Exaggerated repair costs – insurers beware!

Background

The Queensland Magistrates Court recently handed down its decision in the matter of Gower v Ferguson [2021] QMC. The Defendant alleged the Plaintiff’s motor vehicle repair cost, arising from a simple accident, was substantially inflated (approximately 500%). The Plaintiff was represented by lawyers acting for a “Repairer Recovery Syndicate”. The Defendant was represented by Ligeti Partners on instructions from an insurer client.

Following a minor motor vehicle accident, the legal representatives of the not-at-fault Plaintiff sought repair costs in excess of $5,000. A repairer’s invoice and an Assessment Report were provided as proof of loss in support of this sum. As often happens in these matters, the Defendant’s insurer was not provided with further information and documentation despite request. The Defendant’s insurer arranged a “desktop” assessment by an independent assessor based on the Plaintiff’s limited information and the Defendant’s damages. The independent assessor assessed the fair and reasonable repair costs at $1,500. Appropriate settlement offers were made by the Defendant’s insurer. The matter could not be resolved and the Plaintiff issued proceedings in the Southport Magistrates Court.

The Litigation

Following further investigation, and during the course of the litigation, it was ascertained that:

  • the Plaintiff’s vehicle had actually been repaired for an amount less than $900.00. The invoice relating to the actual repairs was obtained through investigations carried out during the course of the proceeding;
  • the Plaintiff failed to disclose or provide any invoice or documentation from the repairer who did the repair work; and
  • the repairer on whose invoice the Plaintiff purported to rely was an entity associated with the Plaintiff’s lawyers.

Based on this information, the Defendant offered to settle the Plaintiff’s claim for the actual cost of repairs, less the Defendant’s legal costs which had been incurred. This offer was not accepted and the matter was listed for Trial. Shortly prior to the Trial, the Plaintiff indicated the proceedings would be discontinued. The matter proceeded as a Cost Application.

Outcome

On considering substantial Affidavit material and Submissions, the Court ordered the Plaintiff to pay the Defendant’s costs of defending the proceedings on a standard basis up to the settlement offer made by the Defendant’s insurer after the issuing of proceedings, and on an indemnity basis thereafter – a total of approximately $17,000.00.

Relevance of Decision

Insurers need to have systems in place and be constantly vigilant that third party repair costs have actually been incurred and are fair and reasonable. They fail to do so at their own peril. Repairer Recovery Syndicates will attempt to inflate claims if the opportunity arises. The above example is far from isolated. Ligeti Partners have noted an influx of these syndicates operating in Queensland (and other States). Our National footprint enables us to identify players in this area and developing trends. By working with our insurer clients, setting up appropriate strategies and vigorously investigating all aspects of these claims, we have been able to substantially reduce the amounts payable by insurers.

Ligeti Partners Contacts

Picture of James Mulcahy.

James Mulcahy

Managing Director

Melbourne