Australia: Past gratuitous services not recoverable from Lifetime Care & Support Authority
Curwoods Case Note

Daly v Thiering [2013] NSWCA 25

Background

This was an Appeal from findings of his Honour Justice Garling in the Supreme Court in relation to the liability of the Lifetime Care & Support Scheme (Scheme) to reimburse its participants for gratuitous attendant care services provided by a friend or family.

Curwoods Case Notes were issued on 11 November 2011 and 21 December 2011 addressing the decision of Garling J.

The first respondent on appeal was catastrophically injured in a motor vehicle accident on 28 October 2007. The applicant was the driver of the motor vehicle alleged to have been at fault in that accident. The applicant sought leave to appeal from the findings of Garling J on the following grounds:

• He erred in finding that the first respondent as a participant in the Scheme is entitled to recover from the appellant or his compulsory third party insurer damages in accordance with s 128 of the Motor Accidents Compensation Act (MAC Act) from the date of accident to the date of judgment or settlement of the first respondent's damages claim.
• He erred in his construction of s 6(1) of the Lifetime Care & Support Act (LCS Act) in failing to find that the Lifetime Care & Support Authority (Authority)'s obligation to pay the "reasonable expenses" of providing for the treatment and care needs of the first respondent did not extend to the attendant care services provided by the first respondent's mother notwithstanding that his mother's attendant care services were recognised by the Authority as part of its Care Plan for the first respondent.
• He erred in failing to find that on a proper construction of s 130A of the MAC Act the first respondent's entitlement to damages under the MAC Act against the appellant is limited to damages for non-economic loss and loss of earning capacity.

Court of Appeal Decision

The appeal was heard by the Court of Appeal on 30 January 2013 with judgment being delivered on 20 February 2013. Justice Hoeben delivered the lead judgment with which Justices McColl and Macfarlan agreed.

Justice Hoeben noted that the traditional Griffiths v Kerkemeyer ² involves a situation where services are provided gratuitously by a friend or family member without any agreement or obligation to do so. Because those services are provided gratuitously, they cannot be regarded as an expense which the Authority is obliged to meet pursuant to s 6(1) of the LCS Act. That is, the words "reasonable expenses incurred" found in s 6 obligate a payment to be made by the Authority for any expenses incurred. No such expense has been incurred when attendant care services have been provided gratuitously.

Accordingly, the Court found that a participant in the Scheme cannot require the Authority to pay for those services and the first respondent had no claim against the Authority for such services.

The Court then went on to consider the issue of whether such services remained compensable as part of the damages claim given the wording of s 130A of the MAC Act. Hoeben J noted that s 130A is a provision to prevent the double recovery of damages. That is, a participant in the Scheme cannot recover both the benefits derived from participation in it and also be compensated in damages for those benefits.

It was found that s 130A excludes recovery of damages for gratuitous attendant care services only to the extent that a participant's needs "are provided for or are to be provided for" while in the Scheme. To read s 130A otherwise would potentially deprive a participant of compensation in certain circumstances given the agreed interpretation of s 6(1) of the LCS Act. The Court held that:

The appeal was not as of right and proceeded by way of an Application for Leave. Leave to appeal was granted, the Court noting actuarial calculations estimating the potential liability of CTP insurers between the date when the LCS Act came into effect on 1 October 2007 and 25 June 2012 when the MAC Act was amended was in excess of $40 million. The appeal was dismissed.

Implications

As outlined in the Curwoods Case Note "Gratuitous Services in the Lifetime Care & Support Scheme – a strategy going forward" issued on 21 December 2011, this case has important implications for insurers in setting their reserves for past gratuitous attendant care services for claims made between 1 October 2007 and 25 June 2012.

For claims made during this period, an injured person will be entitled to damages for past gratuitous attendant care services as modified by s 128 of the MAC Act, regardless of whether the injured person is a participant in the Scheme or not.

Moreover, unless the Authority has already made payments in relation to the past gratuitous attendant care services, damages are recoverable from the motor vehicle tortfeasor. As such, in order for insurers to limit their exposure, it is essential that insurers promote injured persons having their needs met by the Authority.

Accordingly, when an injured person who has made a claim for damages between 1 October 2007 and 25 June 2012 is a participant in the Scheme, it is recommended that insurers request the following particulars:

1. Whether the assistance is being provided on a gratuitous or commercial basis;
2. The type of assistance being provided;
3. Whether the assistance is provided pursuant to a Treatment and Care Needs Plan; and
4. If the services are being provided otherwise than in accordance with a Treatment and Care Needs Plan, whether a review has been sought under s 25 of the LCS Act.

Insurers should also request an injured person (and/or the relevant provider of the gratuitous attendant care services) to enforce the legal right he/she may have against the Authority (by, for example, an agreement between a participant in the Scheme and a friend or family member where it is made clear by the friend or family member that he or she wants to be paid).

It also remains arguable that in an appropriate claim the failure by an injured person to review a Treatment and Care Needs Plan for the Authority to meet the reasonable expense of the entire need for attendant care services would give rise to a failure to mitigate their loss under s 136. That is, an insurer may contend that any award for past gratuitous attendant care services should be reduced as the reasonable past care needs would have been met by the Authority had the injured person pursued their legal right against it and not continued to receive the gratuitous assistance of a friend or family.

Having regard to the nature of injuries sustained by a participant in the Scheme, and noting that the Court of Appeal did not overturn Garling J's finding that the legal right to recover the expense may rest in the provider of the gratuitous services and not the injured person, insurers will need to give careful consideration to the merits of such an allegation before it is made.

The Court of Appeal decision leaves a significant funding gap for claims made between 1 October 2007 and 25 June 2012 (estimated to be in excess of $40 million). While this shortfall is significant, it may fail to attract sufficient interest in the High Court for a grant of Special Leave where the ramifications of the Court of Appeal's decision are of no national interest.

Footnotes

¹ McColl, Macfarlan and Hoeben JJA
² [1977] HCA 45

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