Barnes v AAI Limited t/as GIO

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
Citation:	Barnes v AAI Limited t/as GIO [2023] NSWPICMR 9
ClaimanT:	Alma Barnes
Insurer:	AAI Limited t/as GIO
Merit Reviewer:	Ray Plibersek
DATE OF DECISION:	17 February 2023
CATCHWORDS:	MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; merit review; claim for “reasonable and necessary” legal costs for minor injury dispute and medical review panel; claim for two amounts of maximum regulated legal costs under sections 8.3 and 8.10; Held – claimant awarded regulated legal costs for minor injury dispute of $1660 plus GST; awarded $830 plus GST for medical review panel; claimant’s solicitors did not provide an adequate detailed description or itemisation of the legal work done by them on the two disputes to support a finding justifying two amounts of maximum costs being awarded; parties unable to resolve a dispute over small amount; dispute is in stark contrast to the exhortations contained in the objects of the Motor Accident Injuries Act and section 42 of the Personal Injury Commission Act 2020 which encourages the early resolution of claims and the quick, cost effective and just resolution of disputes; parties have not acted in a way that is proportionate to the importance and complexity of the small amount of legal costs in dispute; Personal Injury Commission required to divert its scarce resources to deal with a dispute about a small amount of legal cost.
Determinations made:	Certificate Issued under s 7.13(4) of the Motor Accident Injuries Act2017 The insurer is to pay the claimant’s reasonable and necessary legal costs assessed at $2,490, plus GST of $249, totalling $2,739 for solicitors professional legal services for the minor injury dispute invoice dated 18 May 2022 in accordance with the Motor Accident Injuries Act 2017 and Motor Accident Injuries Regulation 2017.

BACKGROUND

The claimant, Ms Alma Barnes, was injured in a motor car accident on 12 February 2019. The parties have not supplied details in this application for review of how the motor accident occurred nor the nature of Ms Barnes’ injuries.
In this case there is a dispute between the claimant and the insurer about the payment of her legal costs. The claimant’s solicitors are seeking payment of an invoice dated 18 May 2022 totalling $3,652 (inclusive of GST) for a minor injury dispute and a review by a Medical Review Panel, (A 1).
This current merit review is a dispute about whether legal costs incurred by the claimant in respect of the primary minor injury dispute and medical review proceedings were “reasonable and necessary”.
In legal terms, the issues for determination are whether under ss 8.3 and 8.10 of the MAI Act, costs and expenses incurred by the claimant are reasonable and necessary.
The claimant’s solicitors issued a tax invoice dated 18 May 2022 for the minor injury medical dispute and medical review. The invoice was addressed to the insurer and claimed a total of $3,652 (inclusive of GST) for professional legal costs. There was a claim for $1,660 (plus GST) for the minor injury dispute. There was also a claim for $1,660 (plus GST) for the panel review of a single medical assessment.
In a letter dated 12 July 2022 the insurer offered to pay the claimant’s solicitors a total of $2,739 incl GST of $249 for the invoice dated 18 May 2022 for the minor injury dispute (A 1).
In an email response dated 19 July 2022 the claimant’s solicitors supplied an itemised summary of work done and rejected the insurer’s offer of $2,739 incl GST, (A 1).
In response to the insurer’s offer of payment of the invoice, the claimant’s solicitors made an application for merit review dated 18 May 2022. The review application stated that:
“This was a dispute as to minor injury which was initially unsuccessful and was then the subject of a Review Application. The insurer has refused to pay the Applicant's costs in accordance with the Regulations and we are now seeking a determination in relation to costs.”
The solicitors requested outcome was that the costs be paid.

Procedural matters- admit late documents

Solicitors for both parties made an application each to admit late documents. The solicitors for the insurer applied to admit late documents by application dated 30 November 2022, (AD 1). The claimant’s solicitors applied to admit late documents by application dated
8 December 2022, (AD 2).
I note that under Rule 67(5) a party may lodge additional documents at any time if lodged by consent or lodged at the direction of the Personal Injury Commission (the Commission) or in the interest of justice.
Having reviewed both applications I find that in the interests of justice both applications to admit late documents should be allowed. I admit both documents.

