May 11, 2018
On 1 March 2018, Justice Mullins of the Brisbane Supreme Court, dismissed an application seeking a declaration that Insurer paid rehabilitation had to be added to an offer of settlement. This case has implications for insurers to consider when making offers.
The Applicant made a claim for personal injuries after being involved in a motor vehicle accident on 4 December 2015.
During the claim, the insurer had paid out $22,318.11 in rehabilitation under its legislative obligations.
On 18 January 2018, the Insurer made a Mandatory Final Offer of $53,000.00 plus regulation costs fixed at $3,600.00, exclusive of rehabilitation, paid by the Insurer for $22,318.11.
The Applicant’s solicitors advised the Insurer that they believed the Insurer’s offer had been incorrectly framed. That is, the Insurer’s offer was effectively $75,318.11 (i.e. the insurer’s stated offer plus rehabilitation). That distinction was important because it would mean that the Insurer was responsible for standard basis costs rather than regulation costs fixed at $3,600.00.
The Insurer disputed that this was the case.
On 1 February 2018, the Applicant’s solicitors wrote to the Insurer and advised them that they accepted the Insurers offer on the understanding that it was for $75,318.11 plus costs. They also indicated that if their position was not accepted by the Insurer, then they would be making an Application to the Court.
Justice Mullins dismissed the Applicant’s Application for a declaration that the Insurer’s Mandatory Final Offer be framed as $75,318.11 plus costs.
In coming to that decision, Justice Mullins had regard to the fact that the Insurer had not given notice under section 51 (4) of the Act. Section 51 (4) of the Act provides that if an Insurer intends for a Court to take the cost of rehabilitation paid by them into account, then they must give Claimants written notice of that intention.
Justice Mullins also had regard to section 51 (9) and section 51 (9A) of the Act. Section 51 (9) provides that rehabilitation costs can only be taken into account if the Insurer has granted a notice under section 51 (4) of the Act. Section 51 (9A) provides guidance on how rehabilitation costs should be taken into account where notice has been provided.
Her Honour found that the Applicant could not succeed because the Insurer had not given notice pursuant to section 51 (4) of the Act. The Applicant’s position was also contrary to Justice Applegarth’s analysis of section 51 (4) of the Act in Aldridge v Allianz Australia Insurance Limited  QSC 257.
Justice Mullins awarded the Insurer their costs of the Application on the basis that the answer to the Applicant’s issue was set out in section 51 (4) of the Act and the decision of Aldridge.
What can we take away from this case?
Whenever you are making an offer, it is essential to determine whether notice has been given under section 51 (4) of the Act.
If you have given notice under section 51 (4), then you will need to have regard to whether the rehabilitation paid will push your offer into the plus costs category.
Conversely, if notice has not been given under section 51 (4), then the rehabilitation paid will not affect your offers. However, should the matter proceed to Trial then you will not be able to seek a reduction in damages for rehabilitation paid.
Thus, whether you give notice under section 51 (4) will be a matter that you will need to consider on a case by case basis, weighing up the pros and cons of doing so.
A copy of the decision can be found here.