The TAC will provide a payout (which lawyers call “damages”) if you can prove that you have a “serious injury” and if you can prove that another person is at fault for your motor vehicle accident injuries.
You can learn more about TAC Claims on our website to help you navigate what to do after a traffic accident, however this article will specifically discuss how damages payouts are calculated.
We are frequently asked by clients “what am I going to get as a payout?”. Good TAC lawyers should be able to provide a qualified response to this question reasonably early in your matter, though this is always subject to change as your injuries and matter progress.
You should always be wary of a lawyer who promises what seems too good to be true. It usually is.
A good lawyer should be there to support you through a difficult time of your life, to listen to you, and to achieve the best outcome we can based upon your instructions, and what is realistic in accordance with the TAC scheme.
A TAC Lawyers role is to maximise the payout to you, tailored to your personal circumstances. Good lawyers will speak with you at length, and listen to what you have to say, so that they can maximise your pain and suffering payout. If a person feels they are not being listened to by their lawyer, they should speak up or seek other advice, as this has a direct effect on what they might ultimately be entitled to as a payout.
How is a TAC payout calculated?
Damages payouts in TAC matters can be very complicated. They are worked out by assessing a great deal of factors in any given case and are generally categorised by the following:
The following is a short summary of how a good lawyer will go about assessing such and some real examples of payouts and results.
Note: We have changed the names of examples below for privacy reasons.
Pain and Suffering Damages
In TAC matters, anybody who is entitled to a payout will claim for their “pain and suffering”.
Pain and suffering damages are not only for your literal pain and suffering as a result of injury, but also for all of the other ways that injuries affect you, and your quality of life.
This includes a very wide range of things for any individual, such as not being able to enjoy your favourite pass times, having your sleep or mobility affected, or even simply not being able to look after your family in the normal way.
There is no real guide to how to calculate pain and suffering damages. All people are different, and the same injuries might have very different effects on two separate people.
Usually, lawyers look at a few factors, such as the overall effects of an injury on a person, as well as what medical treatment a person has had to go through, and the lasting trauma that person has as a result of their injuries.
EXAMPLE ONE - Pain and Suffering Damages
Ben (18 - Unemployed)
Suffered an injury whilst on his registered dirt bike
Ben was an 18 year old who suffered an injury whilst on his registered dirt bike, when after starting to ride home after a day’s trail bike riding, he was rear ended whilst slowing down to turn into his driveway. The other driver was looking at their phone.
Ben’s head hit the asphalt hard, and despite his helmet, he suffered a significant head injury. He was in a coma for 21 days, and has had to learn to move and speak again. He has been profoundly affected by his injuries, and requires ongoing care and help with many day to day tasks.
Ben’s payout was the statutory maximum for pain and suffering damages, which was $558,760.00.
PAYOUT AMOUNT
$558,760.00
EXAMPLE TWO - Pain and Suffering Damages
Karen (43 - Division 1 Nurse)
Injured in a car accident by a drunk driver
Karen, a 43 year old nurse, was injured in a car accident by a drunk driver. She suffered fractures to her neck, and a compound fracture to her right lower leg. Both injuries required surgery. Karen also required plastic surgery to her lower leg to revise her scarring.
Karen has been left with significant ongoing pain in her neck, however her leg has recovered well, though remains with nasty scarring. Karen has difficulty sleeping due to neck pain, and has a lot of trouble keeping up with her three boys, who are in their teens. The accident has caused relationship difficulties with her husband, and she no longer plays competition tennis on weekends.
Karen ultimately received a pain and suffering payout of $300,000.00 as a result of her injuries.
PAYOUT AMOUNT
$300,000.00
EXAMPLE THREE - Pain and Suffering Damages
Tim (75 - Retired)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
Tim, a retiree at 75 years old, suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way, and knocking him to the ground.
His shoulder required surgery, and he has had to undergo substantial rehabilitation. Tim’s shoulder was in his opinion “pretty good”, but he was unable to reach above around shoulder height with it any more, and he did require ongoing pain killers as a result. He was able to continue his passion of golfing, but admitted that “my handicap’s not what it used to be”.
