MAIA: Mandatory offer nett of rehabilitation costs paid by the insurer

McDermott v Manley & Anor [2018] QSC 35

Mullins J

Background

The applicant was injured in a motor vehicle accident in December 2015. The second respondent, the compulsory third party insurer for the first respondent, participated in a compulsory conference with the applicant in January 2018. The parties were unable to reach a settlement and mandatory final offers were exchanged pursuant to 51C of the Motor Accident Insurance Act 1994 (Qld) (the “Act”).

Relevantly, the second respondent’s offer was in the following terms:

We have considered all of the material presently available to us and we are prepared to offer your client the amount of $53,000 inclusive of all heads of damage and statutory refunds, exclusive of payments made to date to or on behalf of your client in the sum of $22,318.11. …

The applicant contended that the offer amounted to a gross offer of $75,318.11 which would entitle the applicant to costs and outlays on a standard basis. The relevance was noted by Mullins J:

[9] Another significance of whether the mandatory final offer was $53,000 or $75,318.11 is the difference in costs that apply: see s 51C(4) of the Act and s 27A and s 29 of the Motor Accident Insurance Regulation 2004 (Qld). If the former, the applicant’s costs would be limited to $3,600. If the latter, the applicant seeks standard costs and outlays.

The second respondent disputed that characterisation of the offer and asserted that no notice was given pursuant to 51(4) of the Act.

On 1 February 2018, the applicant accepted the second respondent’s offer, conditional upon whether the applicant’s characterisation of the offer was correct. The application concerned the characterisation of the second respondent’s offer.

Determination

Section 51(4) of the Act provides:

If the insurer intends to ask the court to take the cost of rehabilitation services into account in the assessment of damages, the insurer must, before providing the rehabilitation services, give the claimant a written estimate of the cost of the rehabilitation services and a statement explaining how, and to what extent, the assessment of damages is likely to be affected by the provision of the rehabilitation services.

As to the correct meaning of s 51(4) of the Act, Mullins J held:

[11] Where there has been no notice given by the insurer under s 51(4) of the Act, the insurer has made an election to bear the costs of rehabilitation services, subject to the exception provided for in s 51(10) where the payment has been induced by the claimant’s fraud. Where the notice is given under s 51(4) of the Act, s 51(9) and s 51(9A) cover how the costs of rehabilitation services may be taken into account in the assessment of damages and it is only then that the costs of rehabilitation services paid for by the insurer may be added to the claimant’s damages. See the analysis of s 51(4), s 51(9) and s 51(9A) by Applegarth J in Aldridge v Allianz Australia Insurance Ltd [2009] QSC 257, particularly at [77]-[80].

[12] It follows from the election of the insurer to bear the costs of rehabilitation services provided to the claimant that those costs are then irrelevant to the offers exchanged as mandatory final offers. The applicant’s claim in this matter to gross up the second respondent’s mandatory final offer is unsupported by the statutory scheme in s 51 and inconsistent with the analysis in Aldridge.

On this construction, her Honour dismissed the application, finding that there was no acceptance by the applicant of the second respondent’s mandatory final offer in the terms in which it was made.

Costs

As to the costs of the application, the respondents contended that costs should follow the event while the applicant submitted that it raised an issue of importance and therefore there should be no order as to costs or that costs should be in a proceeding to be commenced by the applicant. Holding that the applicant was to pay the respondents’ costs, her Honour concluded:

[15] The answer to the applicant’s contention was there to be found in the terms of s 51 of the Act and the decision in Aldridge. It was the applicant’s choice to test his contention in the Supreme Court. In those circumstances, costs should follow the event. …

 

David Cormack – Brisbane Barrister & Mediator

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