Submissions

The solicitors for the claimant did not make detailed written submissions. What is clear from numerous emails and the review application is that the claimant seeks the full payment of his outstanding legal costs as claimed in the invoice dated 18 May 2022, (see A1 pp1-11). I note that the claimant’s solicitors application to admit late documents dated 8 December 2022, (AD 2) was for a two-page letter that itemised the legal work claimed by the claimant’s solicitors. I also note that the letter did not itemise the time taken for each item nor the amount of costs claimed for each item.
In its written submissions dated 30 November 2022, (R1) the insurer’s solicitors submit as follows:
(a)    the insurer notes decision of Member Ruschen in Taouk v AAI Limited t/as GIO [2022] NSWPICMR 60;
(b)    the claimant has not provided to the insurer or the Commission any description or itemisation of the legal services provided to the claimant in connection with the primary proceedings;
(c)    the insurer submits that ought occur before there can be a determination of the extent of reasonable and necessary legal costs incurred in respect of those proceedings;
(d)    the claimant has provided a description of work performed in connection with the review proceedings however omitted the amount of time spent on those activities;
(e)    the insurer has extracted the information provided by the claimant in a table together with submissions as to the reasonableness of the work performed;
(f)    the insurer estimates that the amount claimed in the invoice adds up to a total of 26 units or 2 hours and 36 minutes;
(g)    there is no provision within the Act and Regulations of an hourly rate for legal work performed in connection with medical assessment matters (including reviews);
(h)    some assistance may be taken from Schedule 1, Part 1, cl 4 of the Regulations which provides a maximum of 3 monetary units per hour for conferences directly related to assessment of a claim for damages;
(i)    it would be reasonable to utilise that approach which, based upon the relevant monetary unit figure of $103.76, would see an amount of $311 per hour, and
(j)    with reference to the table of work done, the insurer submits an appropriate amount for the claimant’s reasonable and necessary legal costs in connection with the review proceedings would be $809 plus GST (or $933 plus GST in the alternative).
In a letter dated 12 July 2022, (A1) the insurer offered the claimant’s solicitor (on a without prejudice basis) a total payment of legal costs of $2,739. This letter noted as follows:
(a)    the claimant has not provided to the insurer with a “breakdown” or itemisation of how your client’s legal costs in connection with the medical assessment were constituted;
(b)    because an itemised invoice was not provided, an assessment of whether the claimed legal costs are reasonable and necessary cannot be properly made by the insurer;
(c)    the insurer offered to pay some of the invoice on a without prejudice basis to avoid the parties wasting further time by proceeding to a merit review;
(d)    the insurer offered $1,660 for the initial medical assessment of the minor injury;
(e)    regarding the review of the initial medical assessment the insurer noted the four items of work it says were done in respect of the medical review panel;
(f)    the insurer then offered to reimburse the claimant’s legal costs at $830 plus GST which was half of the second amount claimed, and
(g)    finally the insurer requested that if the claimant solicitors continued to dispute the amount of legal costs the insurer requested that they provide an itemised list of work done and why it is said it was reasonable and necessary in connection with the medical assessment.

