Queensland Judgments
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McDermott v Manley & Anor

Unreported Citation:

[2018] QSC 35

EDITOR'S NOTE

In this case, Mullins J considered the effect of s 51(4) Motor Accident Insurance Act. The insurer had paid rehabilitation and other treatment expenses without giving notice under s 51(4). The plaintiff sought to add those costs and expenses to gross up the mandatory final offer so that it could claim standard costs and outlays. Her Honour observed that where an insurer does not provide a notice under s 51(4), they have generally elected to bear the costs of rehabilitation services, and any amount paid is then irrelevant to the calculation of any offers exchanged as mandatory final offers.
Mullins J
2 March 2018
In this recent matter, her Honour considered an important issue arising from a claim for damages for personal injuries arising from a motor vehicle accident. The insurer had not given a notice under s 51(4) Motor Accident Insurance Act 1994, but had paid rehabilitation and other treatment expenses. The question was whether a mandatory final offer made an insurer to pay a claimant an amount exclusive of rehabilitation costs where the insurer had not given notice ought be characterised as a gross offer of the amount plus rehabilitation costs. The sum total of the rehabilitation and other treatment expenses was $22,318.11. [2].  
Section 51(4) of the Act provides:
“If the insurer intends to ask the court to take the cost of rehabilitation services into account in the assessment of damages, the insurer must, before providing the rehabilitation services, give the claimant a written estimate of the cost of the rehabilitation services and a statement explaining how, and to what extent, the assessment of damages is likely to be affected by the provision of the rehabilitation services.”
The offer was worded as follows:
“We have considered all of the material presently available to us and we are prepared to offer your client the amount of $53,000 inclusive of all heads of damage and statutory refunds, exclusive of payments made to date to or on behalf of your client in the sum of $22,318.11.” [5].
The applicant sought a declaration that that amounted to a gross offer of $75,318.11 inclusive of statutory refunds plus standard costs and outlays to be agreed or assessed. [10]. In circumstances where it had not given notice pursuant to s 51(4) of the Act the second respondent challenged that proposition and asserted that the mandatory final offer was not $75,318.11. [7].
The outcome of the application was directly relevant to the calculation of costs, given the operation of s 51C(4) Motor Accident Insurance Act 1994 and ss 27A and 29 of the relevant regulation, which provide that where a mandatory final offer is for more than the lower offer limit but not more than the upper offer limit, and is accepted, costs will be calculated and paid on the basis stated under the regulation. That meant that if the mandatory final offer was $53,000 costs would be limited to $3,600 whereas if it were $75,318.11, the applicant sought standard costs and outlays. [9].
In resolving the matter, her Honour noted that in circumstances where an insurer does not give notice pursuant to s 51(4), they have elected to bear the costs of rehabilitation services, excepting where the payment has been induced by the claimant’s fraud. Where the notice is given under s 51(4), the costs of rehabilitation services may be taken into account in the assessment of damages and/or added to the claimant’s damages: see Aldridge v Allianz Australia Insurance Ltd [2009] QSC 257. In other words there are two distinct scenarios and this matter fell within the first. Accordingly, the costs of rehabilitation services provided to the claimant were deemed irrelevant to the offers exchanged as mandatory final offers, meaning the applicant’s claim to “gross up” the second respondent’s mandatory final offer was unsupported by the statutory scheme in s 51. [11], [12].
Given the applicant had erred in its characterisation of the offer which it then purported to accept [8], it was also the case that there had been no binding acceptance and it followed that the application for a declaration could not succeed. The application was dismissed [13] with costs following the event. [15].
A de Jersey

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