Dimic v AAI Limited t/as GIO Insurance
[2021] NSWPICMR 53
•17 December 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Dimic v AAI Limited t/as GIO Insurance [2021] NSWPICMR 53 |
| CLAIMANT: | Marta Dimic |
| INSURER: | AAI Limited t/as GIO Insurance |
| MERIT REVIEWER: | Ray Plibersek |
| DATE OF DECISION: | 17 December 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit Review; legal costs; two invoices each at $1,826; minor injury dispute; treatment and care dispute; Insurer paid one invoice and offered $1,200 for the other; Claimant sought payment of full maximum amount for both invoices; sections 8.3 and 8.10 of the Motor Accident Injuries Act 2017 (MAI Act); section 42 “guiding principle” of the Personal Injury Commission Act 2020; AAI Ltd trading as GIO v Moon applied; Held - insurer is to pay the Claimant’s reasonable and necessary legal costs assessed at $1,200 plus GST totalling $1,320; parties not acting consistently with legislation 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; Commission’s scarce resources diverted to deal with a dispute about a small amount of legal costs. |
| DETERMINATIONS MADE: | 1. The Insurer is to pay the Claimant’s reasonable and necessary legal costs assessed at $1,200 plus GST totalling $1,320 for solicitors professional legal costs for the minor injury dispute invoice dated 1 May 2021. 2. This determination takes effect on 17 December 2021. |
Background
The Claimant, Marta Dimic, was injured in a motor car accident on 4 May 2019. She was driving her car home from Smithfield RSL Club when another car hit the back of her car. This caused her car to spin and become airborne. After the accident the Claimant was driven home by a tow truck driver.
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 two invoices dated 1 May and 2 September 2020 each totalling $1,826 (inclusive of GST) for a minor injury dispute and treatment and care dispute applications. The Insurer has paid one invoice for $1,826 (inclusive of GST) and has offered to pay $1,200 plus GST for the other invoice. Effectively, this dispute is over a difference of about $506.
In legal terms, the issues for determination are whether under sections 8.3 and 8.10 of the Motor Accident Injuries Act 2017 (the MAI Act), costs and expenses incurred by the Claimant are reasonable and necessary.
On 19 September 2019 the Insurer issued a Liability Notice - Benefits After 26 Weeks, which advised the Claimant that it accepted liability for statutory benefits for the first 26 weeks after the accident, (A1).
On 29 April 2020, the Claimant’s solicitors lodged an application to review the Insurer’s minor injury determination in accordance with Division 7.5 Schedule 2 subclause 2(e) of the MAI Act, (A2).
The application described the disputes between the parties as:
(a) whether the injury caused by the motor accident is a minor injury for the purposes of the MAI Act, and
(b) whether for the purposes of sections 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.
The Claimant’s solicitors issued a tax invoice for the minor injury medical dispute dated 1 May 2020 to the Insurer for $1,826 incl GST under Schedule 1 Part 1, sub-clause 2 (1) Motor Accident Injuries Regulation 2017 (the Regulations), (A3).
The professional legal work done was detailed in the tax invoice as follows. There was no charge for disbursements:
“Medical Dispute
Motor Accident Injuries Regulation - Schedule 1 - Part 1, Clause 2 (1) - 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, are16 monetary units (to a maximum of 60 monetary units per claim).”
On 2 September 2020, the Claimant’s solicitors lodged an application for a medical treatment being reasonable and necessary in accordance with Division 7.5 Schedule 2 sub-clause 2(b) of the MAI Act (A4).
The Claimant’s solicitors also issued another tax invoice for a medical dispute dated 2 September 2020 to the Insurer for $1,826incl GST under Schedule 1 Part 1 sub-clause 2 (1) of the Regulations (A5).
The professional legal work done was detailed in the tax invoice as follows. There was no charge for disbursements:
“Medical Dispute
Motor Accident Injuries Regulation - Schedule 1 - Part 1, Clause 2 (1) - 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, are16 monetary units (to a maximum of 60 monetary units per claim).”
In a Medical Assessment Certificate dated 3 March 2021 Medical Assessor Peter Giblin determined that the spinal fusion treatment was not reasonable and necessary (A6).
In a Medical Assessment Certificate dated 1 April 2021 Medical Assessor Giblin determined that the aggravation of pre-existing radiculopathy in the cervical and lumbar spine and annular tear in the lumbar spine was a minor injury caused by the motor accident, (A7).
By email dated 6 May 2021 the Insurer wrote to the Claimant’s solicitors attempting to negotiate legal costs for the two invoices dated 1 May and 2 September 2020 to $1,200 plus GST each, (A8). The email read in part:
“We note that you sent through 2x legal costs invoices dated 1 May 2020 and 2 September 2020 each totalling $1,826 (inclusive of GST) for a minor injury and treatment and care dispute applications.
We would like to take this opportunity to negotiate legal costs at $1,200.00 plus GST each for the medical – minor injury and treatment and care application.
The reason we are negotiating the above amount is because we have considered your time invested in arranging a client consultation, preparing and reviewing the relevant medical documents and drafting the Personal Injury Commission (PIC) applications pertaining to the minor injury and treatment and care applications.
