People injured in car accidents and making claims under the Motor Accident Injuries Act have been ensured access to justice. Tom Goudkamp unpacks the highly anticipated decision in AAI Limited v GIO v Moon.

Access to justice is bigger than just being able to physically get into a court house or tribunal building. It is about ensuring parties who are in dispute have the ability to be heard and that means having access to lawyers. While Stacks Goudkamp does its fair share of pro bono work, we do believe if an insurance company has a liability to pay the legal costs of the injured person they should do so and at a reasonable rate.

Mr Moon was riding his motor cycle in May 2018 when he was injured in a collision with a car insured with GIO. Mr Moon made a claim under the Motor Accident Injuries Act (the Act) against GIO and was paid weekly income support, treatment and care benefits. GIO terminated those payments after 26 weeks because under s 3.11 and 3.28 of the Act, GIO considered Mr Moon was wholly or mostly at fault for causing the accident. After an unsuccessful internal review, Mr Moon referred his dispute about liability to the government’s Dispute Resolution Service (DRS) and a claims assessor determined that Mr Moon was wholly at fault. Despite Mr Moon losing, the claims assessor awarded him costs and determined there were exceptional circumstances in the case justifying an award of costs over and above the amounts allowed by the government under the Motor Accident Injuries Regulation (the Regulation).

It was that decision that was challenged by the Insurer in the Supreme Court proceedings and the decision of Justice Wright can be found at [2020] NSWSC 714 https://www.caselaw.nsw.gov.au

After summarising the complex statutory provisions relevant to statutory benefits claims, dispute resolution procedures and costs, Justice Wright determined:

  1. Win, lose or draw, a claimant is entitled to costs as there was nothing in the Act which prevented an award of costs to an unsuccessful party [82];
  2. There are two main provisions relating to costs. Section 8.3 concerns the costs as between a party (claimant or insurer) and their lawyer whereas section 8.10 concerns the costs as between two parties (claimant and insurer) and prevents an insurer recovering costs from the Claimant but does allow a claimant to recover costs from the Insurer [70, 72 and 74];
  3. Mr Moon’s entitlement to recover his costs from GIO was based on s 8.10 and under s 8.10(1) these are costs incurred which are reasonably and necessary and subject to other parts of the section [79 and 80];
  4. Under s 8.10(3), there are two means by which a Claimant can be paid costs from an insurer either because the Regulation provides for it or because DRS permits it [85];
  5. There are two corresponding categories of legal costs recoverable by Mr Moon from DRS:
    1. All legal costs that do not exceed the maximum costs fixed in the Regulation [86-92]; and
    2. Costs which exceed the maximum costs fixed by the Regulation if DRS permits that in accordance with the circumstances set out in s 8.10(4) [93-102].
  6. DRS can permit the payment of legal costs over and above the regulated amounts if the Claimant is under a legal disability or because there are exceptional circumstances in the claim. This is because solicitors acting for infants or persons without legal capacity might be required to undertake more work than for a claimant without such legal disability [98]. Other cases may be exceptional because of an ‘unusual degree of factual or legal complexity … requiring the incurring of more substantial legal costs by a claimant’ [99];
  7. The costs must be reasonable and necessary which if not agreed is determined by way of a merits review matter [105]. This suggests that while the claims assessors determines the entitlement to costs it is a merit reviewer who determines the amount of those costs;
  8. The costs must also be ‘incurred’ which requires there to be a liability to pay those costs – which requires consideration of s 8.3 [109 – 112]. Sections 8.3(1) and 8.3(3) prohibit lawyers from being paid for their legal work beyond the maximums provided for in the regulations [116]. That would mean that even if DRS permitted payment beyond the regulations (under s 8.10(3)), the claimant would have no liability to pay those costs which would mean the costs had not been incurred which would lead to the Insurer not having to pay them [117].
  9. Justice Wright recognised [at 132] that s 8.3(4) and s 8.10(3) are inconsistent with each other but utilising the statutory interpretation principle generalia specialibus non derogant (the specific trumps the general) means that s 8.3(3) is to be disregarded.

The current legislation has many provisions lifted and shifted from the previous legislation. Some of those are found in s 8.3. As Justice Wright pointed out [136] this has led to inconsistency which, in our experience of the Act has led to confusion and disputation. Other sections have not been replicated including s 83 which imposed a duty upon the insurer to pay for the claimant’s reasonable and necessary treatment expenses and s 84 which imposed a duty on the insurer to do all things necessary to rehabilitate the claimant. The Act replaces those two duties with a scheme of statutory entitlements but does not impose a duty on the insurer to ensure the injured person gets those entitlements. In my view, the onus has shifted from the insurer (which should facilitate treatment and rehabilitation) to the claimant who must now ask for and pursue treatment and rehabilitation. For some people, including those for whom English is a second language, those who have limited education, or those with a cognitive impairment they need someone to advocate for them to get their statutory entitlements and this decision ensures they can retain a lawyer and that the lawyer can get paid by the insurer.

If you or anyone you know has been injured in a car accident, you may be entitled to compensation under the Motor Accident Injuries Act. For more information, and to arrange a free, no-obligation assessment of your claim, please call Stacks Goudkamp on 1800 25 1800, or alternatively make an online enquiry.

Written by Tom Goudkamp OAM

Tom Goudkamp OAM is the Managing Director of Stacks Goudkamp. He has over 40 years of experience of successfully bringing compensation claims for people injured in motor vehicle accidents.