How and when can a CTP insurer recover rehabilitation costs they have funded?

March 2, 2018


A recent Supreme Court decision of McDermott v. Manley & Anor [2018] QSC 35 has added to the understanding of how and when a CTP insurer can claim rehab costs they have funded be taken into account when calculating damages.



When liability is admitted in part or full or if the insurer elects to fund rehab before deciding liability, an insurer has the obligation under s.51(3) Motor Accident Insurance Act 1994 to fund the reasonable rehabilitation needs of an injured claimant.


s.51(4) then provides the insurer can only claim to have these costs taken into account if notice is given setting out how such costs are to be considered, prior to paying for those services.


A common situation where this has an impact is where liability is only admitted in part, and a Court finds the injured claimant say 50% responsible for contributory negligence.  If the CTP insurer has given the required notice, then full damages including the rehab costs funded are assessed (as if the injured person had paid for them), the % reduction applied for liability, then the full cost of rehab services CTP funded are taken from this reduced amount giving the final award of damages.  It can make a large impact in a small claim with high rehab costs.


It could also apply if the CTP insurer can later convince a Court the rehab was not needed, therefore the costs should not be added to primary damages, but rehab costs as paid will be deducted from the claim.


Issue in McDermott

At stake in McDermott was whether an offer from a CTP insurer, stated to be exclusive of paid rehab expenses, means the total offer is inclusive of the costs of rehab, putting the offer above a costs threshold figure.


In this case liability was not in issue, and the CTP insurer (our friends at RACQ), did not give any notice under s.51(4) to seek those costs be accounted for in the claim.  This makes me wonder why any reference to the rehab costs was even included in their offer, but never mind!


The Court found as no notice under s.51(4) had been given the CTP insurer had no right to recover the costs, so reference to the costs figure in their offer was an irrelevancy, and the offer could not be treated as inclusive of the rehab costs.  This meant the offer was rejected as it was conditionally accepted.


Costs were awarded against the applicant despite a plea he was seeking to clarify an important aspect of the law.



If the CTP insurer does not give any s.51(4) notices during the claim, there is no need to add CTP funded rehab to special damages in any offer or Court claim.


If the CTP insurer does give the required notice, then both the need for the rehab and contributory negligence could have an impact on the calculation of damages.


Disclaimer – This article is designed to share knowledge and should not be relied upon as legal advice.

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