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AFG v GIO Limited [2019] NSWDRS CA 133

Overview

Jurisdiction: Miscellaneous Claims Assessment

Catchwords: Wholly or mostly at fault – motorcycle rider – police report – statutory benefits – legal costs – exceptional circumstances – costs above the regulated fee – just resolution – statutory interpretation – costs assessment

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 1.3, 3.11, 3.28, 3.36, 7.36, 7.37, 7.42, 8.3, 8.6, 8.10, Schedule 2(3)
  • Motor Accident Injuries Regulation 2017 Schedule 1 Part 1 s 3 & Part 6 s 22
  • Motor Accident Guidelines effective 13 July 2018 cl 7.441

Parties:

  • AFG– Claimant
  • GIO Limited – Insurer

Disclaimer: This decision has been edited to remove all unique personal identification including the name of the claimant.

Miscellaneous claims assessment certificate

View the certificate

MISCELLANEOUS CLAIMS ASSESSMENT CERTIFICATE

Issued in accordance with cl 7.36(5) of the Motor Accident Injuries Act 2017 and clause 7.441 of the Motor Accident Guidelines

Determination of a matter declared under Schedule 2(3) of the Act to be a miscellaneous claims assessment matter

 
ClaimantAFG
InsurerGIO
Date of Accident22 September 2018
DRS Reference10089606
Date of Internal Review15 March 2019
DRS Claims AssessorPhilip Watson
Date of Decision13 August 2018

The findings of the assessment of this dispute are as follows:

1. For the purposes of section 3.11 the Insurer has accepted that the motor accident was not caused wholly nor mostly by the fault of the injured person.

2. For the purposes of section 3.28 or 3.36 the Insurer has accepted that the motor accident was not caused wholly nor mostly by the fault of the injured person.

3. Legal Costs: The amount of the Claimant's costs assessed in accordance with the Motor Accident Injuries Act 2017 is $19,390.00 inclusive of GST.

A brief statement of my reasons for this determination are attached to this certificate.

Philip Watson
DRS Claims Assessor Dispute Resolution Services

Reasons for decision

Issued in accordance with section 7.36(4) of the Motor Accident Injuries Act 2017

Background

This determination relates to a Miscellaneous Claim, which is a reviewable decision under Schedule 2(3)(d) and (e) of the Motor Accident Injuries Act 2017, about whether the Claimant was wholly or mostly at fault for causing the accident, and the legal costs to  which the Claimant is entitled in connection with the claim.

1. There was a dispute between AFG, the Claimant, and AAI Limited trading as GIO, the Insurer, as to whether the Claimant was wholly or mostly at fault for causing the motor vehicle accident, pursuant to sections 3.11 and 3.28 of the Motor Accident Injuries Act 2017 ("the Act").

2. On 22 September 2018, the Claimant was riding in a group of motorcycle riders on the Old North Road near Laguna. When rounding a left hand bend his motorcycle crossed to the opposite side of the road and the Claimant then reduced his speed and moved back to the correct side of the road. There was then a collision involving two other motorcycles from the group, but the precise circumstances of this were in dispute.

3. The matter was reported to the Police who attended the scene and prepared a Police Report.

4. The Claimant denied that he was either wholly or mostly at fault for causing the accident. The Insurer initially held a different view and issued a liability notice to this effect on 18 January 2019. The Claimant sought an internal review and by letter of 15 March 2019 the Insurer confirmed its decision. Hence this application.

5. I held an initial teleconference with the parties on 14 May 2019. The Claimant has throughout been represented by Mr Andrew Stone of Senior Counsel. The Insurer has at times been represented by its internal solicitors  and, in part, by Mr William Fitzsimmons of Counsel.

6. At the first teleconference the Insurer was still seeking further information in relation to liability. That was then over six months from the time of the accident and following the initial and review decisions that the Insurer had made regarding liability.

7. At the first teleconference the Insurer indicated it was arranging for its investigator to interview the investigating police officer and to obtain a statement from its insured driver, as well as information from a property damage claim and a GIPA application to the Police.

