Catastrophic injury claims: a new twist in claims inflation

On Wednesday, the High Court handed down a significant case addressing the assessment of damages for personal injury. In Stewart v Metro North Hospital and Health Service [2025] HCA 34, the High Court considered whether a catastrophically injured Plaintiff was entitled to compensation for the costs of future at home care, rather than institutionalised care, which was less expensive.

The Plaintiff had received negligent treatment at the Metro North Hospital (Incident) which led to him suffer brain damage, right-side paralysis and aphasia. He required 24-hour care. After the Incident the Plaintiff was transferred to a nursing home where his physical and mental health deteriorated because of inadequate treatment, lack of exercise and isolation from his family. The Plaintiff’s preference was to receive care at home so his son could visit him and he could continue living with his brother and dog. Dogs were not welcome at the nursing home and visiting hours were restricted, so his son could not stay the night. In proceedings against the Hospital, the Plaintiff claimed the cost of 24 hour at home care to allow him to live in his own home.

The issue at trial was whether the Plaintiff’s desire for at home care could justify a higher award of damages than institutional care which was around $3.8 million cheaper.  The Hospital argued that institutional care was adequate to cater to the Plaintiff’s basic treatment requirements, and therefore was “reasonably necessary” in the circumstances. The Hospital was successful at trial and on appeal to the Queensland Court of Appeal. The Court of Appeal undertook a balancing exercise – assessing the cost of at home care against the physical health benefits that would result. It held that institutional care would have substantially the same health benefits as at home care, and the significant difference in cost led the Court of Appeal to conclude that the at home care was not reasonable in the circumstances. 

The High Court overturned the decision, reaffirming the common law compensatory principle to place a plaintiff in the same position they would have been in had the wrong not occurred. The High Court criticized the cost-benefit analysis undertaken by the lower courts and confirmed the correct way to assess the reasonableness of damages was to determine whether the cost “is a reasonable response to repair the consequences of the tort”. The High Court unanimously held that the “assessment of reasonableness is not confined to balancing only the health benefits against the cost”. Rather, courts are required to compare the plaintiff’s circumstances prior to the tort with the plaintiff’s circumstances after the tort, in an effort to put them back in the same position they would have been had the negligence not occurred. In this case, the Plaintiff was living at home with his dogs and brother prior to the Incident. Applying the compensatory principle, the Court held that it was reasonable that he be restored to this position post-injury, and allowed him to recover the costs of at home care.  Importantly, the Court opined that where a plaintiff lived in their home prior to a tort occurring, it would be “unusual” to find that the cost of at home care to allow them to continue living in their home after the tort to be unreasonable.

This is a significant case for insurers with implications for reserves and settlement in catastrophic injury claims. The Court has confirmed that future at home care is a reasonable and compensable expense even where institutional care is clinically indicated and cheaper. The court emphasised that the concept of “reasonableness” requires recognition of a plaintiff’s right to live as closely as possible to the life they would have led but for the injury.