Rahman v AAI Limited t/as GIO
[2021] NSWPICMR 15
•3 June 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Rahman v AAI Limited t/as GIO [2021] NSWPICMR 15 |
| APPLICANT: | Muhammed Tawhidur Rahman |
| RESPONDENT: | AAi Limited t/as GIO |
| MERIT REVIEWER: | Brett Williams |
| DATE OF DECISION: | 3 June 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- whether legal costs incurred by the claimant are reasonable and necessary under section 8.10 of the Motor Accident Injuries Act 2017; minor injury and treatment disputes; one application lodged; Assessor conducted two medical assessments; Held- entitled to the payment of his legal costs for each medical assessment matter; not satisfied of the maximum amount allowed; not satisfied of exceptional circumstances; decision set aside; $2000 inclusive of GST. |
| DETERMINATIONS MADE: | 1. The reviewable decision set aside. 2. The amount of the Claimant’s costs assessed in accordance with the Motor Accident Injuries Act 2017 (the Act) and Regulations 2017 is $2,000 inclusive of GST. |
Background
This matter involves a dispute between Muhammed Tawhidur Rahman (the Claimant) and the Insurer about whether for the purposes of s 8.10 of the Act legal costs incurred by him are reasonable and necessary.
The Claimant seeks to recover legal costs in connection with two medical assessment matters that were the subject of a single application (APP-10187762). The medical assessment matters related to disputes about minor injury and treatment (‘the medical matters’).
The medical matters were determined by Assessor McGrath, who issued a Certificate on 7 December 2020 (A1). The Claimant was unsuccessful in relation to the medical matters, the Assessor finding that the injuries caused by the motor accident on 2 August 2019 were minor injuries and that the treatment claimed was not reasonable and necessary.
On 12 February 2021 the Claimant’s lawyers sent the Insurer a tax invoice for payment. The invoice related to the legal services provided to the Claimant in connection with the medical matters. Costs were claimed at the regulated maximum, 16 monetary units - $1,660.16 - plus GST, for each medical matter. Thus, the Claimant sought payment of costs amounting to $3,652.35, $1,660.16 x 2 plus GST.
The legal work performed in relation to the medical matters was not itemised, nor was any indication provided of the time taken to perform the legal work in relation to which costs were claimed.
On 11 March 2021 the Insurer informed the Claimant’s lawyers that as only one application was lodged, one assessment took place and one certificate was issued, the Claimant was only entitled to legal costs for one application. The Insurer determined that the costs should be paid at the maximum allowed by the regulations for one matter, $1,826.17 inclusive of GST (A4).
The Claimant’s lawyers responded on 6 April 2021 (A5). They maintained that the Claimant was entitled to costs on the basis that there had been two discrete disputes dealt with and that a separate costs allowance was payable with respect to each dispute.
In accordance with Sch. 2 cl.1(aa) of the Act the costs dispute is a merit review matter.
I am satisfied that sufficient information has been supplied to the Commission in connection with the dispute and that the proceedings can be determined on the papers.
Submissions
The Claimant’s submissions in relation to the costs dispute are contained in the body of the application lodged with the Commission on 8 April 2021. In summary, the Claimant argues that:
(a) The Insurer’s refusal to pay his legal costs on the basis that there were two discrete disputes was contrary to a prior decision of the DRS.
(b) The Insurer should pay legal costs for both disputes at the maximum amount allowed by the regulations.
(c) His costs in connection with the costs dispute should be payable by the Insurer on the basis that exceptional circumstances exist, as required by s 8.10(4)(b), permitting the Commission to make such an order.
(d) Exceptional circumstances are said to exist because the Insurer did not follow a prior DRS costs decision of 22 April 2020 (A6).
(e) It is further argued that such an order should be made to prevent ‘…continuing bad conduct of insurers’.
In summary, the Insurer submits that:
(a) A single application was lodged in relation to the medical disputes.
(b) Brief submissions, in a single document, were provided by the Claimant’s lawyers in the medical disputes. No medical evidence was provided by the Claimant in the application filed in relation to those disputes.
(c) The submissions filed by the Claimant did not address the substance of the medical disputes.
(d) The outcome of the medical disputes ‘…was commensurate with the Insurer’s internal review outcome.’
(e) The medical disputes were entirely without merit.
(f) There is no automatic entitlement to recover costs, particular in a matter that lacks merit.
(g) Consideration ought to be given to the amount of work completed and effort exerted by the Claimant’s solicitor. There is little evidence available to demonstrate that the Claimant’s solicitor demonstrated any genuine legal expertise.
(h) The Claimant’s solicitor did not provide a schedule itemising, or submissions addressing, the legal work undertaken in relation to the medical disputes and with respect to which costs claimed relate.
(i) It is not in line with the objects of the Act to simply award the maximum amount of costs in a medical dispute, or at all, in the absence of evidence of exceptional circumstances, application of legal expertise, or considerable work undertaken.
(j) Maximum costs may be awarded in circumstances where the legal representative has put significant and justified time and effort into the application. In this instance, minimal effort had been exerted in terms of providing medical evidence and/or formulating arguments in support of the application.
