Sparke Helmore's MAD (Motor Accidents Division) - A special edition

The High Court of Australia recently handed down the decision of Stewart v Metro North Hospital and Health Service [2025] HCA 34, which may be significant to motor accident claims brought under the Motor Accident Injuries Act 2017 (NSW), and therefore relevant to the CTP scheme more generally.

Our CTP Insurance team has prepared a special edition summarising this decision and highlighting how the decision has the potential, in some cases, to change the reasonable and necessary calculus by favouring subjective outcomes over a simple costs/benefit analysis.

High Court Justices Gageler CJ, Gordon, Edelman, Jagot and Beech-Jones JJ heard the matter.

Background

The appellant, Mr Stewart, sought treatment at Redcliffe Hospital (the Hospital) in Queensland for nausea and abdominal pain in early 2016 at the age of 63 years. Prior to his admission, the appellant lived with his brother, and his 14 year old son and family dogs would often stay with him.

The treatment provided by Redcliffe Hospital was negligent and the Metro North Health Hospital Service (MNHHS) accepted liability for negligence. The appellant suffered numerous injuries including bowel perforations, sepsis, cardiac arrest, and stroke as a result of the negligence. He was left with permanent impairments such as brain damage, right sided body pain, no active movement in the right upper limb, the need for a colostomy bag, and right lower limb contractures.

The appellant was discharged from the Hospital and moved into a nursing home in November 2016, and to an Aged Care facility in March 2017. The Aged Care facility did not permit the appellant to keep a dog, and it was difficult for the appellant’s son to stay overnight, only being able to stay one night during a period of six years, pre-trial.

The appellant’s physical condition deteriorated at the Aged Care facility consequent to a lack of therapy and exercise, and the trial judge accepted that the appellant’s quality of life would improve if lived in his own home. Further, it was found that living in his own home would improve his physical and mental health including addressing the deconditioning and decreased mobility that the appellant experienced at the Aged Care facility.

The appellant commenced proceedings under the Civil Liability Act 2003 (Qld). At that time, he was 71 years old. He intended to use compensation damages to move from the Aged Care facility into his own residence.  The issue at trial and on appeal was whether it was ’reasonable’ for damages to include a component for medical, nursing care and treatment in the rented home.

At trial, the Court compared the cost of care for the appellant’s life expectancy at the Aged Care facility ($304,650.46) against the cost of care at the Aged Care facility and the provision of more frequent therapy and exercise ($1,081,895.56) and the cost of the appellant to live in a rented home ($4,910,342.52). The trial judge concluded that it was ’not ... reasonable to require that the MNHHS pay the significant additional cost that would be involved in Mr Stewart moving from Ozanam [Aged Care Facility] into his own home’ when weighing the health and quality of life implications against the estimated costs.

The total amount of damages awarded at trial was $2,190,505.48, before management fees.

The appellant appealed and disputed the trial judge’s conclusion that it was not reasonable for MNHHS to pay the additional costs for Mr Stewart to have care in his own home.

Similar to the trial judge, Boddice JA (with Mullins P and Ryan J agreeing) of the Court of Appeal said that the difference in physical health benefits between residences for the appellant would be ’practically removed’ by an increased level of engagement with the additional care and assistance provided by an external care assistant. The Court of Appeal concluded that ’it had not been established, on the balance of probabilities, that living in his own home with Jesse [his son] and a dog, would be likely to result in health benefits for Mr Stewart that are significantly better than those likely to be achieved [at Ozanam Aged Care facility], with additional therapy and a dedicated external care assistant', and that on the basis of substantially identical physical health benefits, the significant difference in cost meant that the option of home care was not reasonable.

The appeal was dismissed. The Court of Appeal amended the award of damages made by the trial judge to $2,171,244.03 on the agreed basis that there had previously been a miscalculation.

The appellant appealed to the High Court, and special leave was granted on the ground that the Court of Appeal erred in its consideration of reasonableness by failing to take into account four of the factors relied in the Court of Appeal – essentially, that the Court of Appeal asked the wrong question in relation to reasonableness.

The High Court agreed, stating that the proper question was whether the appellant’s choice to live at home was a reasonable response to repair the consequences of the tort, and if so, it was for MNHHS to demonstrate that part or all of the cost arising from that choice should have been avoided by reasonable steps by the appellant to mitigate that loss.