8. I noted at the first teleconference that Mr Stone of Senior Counsel was most critical of the Insurer's apparent lack of investigation of the circumstances of the accident, prior to making its liability decisions. As he pointed out, the Claimant's benefits had been ceased whilst the Insurer was still carrying out further investigations. He submitted that it should be expected  that  those investigations should have been completed prior to the Insurer reaching its decision.

9. The Insurer indicated that it was precluded from speaking to the police officer, because of the consideration of criminal proceedings by the Police, in the first six months after the accident. The police officer had apparently declined to be interviewed at that time. However that period having expired, those arrangements were then being made.

10. The matter was also complicated because the insured driver, Mr B, had declined to provide a statement as he had also lodged a claim for statutory benefits. The third motorcycle rider involved in the accident, Mr K, had also not provided a statement at that time and it was unclear whether he had also made a claim for statutory benefits.

11. The Claimant sought a number of documents from the Insurer and I made a direction for the Insurer to provide this material. I deferred the matter to a second teleconference on 4 June 2019.

12. At that stage the Insurer had arranged for its investigator to interview the police officer, Constable Smith and arrangements had also been made for an interview with Mr B.

13. The Claimant raised the important consideration as to whether it was the Claimant or the Insurer who bore the onus  of proof in this application.  That is as to whether the Claimant was wholly or mostly at fault for causing the accident. It was the Claimant's submission that the Insurer bore this onus, as it sought to disentitle the Claimant to the statutory benefits that he had otherwise been receiving. The Claimant submitted that it was important that that issue be decided as a preliminary matter, because this would be relevant to the preparation of the matter for a hearing.

14. I again made directions for the Insurer to provide additional material and deferred the matter to a further teleconference on 3 July 2019.

15. I indicated I would then consider the readiness of the matter for determination and whether a face to face assessment conference would be required.  The third teleconference took place on 3 July 2019. Just prior thereto, the Insurer conceded that it bore the onus of proof as to whether the Claimant was wholly  or mostly at fault. The Insurer also forwarded further documents pursuant to the direction that I had made.

16. At that teleconference, I was advised by Mr Fitzsimmons of Counsel, that the Insurer wished to obtain an expert liability report, but it was likely that this would not be available until the end of October 2019, that is approximately in four months' time from the teleconference. · Mr Stone of Senior Counsel indicated that instructions would need to be obtained from the Claimant and he was concerned about the extent of the Claimant's legal costs, noting the provisions of the Motor Accident Injuries Regulation 2017 ("the Regulation"), to which I will refer. He indicated that the Claimant would likely seek the Insurer's agreement to pay legal costs above any regulated amount because of the additional time and work that had been and would be required, by the Claimant's legal representatives.

17. The Claimant indicated that a face to face assessment conference would be required because relevant witnesses would need to be questioned, including Constable Smith and Mr B.

18. I again deferred the matter so that the parties could consider the further arrangements and made further directions to both parties for additional submissions as to the matters raised.

19. Prior to the next teleconference, the Insurer issued a further liability notice dated 20 July 2019. In that notice, the Insurer  said "As we have assessed that you  are not wholly or mostly at fault for the accident and didn't have a minor injury in the accident, we accept liability to pay you statutory benefits  beyond the first 26 weeks after the accident".

20. I then held a fourth teleconference with the parties on 23 July 2019.  Mr Stone  of Senior Counsel again appeared for the Claimant and Mr Dallas Campbell, the Legal Injury NSW Manager for the Insurer, appeared on behalf of the Insurer.

21. The Insurer indicated that as it had then accepted liability, this dispute need not proceed further. Mr Stone, however, indicated that the Claimant sought costs above the regulated fee because of the exceptional circumstances in this matter, as had been previously foreshadowed. I discussed that question at some length with the parties at the teleconference and made directions for both parties to provide written submissions as to the Claimant's claim for costs on an exceptional basis. These I have subsequently received.

Documents considered

22. I have considered the documents provided in the application and the reply and any further information provided by the parties.

I have considered in particular the submissions from both parties regarding the question of the Claimant's costs. I will set out below the submissions from each and my consideration thereof.

