McIntyre v AAI Limited (No 2) - [2021] QSC 286

SUPREME COURT OF QUEENSLAND

CITATION:

McIntyre & Anor v AAI Limited (No 2) [2021] QSC 286

PARTIES:

MARK McINTYRE

(first applicant)
SU KIM HO
(second applicant)

v
AAI LIMITED
ABN 48 005 297 807

(respondent)

FILE NO/S:

BS No 13125 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

9 November 2021

DELIVERED AT:

Brisbane

HEARING DATE:

Determined on the written submissions without oral hearing

JUDGE:

Davis J

ORDERS:

1. The respondent pay the first applicant’s costs of the application on the indemnity basis.

2. The respondent pay the second applicant’s costs of the application on the standard basis.

CATCHWORDS:

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - COSTS OF AND INCIDENTAL TO PROCEEDING - where the applicants claimed rehabilitation services pursuant to s 51(3) of the Motor Accident Insurance Act 1994 (MAIA) - where the first applicant was effectively completely successful - where the second applicant was substantially successful - where the applicants sought their costs - where the respondent sought to reserve costs of the application to the trial of the damages claim - where the usual rule is costs follow the event - where there was no reason to depart from the usual rule

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS - POWER TO ORDER - RELEVANT CONSIDERATIONS GENERALLY - where the applicants made a claim for rehabilitation services pursuant to the MAIA - where the applicants had offered to pay interest on amounts expended on rehabilitation if at trial the rehabilitation services were found unnecessary or inappropriate - where the offer was rejected - where the first applicant was effectively completely successful in his claims - where the second applicant was substantially successful - where it was unreasonable for the respondent not to accept the offer in relation to the first applicant’s application - where it was not unreasonable for the respondent not to accept the offer in relation to the second applicant’s application - whether indemnity costs ought to be ordered

Motor Accident Insurance Act 1994, s 51
Uniform Civil Procedure Rules 1999, r 681

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCA 225, cited
Di Carlo v Dubois [2002] QCA 225, followed
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, cited
Lee v RACQ Insurance Limited [2015] QSC 120, cited
Massingham v AAMI Insurance Ltd (2007) 48 MVR 235, followed
McIntyre & Anor v AAI Limited [2021] QSC 251, related
Oshlack v Richmond River Council (1998) 193 CLR 72, followed
Rosniak v Government Insurance Office (1997) 41 NSWLR 608, followed

COUNSEL:

Written submissions prepared by M Grant-Taylor QC with C George for the applicants and by T Matthews QC for the respondent

On 8 October 2021, I ordered that rehabilitation services[1] be provided by AAI Limited (AAI) to each of Mark McIntyre and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] QSC 286
Decision Date: 9 November 2021

CaseChat Overview and Summary

McIntyre v AAI Limited (No 2) involved a dispute between Mr McIntyre and Ms Ho, who were severely injured in a motor vehicle accident, and AAI, their compulsory third-party insurer. The applicants sought rehabilitation services under the Motor Accident Insurance Act 1994 (MAIA). The insurer denied most of the requested services, leading to the applicants filing an application for orders. They offered to pay interest if the services were found inappropriate, which was rejected by the insurer. The applicants were mostly successful, with Mr McIntyre being completely successful on 18 of 19 items and Ms Ho successful on 12 of 17 items.

The court had to decide whether the insurer should pay costs on an indemnity basis, considering the general rule that costs follow the event unless there was a reason to depart from it. The insurer argued for reserving costs until the damages trial, while the applicants sought indemnity costs. The court considered whether the insurer's opposition was unreasonable, especially in light of the offer made by the applicants.

The court found that there was no justification to depart from the usual rule of costs following the event. Mr McIntyre was effectively completely successful, and while Ms Ho was not, she was substantially successful. The court held that the insurer’s refusal to accept the offer was unreasonable regarding Mr McIntyre’s application but not unreasonable for Ms Ho’s application. Therefore, the insurer was ordered to pay Mr McIntyre’s costs on an indemnity basis and Ms Ho’s costs on a standard basis. The court concluded that the insurer should pay the applicants’ costs of the application, with the specific basis determined by the degree of success of each applicant.

