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ABZ v QBE Insurance (Australia) Ltd [2018] NSWDRS MR 052

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionMerit Review
CatchwordsPAWE - weekly payments - statutory benefits - pre-accidentally weekly earning - net loss - gross annual earnings - sole proprietor - income tax return - net loss - beef farmer
Legislation citedMotor Accidents Injury Act (NSW) ss 3.6, 7.12, 7.13, Schedule 1 clause 4(1) & (2), Schedule 2
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines effective 13 July 2018
Cases citedN/A
Text citedN/A
Parties ABZ - Claimant
QBE Insurance - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

View the certificate

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

The Claim
Claimant ABZ
Insurer QBE Insurance
Claim Number 360005374301
The Reviewable Decision
Reviewable decision‐makerLiz Carter
Date of Reviewable decision 20 September 2018 (internal review)
Nature of Reviewable decisionThe amount of statutory benefits payable under Division 3.3 (Weekly payments of statutory benefits to the injured person)
The Merit Review
Our Reference10052354
Merit ReviewerStavros Georgiadis
Date of this Certificate20 November 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 (“the Act”). The merit review matter is about the amount of weekly payments of statutory benefits payable to the Claimant under Division 3.3 (weekly payments of statutory benefits to injured persons).

My determination of the Merit Review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
    • The amount of the Claimant’s PAWE is $584.79.
  • Effective Date: This determination takes effect from the date of accident, 5 August 2018.
  • Legal Costs: The applicant was not represented by a legal practitioner in these proceedings.

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

Stavros Georgiadis
Merit Reviewer, Dispute Resolution Service

Merit Reviewer’s Reasons for Determination

Background

1. The Claimant, ABZ, was injured in a motor accident on 5 August 2018. There is a dispute between the Insurer and the Claimant in respect of the amount of weekly payments of statutory benefits payable to him under Division 3.3 of the Motor Accidents Injuries Act 2017 (weekly payments of statutory benefits to injured persons).

2.On 6 September 2018, the Insurer wrote to the Claimant and advised by way of Liability Notice that his claim for weekly statutory benefits and treatment and care had been accepted for the first 26 weeks following the date of accident, but that his weekly payments of statutory benefits, calculated on the basis that his Pre-Accident Weekly Earnings (PAWE) rate was $nil. That decision covered the entitlement to weekly payments of statutory benefits payable by the Insurer to the Claimant from the date of accident, 5 August 2018.

3. The Claimant applied for an internal review by the Insurer and provided additional information and submissions. On 20 September 2018, the Insurer provided the Claimant written notice of it’s decision advising that it had reviewed the available evidence and confirmed the PAWE rate had been calculated to be $nil.

4. The Claimant disputes the Insurer’s decision and lodged an application for merit review with the Dispute Resolution Service on 26 September 2018. The application has been made in accordance with section 7.12(1) of the Act and the Motor Accident Guidelines 2017 (the Guidelines).

Documents and information

5. I have considered the documents provided in the application and the reply and any further information provided by the parties. This includes the written submissions and accompanying documentary material in the application dated 26 September 2018 (received on 3 October 2018) and the Insurer’s reply dated 10 October 2018.

Submissions

6. The Claimant is a self employed bricklayer and beef farmer. He submits that his business “had a loss. And I didn’t make any money.” The Claimant states he is in financial distress but submits “I didn’t cause the accident.”

7. The Insurer submits that after having considered the Claimant’s income tax return for 2018 and submissions provided, the Claimant’s PAWE is correctly calculated at $nil as confirmed by QBE’s Internal Review Specialist.

Legislation

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

a. Motor Accident Injuries Act 2017 (NSW) (“the Act”)
b. Motor Accident Guidelines effective 13 July 2018 (“the Guidelines”)
c. Motor Accident Injuries Regulation 2017 (NSW) (“the Regulation”)

Reasons

9. Clause 4(1) of Schedule 1 of the Act defines “PAWE” as follows:

a. 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.

10. Subclause (2) offers different methods to calculate PAWE. However, those other methods do not apply in this case because I accept that the Claimant was a self-employed person when the motor accident occurred and he was obtaining earnings derived during the period immediately preceding the motor accident.

11. I have also had regard to the SIRA Guidance Note in respect of s.3.6 and Schedule 1 of the Act relating to weekly payments of statutory benefits. Notably, Schedule 1 defines income from personal exertion to include:

  • the amount that is income of the person consisting of earnings, salary, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to services rendered, and
  • the proceeds of any business carried on by the person either alone or in partnership with any other person, and
  • any amount received as bounty or subsidy in carrying on a business.

12. The Claimant has not referred for merit review the Insurer’s decision that he is an earner who is injured as a result of a motor accident. Accordingly, there is no dispute that the Claimant is an earner under the Act. Therefore, the Claimant’s PAWE is the weekly average of his gross earnings during the 12 months immediately before the day on which the motor accident occurred (hereafter “the relevant period”) under clause 4(1) of the Schedule. As the motor accident occurred on 5 August 2018, the relevant period therefore, is the 12 months from 5 August 2017.

13. During the relevant period, the Claimant received earnings as sole proprietor. The application documents and the Claimant’s latest completed taxation return available (being for the 2017/18 financial year) shows the Claimant received all his income from Primary production farming beef cattle and bricklaying.