Submissions

The insurer's submissions

23. The Insurer's costs submissions were provided by Mr Campbell and are dated 30 July 2019. In those submissions the Insurer conceded that it had not discharged its onus to establish that the Claimant was wholly or mostly at fault for the subject accident. It also specifically conceded that there are exceptional circumstances as to permit payment and entitlement for the Claimant to recover incurred legal costs, as permitted by the Act and Regulation.

24. The Insurer, however, submits that section 8.10 of the Act does not confer a power on me to assess, allow or order costs beyond the maximum fixed by the Regulation. It submitted that the Regulation fixes the maximum amount that a Claimant may recover in this type of application and that section 8.10 permits the recovery of that regulated amount, but not any amount in excess thereof.

25. The Insurer refers to the provisions of section 8.3 of the Act and Part 6 of the Regulation and submits that there is a clear statutory intention that legal costs incurred by a Claimant are not to exceed the maximum costs permitted under Schedule 1 of the Regulation. The Insurer further submits that section 8.10 only permits payment by the Insurer of legal costs incurred by the Claimant, if exceptional circumstances exist or a Claimant is under a legal disability.  If that is satisfied, then the Insurer submits that section 22 of the Regulation provides the maximum costs recoverable pursuant to Schedule 1 of the Regulation.

26. In summary, it submits that the only power conferred on the Dispute Resolution Service ("DRS") under section 8.10, is to permit legal costs incurred if exceptional circumstances exist and, if so, those costs are fixed by the Regulation. The Insurer further submits that this is clear because the Claimant cannot have "incurred" legal costs because of the restriction on the Claimant's legal representatives contracting out of the provision for the maximum costs permitted by the Regulation, in a statutory benefits claim.

27. The Insurer further submits that by virtue of section 8.10, the DRS may only permit payment of legal costs and does not provide any power for the DRS to assess costs. In this regard it refers to the provisions of section 7.37 of the Act, to which I will refer, which expressly provides that a Claims Assessor may include an assessment of the Claimant's costs, in the assessment of a claim for damages.

28. The Insurer further submits that its opinion of the limited operation of section 8.10, is confirmed by the provisions of section 8.6, which allows a Court to  make an order as to costs above the regulated costs in an exceptional case. It submits that that section, read together with section 7.37 makes it clear that Parliament did not intend, by section 8.10, to confer power on the DRS to assess costs beyond the regulated costs for a miscellaneous claims dispute.

29. The Insurer submits that the task of conducting a costs assessment of unregulated costs is not within the powers conferred upon a Claims Assessor under Division 7.6 Subdivision 4 of the Act and the Guidelines.

30. The Insurer refers to the objects of the Act as set out in the explanatory note and the Second Reading Speech in Parliament and submits that it was clearly Parliament's intention to reduce and fix legal costs that may be incurred by a Claimant under the Act.

31. In summary, the Insurer submits that the appropriate finding by me should be that exceptional circumstances exist that justify payment of legal costs incurred by the Claimant, as fixed by the Act and Regulation, and permit the Claimant to recover legal costs in the sum of $1,633.00 plus expenses.

The claimant's submissions

32. The Claimant made initial written submissions as to costs dated 18 July 2019 and then further submissions in reply to the Insurer's submissions on 6 August 2019. I will consider these together.

33. The Claimant refers to the provisions of section 8.10 of the Act and to the regulated fee, pursuant to the Regulation, to which I have already referred. He submits that section 8.10(4)(b) makes provision, in the form of a "safety valve", for Claimants to have the benefit of legal representation in unusually complex disputes and where legal costs above the regulated amount may be permitted by the DRS.

34. The Claimant submits that section 8.10 is a clear intention by Parliament to allow DRS Assessors to order costs beyond those permitted by the Regulation in appropriate exceptional circumstances. The Claimant notes that this was not a power previously provided to Claims Assessors under the Motor Accident Compensation Act 1999 but was limited to Courts only. See section 153 of that Act.

35. The Claimant's initial submissions dealt at some length with the question  of what should be regarded as "exceptional circumstances". For the present purposes I do not need to consider that issue in detail as the Insurer has conceded that there are exceptional circumstances in this matter, as I have already noted.

