Background

On 6 December 2016 the Queensland Court of Appeal handed down its much anticipated judgment in the decision of AAI Limited v McQuitty [2016] QCA 326.

The matter was heard by his Honour Justice Jackson in the Trial Division of the Supreme Court earlier this year (see McQuitty v Midgley & Anor [2016] QSC 036) and involved a quantum only trial arising out of a motor vehicle accident that occurred in 2003 and left Mr McQuitty, a 20 year old passenger, with multiple injuries manifesting in a severe traumatic brain injury.

Gratuitous care was the predominant issue in dispute. Accordingly, in his judgment, Justice Jackson provided a detailed analysis of the available medical and extrinsic evidence relating to the plaintiff’s requirement for care and then applied that to the established case law regarding entitlements and costs of gratuitous care.

Damages of $2,719,500.05 were awarded. Of that award, $2,598,100.05 (ie. roughly 96% of the claim) consisted of gratuitous care, with Jackson J concluding that the plaintiff was entitled to 6.5 hours of care per day from the date of the accident to trial (a period of approximately 13 years) and then for a further 47 years.[1] The awards for gratuitous care were far below the 24/7 model claimed by the plaintiff, but still a significant award.

The insurer appealed the entire award and her Honour Justice Dalton handed down the leading judgment (Gotterson and Morrison JJA agreeing) dismissing the appeal.

The allowance for care “required” vs care “received”

At first instance, Jackson J awarded damages for past gratuitous care for an average of 6.5 hours per week based on a finding that this was the amount of care that had at all times been necessary, not on the basis of the care which had in fact been provided.

His Honour had found that on average the Plaintiff had actually only received a lesser amount of five or six hours care per week.

On appeal, the Defendants argued that Jackson J had erred in not awarding damages for past care on the basis of what had actually been provided, rather than on the basis of what was needed.

The Court of Appeal considered the comments of the High Court in both Van Gervan v Fenton[2] and CSR Limited v Eddy[3], in particular the following passage from Eddy[4]:

“…the Griffiths v Kerkemeyer line of cases does not turn on a "post-accident" or an "accident-created need" in the abstract. In Van Gervan v Fenton Mason CJ, Toohey and McHugh JJ said: "the true basis of a Griffiths v Kerkemeyer claim is the need of the plaintiff for those services provided for him or her". That passage was concurred with by Brennan J and quoted with approval by Gaudron J. When later in their judgment Mason CJ, Toohey and McHugh JJ referred to "need", it was to "need" in that sense. Thus they immediately thereafter asserted the proposition that "it is the need for the services which gives the plaintiff the right to an award for damages". They reiterated it later when they spoke of "the services required by the injured person" and "the services which the plaintiff reasonably needs". Although Dawson J did not agree with the majority's approach in Van Gervan v Fenton, he accepted in Kars v Kars that the basis of Griffiths v Kerkemeyer was that a "plaintiff receives the value of services voluntarily provided by way of damages as compensation for the loss suffered by reason of the injuries which manifests itself in the form of a need for those services", and what was in issue was "the voluntary provision of services to a plaintiff". The majority in Kars v Kars (Toohey, McHugh, Gummow and Kirby JJ) described the principle as permitting recovery of damages "in respect of the cost to a family member of fulfilling the natural obligations to attend to the injuries and disabilities caused to the plaintiff by the tort." The later reference to "the injured plaintiff's … needs" must be understood in the same sense. So must references to the plaintiff's needs in Grincelis v House”

Dalton J acknowledged that in this passage, the High Court seems to have interpreted the earlier authorities as meaning that compensation is limited to services in fact provided to a plaintiff, notwithstanding that there was an unfilled need for services before trial. Her Honour further observed however that these statements are obiter and that there is therefore still uncertainty about the law in this respect.

Dalton J ultimately found that in this case, the point need not be determined as if Jackson J erred, the discrepancy was a small one and based on factual findings which were themselves conclusions of “best-fit” on evidence which was based on estimation rather than precise calculation, and that this should therefore not be disturbed on appeal.

The cost of care

The plaintiff claimed for care on the commercial rate (and in fact pleaded the specific amounts claimed), despite the fact that the plaintiff acknowledged that his plan was to purchase a house and to live in that house with a friend, who was prepared to reside there with him and attend to his care needs.

The argument from the insurer in light of the plaintiff’s plan was that the cost of the plaintiff’s care should not be the commercial hourly rate, but rather the actual cost of engaging a carer on a full-time basis (ie. a carer’s salary rather than the hourly charge out rate from a care agency), which would come at a significantly reduced cost.[5]

Jackson J considered the established High Court authorities of Van Gervan v Fenton,[6] Grincelis v House[7] and Waller v Suncorp Metway[8] and held that the correct method of assessing the cost of the gratuitous care required by the plaintiff was to allow the commercial hourly ‘market rate’ of an agency supplied carer.

Jackson J then went on to set out what he considered was the acceptable ‘market value,[9] which was $51.13 per hour for future care. Interestingly, the amounts pleaded by the plaintiff were approximately $5 less per hour than the market value allowed by Jackson J and although his Honour elected to only award the plaintiff the amounts he had pleaded, his judgment suggested that the higher rates would have been allowed, had those amounts had been pleaded. The decision essentially set a benchmark for the acceptable cost of care.

The insurer’s appeal was based on their argument at trial that the correct award for the cost of care was the cost of engaging a carer full time (ie. salary as opposed to agency care rates). Dalton J reaffirmed the judgment of Jackson J and said that, whilst each case turns on its own facts, the proper basis to assess the cost of services is the market value of those services, it seems, unless there is compelling evidence to detract from that assessment (which there was not in McQuitty).[10]

Dalton J upheld the award for care, reaffirming Jackson J’s comments regarding the market value of care.

Ramifications

The Court of Appeal found it unnecessary to make a determination on whether an unmet need for past care is compensable and in doing so constrained the award in this regard in McQuitty to its own facts.

As a result of McQuitty, insurers are likely to see more claims advanced for damages for such unmet need for past care however this should be treated with some caution given the views previously expressed by the High Court in CSR Limited v Eddy that such unmet need is not compensable, albeit in obiter.

Insurers should also expect to see claims for gratuitous services claimed at rate of $51.13 per hour, or higher, moving forward. It would be prudent for insurers and practitioners to revisit assessments for gratuitous care in light of the unsuccessful appeal.

It should also be noted that the cost of care for a person suffering from a brain injury is ordinarily higher than that for persons that are not and, noting the comments of Jackson J and Dalton J that each case will turn on its own facts, it would be wise to adduce evidence from a variety of care providers based on the actual requirements for the care of an injured party to ensure that the appropriate commercial rate is adopted.

Please find the judgement attached.