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AAH v GIO General Ltd [2018] NSWDRS MR 008

Overview

Jurisdiction: Merit review

Catchwords: Weekly benefits - Statutory benefits - pre-accident weekly earnings - joint bank account - director of entities - director fees - massage therapist - error in invoices

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 7.13, schedule 1 cl 4(1), (2) & (3), Schedule 2, Division 3.3
  • Motor Accident Guidelines effective cl 7.194
  • Motor Accident Injuries Regulation 2017 (NSW)

Parties:

  • AAH – claimant
  • GIO Insurance Ltd – insurer

Disclaimer: This decision has been edited to remove Unique Personal Identification information including the name of the Claimant.

Merit Review Certificate

View certificate

Issued under section 7.13(4) of the Motor Accident Injuries Act 2017

The Claim
Claimant AAH
Insurer GIO
Claim Number Y05236200301
The Reviewable Decision
Reviewable decision‐maker Not provided
Date of Reviewable decision Unknown
Nature of Reviewable decision Pre-accident weekly earnings (PAWE)
The Merit Review
Our Reference 10035387
Merit Reviewer Rachel Brittliff
Date of this Certificate28 September 2018

Merit Reviewer’s Determination

This determination relates to a merit review matter, which is a reviewable decision under Schedule 2(1)(a) of the Motor Accident Injuries Act 2017, about weekly payments of statutory benefits.

My determination of the Merit Review is as follows:

●   The reviewable decision is set aside and the decision is remitted to the Insurer for reconsideration in accordance with these directions:
○   AAH is to provide evidence of all income made in self-employment as a massage therapist for the 365 days prior to her injury to the Insurer.
○   AAH is to supply information in relation to the actual costs of running her business to the Insurer.
○   The Insurer is to calculate AAH’s PAWE from her massage therapy business in accordance with clause 4(1) of Schedule 1 of the Act as follows:
((Income from self-employment in the 365 days immediately before the day on which the motor accident occurred ÷ 365) – (Actual costs of business) x 7)
●   Effective Date: This determination takes effect from the date of the first weekly payment of statutory benefits made to AAH in accordance with Division 3.3 of the Act.

A brief statement of my reasons for this determination are attached to this certificate.

Rachel Brittliff
Merit Reviewer, Dispute Resolution Service

Reasons for decision

Background

1.   AAH was involved in a motor vehicle accident on 11 January 2018. At the time of the accident AAH had two sources of income, the first from a part time employment role and the second as a self-employed massage therapist.

2.   On a date that cannot be specified by the Insurer or AAH, the Insurer determined her pre-accident weekly earnings (PAWE).

3.   On 4 May 2018, AAH’s legal representative applied for an internal review of her PAWE, specifically in relation to her earnings from her self-employment as a massage therapist. The internal review was conducted on 18 May 2018.

4.   AAH referred the matter for a merit review with the Authority. The application was received by the Authority on 18 June 2018 and has been accepted.

5.   I consider that a review of AAH’s PAWE relates directly to the calculation of her weekly statutory benefits, which is a reviewable decision in accordance with Schedule 2(1)(a) of the Motor Accident Injuries Act 2017.

Documents and information

6.   I have considered the documents provided in the application and the reply and any further information provided by the parties.

Submissions

7.   AAH has made the following submissions in support of her application for merit review:

●   AAH seeks a review of AAH’s pre-accident income as a self-employed massage therapist.
●   An administrative error was made on the dates of the invoices that were provided to the insurer. The error was continued through the internal review and only came to light when the outcome of the internal review was received.
●   The error caused the calculation of the pre-accident income to be substantially less than what it should have been.
●   Before the accident, AAH was earning approximately $200 per week as a massage therapist and as a result of the accident has been unable to return to this employment.
●   Invoices with the correct dates and further invoices for the three months preceding the accident have also been supplied.

8.   The Insurer has provided the following response to AAH’s submissions:

●   Although it initially accepted AAH’s invoices which were used to calculate pre- accident income for her work as a massage therapist, the amendment and resubmission of the invoices gives rise to concerns.
●   It now has serious doubts about the validity of the invoices originally provided as well as the amended invoices now provided.
●   It raises the following questions regarding the validity of the invoices now provided:
i.   What was the specific error that lead to the date on the original invoice being incorrect.
ii. How did the administrative error occur?
iii.   How did the administrative error come to light?
iv.   How specifically has the invoice been amended?
v.   There were originally 11 invoices and now there are 13. Has the claimant created invoices that did not previously exist?
vi.   Why are there 2 invoices for each of 197, 198, and 201?
vii.   How was invoice 198 dated prior to invoice 197?
●   In the absence of a full and satisfactory explanation to each of the above questions, it submits that the Authority should not be satisfied that the amended invoices are genuine.

Legislation

9.   In conducting my review I have considered the following legislation and guidelines:

●   Motor Accident Injuries Act 2017 (NSW) (“the Act”)
●   Motor Accident Guidelines effective July 2018 (“the Guidelines”)
●   Motor Accident Injuries Regulation 2017 (NSW) (“the Regulation”)

Reasons

10.   The questions in relation to the amended invoices that were posed by the Insurer were put to AAH. A response was received indicating that AAH uses a spreadsheet to generate invoices and that the default format for dates is the American format in which the month precedes the date. The amended invoice has reversed these numbers to show that it was issued in December and not January of 2017.