36. The Claimant's initial submissions then attached the total costs "incurred" by the Claimant for his solicitor and Counsel, totalling an amount of $19,390.00.

37. As I have noted, the Claimant provided submissions in reply to the Insurer's submissions, on 6 August 2019. These submissions deal with each of the Insurer's submissions as to the operation of the Act and Regulation and the powers of a Claims Assessor in relation to costs in a miscellaneous claims assessment.

38. The Claimant describes as "a truly breathtaking submission from GIO" that regulated costs are only recoverable in exceptional circumstances. He submits that there is absolutely no support for this proposition within the Act or associated materials and says that if that had been the intention of Parliament it would have been expressly stated in section 8.10. The Claimant submits that the interpretation of section 8.10, as contended for by the Insurer, is not consistent with the explanatory note, that the Insurer itself refers to. He further submits that had it been the intention of Parliament to only allow the Claimant to recover regulated costs in exceptional circumstances, then this would have been expressly referred to in the Second Reading Speech.

39. The Claimant also submits, no doubt from the extensive experience of Mr Stone of Senior Counsel under the Act and in these types of matters, that the Insurer's contention has not been propounded by other insurers in miscellaneous claims assessment disputes. It is said that legal costs have been permitted and paid in respect of many unexceptional disputes.

40. The Claimant submits that to accept the Insurer's submission as to  the operation of section 8.10, would effectively preclude claimants obtaining legal representation, because of the uncertainty as to whether even regulated costs would be recoverable, if only where there were found to be exceptional circumstances. The Claimant submits that such an interpretation runs contrary to the structure of the Act, the Explanatory Note, the Second Reading Speech and the common experience of the Act to date.

41. The Claimant submits that the Insurer's view, that the Claimant cannot have "incurred" legal costs, when there is a prohibition on a legal practitioner contracting out of the provisions of the Regulation, conflates and confuses two separate concepts.

42. The Claimant says the legal costs are incurred when legal work is performed  but that not all legal work performed can be charged for nor recovered. It is submitted that in this matter the legal work has been done and costs incurred but the Claimant's legal representatives cannot charge for or recover those costs, in excess of the regulated costs, unless there are exceptional circumstances and are permitted by the DRS.

43. The Claimant acknowledges that there are separate and additional costs powers contained within the Act in relation to claims assessments and court assessments but says that the existence of those provisions does not detract from the need for the Act and Regulation to have provisions dealing with costs in statutory benefits disputes. The Claimant submits that the regulated fee has been set for unexceptional matters but with the provision, in section 8.10, for additional costs to be permitted in exceptional circumstances.

44. The Claimant responds to the Insurer's submission regarding the objects of the Act. Mr Stone of Senior Counsel submits "It takes some quite remarkable hutzpah for GIO to submit that it is seriously the object and intent of the MAI Act to only allow for recovery of the regulated fee in "exceptional circumstances". The net effect of the GIO's submission is that in the vast majority of statutory benefits disputes the Claimant would be legally unrepresented as no fees whatsoever are recoverable in unexceptional circumstances".

45. It is said that the Insurer's submissions ignore an object of the Act, under section 1.3, to encourage the ''just' resolution of disputes. The  Claimant submits that given that CTP insurers can spend unlimited amounts on legal assistance through investigators and internal legal departments, the suggestion that the Act and Regulation provides for a Claimant to only have legal assistance in exceptional circumstances, is not only difficult to comprehend but would be unjust.

46. In conclusion, the Claimant submits that I should permit costs, in excess of the regulated amount, due to the exceptional circumstances in this matter and in the amount itemised. The Claimant submits that I may quantify such costs, in excess of the regulated amount, so as to provide a quick, cheap and effective dispute resolution service. He submits that if I did not do so, then this would require the parties to apply for a costs assessment in the Supreme Court, which may not only be disproportionate to the amount in dispute but also run contrary to the intention of the Act. The Claimant submits that the quick and efficient approach would be to allow a reasonable lump sum, noting that the Insurer does not contend that a costs assessment should be undertaken.

Legislation

47. In making my decision I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW)
  • Motor Accident Injuries Regulation 2017
  • Motor Accident Guidelines 2017

Reasons

48. I have considered the documents provided in the application and the reply and all further information provided by the parties.

