- The costs provisions in the Motor Accident Injuries Scheme are proving complex and, considering the decision in AAI Limited trading as GIO v Moon  NSWSC 714, somewhat unclear.
- Here, in part two of our costs series, we move on from statutory benefits to an explanation of common law claims.
- Practitioners working in Personal Injury must be very familiar with the relevant Act, Regulations and Guidelines.
- Events, weighting and amounts have not varied greatly for common law costs compared with the previous scheme.
- Exemption from Dispute Resolution Service means exemption from the regulated costs.
- A costs penalty can now be imposed on insurers for unreasonable denials of liability.
In the first article of this two-part series, I explained the costs regime applicable to claims for statutory benefits including the concepts of ‘monetary units’ and ‘maximum costs’ (see: Belinda Cassidy, ‘Costs in the Motor Accident Injuries Scheme’ Law Society of NSW Journal, Issue 69 August 2020, 76-77).
This month, we turn to a discussion of common law matters which are also regulated by the Motor Accident Injuries Act 2017 (‘the Act’), the Motor Accident Injuries Regulation 2017 (‘the Regulation’) and the Motor Accident Guidelines (‘the Guidelines’). Practitioners working in this area must be very familiar with these sources.
Common law costs
Very little has changed for common law costs when compared with the previous scheme. There are still events, the events have not changed greatly, the weighting of the amount of costs to the event has not changed, and the mechanism for the calculation of costs in stages three and four remains the same based on the quantum of the assessment or settlement and the liability status.
There events or stages provide for in the regulations are:
- from retainer to the service of the common law claim form;
- from service of the claim form to responding to the insurer’s offer made under s 6.22 of the Act;
- from the response to the resolution of the claim without a certificate of assessment;
- from the issue of a Dispute Resolution Service (‘DRS‘) certificate of assessment;
- from the commencement of court proceedings.
Note s 3.40(1) of the Act provides for the deduction of statutory benefits from the award of damages, which suggests costs should be calculated on the gross amount of damages awarded and not the total sum of damages less the statutory benefits paid.
Take this example of a practitioner who takes instructions from a client after a statutory benefits claim was made and weekly payments totaling $45,000 were paid. The practitioner then makes and prosecutes a common law claim for the top up of past loss of earnings (say $10,000) and future loss of earning capacity ($100,000). If the insurer accepts liability and the claimant obtains an award of damages at DRS for $155,000 then the following costs can be charged to the client to be paid by the insurer:
- stages one and two: 7.24 monetary units (currently $751)
- stage three: 114.48 monetary units plus 2 cents x $55,000 (currently $12,988.44)
- stage four: 2 cents per the dollar value of the settlement ($3,100)