The TAC agreed to pay Tim $120,000.00 for his pain and suffering as a result of his shoulder injury.
PAYOUT AMOUNT
$120,000.00
Economic Loss Damages
For those that were working at the time of their accident, or likely to be able to work at the time, a claim can be made for “economic loss”.
Economic loss payouts factor in your past loss of earnings, which is the economic loss for between you suffering injury and the date you receive any payout, and future loss of earnings, which is what you are unable to earn in the future due to being incapacitated as a result of your injuries.
1. Past Economic Loss
Under the TAC scheme, given that there is a substantial entitlement to weekly payments immediately after injury, there is a cap on past economic loss.
The Transport Accident Act 1986, that applies to TAC matters does not allow a person to claim for economic loss in the first 18 months post-accident. This means that the only economic loss compensation available to injured persons under the TAC scheme is the weekly payment of 80% of their pre accident weekly earnings, which is discussed elsewhere on our site.
After this 18 month period, however, the full economic loss of an individual can be claimed as part of their payout. There will be an account for what further weekly payments TAC pays during this time.
Often past economic loss payments are not large, as the bulk of such payments have already been paid by TAC due to an injured person’s entitlement to weekly payments in accordance with law.
EXAMPLE ONE - Past Economic Loss
Ben (18)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
Ben was not working at the time of the accident. He had left school at 16, and had not yet found any work. He was not paid any benefits by TAC for his loss of earnings. He did not have any work lined up at the time of the accident.
Ben was not paid anything for his past economic loss when his matter settled 2 years after the accident, as he could not show any past loss.
PAYOUT AMOUNT
No past economic loss damages awarded
EXAMPLE TWO - Past Economic Loss
Karen (43)
Injured in a car accident by a drunk driver
Karen was working full time as a Division 1 nurse at the time of the accident. She was earning around $1600.00 net per week. TAC paid her the statutory maximum of $1,430.00 per week. As a result of her injuries, she has not returned to work.
Karen’s claim settled three and a half years after the accident. Karen was entitled to TAC payments for only three years post accident in accordance with law.
Karen was unable to claim her economic loss for the first 18 months, in accordance with law.
For the next 18 months, Karen was able to claim the difference between her weekly TAC payment, and what she would have normally earned had she not been injured, by the following calculation:
Number of weeks x (Pre accident earnings – TAC payments) = Past Loss
PAYOUT AMOUNT
78 weeks x ($1,600.00 – $1,430.00) = $13,260.00 past economic loss
EXAMPLE THREE - Past Economic Loss
Tim (75)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
As a retiree at the time of the accident, Tim’s pension was not affected by his accident, and therefore he had no past economic loss.
PAYOUT AMOUNT
No past economic loss damages awarded
2. Future Economic Loss
Future economic loss can be particularly complex. It can involve a bit of “crystal ball gazing” to try to work out how an injury will continue to affect a person’s capacity to earn.
Catastrophically injured persons are often conceded to be a “total loss of earning capacity”.
However, most people after an accident will retain some capacity to earn, either in their own job, or in another job that might be suitable for them.
Judgment calls need to be made about what a Court or jury would accept was a likely scenario in the future as to a person’s earning capacity. Questions that must be asked are things such as:
- Can they work?
- What can they earn?
- When would they have retired?
Good lawyers will spend a great deal of time analysing this. It is essential to get proper and realistic instructions from a client. Less experienced lawyers, or those that do not have proper training and oversight from an experienced TAC lawyer, cannot obtain just compensation results in this area of damages.
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Damages for future economic loss are calculated by looking at the weekly loss, multiplying this using an actuarial figure as to what each dollar is worth over time, and then taking away a percentage, typically 15%, for unforeseen events that might occur in the future to stop someone working. This reduction is know as the “vicissitudes of life”.
Superannuation is also usually factored in, at the compulsory rate as applicable.