49. The provision for costs and fees is found in Part 8 of the Act and specifically sections 8.1 to 8.10. Section 8.3 provides:

"8.3 REGULATIONS FIXING MAXIMUM COSTS ETC RECOVERABLE BY AUSTRALIAN LEGAL PRACTITIONERS

(1) The regulations may make provision for or with respect to the following:

(a) fixing maximum costs for legal services provided to a claimant or to an insurer in any motor accidents matter,

(b) fixing maximum costs for matters that are not legal services but are related to proceedings in any motor accidents matter (for example, expenses for investigations, for witnesses or for medical reports),

(c) declaring that no costs are payable for any such legal services or other matters of a kind specified in the regulations.

(2) Without limiting subsection (1), the regulations may fix maximum costs for legal services provided to a claimant by reference to the  amount recovered by the claimant.

(3) An Australian legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section. An Australian legal practitioner is not entitled to be paid or recover  any amount for a legal service or other matter of a particular kind if the regulations declare that no costs are payable for a service or other matter of that kind.

(4) An Australian legal practitioner is not entitled to be paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits (whether the claimant or the insurer) in connection with the claim unless payment of those legal costs is permitted by the regulations or the Dispute Resolution Service.

(5) This section does not entitle an Australian legal practitioner to recover costs for a legal service or matter that a court or costs assessor determines were unreasonably incurred.

(6) This section and any regulations under this section prevail to the extent of any inconsistency with the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014). An assessment under that legislation of any costs in respect of which provision is made by a regulation under this section is to be made so as to give effect to that regulation.

(7) The Minister is to consult the Councils of the Bar Association and the Law Society about any proposed regulation under this section. The validity of a regulation is not affected by a contravention of this subsection."

50. As the Insurer has noted and pursuant to section 8.3(4), an Australian legal practitioner is not entitled to be paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits (whether the claimant or the insurer) in connection with the claim unless payment of those legal costs is permitted by the Regulations or the DRS.

51. Section 8.10 provides as follows:

"8.10 RECOVERY OF COSTS AND EXPENSES IN RELATION TO CLAIMS FOR STATUTORY BENEFITS

(1) A claimant for statutory benefits is (subject to this section) entitled to recover from the insurer against whom the claim is made the reasonable and necessary legal costs, and other costs and expenses, incurred by the claimant in connection with the claim. Other costs and expenses include the cost of medical and other tests and reports.

(2) The regulations may make provision for or with respect to fixing the maximum costs and expenses recoverable by a claimant under this section (including any matters for which no costs and expenses are recoverable from the insurer).

(3) A claimant for statutory benefits is only entitled to recover form the insurer against whom the claim is made reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the Dispute Resolution Service.

(4) The Dispute Resolution Service can permit payment of legal  costs incurred by a claimant but only if satisfied that:

(a) the claimant is under a legal disability, or

(b) exceptional circumstances exist that justify payment of legal costs incurred by the claimant.

(5) An insurer is not entitled to recover from a claimant for statutory benefits any legal costs, or other costs and expenses, of the insurer in relation to the claim."

Are legal costs only recoverable in exceptional circumstances?

52. Section 8.10(1) enables a claimant for statutory benefits to recover from the insurer, against whom the claim is made, the reasonable necessary legal costs and other costs and expenses, incurred by the claimant in connection with the claim.

53. Subsection (2) provides that the Regulations may make provision for and with respect to fixing the maximum costs and expenses recoverable by a claimant under this section. Such provisions are set out in Part 6 Division 2 of the Regulation. Section 22(1) provides that the costs set out in Schedule 1 are the maximum costs that may be recovered.

54. Schedule 1, Part 1, section 3(1) provides:

"The maximum costs for legal services provided to a claimant or an insurer in connection with an assessment under Division 7.6 of the Act involving a dispute about a regulated miscellaneous claims assessment matter are $1,600.00 (to a maximum of $6,000.00 per claim)"

55. As the parties agree the figure of $1,600.00 has now increased to an amount of $1,633.00.

56. Had the legislature intended, as the Insurer submits, that legal costs for a claimant be restricted to the maximum costs set out in the Regulation, then section 8.10 need make no further provision. Subsection (1) provides an entitlement to recovery of reasonable and necessary legal costs and subsection (2) provides for a regulated maximum.