(k) Given there was only one application, one reply, one medical assessment and one Medical Assessment Certificate, the amount offered by the Insurer to the Claimant for his cost, $1,826.17, was reasonable.
(l) The costs penalty claimed by the Claimant pursuant to s 6.21 is not available in the context of the current dispute. That section relates to determinations about liability under s 6.20, as opposed to a denial of part payment of a legal costs invoice.
(m) Legal costs should not be allowed in relation to the costs dispute as there is no allowance made for the payment of such costs in the regulations. Exceptional circumstances don’t exist to justify the Commission permitting payment under s 8.10(4)(b).
Relevant statutory provisions
The objects of the 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 Act or the regulations, a construction that would promote the objects of the 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 Act or the regulations, the person exercising the discretion must do so in the way that would best promote the objects of the Act or of the provision concerned (s 1.3(5)).
The Claimant’s entitlement to recover legal costs is governed by Pt 8 of the 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 states:
“8.3 Regulations fixing maximum costs etc recoverable by Australian legal practitioners
(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.
(5) This section does not entitle an Australian legal practitioner to recover costs for a legal service or matter that a court or costs assessor determines were unreasonably incurred.
(6) This section and any regulations under this section prevail to the extent of any inconsistency with the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014). An assessment under that legislation of any costs in respect of which provision is made by a regulation under this section is to be made so as to give effect to that regulation.
(7) ….”
Section 8.10 states:
“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 under a legal disability, or
(b) exceptional circumstances exist that justify payment of legal costs incurred by the claimant.
(5)…”
Schedule 1 Pt 1 cl 2 (1) of the regulations states relevantly:
“2 Medical disputes
(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 are 16 monetary units (to a maximum of 60 monetary units per claim).”
Section 7.1(1) defines medical assessment matter to mean a matter declared by Schedule 2 to be a medical assessment matter for the purposes of this Part.
Section 7.17 states:
“7.17 Definitions
In this Part—
medical assessment means an assessment of a medical assessment matter under this Division.
medical dispute means—(a) a dispute between a claimant and an insurer about a medical assessment matter, or
(b) an issue arising about a medical assessment matter in proceedings before a court for damages or in connection with the assessment of a claim by the Commission.”
Schedule 2 cl 2 states:
“2 Medical assessment matters
The following matters are declared to be medical assessment matters for the purposes of Part 7—
(a) the degree of permanent impairment of the injured person that has resulted from the injury caused by the motor accident (including whether the degree of permanent impairment is greater than a particular percentage),
(b) whether any treatment and care provided to the injured person is reasonable and necessary in the circumstances or relates to the injury caused by the motor accident for the purposes of section 3.24 (Entitlement to statutory benefits for treatment and care),
(c) whether for the purposes of section 3.28 (Cessation of statutory benefits after 26 weeks to injured adult persons most at fault or to injured persons with minor injuries) treatment or care provided to an injured person will improve the recovery of the injured person,
(d) the degree of impairment of the earning capacity of the injured person that has resulted from the injury caused by the motor accident,
(e) whether the injury caused by the motor accident is a minor injury for the purposes of the Act.”
Determination
The application filed in relation to the medical matters was in connection with disputes about minor injury and treatment. Each of those matters are declared by Sch.2 cl. 2 of the Act to be separate and distinct medical assessment matters; minor injury under cl 2(e) and the treatment dispute under cl 2(b).
The Claimant’s lawyers can only recover legal costs for legal services provided in relation to the medical matters if payment of those costs is permitted by the regulations or the Commission (s 8.3(4)).
The Claimant is only entitled to recover from the Insurer reasonable and necessary legal costs incurred by him if payment of those costs is permitted by the regulations or the Commission.
Success is not a pre-requisite to the Claimant accruing an entitlement to the payment of his legal costs in connection with the medical matters. In AAI Ltd v Moon [2020] NSWSC 714 (Moon) Wright J observed:
“82 As to the general nature of the entitlement conferred by s 8.10, it can be noted that it is not similar to the awarding of costs in court proceedings. There is nothing in s 8.10 or any other provisions of the MAI Act that suggests that a claimant’s entitlement to recover legal costs under s 8.10 depends on whether or not the claimant was successful before the DRS…”.
Payment of the Claimant’s costs in relation to the medical matters is permitted by Sch 1 Pt 1 cl 2 (1) of the regulations, subject to a maximum of 16 monetary units ($1,660.16).
Clause 2(1) refers to legal services provided to a claimant ‘in connection with a medical assessment under Div 7.5 of the Act.’
As noted above, each of the medical matters that were the subject of the Claimant’s application were separate and distinct medical assessment matters for the purposes of Pt 7 Div 7.5 of the Act.
The regulations provide for the payment of legal costs in connection with a ‘medical assessment’ under Div 7.5 of the Act. ‘Medical assessment’ means an assessment of a ‘medical assessment matter’ (s 7.17). ‘Medical assessment matter’ means a matter declared by Schedule 2 to be a medical assessment matter for the purposes of Part 7 (s 7.1(1)). Sch 2 cl. 2 declares both the treatment dispute and the minor injury dispute to be medical assessment matters. When read together, these provisions have the effect of allowing payment of the Claimant’s reasonable and necessary legal costs with respect to each medical assessment matter. Each medical assessment matter was the subject of a medical assessment.
