AFV v AAI Limited trading as GIO [2019] NSWDRS MR 148

JurisdictionMerit Review
CatchwordsStatutory benefits – minor injuries – costs of application for medical assessment – legal costs – physical medical dispute application – reasonable and necessary costs – radiculopathy
Legislation citedMotor Accidents Injury Act (NSW) ss 1.3(2)(g), 7.13(4), 8.3(1)(c), 8.3(3), 8.10(3), 8.10(4), div 7.6, Schedule 2(1)(aa)
Motor Accident Injuries Regulation 2017 cl 10(d), Schedule 1, part 1 (2)(1)
Motor Accident Guidelines cl 7.18.1, 7.18.6
Cases cited


Text citedN/A
Parties AFV - Claimant
AAI Limited trading as GIO - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

Reasons for decision

Issued in accordance with section 7.13(4) of the Motor Accident Injuries Act 2017


1.  AFV was injured in a motor vehicle accident on 4 February 2018.

2.  AAI Limited trading as GIO (“the Insurer”) accepted AFV’s claim under the Motor Accidents Injuries Act 2017 (“the Act”).

3.  On 5 June 2018, the Insurer issued a decision to AFV denying liability for statutory benefits after 26 weeks of his claim on the basis that his injuries had been determined as ‘minor injuries’ under the Act.

4.  AFV disputed this decision and sought an internal review by the Insurer. On 2 July 2018 the insurer issued a Certificate of Determination – Internal review, which affirmed the original decision.

5.  AFV lodged an application with the Dispute Resolution Service (“DRS”) on 27 July 2018 for a medical assessment in relation to the ‘minor injury’ determination.

6.  An assessment was conducted by Assessor Gregory Carr who found, in his decision dated 5 September 2018, that AFV’s injuries were non-minor.

7.  AFV’s legal representatives, Penrose Lawyers, issued an invoice to the insurer on 15 May 2019 seeking costs of the application for medical assessment in relation to the minor injury determination. The invoice sought the sum of $1796.30.

8.  There is no response provided from the insurer, however in its reply the insurer confirms that it refused to pay the invoice. In a telephone conversation with DRS in which the Insurer was asked whether it provided written notice of its decision not to pay the invoice the insurer advised that it indicated to AFV’s legal representatives that it would not be paying the invoice and would be awaiting the decision of a Merit Reviewer.

9.  The issue in dispute is whether AFV is entitled to recover from the Insurer the legal costs incurred pursuant to section 8.10 of the Act, and if so, the quantum of those costs.

10.  I note that clause 10(d) of the Regulations excludes disputes arising under section 8.10 of the Act from the requirement of internal review.

11.  AFV has made an application for merit review with the DRS on 9 July 2019. The application was accepted and falls within the jurisdiction of the DRS as a merit review matter under Schedule 2(1)(aa) of the Act.

Documents considered

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


13.  In conducting my review, I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (“the Act”)
  • Motor Accident Guidelines 2017 (as amended on 15 January 2019) (“the Guidelines”)
  • Motor Accident Injuries Amendment Regulation 2017 (NSW) (“the Regulations”)


14.  AFV submits:

a.  The claimant seeks to recover reasonable costs, in invoice 206, from the insurer in connection with the statutory benefits claim.

b.  These costs are reasonable and ought to be allowed, particularly in circumstances where the claimant was compelled to make an application to DRS by reason of the Insurer’s determination which was ultimately overturned by DRS.

15.  The Insurer submits:

a.  The claimant has made an application pursuant to Schedule 2, Clause 1(aa) of the Motor Accident Injuries Act 2017 regarding a merit review dispute concerning legal costs. The claimant’s solicitors are claimant $1,796.30 (inclusive of GST) for the completion and lodgment of the Claimant’s physical medical (minor injury) dispute application.

b.  The insurer notes that by operation of section 8.10(3) of the Act, the claimant is entitled to recover legal costs in relation to a claim for statutory benefits if such costs are permitted by the Regulation of the DRS.

c.  The insurer submits that it is unable to pay any costs for legal services given that there is no mechanism permitting such costs, unless allowed by a Claims Assessor or a Court.

d.  Pursuant to section 8.10(4), the DRS 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.

e.  AFV has the onus of complying with section 8.10(4) and until he satisfies DRS that there are exceptional circumstances in existence to justify the payment of legal costs, it is unable to pay such a claim for legal services.

f.  It is not submitted that the provisions in the Regulations in relation to maximum costs for legal services have no application at all. Such costs may be allowed where a claim proceeds to the assessment of damages under Division 7.6.