57. However section 8.10 continues. Section 8.10(3), as set out above, provides that a claimant is only entitled to recover from the insurer against whom the claim is made the reasonable and necessary legal costs incurred by the claimant if payment of those costs is permitted by the regulations or the DRS (my underlining).

58. Subsection (3) is clearly considering two separate circumstances. The first, as provided for in subsections (1) and (2) and the second for an entitlement if permitted by the DRS.

59. Subsection (4) provides the parameters by which the DRS can permit payment of legal costs, other than as provided by the Regulation. Relevantly, in this matter, that is if the DRS is satisfied that exceptional circumstances exist that permit payment of legal costs incurred by the Claimant.

60. This provision mirrors the provision in section 8.3(4) to allow an Australian legal practitioner to be paid or recover legal costs if permitted by the DRS.

61. Sections 8.10(3) and (4) have work to do. Similarly does section 8.3(4). The submission contended for by the Insurer, misunderstands the work those subsections are to do. That is, in my view, to permit payment of legal costs by the DRS, as an alternative to the payment of costs permitted by the Regulation, and, relevantly here, if exceptional circumstances exist that justify payment of legal costs incurred by the Claimant.

62. As I have indicated, section 8.10(3) provides for an entitlement to recover reasonable and necessary legal costs in two alternate scenarios. One is permitted by the Regulation and the other permitted by the DRS.  Section 8.10(4) provides that the existence of exceptional circumstances is only a consideration if legal costs are to be permitted by the DRS.

63. Accordingly, I would not accept the Insurer's interpretation that the legal costs permitted by the Regulation are only recoverable if exceptional circumstances exist.

Can legal costs be "incurred" beyond the regulated amount?

64. I would also not accept the Insurer's submission that the Claimant  cannot "incur" legal costs beyond the maximum sum set out in the Regulation, such  that that amount may be permitted under section 8.10. I accept the Claimant's submission to the contrary. Such is clear from the words of section 8.3(4). The disentitlement is to not be "paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits". It is not a disentitlement to legal costs being "incurred".

65. I am satisfied, therefore, that section 8.10 of the Act entitles the Claimant to recover from the Insurer reasonable and necessary legal costs, if permitted by the DRS. The DRS can permit such payment but only if satisfied that exceptional circumstances exist that justify payment of legal costs incurred by the Claimant.

66. I am satisfied, as submitted by the Claimant, that the section evidences the intention of Parliament to allow for the payment of legal costs as permitted by the Regulation or as permitted by the DRS if there are exceptional circumstances. In other words, if the miscellaneous claims assessment  matter is unusual or out of the ordinary, to adopt the language of the Court of Appeal in San -v- Rumble (No 2) [2007] NSWCA 259.

67. As I have noted, the Claimant says there are exceptional circumstances in this matter and the Insurer concedes that that is the case.

Do I have the power to assess costs?

68.However the Insurer has submitted, as I have set out above, that the DRS can permit payment of legal costs but may not assess these. The Insurer submits that the provision of section 8.10 only empowers the DRS to permit payment of legal costs, but not to assess costs. It refers to the provisions of section 7.37 of the Act which provides as follows:

"7.37 CLAIMS ASSESSOR MAY ASSESS COSTS

(1) In making an assessment and specifying damages in respect of a claim, a claims assessor may include in the assessment an assessment of the claimant's costs (including costs for legal services and fees for medico­ legal services) in the matter.

(2) An assessment of those costs may also be made (whether or not an assessment has been made under subsection (1)) if a court does not determine a matter after the issue of a certificate as to an assessment but remits the matter for further assessment under this Division.

(3) In making an assessment under this section, a claims assessor:

(a) may have regard to the amount of any written offer of settlement made by either party to the matter, and

(b) must give effect to any requirement of the regulations under Part 8 (Costs and fees) as to costs that may be included in any assessment or award of damages or fixing maximum fees and costs, and

(c) must have regard to the principles and matters referred to in section 200 of the Legal Profession Uniform Law (NSW).