In summary, the court ordered the insurer to pay Mr McIntyre’s costs on an indemnity basis and Ms Ho’s costs on a standard basis, reflecting their respective levels of success in the application.

Orders

Orders of the court

1. The respondent pay the first applicant’s costs of the application on the indemnity basis.

2. The respondent pay the second applicant’s costs of the application on the standard basis.

Background

Background to the litigation

Written submissions on costs were filed and no party has made application to be heard orally on the question of costs which I have now determined based on the written submissions.Background Mr McIntyre and Ms Ho are husband and wife. With their young twin sons, they were involved in a high-speed head-on motor vehicle accident near Gin Gin on 28 June 2018. Mr McIntyre and Ms Ho were both very severely injured. AAI is the relevant compulsory third party insurer. It has admitted that it’s insured driver was totally responsible for the accident and, therefore, for the injuries suffered by Mr McIntyre and Ms Ho. Mr McIntyre and Ms Ho seek common law damages. Mr McIntyre and Ms Ho requested the provision of rehabilitation services pursuant to s 51 of the MAIA. Those requests were considered. Some of the items requested were agreed to be provided and were provided. A large number of items were denied. Some were accepted in part. Mr McIntyre and Ms Ho filed an application seeking orders for provision of the rehabilitation services. They offered that, if AAI funded the rehabilitation initiatives but it is later determined that the rehabilitation initiatives are inappropriate, interest of 10 per cent per annum on those payments from the date of payment to the date of judgment will be calculated and offset against the damages claim (the offer). The offer was not accepted and the application proceeded. In relation to Mr McIntyre, there were 19 items in dispute. He was completely successful in relation to 18 items. The 19th item concerned transport services. Mr McIntyre proposed that he ought to have access to a particular service to meet any transportation requirements that he needed, whereas AAI proposed that Mr McIntyre ought to ask for the provision of transport services as and when the need arose. In relation to that issue, I held:“[146] In my view, there is hardly a dispute at all about this item. AAI recognise a need for transportation services and has previously provided transport services upon request. AAI doesn’t wish, understandably, to be in a position where it must fund any services which Mr McIntyre might request. They wish to be in a position to consider any request.[147]Given that there is nothing to suggest that AAI would not give bona fide consideration to requests for transportation, it is not reasonable and appropriate to make orders in terms sought by Mr McIntyre under this item.”[3][3]McIntyre & Anor v AAI Limited [2021] QSC 251. Ms Ho was totally successful in relation to 10 of the 17 items in dispute and partially successful in relation to another two items.Submissions of the parties Mr McIntyre and Ms Ho sought costs on an indemnity basis. The submissions can be summarised as follows:1.The application for rehabilitative services is considered independently (although broadly associated with) the damages claim.2.The rehabilitation scheme established by the MAIA operates so that it is for claimants to set on a rehabilitation plan and the services ought to be provided by the licensed insurer unless they are unreasonable.3.Mr McIntyre was, for all practical purposes, completely successful in his claims for rehabilitation.4.Ms Ho was largely successful.5.Had AAI accepted the offer, it would have been in a better position now as the judgment on the application was adverse to it.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The respondent’s submissions can be summarised as follows:1.The costs of the originating application should be reserved to the trial judge.2.AAI relied upon expert evidence which contradicted the evidence led by Mr McIntyre and Ms Ho on the issue of the reasonableness of the rehabilitation services in dispute.3.AAI succeeded on a number of the claimed items, at least in relation to Ms Ho.4.If costs are awarded against AAI, then there should be some allowance for that success.5.The opposition to the application was not unreasonable and consequently indemnity costs ought not to be ordered.Consideration and conclusions Rule 681 of the Uniform Civil Procedure Rules 1999 (UCPR) provides:“681 General rule about costs(1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.(2)Subrule (1) applies unless these rules provide otherwise.” The rationale behind the general rule that costs follow the event was explained by McHugh J in Oshlack v Richmond River Council,[4] where his Honour said:“The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. (Latoudis (1990) 170 CLR 534 at 543; 97 ALR 45; 65 ALJR 151; BC9002896 per Mason CJ; at 562-563 per Toohey J: at 566-567 per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410; 120 ALR 385; 68 ALJR 374; BC9404608 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ). If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of unsuccessful litigation.”[5][4](1998) 193 CLR 72.[5]At 97. There is no suggestion that if AAI had conceded all the items claimed by Mr McIntyre apart from the transportation costs, that he would have proceeded on that item alone. As I observed in the primary judgment, there was hardly a dispute about that item. It follows that Mr McIntyre has, in all practical senses, been completely successful in obtaining orders for the provision of very significant rehabilitation services. Ms Ho has been less successful in that several of her claims did not succeed. She was though, substantially successful to the extent of achieving the provision to her of significant rehabilitation services. In those circumstances, I can see no reason why costs ought not follow the event. AAI ought to be ordered to pay Mr McIntyre and Ms Ho their costs of the application. There are numerous decisions where factors have been identified as justifying an award of costs on an indemnity basis. In cases such as Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd[6] and Colgate Palmolive Co v Cussons Pty Ltd,[7] attempts were made to categorise the circumstances where an award of indemnity costs should be made. However, the circumstances justifying departure from the usual rule that costs be assessed on a party/party basis cannot be conclusively categorised. In Rosniak v Government Insurance Office,[8] the New South Wales Court of Appeal said this:“… the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule-marker.”[6](1988) 81 ALR 397.[7](1993) 46 FCA 225.[8](1997) 41 NSWLR 608.