Statutory provisions

The claimant’s entitlement to recover legal costs is governed by Part 8 of the MAI Act. That Part applies to and in respect of legal costs payable on a party and party basis, on a solicitor and client basis or on any other basis, unless the Part otherwise provides, s 8.2.
Section 8.3 of the MAI Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. Sub-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 sub-ss (3) and (4) which provide that the recovery of costs is allowed if payment is permitted by the Regulations or the Commission, if satisfied that the claimant is under a legal disability or exceptional circumstances exist.
Sub-section 8.3 provides, in part, as follows:
“8.3 Regulations fixing maximum costs etc recoverable by Australian legal practitioners
(cf s 149 MACA)
(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 Commission.”
Sub-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 from 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 Commission.
(4)     The Commission can permit payment of legal costs incurred by a claimant but only if satisfied that—
(a) the claimant is a person under legal incapacity, 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.”
Schedule 1, Part 1 sub-cl 2 (1) of the Regulation provides that 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 MAI Act are 16 monetary units (to a maximum of 60 monetary units per claim).
Sub-section 7.1(1) of the MAI Act defines “medical assessment matter” to mean a matter declared by Schedule 2 to be a medical assessment matter for the purposes of this Part.
Schedule 2, cl 2(e) of the MAI Act declares a dispute about whether an injury is a minor injury for the purposes of the Act is declared to be a “medical assessment matter” for the purposes of Part 7.
Thus maximum legal costs for a dispute about a minor injury are 16 monetary units to a maximum of 60 monetary units per claim.
I particularly draw the parties attention to the “guiding principle” contained in s 42 of the Personal Injury Commission Act 2020 (the PIC Act). That principle is that the Commission and the parties must co-operate and facilitate the just, quick and cost-effective resolution of the real issues in the proceedings. In the context of this case I especially underscore sub-s 42(4) which exhorts the Commission and the parties to resolve issues together in such a way that the cost to the parties and the Commission is proportionate to the importance and complexity of the subject-matter of the proceedings.
Section 42 provides, in part, as follows:
“42 Guiding principle to be applied to practice and procedure
(1)     The guiding principle for this Act and the Commission rules, in their application to proceedings in the Commission, is to facilitate the just, quick and cost effective resolution of the real issues in the proceedings.
(2)     The Commission must seek to give effect to the guiding principle when it—
(a) exercises any power given to it by this Act or the Commission rules, or
(b) interprets any provision of this Act or the Commission rules.
(3)     Each of the following persons is under a duty to co-operate with the Commission to give effect to the guiding principle and, for that purpose, to participate in the processes of the Commission and to comply with directions and orders of the Commission—
(a) a party to proceedings in the Commission,
(b) an Australian legal practitioner or other person who is representing a party in proceedings in the Commission.
(4)     In addition, the practice and procedure of the Commission should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Commission is proportionate to the importance and complexity of the subject-matter of the proceedings.”
I also briefly note the objects of the MAI Act include, at s 1.3(2)(g), ‘to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes’. In the interpretation of a provision of the MAI Act or the Regulations, a construction that would promote the objects of the MAI Act or the provision is to be preferred to a construction that would not promote those objects (s 1.3(4)). In the exercise of a discretion conferred by a provision of the MAI Act or the Regulations, the person exercising the discretion must do so in the way that would best promote the objects of the MAI Act or of the provision concerned (s 1.3(5)).

Reasonable and necessary costs

In this matter the claimant’s solicitor claims total professional legal costs of $3,652 (inclusive of GST) in relation to the minor injury dispute invoice dated 18 May 2022.
The insurer initially offered to pay the claimant’s legal costs of a total of $2,739 incl GST of $249 for the invoice dated 18 May 2022.
The claimant’s solicitors and the insurer maintain their respective positions for payment of professional legal costs. The first observation I would make is that it is very disappointing that the parties have be unable to resolve a dispute over this small amount of about $900. Such a dispute is in stark contrast to the exhortations contained in the objects of the MAI Act and
s 42 of the PIC Act. The legislation encourages the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes. Sub-section 42(4) urges the resolution of disputes in such a way that the cost to the parties and the Commission is proportionate to the importance and complexity of the subject-matter of the proceedings. In this case the parties have not acted in a way that is proportionate to the importance and complexity to the small amount of legal costs in dispute. No doubt the parties have spent many times that amount in arguing this application for review. The Commission has been required to divert its scarce resources to deal with a dispute about a small amount of legal costs.
I have reviewed the materials supplied by the parties which are contained in the documents filed in the Portal. I have also reviewed the claimant’s solicitors tax invoice and the itemised list of work done contained in the letter dated 8 December 2022.
The claimant’s solicitors have provided some detail and itemisation of the legal work done by them on the minor injury dispute and Review Panel dispute. The claimant’s solicitors give a detailed description of the work done by them in their review application for the medical assessment dispute. However, as the insurer and its solicitors appropriately highlight, the claimant’s solicitors have failed to disclose the time taken or claimed for each item of work and also have failed to specify the actual amount claimed for each item of work.
The claimant’s solicitors main contention seems to be that they had done the work for the medical review and they were entitled to the maximum prescribed payment without the need for any detailed explanation or account of exactly what work they did and why it was reasonable and necessary to be done to advance the claimant’s medical assessment and review application.
In this case I find that the insurer’s submission, that because an itemised invoice was not provided, an assessment of whether the claimed legal costs are reasonable and necessary cannot be properly made by the insurer, is well-made and persuasive.
In the invoice and the itemised list of work done, the claimant’s solicitors did not provide an adequate detailed description or itemisation of the legal work done by them on the two disputes. Absent sufficient detail, a finding justifying two amounts of maximum costs being awarded cannot be supported.
Simply claiming the maximum amount of legal costs in a medical dispute in the absence of a detailed explanation of the work done and why it was necessary does not accord with requirements of ss 8.3 and 8.10 and the objects of the MAI Act.
The issue of legal costs was dealt with comprehensively by Wright J in AAI Ltd trading as GIO v Moon [2020] NSWSC 714, (Moon’s case). In that case his Honour held that legal costs are recoverable by a claimant under s 8.10(1) and (3), namely those whose “payment … is permitted by the regulations”, includes all legal costs that do not exceed the maximum legal costs fixed by the regulations, subject to those costs being “incurred” and “reasonable and necessary” as required by s 8.10(1), at [92]. The meaning of was the phrase “reasonable and necessary” was referred to briefly by Wright J as follows at [105]:
“Whether legal costs are ‘reasonable and necessary’ is a matter that depends on the particular circumstances of each case. No issue arose in the present matter concerning the construction or application of the words ‘reasonable and necessary’. As a result, it is not appropriate to consider that aspect of s 8.10(1) in these reasons. It can be noted that, if there is a dispute concerning whether the legal costs sought to be recovered by a claimant for statutory benefits are ‘reasonable and necessary’, this is declared by Sch 2 cl 1(aa) of the MAI Act to be a ‘merits review matter’ for the purposes of Pt 7 of the Act and can be determined in accordance with Div 7.4 of Pt 7.”