We further note that you put forth two unmeritorious applications which were not successful at PIC.
We note that if this matter was to proceed to a Merit Reviewer for an assessment of legal costs it is likely they will also take into consideration all of the above when calculating and awarding legal costs.”
On 18 May 2021 the Insurer paid the Claimant’s solicitors $1,826 incl GST for the invoice dated 2 September 2020 for the treatment dispute (A10).
By email dated 26 May 2021 the Claimant’s solicitors responded advising that they would not negotiate costs (A9). The email read in part :
“Please note, these charges are in relation to regulated costs – prescribed by Schedule 1, Part 1, Clause 2 (1) of the Motor Accident Injuries Regulation 2017……
As I’m sure you can appreciate, two applications were prepared, collated and lodged on behalf of our client.
We further attract your attention to 7.28 (1) of the Motor Accident Injuries Act 2017:……….
As you will see success in the Commission is not a requirement for the above to apply. The applications were accepted and proceeded through to referral for assessment.
For the reasons above, our invoice for the remaining $1826.00 incl GST is not available for negotiation, and remains standing.”
By email dated 7 June 2021 the Insurer wrote to the Claimant’s solicitors, (A 11) in part as follows:
“The reason we are negotiating the above amount is because we have considered your time invested in arranging a client consultation, preparing and reviewing the relevant medical documents and drafting the Personal Injury Commission (PIC) application pertaining to the minor injury dispute.
We further note that the application put forth was unmeritorious and not successful at PIC.”
On 24 June 2021 the Claimant’s solicitors wrote to the Insurer, (A12). The letter referred to the attempt by the Insurer to negotiate the “regulated costs”. In response the letter stated, “our office has made no attempt to entertain such a negotiation.” The letter then referred to subsections 8.10 (1) and (3) , the two invoices and Moon’s case. When referring to Moon’s case the letter noted that nothing in section 8.10 suggests that a claimant’s entitlement to recover legal costs under section 8.10 depends on whether or not the claimant was successful before the Dispute Resolution Service (DRS). The letter then states:
”GIO confirmed payment of a single set of regulated costs, being $1,826.00, on 18 May 2021. You later confirmed to be for the treatment dispute, leaving the minor injury dispute costs outstanding. Payment of the treatment dispute costs, in essence, has undermined your own unfounded offer of $1,200.00 +GST.
We maintain that two separate applications were prepared and submitted to the DRS, inclusive of their own separate investigations and advice. Your statement that you have considered the time in arranging client consultations, preparing evidence and drafting such applications is entirely unsupported.”
The Claimant’s solicitor’s letter then concluded that if no response was received from the Insurer within 28 days it will be taken to be a refusal to undertake an internal review and a merit review application will be made.
By email dated 25 June 2021, the Insurer maintained its previous offer and noted that legal costs cannot be subject of internal review and the dispute must proceed to the PIC, (A13).
On 12 July 2021 the Claimant’s solicitors made an application for merit review stating that the invoice dated 1 May 2021 (A3) remains outstanding and requests a determination from the PIC of same.
Submissions
The solicitors for the Claimant seek the payment of the Claimant’s outstanding legal costs legal costs of $1,826 incl GST for the invoice dated 1 May 2020 for a medical assessment concerning a minor injury, (A3).
The Claimant’s solicitors submissions, (A1), refer to sub-sections 8.10 (1) and (3), the two invoices and Moon’s case. The submissions contain very similar arguments to the letter dated 24 June 2021 which the Claimant’s solicitors wrote to the Insurer, (A12). In brief the submissions argue that:
· the Insurer paid one invoice for $1,826 incl GST leaving the minor injury dispute costs outstanding;
· payment of the treatment dispute costs undermined the Insurer’s own unfounded offer of $1,200 plus GST;
· the Claimant prepared and made two vastly separate applications to the DRS which required separate investigations and advice;
· the Insurer’s statement that they have considered the time in arranging client consultations, preparing evidence and drafting such applications is entirely unsupported;
· success at the DRS is not requirement for the Insurer to “incur” the regulated costs;
· the Insurer has no basis to attempt to negotiate the incurred costs. Refusing to honour costs imposed by the MAI Act and Regulations is a blatant waste of both the Commission’s and the Claimant’s representatives resources, and
· the invoice dated 1 May 2021 (A3) remains outstanding and requests a determination from the PIC of same.