g.  The Insurer outlines its understanding of how medical disputes proceed in the new scheme, based on the intention of the scheme and submits that claimants may retain lawyers for the purposes of providing submission to the proper officer that the Medical Assessment was incorrect in a material respect. It is submitted that it is only at this point that the Insurer is liable to pay costs for legal services for the subject medical dispute by operation of Schedule 1 of the Regulations.

h.  The Insurer submits that AFV does not have exceptional circumstances to be allowed costs in connection with the dispute regarding minor injury. For AFV to engage lawyers to complete the application form for the medical dispute is not reasonable and necessary as it is not necessary for solicitors to make legal submissions to a medical assessor.

i.   The Claimant’s legal representative omitted to draft detailed submissions in support of their application apart from submitting that the claimant’s injuries are non-minor due to complaints of radiculopathy and that the insurer did not have sufficient medical evidence on which to base its determination.

j.   The Insurer is not satisfied on the information before it that the information submitted supports that there are exceptional circumstances to justify payment of legal costs and submits that legal costs should not be recoverable for this application.


16.  The issue in dispute before me is AFV’s entitlement to legal costs relating to the application for medical assessment of the ‘minor injury’ dispute.

17.  Section 8.3 of the Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. Section 8.10(1) provides that a claimant for statutory benefits is (subject to that section) entitled to recover from the insurer ‘reasonable and necessary’ costs in connection with the claim. This is qualified by subsections (2), (3) and (4) which provide that the recovery of costs is allowed if payment is permitted by the Regulations or the DRS.

18.  The Insurer makes a number of submissions in relation to the payment of legal costs in this matter. The Insurer submits initially that it is unable to pay any costs for legal services in connection with medical assessments because there is no mechanism permitting such costs unless allowed by a claim’s assessor or a court.

19.  I am not persuaded by the insurer’s submissions in this regard. Costs for medical assessments are specifically permitted by the Regulations at Schedule 1, Part 1(2)(1) of the Regulations, which provides:

The maximum costs for legal services provided to a claimant or an insurer in connection with a medical assessment under Division 7.5 of the Act, as allowed by the claims assessor or court, are 16 monetary units (to a maximum of 60 monetary units per claim).

20.  In providing a maximum amount recoverable the Regulations, in my view, specifically permit payment of reasonable and necessary legal costs incurred “in connection with a medical assessment”.

21.  The Insurer submits that the use of the words “claims assessor or court” supports that the intention of the scheme is that claimants are not legally represented in applications for medical assessment matters unless the matter proceeds to a proper officer for review of a medical assessment or assessment of damages under Division 7.6 of the Act. I note however that the costs recoverable in the case of these latter forms of dispute are provided for separately under the Regulations.

22.  Further, section 8.3(1)(c) of the Act provides that the Regulations may make provision with respect to declaring that no costs are payable for any such legal services or other matters of a kind specified in the Regulations. I consider, that if it was the intention of the scheme that costs are not recoverable in relation to medical assessment matters, such matters could have been specified in the Regulations as such.

23.  For the above reasons, I do not agree with the submissions of the Insurer that there is no mechanism allowing insurers to pay the costs of medical assessment matters and that this is in line with the perceived intention of the scheme that lawyers are not retained in medical assessment matters.

24.  Accordingly, I do not consider that AFV has the onus of establishing that exceptional circumstances exist to allow costs in this matter, as submitted by the Insurer, because I am not required to rely on sub-section 8.10(4)(b) of the Act as I am satisfied that the Regulations permit the recovery of reasonable and necessary costs of medical assessment matters, at Schedule 1, Part 1, clause 2 of the Regulations.

25.  The Insurer advised that it was unable to pay costs without an order from DRS, which appears to have been advised on the same basis as the submissions referred to above.

26.  I note that the DRS has jurisdiction to determine disputes arising in relation to costs as merit review matters under Schedule 2, clause 1(aa), which outlines the dispute as follows:

whether for the purposes of section 8.10 (Recovery of costs and expenses in relation to claims for statutory benefits) the costs and expenses incurred by the claimant are reasonable and necessary.

27.  Accordingly, in matters where there is a dispute between parties about whether the costs and expenses incurred are reasonable and necessary, for the purpose of recovery of such costs, the DRS has jurisdiction to determine such disputes and make determinations or “orders”.

28.  Jurisdiction is therefore conferred to the DRS when there is a dispute referred for determination. The above provision does not, nor does any other provision under the Act, work to prevent an insurer from agreeing to pay costs in matters in which it accepts it is liable to pay costs. Similarly, there is no provision in the Act or the Regulations which states that costs cannot be agreed to or paid without a costs order.

