Procedural Direction MA3 – Approval of damages settlement
This Procedural Direction concerns the requirement for the Commission to approve the settlement of a claim for damages in circumstances where the claimant is not represented by an Australian legal practitioner; and the process of obtaining the Commission’s approval of the settlement of the claim.
This Procedural Direction applies to: Motor Accidents Division
Date of commencement: 1 March 2021
1. This Procedural Direction concerns the requirement for the Commission to approve the settlement of a claim for damages in circumstances where the claimant is not represented by an Australian legal practitioner; and the process of obtaining the Commission’s approval of the settlement of the claim.
2. This Procedural Direction is made by the President under section 21 of the Personal Injury Commission Act 2020 (the PIC Act).
3. The President or a member before whom a matter is listed may excuse a party from complying with any aspect of this Procedural Direction before or after the time for compliance with any action required.
4. Nothing in this Procedural Direction prevents the President or a member directing a party to take any appropriate step in proceedings.
5. This Procedural Direction is to be read with and subject to any provision of the PIC Act, the enabling legislation, and the Personal Injury Commission Rules2021 (the PIC Rules).
Applicable legislation and rules
6. Parties should be familiar with the following provisions:
(a) section 6.23 of the Motor Accidents Injury Act 2017 (the 2017 Act), and
(b) Part 95 of the PIC Rules.
When an application for approval of damages settlement must be made
7. Rule 96 of the PIC Rules and section 6.23 of the 2017 Act provides that a claim for damages by an injured person cannot be settled within 2 years after the motor accident unless the degree of permanent impairment of the injured person as result of the injury caused by the motor accident is greater than 10%.
8. Section 6.23(2) provides that when the claimant is not represented by an Australian legal practitioner, the Commission must approve the settlement.
9. An application must be made by the insurer on behalf of the insurer and the claimant within 7 days of reaching settlement.
Making an application for approval of damages settlement
10. An application for approval of damages settlement may be made by a claimant by lodging an application in the form approved by the President.
11. The application must include:
(a) the amount of the proposed damages settlement, including a breakdown of the amount allowed for each head of damage and how each amount allowed has been calculated;
(b) the amount of any reductions in the proposed damages settlement including for contributory negligence or any other reduction, including brief reasons for that reduction and how any reductions have been calculated;
(c) the amount of any advance payments that the insurer has made in advance of the settlement and the dates of those advance payments, including brief reasons explaining why those advanced payments were made, and
(d) the evidence, documents and materials relevant to an assessment of the damages settlement.
12. The Commission may refuse to approve the settlement if the application does not comply with the above directions.
13. The matter will be reviewed by an officer of the PIC for allocation to a member. The allocation of an application may be deferred for a period of time that the Commission considers appropriate in circumstances where further documentation is required.
Conduct of Claims proceedings when an application for settlement approval is made
14. In accordance with section 43(2) of the PIC Act, the Commission is not bound by the rules of evidence but may inform itself on any matter in the manner the Commission thinks appropriate and as the proper consideration of the matter before the Commission permits.
15. The application for settlement approval must be dealt with in the way that best supports the objects of the enabling legislation, given the facts and circumstances of the particular claim and the particular application for settlement approval, which may include undertaking the review on the papers, using teleconferences, video conferences or face-to-face meetings as appropriate.
16. The member may request additional information from the parties for the purpose of considering the settlement approval.
17. The proposed settlement must comply with the following requirements:
(a) timeliness – the proposed settlement satisfies the timing requirements in section 6.23(1) of the 2017 Act;
(b) appropriateness – the proposed settlement is just, fair and reasonable and within the range of likely potential damages assessments for the claim were the matter to be assessed by a claims assessor, taking into account the nature and extent of the claim and the injuries, disabilities, impairments and losses sustained by the claimant, and taking into account any proposed reductions or deductions in the proposed settlement, and
(c) understanding – the claimant understands the nature and effect of the proposed settlement and is willing to accept the proposed settlement.
18. The member must act with as little formality as the circumstances of the claim permit and according to equity, good conscience and the substantial merits of the matter, without regard to technicalities and legal forms.
19. The member must ensure that relevant material is available so as to enable all of the relevant facts in issue to be determined.
20. Any further procedures and requirements of the parties in respect to the conduct of parties during proceedings are set out in Procedural Direction PIC1
The settlement approval decision
21. The member may decide to:
(a) reject the proposed settlement as submitted in the application, with or without recommendations to the parties about the further conduct of the claim;
(b) approve the proposed settlement as submitted in the application, or
(c) approve an amended proposed settlement agreed by the parties during the course of the consideration of the proposed settlement approval.
22. The member must issue the parties with a certificate as to the determination of the settlement approval application, attaching a brief statement of reasons for the determination.
23. The settlement approval application will be determined as soon as practicable by the issuing of the member's certificate, and preferably within 14 days of the application being made; however, a determination is not invalid if it is made after that period expires.
Giving effect to an approved settlement damages settlement
24. On receiving the settlement approval decision, the insurer is to advise the claimant about the effect of the decision, providing the claimant with details of:
(a) how and when the insurer will give effect to the settlement approval decision, and
(b) the impact of the settlement approval decision on the claimant and their claim.
25. The insurer must give effect to the approved damages settlement as soon as practical after the approval is received and in accordance with any terms of the agreement.