14. Question 7 of the claim form requests the following information: “Please outline your earnings at the time of accident.”  In response, the Claimant records a figure of $2,000 per fortnight as his earnings at the time. The Tribunal notes this is broadly consistent with the total Sales declared on the income tax return of $56,364 for the 2018 financial year.

15. As sole proprietor, the Claimant’s net earnings are determined by the total business income earned by him in self-employed capacity after accounting for business expenses but before tax. In the period 1 July 2017 to 30 June 2018 prior to the accident, the Claimant’s total business income (Sales) was $56,364 as recorded on his income tax return for 2018. From this, the following business expenses were deducted:

Opening stock $55,725
Purchases and other costs plus $641
Closing stock less $30,411 = (cost of sales) $25,955
COST OF SALES $25,955
INTEREST $25,047
MOTOR VEHICLE $5,558
ALL OTHER EXPENSES $30,150
TOTAL EXPENSES $86,710

16. Subtracting the total expenses of $86,710 from the total sales figure of $56,364 gives a net income or business loss of $30,346 (loss in this case) for the 12 months to 30 June 2018. There are no business financial reports provided specifically for the relevant period 12 months immediately before 5 August 2018 so I have used the 2018 income tax return figures above as the closest available and reliable information over a material 12 month period being very close in time to the relevant period.

17. I accept and find that the Claimant’s business as sole proprietor made a net loss of $30,346 in the 2018 financial year. However, the legislation under cl.4(1) of Schedule 1 of the Act requires a consideration of the Claimant’s gross profit (as opposed to net profit / loss) as an earner.

18. I have had regard to the decision in SIRA Merit Review Reference MA04/18 which sets out: As PAWE requires consideration of the “gross earnings received by the earner as an earner”, I must look at what the earner earns or profits from his or her skills and labour when calculating his or her PAWE. Put simply, the Claimant’s business expenses are not to be included in the calculation of PAWE. This is consistent with the approach I have adopted applying the notion of counting only gross earnings received by the Claimant as an earner as set out in cl.4(1) of Schedule 1 of the Act.

19. In this particular case, I consider the cost of Sales should be counted as expenses against the Sales derived or ‘proceeds’ of a business carried on by the person when considering the Schedule 1 definition of  income from personal exertion and relevant Regulations.

20. I note total Sales of $56,364 recorded for the 2018 Financial Year in the Claimant’s income tax return as a result of stock Sales. It is apparent that the Claimant’s claimed earnings of $2,000 per fortnight derives from these Sales made.  However, for the reasons outlined above, gross earnings as an earner must take into account the cost of sales to arrive at a Gross Profit figure. The Claimant’s Primary Production Business Worksheet for 2018 records a Gross Profit figure of $30,409 derived as follows:

Total Sales  (INCOME)  $56,364

less Cost of Sales  $25,955  = GROSS PROFIT of $30,409.

21. I give substantial weight to this evidence relating to earnings in a material 12 month period just prior to the accident as a reasonable representation of the Claimant’s gross weekly income before other expenses claimable in the business resulted in the aforementioned net loss.

22. Although the Income Tax return for 2018 records Primary Production loss from the Claimant’s business of $30,346, this represents the net loss. The Tribunal considers the Insurer on internal review relied on a net loss figure (as is the case here) as opposed to a gross profit (or loss) as required by Clause 4(1) of Schedule 1 of the Act.  In coming to this view I have applied the definition of pre-accident weekly earnings, in relation to an earner who is injured as a result of a motor accident, as 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.

23. I am satisfied that the gross profit of $30,409 for the aforementioned 12 months before the accident, reflects the gross earnings received by the Claimant for the purposes of calculating his average weekly earnings just prior to the accident of 5 August 2018.

24. I have averaged out the gross annual earnings of $30,409 over 52 weeks to arrive at the Claimant’s Pre Accident Weekly Earnings of $584.79.

25. Having considered all the available evidence before me, I accept the submission that the Claimant business as sole proprietor had made a net loss over the relevant period.  However, for the reasons above, I find that the Claimant’s gross earnings received by him as an earner during the 12 months immediately before the day on which the motor accident occurred were $30,409.

26. I am satisfied that the Claimant’s earnings from personal exertion are equivalent to the gross annual earnings of $30,409 over 52 weeks. This therefore, equates to calculation of Pre Accident Weekly Earnings (PAWE) of $584.79.

Conclusion

27. The review decision referred for merit review by the Claimant relates to the amount of his Pre Accident Weekly Earnings (PAWE) and the decision covers weekly payments of statutory benefits payable by the relevant Insurer to the Claimant from the date of accident.

28. It is the function of the Dispute Resolution Service on merit review to arrive at the correct or preferable outcome in respect of the period covered by the reviewable decision that is referred for review.

29. Accordingly, this determination applies to weekly payments of statutory benefits from the day of the accident being 5 August 2018.  The Insurer is to pay the Claimant the difference between what (if anything) has been paid to the Claimant and what he is entitled to be paid in accordance with this decision.

Legal Costs

30. The applicant was not represented by a legal practitioner. There are no costs.

Determination

My determination of the Merit Review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
    - The amount of the Claimant’s PAWE is $584.79
  • Effective Date: This determination takes effect from the date of accident, 5 August 2018.
  • Legal Costs: The applicant was not represented by a legal practitioner in these proceedings.

Stavros Georgiadis
Merit Reviewer, Dispute Resolution Service