CITATION:	McIntyre & Anor v AAI Limited (No 2) [2021] QSC 286
PARTIES:	MARK McINTYRE (first applicant) SU KIM HO (second applicant) v AAI LIMITED ABN 48 005 297 807 (respondent)
FILE NO/S:	BS No 13125 of 2020
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	9 November 2021
DELIVERED AT:	Brisbane
HEARING DATE:	Determined on the written submissions without oral hearing
JUDGE:	Davis J
ORDERS:	1. The respondent pay the first applicant’s costs of the application on the indemnity basis. 2. The respondent pay the second applicant’s costs of the application on the standard basis.
CATCHWORDS:	PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - COSTS OF AND INCIDENTAL TO PROCEEDING - where the applicants claimed rehabilitation services pursuant to s 51(3) of the Motor Accident Insurance Act 1994 (MAIA) - where the first applicant was effectively completely successful - where the second applicant was substantially successful - where the applicants sought their costs - where the respondent sought to reserve costs of the application to the trial of the damages claim - where the usual rule is costs follow the event - where there was no reason to depart from the usual rule PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS - POWER TO ORDER - RELEVANT CONSIDERATIONS GENERALLY - where the applicants made a claim for rehabilitation services pursuant to the MAIA - where the applicants had offered to pay interest on amounts expended on rehabilitation if at trial the rehabilitation services were found unnecessary or inappropriate - where the offer was rejected - where the first applicant was effectively completely successful in his claims - where the second applicant was substantially successful - where it was unreasonable for the respondent not to accept the offer in relation to the first applicant’s application - where it was not unreasonable for the respondent not to accept the offer in relation to the second applicant’s application - whether indemnity costs ought to be ordered Motor Accident Insurance Act 1994, s 51 Uniform Civil Procedure Rules 1999, r 681 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCA 225, cited Di Carlo v Dubois [2002] QCA 225, followed Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, cited Lee v RACQ Insurance Limited [2015] QSC 120, cited Massingham v AAMI Insurance Ltd (2007) 48 MVR 235, followed McIntyre & Anor v AAI Limited [2021] QSC 251, related Oshlack v Richmond River Council (1998) 193 CLR 72, followed Rosniak v Government Insurance Office (1997) 41 NSWLR 608, followed
COUNSEL:	Written submissions prepared by M Grant-Taylor QC with C George for the applicants and by T Matthews QC for the respondent