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5.14 Claimants Instituting Action for Damages (Common Law Action)
Section 389 of the MRCA provides that a member or former member to whom permanent impairment (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 for non-economic loss. This is commonly referred to as 'common law action'. 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.
Instituting action for damages (common law action)
The amount of damages at common law is restricted to a maximum of $110,000, is not indexed and is for pain and suffering (non-economic loss) only. Compensation payments other than PI compensation such as incapacity payments and treatment will remain payable under the MRCA. If PI compensation has already been paid in respect of a specific service injury or disease, common law action cannot be taken in relation to that same service injury or disease.
Commencing compensation payment
Section 77 of the MRCA provides that once compensation is payable to a person, it becomes payable from a prescribed date and weekly arrears will continue to accrue from this date. There is no positive action required from a person to receive PI compensation. However, once compensation is paid to a person they no longer have the option to institute action for damages (for non-economic loss). For this reason it is important to ensure clients are provided with adequate information about the two options available to them at this point in the PI compensation process, and a suitable timeframe to decide what they prefer to do.
Notifying a client of their rights
There is no statutory timeframe attached to a s389 choice, a person may take as long as they require to decide if they wish to take the compensation amount calculated by DVA, or alternatively institute action for damages against the Commonwealth or a potentially liable member. Where no response has been received in relation to the s389 choice (i.e. where the election form has not been returned) it is appropriate for the delegate to make contact with the client with a view to identifying any difficulties the client may be having in reaching a decision. 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 can be placed into periodic payment if this is considered reasonable.
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.