- The Motor Accidents Injuries Act 2017 provides for no fault funeral expense benefits.
- The Act makes no changes to claims under the Compensation to Relatives Act 1897 but dependency benefits are capped.
- The Act permits claims for pure mental harm by persons who witness fatal accidents or who are closely related to the deceased.
The Motor Accident Injuries Act (the ‘Act’) provides for two streams of benefits and compensation in respect of deaths or injury caused in a NSW motor accident on or after 1 December 2017 as follows:
- a scheme of defined and limited statutory benefits under Part 3 of the Act; and
- claims for common law damages as permitted by Part 4 of the Act.
Where an accident results in a fatality (or injury), witnesses to the accident or close family members of the deceased (or injured person) can make claims for statutory benefits or common law damages if they sustain certain types of nervous shock as a result.
Section 3.4 of the Act provides for the payment of statutory benefits for the reasonable funeral expenses of almost all persons killed in a motor vehicle accident in NSW regardless of whether anyone was at fault and even if the deceased was at fault.
The usual disentitling provisions in Part 3 apply (ss 3.35, 3.36 and 3.37) so, for example, if the death occurred in a motor accident while the deceased was at work, his family would have to make a workers compensation claim (where the amount of funeral benefits is limited to $15,000) and not a motor accident claim.
Funeral expenses do not have to be reduced for any contributory negligence on the part of the deceased and they are not dependant on proving negligence on the part of someone or satisfying the insurer that the deceased was not wholly or mostly at fault.
There is no definition of ‘funeral expenses’ in either the Act, the Regulation or the Guidelines, however the SIRA website contains an outline of what would be included: funeral director’s professional fees, cost of the funeral service (including cremation or burial), coffin, mourning car, cemetery site, flowers, newspaper notice and death certificate.
The expenses of the funeral are payable to the legal personal representative of the deceased or the person who has paid or is liable to pay the funeral expenses. There is nothing in the Act to impose a monetary limit. What is ‘reasonable’ will depend on, amongst other things, the age of the claimant, the size of the deceased’s family and circle of friends, the nature of the deceased’s standing in the community or his or her occupation, as well as cultural matters and religious beliefs.
If the person who died usually lived in Australia, the reasonable funeral expenses include the cost of transporting the body to the usual place of residence or an appropriate place for the burial or cremation. If the person who died usually lived overseas then the reasonable funeral costs are to include the repatriation of the body to their home country.
Disputes about the amount of statutory benefits payable for funeral expenses are a merit review matter under Schedule 2, 1(a) of the Act. These disputes are not a regulated merit review matter listed in Schedule 1, Part 1 of the Motor Accident Injuries Regulation (the ‘Regulation‘) and therefore no costs are payable for any legal work undertaken in any dispute about the funeral expenses claim.
Compensation to Relatives claims
The Act makes no changes to claims made under the Compensation to Relatives Act (the ‘CTR Act’).
The CTR Act provides for the recovery of expenses associated with the funeral or cremation of the deceased plus the cost of erecting a headstone or gravestone. There is a clear overlap with the statutory benefits claim for funeral expenses. But it is arguable that the term ‘funeral expenses’ in Part three does not extend to cover headstone or gravestone expenses and therefore the cost of a headstone or gravestone can only be recovered from the insurer in the common law claim.
For example, if the deceased was killed in a car accident due to the negligence of the owner or driver of a motor vehicle, the CTP scheme may have a liability to pay both the funeral expenses under Part 3 of the Act and funeral expenses and headstone or gravestone expenses under the CTR Act. If the deceased was at fault, the CTP scheme will pay for the funeral but the family will have to pay for the gravestone or headstone.
Dependency and services
The CTR Act and the common law has permitted dependants to recover the financial support they would have expected but for the death of their loved one and the value of domestic services which the deceased used to perform.
The loss of expectation of financial support is capped at the weekly maximum statutory benefits amount (see s 4.6(1)) which is currently $4,180 and the discount rate of 5 per cent for future losses also applies.
The abolition of the right to claim damages for gratuitous domestic assistance and care provided to an injured person has not been replicated for the dependants of a deceased in a Compensation to Relatives motor accident claim. While the deceased may have performed domestic duties on a gratuitous basis, if this has had to be outsourced, damages are permitted for the commercial value of these services.
