Australia: Insurer's failure to succeed in rejection of claim at CARS and in court doesn't make a case "exceptional"

James Muscat v Rhys Thomas [5 March 2013] (NSWDC Unreported)

A March 2013 decision by the District Court held that the costs regulation will continue to apply where an insurer has rejected a CARS Assessor's determination in a late lodgement dispute, even if the insurer loses its argument in Court about late lodgement.

Background

The claimant brought a claim in NSW for personal injuries sustained in a motor vehicle accident on 26 October 2006. The claim was lodged late, but at a Special Assessment an Assessor accepted that the Claimant's explanation was full and satisfactory.

The insurer issued a section 81 notice admitting fault but denying liability on the basis that it did not accept the Assessor's decision in the late claim.

The matter proceeded to CARS General Assessment before an Assessor, who awarded the claimant a very significant sum.

The insurer wrote to the claimant's solicitor and confirmed that it did not accept the CARS Assessor's assessment and required the claimant to commence court proceedings, indicating that they required the claimant to seek leave to commence proceedings out of time.

The claimant filed a summons in the District Court on 25 October 2011 seeking leave to file proceedings. Leave was ultimately granted by Judge McLoughlin on 19 April 2012. The claimant then filed a Statement of Claim in the District Court on 27 April 2012. Judge McLoughlin indicated that the claimant's potential damages were in excess of $200,000 in granting leave.

The claim proceeded to hearing in Taree District Court before his Honour Judge Toner SC from 13 to 15 June 2012. His Honour delivered judgment on 20 November 2012 and found in favour of the claimant in the sum of $15,133.93.

The claimant submitted that the Motor Accidents Compensation Costs Regulation did not apply as they had to seek leave and that if they did there were "exceptional circumstances" that warranted the discretion be applied pursuant to section 153(1) of the Motor Accidents Compensation Act 1999 (NSW) for their costs to be unregulated.

The claimant's costs were substantial if they were unregulated, and minimal if the regulation applied.

Findings

On 5 March 2013, Judge Toner SC found that the costs regulations did apply and that there were no "exceptional circumstances".

He noted that the question of whether or not the claimant had provided an explanation for late lodgement of his claim went to the liability of the insurer and the Assessor's decision on this issue was not binding on the insurer. Judge Toner emphasised that the insurer was entitled to not accept the CARS Assessor's assessment of the claimant as the insurer had not accepted his decision as to the explanation for the delay in lodging the claim.

Once the Assessor accepted the explanation for late lodgement, the claim had to be assessed by CARS as there was no entitlement to an exemption. Judge Toner concluded that once an assessment of the claimant's entitlement to compensation had been assessed by a CARS Assessor, regulated costs had to apply in Court and there was nothing exceptional in the claim as it had followed the course envisaged by the Motor Accidents Compensation Act. It did not matter that the insurer had failed in its objections to the late lodgement on two occasions.

Judge Toner found that the case was not exceptional. Although he was not required to do so, he also found there was no injustice to the claimant as the case had followed the course that was consistent with the Motor Accidents Compensation Act.

Implications

The decision is helpful to insurers in claims where an insurer chooses to not accept a CARS Assessor's determination of a late lodgement dispute. It quite clearly confirms that even if the insurer loses its argument in Court about late lodgement, then the costs regulation will continue to apply.

If an insurer doesn't succeed in its argument about late lodgement, then it doesn't mean that a case is exceptional.

In this claim, the regulated costs amounted to less than 10% of the claim that the claimant was making on a party/party basis. If the claim had been found to be exceptional, the insurer would have had to pay a significant amount for costs

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