Queensland's Costs Threshold: Deterring minor claims or denying justice? 

18th September 2025

In the early 2000s, Queensland introduced a ‘costs threshold’ in some personal injury cases – a rule that an injured plaintiff can only claim their standard legal costs from the defendant if their damages exceed a certain amount. This reform aimed to deter minor claims and stabilise an insurance market in apparent crisis. Fast forward to today, that threshold (initially $50,000) has nearly doubled to $96,870 due to indexation. While it clearly succeeded in curbing small claims, it also means that plaintiffs with significant injuries – if they don’t involve substantial economic loss or medical expenses – fall below the threshold, leaving those plaintiffs unable to recover their legal costs.

Why introduce a costs threshold?
The 2001 Insurance Crisis: Around 2001–2002, Australia’s public liability insurance was in turmoil. The collapse of HIH Insurance and a spike in claims and payouts had sent premiums soaring. Community groups and businesses worried about insurance affordability. Governments feared a ‘litigation explosion’, though evidence of that was mixed. In Queensland, as in other states, the government moved swiftly with tort reforms to rein in liabilities and restore insurer confidence.

The Personal Injuries Proceedings Act 2002 (PIPA) and Civil Liability Act 2003 (CLA) overhauled how personal injury claims were run. A centrepiece was abolishing the defendant and therefore insurer’s liability to pay the plaintiff’s legal costs for ‘small’ claims. Specifically, if a claimant’s damages are below a set upper limit (originally $50,000), they cannot recover their solicitor-client costs from the defendant (aside from minimal fixed costs). This upper limit – often called the costs threshold – was intended to deter minor injury claims that were seen as economically inefficient and alleged to be partly responsible for rising insurance costs.

How the costs threshold works
Under current law, an injured plaintiff in Queensland must obtain a damages award above the ‘upper offer limit’ (now $96,870) to be entitled to recover standard legal costs from the defendant/insurer. If their compensation is below that, each side generally pays their own lawyer (subject to a few exceptions and minimal set costs).

What counts toward the $96k? All heads of damage in the judgment or settlement count – eg, economic loss (lost wages, etc.), medical and care costs, and general damages for pain and suffering (which are awarded by reference to an Injury Scale Value (ISV) under the Civil Liability Regulation). Notably, general damages are capped by the ISV system, which is a scale that goes from 0 to 100 with catastrophic injuries falling in at 50 and above; for example, an ISV of 30 (one of the higher values for non-catastrophic injuries) corresponds to a set dollar amount (in 2025, an ISV 30 equates to about $87,100 in pain-and-suffering damages, the smaller the ISV the smaller the amount). So even a fairly significant injury might yield less than the $96k total if it doesn’t cause much economic loss or ongoing expense.

No economic loss or big bills?
That scenario is more common than it sounds. Consider an otherwise healthy adult who suffers a permanent injury due to someone’s negligence: eg, loss of sight in one eye, or loss of several fingers on one hand. Suppose they were able to return to work after recovery or they already did not work (so no or minimal lost income), and they don’t require long-term care. Their damages would largely be general damages for the loss of body function or disfigurement, probably some medical costs – likely totalling well under the $96k threshold. For instance:

• Loss of one eye (complete sight in one eye): Classified as an ISV 26–30 in the Civil Liability Regulation. That level of general damages might be on the order of $70k–$80k.
• Loss of multiple fingers: The regulation rates the amputation of the index, middle, and ring fingers (two or all three on one hand) as ISV 15–30.
• Serious shoulder injury with permanent mobility loss is ISV 16–30.
•  Serious facial scarring (ISV up to 20).
• A moderate brain injury with good recovery (ISV under 20).
• A fracture/disc injury/nerve injury to the neck or back (ISV 5–15).
• Reproductive system injuries eg, loss of part or all of penis, injury to female genitalia/organs (ISV up to 25).

In all such cases, the injured person essentially pays their own way to seek justice, because the threshold was meant to signal these claims as relatively minor (even if, to the individual, the injury feels anything but minor).  A $96k claim in 2025 is not a trivial matter; it’s roughly twice Queensland’s average yearly wage. The system can produce harsh outcomes, especially for plaintiffs whose injuries are significant but who don’t have significant financial, care or medical costs. It generally operates harshly for a retired person, a parent with long term caring responsibilities or a child.

The examples above illustrate a fairness dilemma: Some individuals with serious injuries that carry lifelong impacts might be treated as second-class plaintiffs under the threshold. If their damages don’t tick over the magic number – perhaps because they minimised their economic losses by soldiering on with work or simply had the misfortune of a type of injury that the system values ‘only’ tens of thousands – they effectively pay a penalty (their legal costs) for seeking compensation. In cases close to the threshold, it also encourages unproductive disputes (eg, an insurer might fight extra hard to keep damages assessed just below $96k to avoid paying costs).

Time for a rethink?
The Queensland costs threshold was born in a unique time of crisis and responded to purported issues in the insurance market. Two decades on, it stands as a permanent fixture – one that does keep small claims in check, but at the potential cost of access to justice for certain injured people. For plaintiffs who suffer no less pain but simply less financial loss, the threshold can feel like an added injury: ‘Sorry, your harm isn’t expensive enough for the insurer to cover your legal fees’.

As the threshold climbs past $100k in coming years, the question is worth asking: ‘Do we still have the balance right?’ Governments may need to consider if this blunt instrument is due for fine-tuning. Perhaps the threshold could be lowered, or made more flexible, to ensure truly minor claims are deterred without inadvertently punishing those who should be entitled to make a claim and have their legal costs paid. 

The goal of an efficient, affordable compensation system remains valid – but ensuring fairness and compassion for individuals with significant injuries should carry equal weight. In the end, Queensland must periodically decide whether its costs threshold is striking the right balance, or whether it’s time to recalibrate this trade-off between discouraging minor claims and delivering just outcomes for all. Has the costs threshold gone too high, or does it still serve us well? The debate is open, and it’s a conversation worth having as we reflect on whether this policy, forged in crisis, is fit for the future. 

The ALA thanks Peter Gibson for this contribution.

The views and opinions expressed in this article are the authors and do not necessarily represent the views and opinions of the Australian Lawyers Alliance.

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