EXAMPLE ONE - Future Economic Loss
Ben (18)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
Even though Ben was not working at the time of the accident, he had expressed interest in becoming a butcher. His father owned a butchers, and had always intended to employ Ben in the family business, though was allowing him time to “find himself” first.
Ben’s dad had a few employees, and they typically earned around $700 net per week.
The TAC was able to be convinced that Ben would have been able to earn at least this amount, and conceded he probably would have been able to work as a butcher until he was 60 years old. Ben was unable to work at all due to his catastrophic injuries.
Ben’s future economic loss was calculated as follows:
Weekly net earnings if not injured x Relevant multiplier between ages 20 and 60 years
$700 x 808.4 = $565,880.00
Less vicissitudes:
$565,880 x 0.85 = $480,998.00
Plus superannuation:
$480,998 x 1.095 = $526,693.00
PAYOUT AMOUNT
TAC rounded this figure, and agreed to pay Ben $527,000.00 for his future economic loss.
EXAMPLE TWO - Future Economic Loss
Karen (43)
Injured in a car accident by a drunk driver
Whilst at the time of settlement Karen had not returned to work, she had been in discussions with her employer regarding another role. This was only part time work, as a nurse administrator, working 20 hours per week. She instructed us that she believed she could cope with an office role, and hopefully return to around 30 hours per week eventually.
The new part time role she was offered was to pay $600.00 net per week for her 20 hours. Karen was of the view that she could move up to 30 hours at $900 net per week within 2 years. She intended to work to 67. The TAC accepted this, and her future economic loss was calculated as follows:
Next two years (104 weeks):
Weekly net earnings if not injured x number of weeks
$1,000.00 x 104 = $104,000.00
From two years onwards:
Weekly net earnings if not injured x Relevant multiplier between ages 48 and 67 years
($1,600 – $900) x 599.5 = $419,650.00
Less vicissitudes:
$419,650 x 0.85 = $356,702.50
Plus superannuation:
$356,702 x 1.095 = $390,589.23
PAYOUT AMOUNT
TAC rounded these figures, and agreed to pay Karen $494,000.00 for her future economic loss.
EXAMPLE THREE - Future Economic Loss
Tim (75)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
Again, as a retiree at the time of the accident, Tim’s pension was not affected by his accident, and therefore he had no future economic loss.
PAYOUT AMOUNT
No future economic loss damages awarded
Total Damages Paid
EXAMPLE ONE - Total Damages Paid
Ben (18)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
- Pain and Suffering: $558,760.00
- Past Loss: $0.00
- Future loss: $527,000.00
Total PAYOUT
$1,085,760.00
EXAMPLE TWO - Total Damages Paid
Karen (43)
Injured in a car accident by a drunk driver
- Pain and Suffering: $300,000.00
- Past Loss: $13,260.00
- Future loss: $494,000.00
Total PAYOUT
$807,260.00
EXAMPLE THREE - Total Damages Paid
Tim (75)
Suffered a right shoulder injury as a pedestrian as a result of another driver failing to give way
- Pain and Suffering: $120,000.00
- Past Loss: $0.00
- Future loss: $0.00
Total PAYOUT
$120,000.00
Key Points
It should be noted that the above examples are tax free and do not need to be declared to the ATO.
It should also be noted that upon a damages payout, you remain entitled to medical and like expenses and treatment on an ongoing basis via the TAC scheme. These entitlements are not affected by a damages payout.
Conclusion
The above examples are just that. All cases are different, which is why you need a lawyer who will get to know and understand you. Far too many lawyers are only interested in finishing cases, rather than finishing them well.
Making a claim can be stressful and confusing so if you or a loved one has been involved in an accident, do not hesitate to reach out to Arnold Dallas McPherson Injury Lawyers. Our dedicated team is ready to provide you with a free initial consultation to assess your case and discuss your legal options. Let us take the burden off your shoulders and champion your rights while you focus on your recovery.
We provide services on a No Win, No Fee basis and have helped injured Victorians obtain compensation for 30 years. If you have been injured in a road traffic accident, our experienced lawyers at Arnold Dallas McPherson can guide you through this process, providing you with expert advice and assistance.
