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The Limits of Compensation: An Australian Perspective on Public Policy, Causation and Mitigation

To forestall unwarranted expectations about the content of this article, it is probably necessary to issue a cautionary word about the phrase "limits of compensation". In the continuing debate about the relative merits of the common law approach to compensation for personal injury and alternative compensation systems, one fundamental question which has emerged is whether "compensation", in the sense of restitution for loss, should be the sole or even dominant concern in dealing with the consequences of personal injury. It has been persuasively argued that an increased proportion of the limited resources available to deal with accidental injury should be directed to the prevention of accidents and the minimisation of their consequences by effective rehabilitation. Compensation is at best an imperfect answer in those cases where efforts at prevention and rehabilitation have failed. But it is not the "limits of compensation" in this sense with which this article is concerned. The term is used, as it is in standard texts on damages, to refer to rules which operate at the outer end of damages awards at common law and which provide a variety of reasons for cutting back, or setting an upper limit to, the amount recoverable. The investigation of these rules from an Australian perspective is not possible without consideration of relevant experience in other Commonwealth jurisdictions. In spite of an increasing tendency towards the development of a peculiarly "Australian" common law, especially in assessment of damages for personal injury, common origins and common problems remain. Even where relevant Australian authority is available, it is still frequently measured against its counterparts in England and elsewhere; the more so in areas where the Australian courts have themselves proceeded with some uncertainty. Furthermore, the process of reliance is no longer one way. Solutions devised by Australian courts are beginning to have influence elsewhere.