A claimant is entitled to recover “reasonable and necessary” legal costs under s 8.10. Despite what is submitted by the claimant’s solicitors, the entitlement to legal costs does not arise as a matter of right but must be shown to be: permitted by the Regulations, “reasonable and necessary” and to have been “incurred”. Sub-section 8.10 (2) provides that the Regulations may make provision for fixing the maximum costs. The Regulations provide, under Schedule 1, Part 1 sub-cl 2 (1), that 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 MAI Act are 16 monetary units. In this case the claimant can claim the maximum amount of 16 monetary units if the costs were “incurred” and “reasonable and necessary”.
In the present case the claimant’s solicitors issued an invoice dated 18 May 2022 totalling $3,652 incl GST which under Moon’s case qualifies as being incurred. The remaining issue is whether those cost were reasonable and necessary in the particular circumstances of this case. Based on my reading of the limited material before me, it is clear the claimant’s solicitors devoted some time and effort in preparing and arguing the minor injury medical dispute. I agree with the insurer’s submission that claimant’s solicitor ought to have identified in more detail precisely what work was done. The claimant’s solicitors provided scant detail or an explanation in their invoice, letters or application for review detailing exactly what work they did and why this was “reasonable and necessary” as required by sub-s 8.10(1).
I agree with the insurer’s submissions that the claimant’s review application lacked sufficient legal services to warrant maximum costs for a medical assessment. I also agree with the insurer’s submissions that the claimant’s submissions were brief (2 pages) and contained no new information that was not already before the Medical Assessor.
Because the work done by the claimant’s solicitors was not described in detail, it is difficult when assessing legal costs to determine whether the work was “reasonable and necessary” in the circumstances of this case.
Based on the considerations set out above, I find that the claimant’s solicitors have shown the claimant has incurred reasonable and necessary legal costs. I note they claim the maximum amount which is fixed by the Regulations. Because the claimant’s solicitors have not provided a detailed explanation of what work they did and why that work was reasonable and necessary I am not satisfied that I should allow them the maximum legal costs that they have claimed for the two medical disputes.
Having carefully considered all the materials and submissions before me, I find that an appropriate assessment for the legal costs in this case is as proposed in the insurer’s letter dated 12 July 2022. That is, I would allow the legal costs claimed for the initial minor injury dispute of $1,660 plus GST and then allow legal costs of $830 plus GST for the panel review of the single medical assessment which gives a total of $2,490 plus GST of $249 giving a total of $2,739 in respect of both disputes.
Given the material and submissions before me, I find that the amount of the claimant’s reasonable and necessary legal services in accordance with the MAI Act and the Regulations is $2,490 plus GST for the solicitors professional legal costs.

CONCLUSION

Under ss 8.3 and 8.10 of the MAI Act and the Regulations, I am satisfied that the claimant is entitled to recover from the insurer reasonable and necessary legal costs incurred by the claimant in connection with the claim.
In the circumstances of this case I have assessed the amount of the claimant’s reasonable and necessary legal costs in accordance with the MAI Act and the Regulations as $2,490 plus GST for the solicitors professional legal costs.

[2023] NSWPICMR 9

17 February 2023