29.  As noted above, section 8.3(3) provides that costs are recoverable if permitted by the Regulations or the DRS. I am satisfied on the reasons outlined above, that the Regulations permit costs in medical assessment matters. In this case, an “order” or determination from the DRS is not necessary for an insurer to agree to pay the reasonable and necessary costs of a claimant.

30.  It is also important to note that the Insurer’s behavior in this instance, in refusing to consider payment of legal costs on the grounds as submitted in this case, resulting in further disputation, falls contrary to the objects of the Act particularly that at section 1.3(2)(g): “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”. This object is reiterated at clause 7.18.1 of the Guidelines, and clause 7.18.6 also stipulates that insurers are to attempt to identify and narrow any issues in dispute before applications are lodged with DRS.

Reasonable and Necessary Costs

31.  Having established that the costs of medical assessments are recoverable, I will proceed to assess AFV’s reasonable and necessary legal costs in respect of the medical assessment. Sub-clause (1) of Schedule 1, Part 1, clause 2 of the Regulations limits costs in connection with medical assessments to 16 monetary units. I am required, pursuant to the jurisdiction conferred by Schedule 2, clause 1(aa) of the Act (above), to determine the quantum of the maximum costs I consider appropriate.

32.  AFV, through his legal representatives, lodged an application for medical assessment with the DRS on 27 July 2019 in respect of the Insurer’s decision, affirmed in an internal review, that he had a ‘minor injury’. A medical assessor subsequently found that AFV’s injuries were non-minor.

33.  It is open to me to permit any amount of costs up to the maximum amount, including nil. In this case, I consider it appropriate to allow costs for the preparation and lodgment of the application for medical assessment, particularly given that the Insurer’s decision was found to be incorrect after AFV was put to the cost of lodging an application.

34.  In this matter, given that there was one medical dispute about minor injury, that was referred to the DRS, I consider the maximum of 16 monetary units applies in respect to AFV’s application for medical assessment dated 9 July 2019.

35.  As noted above, it is open to me to permit any amount of costs up to the maximum amount.

36.   On review of AFV ’s application for medical assessment dated 27 July 2018, I note that AFV’s legal representatives approximately one page of submissions on his behalf. Those submissions outline a history of the matter and detail the insurer’s decision. Submissions specific to the claimant’s injuries are relatively brief, stating:

“It is the claimant’s position that following a proper assessment of his injuries, he will exhibit two or more of the symptoms listed in the Motor Accident Guidelines for a diagnosis of radiculopathy, therefore a finding he sustained a “major” injury.

37.  I am not persuaded by the insurer’s submissions that AFV’s representatives omitted to draft detailed submissions. I note that although the submissions are brief they address the fundamental issue in respect of the application, which is that AFV exhibits signs of radiculopathy. In my view the issue did not necessitate lengthy submissions.

38.  The application includes a number of attachments, namely a copy of the Application for Personal Injury Benefits form, Certificate of Capacity/Certificate of Fitness dated 27 February 2018 and 5 July 2018, liability decision from the Insurer and the internal review decision, and a medical certificate and CT report.

39.  AFV’s legal representatives have not provided a schedule itemising the costs incurred in respect of the application for medical assessment or make submissions about what the costs claimed in the invoices relate to.

40.  When considering what costs, of the costs claimed by AFV’s legal representatives, are reasonable and necessary however, I have had particular regard to the medical assessor finding that AFV’s injuries are not minor. If the Insurer failed to properly investigate AFV’s injuries before making the decision, I do not consider AFV should bear the costs of such an error. It appears that the insurer had information before it that suggested that AFV exhibited radiculopathy, yet made a contrary decision.

41.  Applying my discretion and experience, having had regard to the application for medical assessment prepared by AFV’s legal representatives and to the level of submissions/reasons provided and overall consideration put into the application, I consider it appropriate to allow the maximum legal costs of $1633.00.

42.  Accordingly, I allow costs in the amount of $1796.30 (inclusive of GST) in respect to the application for medical assessment dated 19 October 2018.


43.  The Insurer’s reviewable decision, being its absence of a response to a request to pay costs, is set aside and the following decision is made in substitution of the reviewable decision:

The Insurer is to pay AFV’s legal costs in the amount of $1796.30 (inclusive of GST) in respect to the application for medical assessment dated 27 July 2018.

44.  Effective date: This determination takes effect on 2 September 2019.

Michelle Boyle
Merit Reviewer and Claims Assessor
Dispute Resolution Service