(4) A claimant or an insurer (or an Australian legal practitioner acting for a claimant or an insurer in respect of the relevant claim) has the same right of appeal against an assessment made under this section as the claimant, insurer or legal practitioner would have under section 89 of the Legal Profession Uniform Law Application Act 2014 if the assessment were a decision of a costs assessor under Part 7 of that Act in respect of a bill of costs."

69. The Insurer notes the specific power provided to a claims assessor to make an assessment of the Claimant's costs, when making an assessment of damages. That interpretation wrongly assumes that a claims assessor may only make an assessment of the claimant's costs when specifying damages. In my view it is wrong for two reasons.

70. Firstly section 7.37(1) provides for two scenarios where a claims assessor may include in an assessment an assessment of the claimant's costs. This is "in making an assessment in respect of a claim" and "in specifying damages in respect of a claim". It follows that in making an assessment in respect of a claim a claims assessor may include in the assessment an assessment of the claimant's costs.

71. This is clear from the provisions of section 7.36(1) which provides:

(1) The claims assessor is, in respect of a claim referred to the assessor for assessment, to make an assessment of:
(a) the issue of liability for the claim (unless the insurer has admitted liability), and

(b) the amount of damages for that liability (being the amount of damages that a court would be likely to award).

72. The section clearly provides for separate assessments of liability and damages.

73. Secondly, Subdivision (3) of Division 7.6 refers to miscellaneous claims assessments and includes section 7.42. That section provides as follows:

"7.42 ASSESSMENT OF MISCELLANEOUS DISPUTES IN CONNECTION WITH CLAIMS

(1) A dispute may be referred at any time to the Dispute Resolution Service  by any party to the dispute for assessment under this Division.

(2) Subdivision 2 applies to the assessment of a dispute in the same way as it applies to the assessment of a claim for damages, subject to subsection (3)and such other modifications as may be prescribed by the regulations.

(3)  An assessment of a dispute about a miscellaneous claims assessment matter relating to a claim for statutory benefits is binding on the parties to the dispute."

74. It is clear that by virtue of section 7.42(2), the provisions of Subdivision 2, including section 7.37, apply, mutatis mutandis, to the assessment of a dispute in a miscellaneous claims assessment. The limitations in that subsection  are not relevant for present purposes. The dispute here was as to liability.

75. Therefore, in a miscellaneous claims assessment, a claims assessor may include in the assessment an assessment of the claimant's costs in the matter.

76. Accordingly, if a claimant is permitted under section 8.10(4) to the payment of legal costs because exceptional circumstances exist, then a claims assessor may include an assessment of those costs.

77. Section 8.6(1), as referred to by the Insurer, provides for a court to make  a costs order consistent with the provisions of the Act, in an exceptional case and for the avoidance of substantial injustice.

78. The Insurer submits that as section 8.10 does not contain such an express power, then it was clearly the intention of Parliament not to permit costs beyond the regulated amount for a miscellaneous claims assessment dispute.

79. Clearly section 8.6 relates to a consideration of costs when a matter is in court. However a claims assessor may make an assessment of the claimant's costs, pursuant to sections 7.37 and 7.42 and permit payment pursuant to section 8.10.Such is the legislative framework for costs in a miscellaneous claims assessment dispute in relation to a statutory benefits matter.

Is my interpretation contrary to the objects of the Act?

80. The Insurer refers to the Explanatory Note to the Motor Accidents Injuries Bill 2017, and in particular to the following feature of the new motor injuries compensation scheme, namely:

"(t) the regulation will fix maximum costs for legal services provided in a motor accidents matter. Legal costs will not be recoverable for statutory benefits claims unless permitted by the regulations or the Dispute Resolution Service."

81.The Insurer says that that when read together with the Second Reading Speech relating to the fixing of maximum legal costs and the objects of the Act, this provides a clear intention that only regulated costs may be recovered in a statutory benefits miscellaneous claims assessment dispute.