While there may have been a single application lodged in relation to the medical matters, the Assessor conducted two medical assessments, one in relation to the minor injury medical assessment matter and one in relation to the treatment medical assessment matter.
A further matter that lends support to the conclusion I have reached in relation to this issue is the practical impact of determining that costs are payable on a ‘per application’ basis, as opposed to a ‘per medical assessment matter’ basis. If the former were correct, it is likely to result in legal representatives lodging multiple applications to address multiple medical assessment matters rather than lodging a single application addressing multiple medical assessment matters. This in turn would result in multiple medical assessments being undertaken, and multiple certificates and reasons being issued. Such an outcome would not be consistent with a construction of the relevant provisions in a manner that promoted the objects of the Act. In particular, it would not encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes. It would not be consistent with keeping the overall costs of the scheme within reasonable bounds. In my view, allowing costs on a ‘per medical assessment matter’ basis is consistent with these objects.
Having found that the Claimant is entitled to the payment of his legal costs for each medical assessment matter, the next question that arises is the amount of costs that should be allowed.
The Claimant seeks the maximum allowance under the regulations for each matter. While the regulations allow payment of costs up to the maximum, they do not mandate an entitlement to the maximum in every case. This is not an event based costs regime.
In determining the reasonable and necessary costs the Claimant is entitled to recover from the Insurer it is appropriate to consider the nature, extent and complexity of the work undertaken by his legal representatives in connection with the medical matters.
The Claimant’s lawyers have not itemised or particularised the legal services provided or the time taken to perform those services. As noted by the Insurer, the Claimant’s lawyers did not make submissions addressing the tasks with respect to which the claimed costs relate, other than a reference to the two dispute types.
I am therefore left to assess the Claimant’s reasonable and necessary costs on the basis of the material lodged by the parties in these proceedings.
The only document attached to application lodged with respect to the medical matters was the Claimant’s submissions. The application referred to 19 documents that were relied on by the Claimant. It records that all these documents were to be provided by the Insurer.
The Claimant’s submissions occupied 26 paragraphs over three pages. They addressed both medical assessment matters. The bulk of the submissions summarised the evidence. Submissions that went to the substance of the medical matters occupied four succinct paragraphs (22-25),
In addition to drafting the submissions, forensic legal judgement would have been required to identify relevant documents that the Insurer was to provide in relation to the medical matters.
I am not satisfied that the Claimant’s reasonable and necessary costs in connection with the medical matters amount to the maximum allowed by the regulations.
I have concluded that the Claimant’s reasonable and necessary costs in connection with the medical matters was $1,000 inclusive of GST in each matter, a total of $2,000 inclusive of GST.
To the extent that the Claimant seeks payment from the Insurer of any legal costs under s 6.21, I agree with the Insurer’s submission that s 6.21 only applies to a claim for damages, specifically with respect to compliance by an insurer with its duty under s 6.20. That section relates to the admission or denial of liability in a claim for damages. It does not apply to medical or costs disputes that have arisen in the context of a claim for statutory benefits.
The Claimant also seeks payment by the Insurer of his legal costs in connection with the costs dispute. The regulations do not permit payment of legal costs in a costs dispute. In the circumstances, the Claimant invites the Commission to find that exceptional circumstances exist, thereby permitting the Commission to order payment of those costs.
Exceptional circumstances are said to exist because the Insurer refused to follow a previous DRS costs decision (A6). It is argued that such an order should be made to prevent ‘…continuing bad conduct of insurers’.
The Insurer disputes that s 8.10(4)(b) is satisfied and submits that the Commission should not permit the payment of ‘exceptional circumstances costs’.
While I have found against the Insurer with respect to the basis upon which the Claimant’s costs should be paid in the medical matters, I am not satisfied that the costs dispute involved an unusual degree of factual or legal complexity (see Moon at [99]). I am not satisfied that exceptional circumstances exist that would justify an order for the payment of the Claimant’s costs under s 8.10(4)(b).
Further, while the basis upon which the Insurer was prepared to pay the Claimant’s costs was not consistent with the DRS decision relied on by the Claimant, or my interpretation of the applicable costs provisions, having regard to my conclusions in relation to the reasonable and necessary costs recoverable by the Claimant in the medical matters, the Insurer’s offer to pay his costs of $1,826.17 inclusive of GST was not unreasonable in the aggregate.
Accordingly, I find that:
(a) the Claimant is entitled to recover from the Insurer reasonable and necessary costs in the minor injury medical assessment matter in the sum of $1,000 inclusive of GST, and
(b) the Claimant is entitled to recover from the Insurer reasonable and necessary costs in the treatment medical assessment matter of $1,000 inclusive of GST.
Brett Williams
Member – Motor Accidents Division | Merit Reviewer
Personal Injury Commission
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