11.   AAH also explained that additional invoices for the year 2017, that pre-date those provided to the Insurer have been added to the information provided to the Authority as further evidence of earnings during that period.

12.   The errors with numbering are explained due to the fact that AAH generates invoices via her phone. I was uncertain of how this lead to the duplication of numbering, however, I accept that as a sole operator of a small business, administration may not have been a focus for AAH and that the numbering of invoices could be inaccurate without the invoices themselves being false.

13.   On balance I accept that the invoices provided as evidence of AAH’s income are genuine records of services that AAH has rendered as a massage therapist.

14.  Finally, I note

Definition of Pre-accident weekly earnings (“PAWE”)

15.   AAH has requested a review of PAWE in relation to the calculation of her PAWE from self-employment as a massage therapist only. In conducting the review I am to use the definitions set out in the Act.

16.   The definition of PAWE is set out at clause 4 of Schedule 1 of the Act as follows:

(1) Pre-accident weekly earnings, in relation to an earner who is injured as a result of a motor accident, means the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.
(2) In the following cases, pre-accident weekly earnings, in relation to an earner (other than a self- employed person) who is injured as a result of a motor accident, means:
(a)   if, on the day of the motor accident, the earner was earning continuously, but had not been earning continuously for at least 12 months—the weekly average of the gross earnings received by the earner as an earner during the period from when the earner started to earn continuously to immediately before the day of the motor accident,

(a1) if the earner was employed or self-employed during a period or periods equal to at least 26 weeks during the first year of the pre-accident period, but was not obtaining earnings from any source at any other time during the pre-accident period—the average weekly gross earnings received by the earner as an earner during the first year of the pre-accident period,

(b)   if subclause (3) applies—the weekly average of the gross earnings received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident,

(c)   if the earner is an earner by reason of having entered into an arrangement with an employer or other person to undertake employment or to commence business as a self-employed person—the average weekly gross earnings that the earner could reasonably have been expected to earn, but for the injury, in employment under that arrangement.

17.   Clause (4)(2)(b) of the Act refers to subclause 3 as follows:

(3)   This subclause applies if, during the 12 months immediately before the day of the motor accident, there was, as a result of any action taken by the earner, a significant change in his or her earnings circumstances that resulted in the earner regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred.

Note: Examples of a change of circumstances to which this subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.


18.   There is no dispute that AAH is an earner who was injured as a result of a motor accident.

Reasons and findings

19.   Employer/employee income. AAH was employed on a part time basis with an employer and also undertook self-employment as a massage therapist at the time of her accident.

20.   I am asked to review AAH’s earnings only in relation to the self-employment component of AAH’s PAWE. Clauses 4(1) and (2) of Schedule 1 of the Act set out various methods for calculation of PAWE.

21.   Clause 4(2) of Schedule 1 of the Act stipulates:

“In the following cases, pre-accident weekly earnings, in relation to an earner (other than a self-employed person) who is injured as a result of a motor accident, means…”

22.   Despite the exclusion “other than a self-employed person” that appears in clause 4(2) of Schedule 1 of the Act, there are two sub-clauses that refer to self-employment. As clause 4(1) of Schedule 1 of the Act only applies to an earner if none of the sub-clauses under clause 4(2) are applicable, it is necessary to determine whether AAH’s circumstances prior to the accident fit within the circumstances set out in that sub-clause.

23.   I note that sub-clauses 4(2)(a) and (b) and (3) of Schedule 1 of the Act do not refer to self- employment. They may therefore be read in the context of the overarching statement of sub- clause (4)(2) which excludes “a self-employed person”.

24.   Subclause 4(2)(a1) refers to a person who was employed or self-employed in the 26 weeks prior to the accident but who had no income from any source at the time of the accident. I understand that AAH had income both from part-time work as well as massage therapy services at the time of the accident. Sub-clause 4(2)(a1) therefore does not apply to AAH.

25.   Subclause 4(2)(c) refers to an earner who fits the definition of “earner” by way of having entered into an arrangement for future earnings either through employment or self-employment but who has not commenced the agreed work. Again, AAH’s circumstances do not fall in this category.

26.   I therefore find that AAH’s PAWE from her earnings in self-employment are to be determined in accordance with clause 4(1) of Schedule 1 of the Act. I note that this requires that the income earned in the year prior to the accident must be averaged over the one year period. There is no allowance for the use of a shorter period, even in circumstances where AAH had not been operating AAH’s business for that full period.

27.   Calculation of earnings. AAH’s income from her massage therapy business should be calculated as follows:

((Income from self-employment in the 365 days immediately before the day on which the motor accident occurred ÷ 365) – (Actual costs of business) x 7)

Determination

My determination of the Merit Review is as follows:

●   The reviewable decision is set aside and the decision is remitted to the Insurer for reconsideration in accordance with these directions:

○   AAH is to provide evidence of all income made in self-employment as a massage therapist for the 365 days prior to her injury to the Insurer.

○   AAH is to supply information in relation to the actual costs of running her business to the Insurer.

○   The Insurer is to calculate AAH’s PAWE from her massage therapy business in accordance with clause 4(1) of Schedule 1 of the Act as follows:

((Income from self-employment in the 365 days immediately before the day on which the motor accident occurred ÷ 365) – (Actual costs of business) x 7)


●   Effective Date: This determination takes effect from the date of the first weekly payment of statutory benefits made to AAH in accordance with Division 3.3 of the Act.

Rachel Brittliff
Merit Reviewer
Dispute Resolution Service