In its written submissions dated 23 July 2021, (R1) the Insurer submits as follows:
· in the original PIC Application concerning the minor injury dispute the Claimant’s submissions focused on procedural issues;
· the submissions did not sufficiently articulate why a different outcome would be achieved at the Commission from the internal review by the Insurer;
· the Claimant’s applications for assessment were brought entirely without merit, which ought to be strongly taken into account;
· there was no indication that the Claimant’s injuries were not ‘minor’, the Claimant’s solicitors ought to have identified this before putting forward the unsuccessful PIC application;
· whilst injured persons have a right to have medical disputes determined by a Medical Assessor, there is no automatic entitlement to recover legal costs, particularly the maximum amount of legal costs in unmeritorious matters such as this;
· consideration ought to be given to the amount of work completed and effort exerted by the Claimant’s solicitor. The Claimant’s solicitor has not demonstrated any genuine legal expertise;
· the Claimant’s Solicitor did not provide a schedule itemising the tasks for which the legal costs were claimed for the application and they did not make submissions detailing the tasks for which the costs were claimed in the invoice;
· it is not in line with the objects of the MAI Act to simply award the maximum amount of costs in a medical dispute in the absence of evidence of exceptional circumstances, application of legal expertise, or considerable work undertaken;
· maximum costs may be awarded where the legal representative has put significant and justified time and effort into the application. But in this case there has been minimal effort exerted formulating arguments in support of the Claimant’s position;
· only a minimal costs should be awarded because only brief submissions on procedural issues were made and it would not be appropriate to award the maximum costs claimed;
· the Insurer offered the Claimant $1,200 plus GST in costs for each of the applications – totalling $2,400 plus GST. This offer was put forward in the interests of promoting fair resolution of the legal costs dispute, taking into consideration the objects of the MAI Act which are, in part, to keep the cost of the scheme within reasonable bounds and also to resolve disputes in a cost effective and just manner;
· the Claimant’s solicitors rejected this offer of costs on the premise that only maximum costs can be awarded and applied for a merit review in the Commission;
· the Claimant is entitled to recover $1,200 plus GST for the minor injury application and $1,200 plus GST for the treatment application (as offered by the Insurer), and
· the Claimant is not entitled to exceptional circumstances costs nor costs for bringing the merit review application.
Relevant Statutory Provisions
Both parties in this dispute have referred to the relevant statutory provisions in their submissions.
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, section 8.2.
Section 8.3 of the MAI Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. Subsection 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 (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.
Subsection 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.”
Subsection 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-clause 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).
Subsection 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, clause 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 section 42 of the Personnel Commission Act (PIC Act) which 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 subsection 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 note briefly the objects of the MAI Act include, 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’. 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 (section 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 (section 1.3(5)).
Reasonable and necessary costs
In this matter the Claimant’s solicitor claims professional legal costs of $1,826 (incl GST) in relation to the minor injury dispute invoice dated 1 May 2020 and $1,826 (incl GST) in relation to the treatment and care dispute invoice dated 2 September 2020.
The Insurer initially offered the Claimant $1,200 plus GST in costs for each of the applications totalling $2,400 plus GST. On 18 May 2021 the Insurer paid the Claimant’s solicitors $1,826 incl GST for the invoice dated 2 September 2020 for the treatment dispute. For reasons that are not clear, the Insurer in its written submissions dated 23 July 2021 repeated its original offer of $1,200 plus GST for legal costs for each of the applications. This offer was made about three months after it had already paid $1,826 incl GST for the invoice dated 2 September 2020.
The Claimant’s solicitors and the Insurer maintain their respective positions for payment of professional legal costs of $1,826 (incl GST) and $1,200 plus GST which totals $1,320.The difference between the parties is $506. 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 section 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. Subsection 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 and submissions made by the Claimant’s solicitors which are contained in minor injury application collected at R 2. I have also reviewed the Claimant’s solicitors tax invoice for the minor injury medical dispute dated 1 May 2020 which simply claims the “…maximum costs for legal services provided to a claimant or an insurer in connection with a medical under Division 7.5 of the Act, as allowed by the claims assessor or court, are16 monetary units (to a maximum of 60 monetary units per claim).”
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 written submissions (A1) or letter dated 24 June 2021 to the Insurer, (A12).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 of $1,826 without the need for any detailed explanation or account. The tenor of the Claimant’s solicitors arguments is represented by their submission that : “The Insurer has no basis to attempt to negotiate the incurred costs. Refusing to honor costs imposed by the MAI Act & regulations is a blatant waste of both the Commission’s and the Claimant’s representatives resources.”
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 sections 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 section 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 section 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 section 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”. Subsection 8.10 (2) provides that the Regulations may make provision for fixing the maximum costs. The Regulations provide, under Schedule 1 Part 1 sub-clause 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 for $1,826 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, (R2) it is clear the Claimant’s solicitors devoted significant time and effort in preparing and arguing the minor injury medical dispute. However , as noted above, the Claimant’s solicitors did not provide much detail or an explanation in their invoice, letters or submissions detailing exactly what work they did and why this was “reasonable and necessary” as required by subsection 8.10(1). I note the Insurer’s submissions that: in the minor injury dispute the Claimant’s submissions focused on procedural issues and the submissions did not sufficiently articulate why a different outcome would be achieved at the Commission from the internal review by the Insurer. Having reviewed the minor injury application I agree with this submission by the Insurer. Because the work done was not described in detail by the Claimant’s solicitors, 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.
I note the Insurer submits that there are no exceptional circumstances which justify any higher payment. I also note the Claimant’s solicitors made no application for the award of exceptional circumstances legal costs.
Conclusion
Under sections 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.
Ray Plibersek
General Member and Merit Reviewer
Personal Injury Commission
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