Essentially, the High Court:

1. Said that the proper starting point was that the appellant was entitled to compensation in a sum which, so far as money can do, would put him in the same position as he would have been in had MNHHS not acted negligently pursuant to Haines v Bendall (1991) 172 CLR 60 at 63. In assessing the reasonableness of that choice, all the circumstances should be considered, and the assessment of reasonableness is not confined to balancing only the health benefits against the cost.
2. The onus is on the defendant to demonstrate that the appellant failed to mitigate the loss by unreasonably refusing a cheaper alternative.
3. Noted that there was no issue that the amount of $4,753,241.47 represented the reasonable cost of home care for the appellant. The evaluation of the reasonableness of the appellant’s response was not discharged by balancing only the health benefits against the increased cost.

The High Court ultimately determined that the choice of home care was a reasonable means of repairing the consequences of the tort. MNHHS did not establish that part or all of that claimed cost of home care could be avoided but for an unreasonable decision by Mr Stewart to refuse a proffered alternative option. The appeal was allowed.

The matter was remitted to the Supreme Court of Queensland for assessment of damages and consequential orders.

Implications for CTP

It should firstly be noted that the Motor Accident Injuries Act 2017 (NSW) and Guidelines apply a test of whether treatment is ’reasonable and necessary’ (see for example, s 3.17), compared to the Civil Liability Act 2003 (Qld), which considered whether treatment of the appellant was ’reasonably necessary’.

In Bungate v Insurance Australia Limited t/as NRMA Insurance [2025] NSWPICMP 562 (31 July 2025), the Personal Injury Commission acknowledged that establishing treatment is related to the accident and both reasonable and necessary, and ’is a more onerous test’ than the NSW workers compensation legislation, which requires a worker to establish that the treatment is reasonably necessary.

In saying that, the High Court gave exclusive commentary to the applicability of Sharman v Evans (1977) 138 CLR 563. Ms Evans was a 20-year-old woman who was injured in a motor accident in NSW. On trial in the Supreme Court, Sheppard J accepted that the respondent’s preference to return to her home in Perth was not reasonable and assessed damages to service care partly at hospital and partly at home, and therefore including the cost of modifications to Ms Evans' mother's house, being $150,000 to $175,000. This was to account for ’practical problems’ in providing in-home care entirely.

The Court of Appeal upheld the assessment of damages made by the trial judge, and in the High Court, the award was reduced. Barwick CJ said that the periods when the claimant would stay at her mother's house ‘would necessarily be relatively few and that consequent costs were ’not reasonably necessary in any real sense for the treatment and care of [Ms Evans]’ and were ’disproportionate to any causal connexion which might possibly be found’.

Different to Stewart, it was said that there were increased physical health risks for at-home care and not likely to be psychiatric benefits. The Court in Evans said that the ’touchstone of reasonableness’ involved considering the ’cost matched against health benefits to the plaintiff’, where it is clearly unreasonable to incur a great cost with slight or speculative health benefits, particularly if there is a relatively inexpensive alternative offering equal or slightly lesser benefits.

The High Court differentiated Evans from Stewart and said that ’Ms Evans' choice to live full-time with her mother was not something that was reasonably required as a step in attempting to restore her to the position prior to the tort. Their reasoning depended upon the increased risk to the health of Ms Evans with no evidence of any likely psychiatric benefits.’ The circumstances were considered in light of the 2025 context in that ’the exercise of a person's autonomy of choice will usually be associated with mental well-being’, and that ’it is commonly accepted nowadays that significant benefits will flow to a person from modifications which would allow him or her to live at home, rather than an institution’.

Under the CTP legislation, insurers must consider whether treatment and care is reasonable and necessary, not reasonably necessary, though there are times where the terms are used interchangeably, and circumstances where ’reasonableness’ is used on its own.

In Mandoukas v Allianz Australia Insurance Limited [2024] NSWCA 71, Stern JA said at 54 that:

'In circumstances in which, as here, the particular surgical procedure is not contended to have been other than reasonably necessary, and the Court was not taken to any evidence showing an identifiable detrimental impact upon Mr Mandoukos’ symptoms or functioning arising from the foraminotomy procedure, it may be doubted whether this submission should be accepted. That is particularly so given that the scheme of the Act is to provide treatment, care, compensation and financial support to those injured in motor accidents.'

One can clearly see the applicability of the Court’s approach to the reasonable and necessary calculus in favouring subjective outcomes, over a simple costs/benefit analysis as they may be applied in the CTP scheme in the future.

View decision: Stewart v Metro North Hospital and Health Service (B10-2025) [2025] HCA 34