82. I have already noted the Claimant's submissions in this regard, that disputes be resolved justly.

83. The Explanatory Note to the Bill, as referred to by the Insurer, mirrors the provision in section 8.10. It clearly sets out that legal costs will be recoverable if permitted by the Regulation or the DRS. That note is not contrary to the interpretation of section 8.10, that I have set out above.

84. In my view this interpretation also, as submitted by the Claimant, meets the objects of the Act as set out in section 1.3(g) "to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes". In exceptional circumstances, it would not be cost effective for a claimant to be limited to the maximum regulated costs. This may not see the legal work properly completed. It would also not provide a just resolution of disputes.

85. The Insurer refers to the Second Reading Speech to the Bill. The Second Reading Speech by Minister Dominello on 9 March 2017 refers to the reduction in legal costs and, as quoted by the Insurer, the Minister says "it allows for both the fixing of maximum legal costs by reference to the amount recovered by the claimant and a fee for service model".

86. That clearly refers to the regulated fee and the speech makes no reference to the allowance of costs in exceptional circumstances, whether by a claims assessor or a court. The Minister did however say, when referring, inter alia, to claims assessors, that the Bill establishes "an independent dispute resolution service for disputes to be resolved independently, flexibly, fairly, cost effectively and quickly". I have endeavoured to meet that expectation in this decision. It is far more cost effective that I assess costs, rather than the parties having to proceed to a separate costs assessment. That would also not resolve the dispute quickly.

87. I note that the State Insurance Regulatory Authority has published a paper entitled "Legal costs in claims for CTP statutory benefits". This paper is for the benefit of legal advisors and says at page 2, referring to section 8.10:

"A claimant for statutory benefits is only entitled to recover reasonable and necessary legal costs if payment of those costs is permitted by the Regulations or the Dispute Resolution Service.

The Dispute Resolution Service may permit the payment of costs in special circumstances including where the Claimant is under a legal disability, an infant, or in exceptional circumstances that justify payment of legal costs incurred by the claimant."

88. In my view, my interpretation of section 8.10 reflects that statement by the regulator.

Summary

89. I am satisfied that the provisions of section 8.10 allow the DRS to permit payment of legal costs incurred by a claimant if exceptional circumstances exist, and above the amount set out in the Regulation.

90. I am also satisfied that as a claims assessor I have the power to include in this assessment, an assessment of the Claimant's costs pursuant to sections 7.37 and 7.42 of the Act.

91. I am further satisfied that legal costs have been incurred but may only be paid  or recovered if permitted by the DRS.

92. I am satisfied that these findings conform to the objects of the Act and as explained in the Explanatory Note to the Bill and in the Second Reading Speech in Parliament.

Costs and disbursements

93. I have set out above the submissions from each party and my findings as to the statutory provisions.

94. The Insurer has conceded that there are exceptional circumstances that justify payment of legal costs incurred by the Claimant. I am also so satisfied. Accordingly, I permit payment of legal costs pursuant to section 8.10 of the Act.

95. The Claimant submits that I should allow the costs as claimed as the Insurer has not contested the reasonableness of the fees. The Claimant submits that I should allow the unchallenged amount of the fees claimed, being a sum of $19,390.00.

96. In the absence of any dispute from the Insurer as to the reasonableness of the amount sought by the Claimant, I assess the Claimant's costs in the sum claimed of $19,390.00.

97. That amount includes fees for both the Claimant's solicitor and Counsel. This was clearly an unusual matter, involving as it did four teleconferences and lengthy submissions from each party. There was a large amount of material submitted by each. I note the Insurer was represented at different times by  three separate solicitors and by Counsel.

Conclusion

My determination of the Miscellaneous Claim is as follows:

98. For the purposes of section 3.11 the Insurer concedes that the motor accident was not caused wholly nor mostly by the fault of the injured person.

99. For the purposes of section 3.28 or 3.36 the Insurer concedes that the motor accident was not caused wholly nor mostly by the fault of the injured person.

100. Legal Costs: The amount of the Claimant's costs, assessed in accordance with the Motor Accident Injuries Act 2017 is $19,390.00 inclusive of GST.

Philip Watson
DRS Claims Assessor
Dispute Resolution Service