Do the Victorian Wrongs Act thresholds for non-economic loss apply to ACL claims?
Burke v Ash Sounds Pty Ltd  VSC 771
In the recent decision of Burke v Ash Sounds Pty Ltd  VSC 771, the Victorian Supreme Court determined that festival-goers injured in a mass stampede at the 2016 Falls Festival in Lorne are required to meet the threshold of significant injury for non-economic loss damages in respect of their claims for breach of consumer guarantees.
The issue before the Court was whether an action for breach of consumer guarantees against the suppliers of services under Schedule 2 of the Australian Consumer Law (ACL) is restricted by the provisions in Part VBA of the Wrongs Act 1958 (Vic). The ruling involved statutory interpretation of the wording of the Wrongs Act provisions to determine whether they apply to strict liability causes of action or whether its application is limited to fault-based liability.
On 30 December 2016, at the Falls Music and Arts Festival in Lorne, a large number of festival-goers were injured when the crowd rushed between stages (incident). Two of the major headlining acts were scheduled to play at different stages only 5 minutes apart, which caused a mass exodus from one Marquee, ‘the Grand Theatre’, and created bottlenecks at the exits.
Ms Burke commenced a class action on behalf of herself and the group members, being all those injured as result of the incident, against the promoter of the Festival. She alleged that the promoter failed to schedule the events with adequate spacing to allow the orderly and safe movement of large crowds around the venue, failed to provide adequate exits and failed to provide adequate crowd control staff.
She claimed that this conduct breached:
- duties owed by the promoter under the Wrongs Act (as an occupier) and under the common law; and
- consumer guarantees in sections 60 and 61(1) and (2) of the ACL, namely that the promoter failed to render the services with due care and skill and that the service was not fit for purpose.
The promoter admitted liability, but argued the plaintiff must satisfy the Wrongs Act significant injury threshold in order to recover damages for non-economic loss with respect to the ACL claims.
Section 28LE of the Wrongs Act places a restriction on the recovery of damages for non-economic loss by imposing a threshold of ‘significant injury.’ This phrase is satisfied by meeting one of a number of definitions, but requires a plaintiff to have a whole person impairment of greater than 5% for physical injuries (or 5% or more for back injuries) or 10% or more for psychiatric injuries. Section 28LE provides:
A person is not entitled to recover damages for non-economic loss in any proceeding in a court in respect of an injury to a person caused by the fault of another person unless the person injured has suffered a significant injury.
The plaintiff argued that the benefit of consumer protection guarantees under the ACL (and in particular section 61 of the ACL) is they are not fault-based, and therefore damages thereunder ought not be limited by the significant injury threshold in the Wrongs Act. The plaintiff submitted that use of the phrase ‘caused by the fault of another person’ in section 28LE of the Wrongs Act applies to fault-based causes of action only, and does not apply to the ACL claims under section 61.
Justice McDonald rejected this submission stating the wording of section 28LE of the Wrongs Act was unambiguous and applied to:
any proceeding…in respect of an injury…caused by the fault of another person.
His Honour preferred the interpretation that a ‘proceeding’ refers to the entirety of a plaintiff’s claim. As the plaintiff had pleaded breaches of common law duties of care (where fault is clearly an element, even putting aside the defendant’s admission of liability), this had the effect of barring recovery for any non-economic loss damages for other non-fault based causes of action (such as the ACL claims) unless the plaintiff had a significant injury. Therefore, although a breach of the consumer guarantees is strict liability, section 28LE of the Wrongs Act applied to any such claim.
His Honour stated his finding was not predicated on the admission of negligence by the promoter or based on an interpretation that a ‘proceeding’ refers to each distinct cause of action; instead, the particularised conduct in the Statement of Claim ‘was replete with language attributing fault.’ The word ‘failing’ appeared on six separate occasions. His Honour found that ‘failing’ is synonymous with ‘at fault.’
His Honour conceded that it was unnecessary for him to decide whether the section 28LE threshold could still be engaged if the proceeding had only pleaded the contractual claims. In our view this outcome is open, given the effect of section 28LC(4) of the Wrongs Act, which states:
This part applies to claims for damages for non-economic loss even if the claim is founded on breach of contract or any other cause of action.
However, there is a disconnect between this section, and the specific provision in section 28LE, which states the limitation is to apply to proceedings where the injury is caused by the fault of another. This issue could be tested in the future by solely pleading breach of the ACL guarantees, but it would be a rare case where there was no pleading alleging some kind of fault as the basis for the case.
It is worth noting certain claims under the ACL are limited by a scheme for awarding non-economic loss damages which is less generous than the Victorian and NSW schemes. It stipulates a threshold of 15% or more of the most extreme case and a formula with a capped figure which is far less generous (almost half) than the Victorian and NSW schemes.
The Wrongs Act assesses non-economic loss damages under common law principles, with a current cap on non-economic loss damages of $611,430, whereas the cap for claims under the ACL formula is approximately $350,000. We highlight the NSW’s Civil Liability Act 2002 operates the same formula as the ACL with respect to an assessment of a most extreme case but has a current maximum of $635,000.
However, the ACL threshold does not apply to claims against the suppliers of goods or services which is one of the reasons why the decision is of significance, as it imposes the Wrongs Act hurdle to claim non-economic loss damages in these cases. There is no provision equivalent to section 28LE of the Wrongs Act 1958 in other jurisdictions, so this decision is limited to Victorian application.
Contrast this with claims where the ACL threshold does apply, such as claims against manufacturers. In Victorian proceedings where fault is alleged against a manufacturer in addition to the strict liability provisions of the ACL, this decision makes clear that the Wrongs Act threshold still applies. In these proceedings, a plaintiff may choose the scheme which is most favourable (provided the appropriate threshold is met).
While strict liability causes of action like breach of consumer guarantees are traditionally regarded as non-fault based, usually they are accompanied by pleadings involving an element of a failure of some kind or another. This decision clarifies that, in these cases, a claimant in Victoria is precluded from claiming non-economic loss damages unless they establish that they have suffered a significant injury.