Pure mental harm claims
The definition of injury in s 1.4 of the Act includes psychological or psychiatric injury and therefore if a person suffers only psychiatric or psychological injury as a result of the accident, they are not prevented from making a claim for statutory benefits or common law damages.
The definition of ‘minor injury’ in s 1.6 includes an injury that is not a recognised psychiatric illness. Clause 4(2) of the Regulation identifies the illnesses of ‘acute stress disorder’ and ‘adjustment disorder’ as minor injuries.
In a common law claim, the provisions of Part 3 of the Civil Liability Act 2002 (‘CL Act’) continue to apply. The ‘minor injury’ test will apply and prevent damages being recovered for persons found to have a minor psychological or psychiatric illness. For those able to recover damages the amount of damages are limited to non-economic loss (if the illness attracts a whole person impairment of greater than 10%) and certain economic losses (capped).
In respect of statutory benefits, s 3.39 has been criticised by some commentators as a form of ‘legislative laziness’. It says: ‘Part 3 (Mental Harm) of the Civil Liability Act 2002 applies to the payment of statutory benefits under this Part in connection with an injury in the same way as it applies to the award of damages in connection with an injury, subject to any necessary modifications and to any modifications prescribed by the regulations.’
Part 3 of the CL Act of course relates to all forms of accidents, not just motor accidents so it refers throughout to actions for damages and substituting the words ‘claim for statutory benefits’ does not always work.
Section 29 can clearly and easily be ‘modified’ to enable a person who sustained pure mental harm to recover statutory income support and treatment and care benefits.
Clause 8 of the Regulation modifies s 30(3) of the CL Act to reduce or cease a claimant’s weekly income benefits on the basis of the contributory negligence of the victim. The following examples illustrate this in practice:
- If John is killed in a motor vehicle accident that was entirely his fault, and his surviving partner suffers from a serious depression she would be entitled to only 26 weeks of statutory income support, treatment and care expenses because her statutory benefits can be terminated under s 11(1) and s 3.28(1) of the Act because John was wholly at fault;
- If Joan is an eye-witness to an accident involving a reckless drunk pedestrian (who she does not know) darting out into traffic and she sustained PTSD as a result, she too would be entitled to only 26 weeks of statutory income support and treatment and care expenses. Her entitlements would likely be terminated under s 3.11(1) and 28(1) because the pedestrian’s fault is applied to her claim.
- If Lindsay’s father, sitting in the front passenger seat not wearing a seat belt, is killed in a head-on collision with an at-fault vehicle and there is evidence that he would not have died if the seat belt had been worn, then Lindsay’s income support benefits may be reduced for her father’s contributory negligence.
No other sections of the Civil Liability Act have been modified and there is confusion as to how s 31 should be ‘modified’ and interpreted. This is the section that prevents the recovery of damages unless the plaintiff (claimant) has a recognised psychiatric illness. If that section is to be modified to simply replace damages with a reference to statutory benefits then it could be interpreted as disallowing any statutory benefits at all, even in the first 26 weeks, unless there is a recognised psychiatric illness. Legislative (or regulatory) clarification of this may reduce disputation. At present it appears that claims are being made for pure mental harm and insurers are making payments in the first 26 weeks regardless of the nature and extent of the particular psychiatric or psychological illness. However, benefits after the first 26 weeks are being denied by insurers under s 3.11(1) and s 3.28(1) unless there is evidence (from a psychiatrist) that the claimant has suffered a recognised psychological or psychiatric condition.
Data produced by SIRA does not show the number of mental harm claims or how much is paid by way of statutory benefits or damages. Data produced by SIRA shows that in early April 2020 there have been 473 Compensation to Relatives common law claims, but it does not show how many statutory benefits claims for funeral expenses have been made. On the other hand, data produced by SIRA reveals that $6 million has been paid out in funeral expenses but does not include the amount of damages paid out in the 473 Compensation to Relatives common law claims. According to data produced by the Centre for Road Safety, 706 people died on NSW roads in 2018 and 2019. It would be a fair indicator of the performance of the scheme if all of them had their funerals paid for by the CTP scheme.