Bolat v AAI Limited t/as GIO
[2022] NSWPICMR 69
•18 November 2022
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| Citation: | Bolat v AAI Limited t/as GIO [2022] NSWPICMR 69 |
| ClaimanT: | Gulten Bolat |
| Insurer: | AAI Limited t/as GIO |
| Merit Reviewer: | Ray Plibersek |
| DATE OF DECISION: | 18 November 2022 |
CATCHWORDS: | MOTOR ACCIDENTS - Merit Review; claim for “reasonable and necessary” legal costs for minor injury dispute; physical injury; claim for maximum regulated legal costs; sections 8.3 and 8.10 of the Motor Accident Injuries Act 2017 (2017 Act); Held – claimant not awarded maximum regulated legal costs; awarded $1,200 plus GST; parties unable to resolve a dispute over small amount; dispute is in stark contrast to the exhortations contained in the objects of the 2017 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; the Personal Injury Commission was required to divert its scarce resources to deal with a dispute about a small amount of legal costs; claimant’s solicitors did not provide any detailed description or itemisation of the legal work done by them on the minor injury dispute; claim for additional payment of $302.97 under Schedule 1 Part 2 of the Regulations refused as it relates only to legal services provided in connection with a claim for damages; no exceptional circumstances exist to justify additional legal costs. |
| Determinations made: | Certificate Issued under s 7.13(4) of the Motor Accident Injuries Act2017 1. The insurer is to pay the claimant’s additional reasonable and necessary legal costs assessed at $1,200 plus GST totalling $1,320 for solicitors professional legal services for the minor injury dispute invoice dated 20 February 2020 in accordance with the Motor Accident Injuries Act 2017 and Motor Accident Injuries Regulation 2017. |
BACKGROUND
The claimant, Mrs Gulten Bolat, was injured in a motor car accident on 23 August 2018. She was travelling on the M4 motorway stopped in a line of traffic at the church street off ramp. Her vehicle was hit from behind and spun into another vehicle in an adjoining lane.
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 20 February 2020 totalling $2,159.44 (inclusive of GST) for a minor injury dispute, (A 2).
On 29 April 2019 the claimant’s solicitors made an application for a minor injury under the Motor Accident Injuries Act2017 (MAI Act).
The claimant’s solicitors disputed the insurer’s determination that the claimant’s injuries were a minor injury.
The claimant’s solicitors lodged an application to review the insurer’s minor injury determination in accordance with Division 7.5 Schedule 2 sub-cl 2(e) of the MAI Act.
In a Medical Assessment Certificate dated 4 July 2019 Medical Assessor Neil Berry determined that the claimant’s injuries were caused by the motor accident. The injures were described as: neck, upper back, right shoulder, left knee and left wrist which met the definition of a minor injury for the purposes of the MAI Act
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 20 February 2020 for the minor injury medical dispute addressed to the insurer totalling $2,159.44 (inclusive of GST) for professional legal costs. There was a claim for $1,660.16 under Schedule 1 Part 1,
sub-cl 2 (1) Motor Accident Injuries Regulation 2017 (the Regulations), for a medical assessment under division 7.5 of the MAC Act for 16 monetary units. There was also a claim for $302.97 under Schedule 1 Part 1 sub-cl 2 (1), Column 1 Stage I item (a). The second amount claimed was for acceptance of retainer preparation and service of notice of claim – 2.92 monetary units.On 30 October 2020 the insurer offered to pay the claimant’s solicitors $1,000 incl GST for the invoice dated 20 February 2020 for the minor injury dispute (A 4).
In response to the insurer’s part payment of the invoice, the claimant’s solicitors made an application for merit review dated 15 October 2021. The review application stated that: “GIO has denied payment to invoice dated 20/02/2020 for DRS Assessment of Assessor Neil Berry dated 4/07/2019 in relation to minor injury (DRS Ref: 10094554).” The solicitors requested that the insurer make “Payment of invoice as per costs schedule.”
Submissions
The solicitors for the claimant did not make detailed written submissions. What is clear from their review application, which is referred to above, they seek the full payment of the claimant’s outstanding legal costs as claimed in their invoice dated20 February 2020.
In its written submissions dated 8 November 2021, (R1) the insurer submits as follows:
· the insurer notes that referred medical assessment were permanent to be minor;
· the claimant’s applications for assessment were brought without merit;
· the claimant’s solicitor ought to have identified that it was unlikely that the claimant injuries were other than minor;
· when bringing the medical the claimant’s solicitor or is not demonstrate any genuine legal expertise;
· the claimant’s solicitor did not itemise what work was done with respect to the application for medical assessment;
· it is not in accordance with the objects of the MAI Act to simply award the maximum amount of legal costs in a medical dispute;
· the notes that taking into separation above factors are generously offered claimant $1,000 for legal costs, and
· regarding the claim for further payment of retainer costs, Schedule 1 Part 1 cl 2 (1) of the Regulations relate only to legal services provided in connection with a claim for damages. This part of the schedule has no reference to claims for statutory benefits. The claimant’s claim in this case is only in relation to statutory benefits. As no claim for damages has been made there is no entitlement to payment of retainer costs as is claimed in the invoice.
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 Personal Injury Commission (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 (PIC Act) 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 $2,159.44 (inclusive of GST) in relation to the minor injury dispute invoice dated 20 February 2020.
The insurer initially offered to pay the claimant’s legal costs of $1,000.
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. 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 cost.
I have reviewed the materials supplied by the claimant’s solicitors which are contained in minor injury application, attachments and other documents filed in the Portal. I have also reviewed the claimant’s solicitors tax invoice for the minor injury medical dispute dated 20 February 2020.
The claimant’s solicitors have not provided any detailed description or itemisation of the legal work done by them on the minor injury dispute. Nor do the claimant’s solicitors give any detailed description of the work done by them in their review application for the medical assessment dispute. 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. In their invoice the claimant’s solicitors also claim a further payment of $302.97 under Schedule 1 Part 2 of the Regulations.
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 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 20 February 2020 totalling $2,159.44 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 minor injury dispute application and other material before me, it is clear the claimant’s solicitors devoted little 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 that it was unlikely that the claimant injuries were other than minor. 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 and failed to engage with the relevant statutory provisions for the assessment of minor injury.
I also agree with the insurer’s submissions about the claim for further payment of $302.97 under Schedule 1 Part 2 of the Regulations. This clause in the Regulations relate only to legal services provided in connection with a claim for damages. The claimant’s claim in this case is only in relation to statutory benefits. As no claim for damages has been made there is no entitlement to payment of legal costs as is claimed for that amount in the invoice.
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. Nor do I accept the insurer’s submissions that the award of legal costs should be limited to $1,000.
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 $1,200 plus GST for the solicitors professional legal costs.
I agree with the insurer’s submissions that the claim for further payment of $302.97 under Schedule 1 Part 2 of the Regulations is not payable because it relates only to legal services provided in connection with a claim for damages.
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 $1,200 plus GST for the solicitors professional legal costs.
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