and compensation payments other than PI compensation will remain payable under the MRCA (e.g. incapacity payments). If PI compensation has already been paid/commenced, common law action cannot be taken.

Unlike compensation under the MRCA, which is provided regardless of whether or not any negligence on the part of the Commonwealth is involved, common law action can only succeed if the Court is satisfied that the Commonwealth or a potentially liable member was negligent.

Commencing compensation payment

It is important to note that the statutoryobligation to make a payment does not depend upon the person making a 'choice' to receive that compensation.  Furthermore, s389 does not require a person to make a choice not to commence action for non-economic loss either.  It is only in the circumstances that they wish to commence action that they are required to make such a choice.  Once the determination is made, the weekly arrears continue to accrue.

Accordingly, the combined effect of s77 and s389 only requires a positive action on the person's part if they do want to take action under s389.  This reinforces the MRCA mandate that the MRCC should not delay indefinitely the commencement of weekly payments of compensation.

DVA and Comcare policy have a 21 day time period for s45 elections under the SRCA, which is similar in operation to the MRCA s389 provision. The 21 days enables enough time to administer a payment in compliance of the 30 day time limit imposed before interest becomes payable under the SRCA PI.  Similar interest payable provisions apply under MRCA for PI if a lump sum option is selected and payment is not made within 30 days.

Notifying a client of their rights

Notifying a person of their rights under s389 and in the absence of an election response by the client to commence action for non-economic loss, the first weekly payments and payment of arrears will commence within 30 days (ie 21 days as above)  after the date of determination.  That gives a person reasonable time to consider their options on the s389 election. 

Delegates are encouraged to use their discretion to delay payment if there is no client contact, for example if the client is hospitalised or overseas, and doubt exists over the clients intentions to accept compensation. However, payments should not be delayed indefinitely and if after a reasonable time has elapsed and all practical efforts have been made to contact the client, then the client should be placed into payment.  Interest payable provisions may apply in these circumstances.

While there is no legislative requirement for the claimant to advise that they intend to sue the Commonwealth, subsection 390(2) states that the claimant must advise the MRCC of a claim under common law not later than 7 days after the common law claim is lodged.