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Legal costs in personal injuries matters – what’s reasonable and what’s excessive?

In November of last year, I wrote about a recent decision by Justice Freeburn and its impact on the assessment of care and assistance claims.

Ms Sutton was injured in a motor vehicle accident on 15 February 2015, where a vehicle made a significant impact to the rear of her own vehicle.  As with most motor vehicle accident matters, a claim was made against the compulsory third party insurer, which was Allianz in this case.  On 7 October 2021, she was awarded $314,345 in damages, with the amount awarded for costs being decided separately.

This month, I’ll discuss the separate decision by Justice Freeburn, for the same matter, which offers an interesting examination into the law of costs.

Sutton v Hunter (No 2) [2021] QSC 268

In a separate decision on 22 October 2021, Justice Freeburn decided upon recoverable costs in Ms Sutton’s matter.

Among other costs issues, Justice Freeburn decided that Allianz pay Ms Sutton’s costs on the District Court scale and on a standard basis, excluding the costs of the application to transfer the proceeding from the District Court (at Southport) to the Supreme Court.  This will be the focus of this article.

Indemnity vs standard costs

Ms Sutton had sought costs on an indemnity basis or at the very worst, a standard basis on the District Court Scale.

Ms Sutton’s Mandatory Final Offer (MFO) was $310,000, which was seen as being within the vicinity of the judgement of $314,345, rather than “beating” the MFO.  The issue of what the MFO was worth in present day values was raised, along with how the valuation of past and future economic had varied with the passage of time.  A precise comparison was not considered possible, and Justice Freeburn considered it sufficient to say that the MFO and judgement were similar.

Justice Freeburn also found that it was not possible to conclude that Allianz, acting reasonably, ought to have accepted the MFO.  Three years had passed since the issuing of the MFO and much had happened during that time, specifically noting the following:-

1. Additional and updated psychiatrist expert evidence had been obtained, including a second report from psychiatrist Dr John Chalk that described an increase in impairment to social functioning, which Justice Freeburn noted would have an effect on assessing the value of general damages and loss of earning capacity, post MFO.

2. Ms Sutton had been absent from the workforce for over a decade prior to the motor vehicle accident and there was always an element of uncertainty when assessing lost earning capacity.

3. Ms Sutton had ceased receiving psychiatric treatment at the time of the MFO but has resumed treatment with a new psychiatrist following the MFO. This for example, impacted the Claimant’s entire claim for future medical and pharmaceutical expenses, which relied on medical opinions received well after the MFO.

Comment was also made about the offers of settlement made by Ms Sutton following the MFO,  which ranged from $709,761 to $1,973,080, which Justice Freeburn considered to be rather extravagant.

Ultimately, having regard to the above factors, Justice Freeburn ordered costs on a standard basis rather than the indemnity basis sought and preferred by Ms Sutton.

Exclusion of payment of application to transfer proceeding

As the judgement for damages was well within the jurisdiction of the District Court, Justice Freeburn noted that the proceeding should not have been transferred from the District Court to the Supreme Court.  Accordingly, costs were ordered to be assessed on the District Court scale and payment for the application to transfer the proceeding to the Supreme Court was excluded.

The decision by Justice Freeburn is a reminder to practitioners to apply careful scrutiny when incurring costs in a matter.  Court awards on costs will consider and scrutinise the decisions practitioners make to take a case in a certain direction.

In the writer’s view, while it’s reasonable to try and recover as much costs as possible for your client, care should still be given when deciding to incur a cost in the first place as recovering costs are rarely, if ever, certain.

Ray is an Associate who works in the Brisbane office of vbr Lawyers with Greg Black. Ray successfully completed a Bachelor of Business and Bachelor of Laws and also his Practical Legal Training at QUT.
Greg is widely regarded as one of Australia’s leading compensation law experts. Greg has a very healthy practice and enjoys providing his clients with superior personal service in every case. Greg is absolutely committed to achieving the best settlement outcomes for his clients while keeping the legal costs down.

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