Background
Grant Robert McMillan brought a motor vehicle accident claim against Sharbel Trad and AAI Limited. After assessing McMillan’s damages at $8,002.75 in an earlier judgment, the Court considered written submissions about the costs of the proceeding. Trad had taken no part in the proceeding, while AAI sought its costs on the standard basis and an order setting those costs off against the damages award.
At a compulsory conference on 17 November 2021, AAI offered $20,000 and the unrepresented McMillan offered $50,000 plus costs. McMillan commenced the proceeding on 31 January 2022. AAI had not accompanied its offer with the explanatory statement required for an offer made to an unrepresented claimant under s 20 of the Motor Accident Insurance Regulation 2018 (Qld).
The Court’s Holding
Justice McCafferty held that AAI’s failure to provide the explanatory statement did not stop its $20,000 offer from being a mandatory final offer for the purposes of s 55F(2) of the Motor Accident Insurance Act 1994 (Qld). Neither the Act nor the Regulation specified that noncompliance invalidated the offer, and the statement concerned the finality of accepting an offer rather than the costs consequences of rejecting one.
Section 55F(2)(c) applied because the $8,002.75 award was both below the statutory lower offer limit of $44,070 and below AAI’s mandatory final offer. The provision was mandatory and left no discretion based on McMillan’s possible impecuniosity. The Court therefore ordered McMillan to pay AAI’s standard-basis costs from 31 January 2022, to be assessed if not agreed.
The Court also ordered those costs to be set off against McMillan’s damages award. It considered a set-off appropriate because AAI’s recoverable costs and outlays were likely to exceed the award and McMillan was unemployed.
Key Takeaways
- Section 55F(2)(c) required an award of standard-basis costs to the insurer where the damages were no more than the statutory lower offer limit and no more than the insurer’s mandatory final offer.
- Failure to give an unrepresented claimant the prescribed explanatory statement did not invalidate the mandatory final offer because the legislation imposed no such consequence and the statement addressed acceptance, not rejection.
- The Court may set an insurer’s costs off against a claimant’s damages where the circumstances make that order appropriate.
Why It Matters
The decision illustrates the potentially substantial costs consequences of pursuing a relatively small Queensland motor accident claim after rejecting an insurer’s mandatory final offer. Crucially, the statutory result applied here because both monetary conditions were satisfied: the award did not exceed either the lower offer limit or the insurer’s offer.
It also clarifies that omission of the explanatory statement required for an unrepresented claimant does not, without a prescribed invalidating consequence, necessarily prevent an offer from operating as a mandatory final offer under the costs regime.