McIntyre v AAI Limited (No 2)

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.