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ACT v AAI Limited trading as GIO [2018] NSWDRS MR 072

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionMerit Review
CatchwordsPre-accident weekly earnings – PAWE – weekly payments of statutory benefits – interim payment rate – self employed taxi driver – GST – earner –tax return – disability persion – business activity statement
Legislation cited                    Motor Accidents Injury Act (NSW) ss 3.6, 3.9, 7.13, Schedule 1 cl 2, 4(1), 8(1) & 8(2), Schedule 2(1)(a)
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines effective 13 July 2018
Cases cited

N/A

Text citedN/A
Parties ACT - Claimant
AAI Limited trading as GIO - 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 ACT
Insurer AAI Limited trading as GIO
Claim Number Y058748005-01
The Reviewable Decision
Date of decision                                                         5 October 2018
Nature of decision The amount of weekly payments of statutory benefits
The Merit Review
Our Reference 10062295
Merit Reviewer James Lowe
Date of Merit Review Certificate 19 December 2018

Merit Review's Determination

The reviewable decision is about the amount of weekly payments of statutory benefits and is therefore a merit review matter under Schedule 2(1)(a) of the Motor Accident Injuries Act 2017.

The determination of the Merit Review is as follows:

  • The reviewable decision is set aside and remitted to the Insurer for reconsideration with the following direction:
o The Insurer is to determine the amount of statutory benefits that are payable under Division 3.3 (Weekly payments of statutory benefits to injured persons) to ACT, on the basis that the amount of ACT’s pre-accident average weekly earnings (PAWE) is $504.93.
  • Effective Date: This determination has effect from the date of the reviewable decision, being 5 October 2018, until 13 November 2018. A brief statement of my reasons for this determination are attached to this certificate.

James Lowe
Dispute Resolution Service Merit Reviewer

Reasons for Determination

Background

1.  ACT was injured in a motor vehicle accident on 14 August 2018.

2.  On 5 October 2018, the Insurer advised ACT that it was unable to calculate his PAWE and would pay him the interim payment rate as determined in the Motor Accident Guidelines (the Guidelines). ACT sought an internal review of that decision.

3.  On 25 October 2018, the Insurer issued its decision on internal review, which affirmed the original decision.

4.  ACT lodged an application for merit review with the Dispute Resolution Service. That application was received on 20 November 2018 and has been made in accordance with section 7.12(1) of the Act and the Guidelines.

5.  On 26 November 2018, the Insurer made a decision determining the amount of ACT’s PAWE to be $430. That reviewable decision of the Insurer is not before the Dispute Resolution Service and it is not subject to this merit review. However, as detailed below, it affects the weeks of statutory benefits covered by the reviewable decision of the Insurer that is the subject of this merit review.

Documents and Information

6.  I have considered the documents provided in and submitted with the application and the reply and any further information that has been provided to the Dispute Resolution Service and exchanged between the parties.

Submissions

ACT

7.  ACT submits that the Insurer has approved an interim rate for wages and he wants a determination of the actual rate.

Insurer

8.  In reply, the Insurer notes ACT’s submissions on merit review. It also notes that the internal review affirmed that ACT be paid an interim rate. The Insurer submits this was because at the time of the internal review there was not enough evidence to properly calculate ACT’s PAWE.

9.  The Insurer says that ACT has provided further financial documents since the internal review. It says that the Claims Team sent ACT a letter dated 26 November 2018 in which PAWE was calculated at $430.

10.  The Insurer submits that in light of a PAWE calculation being made, it is unclear whether a dispute still remains between the parties. The Insurer says that in the event ACT wishes to proceed with the assessment of the dispute, it defers the calculation of PAWE to the Dispute Resolution Service based on the available evidence.

Further submissions – ACT

11.  On 9 November 2018, ACT gave further submissions including that he started as a self- employed taxi driver on 14 April 2018 and was working continuously in that capacity until the date of accident.

12.  ACT also mentioned that he thinks that his accountant may have mistakenly failed to include GST as a part of his income in his business activity statements when it should have been included. He later advised the DRS that his accountant is on leave and that he would like the merit review to proceed on the current information that has been provided.

13.  On 17 December 2018, ACT advised that he only worked with XXXX, his former employer, between 10 October 2017 to 29 October 2017.

Legislation

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

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Guidelines effective 13 July 2018 (the Guidelines)
  • Motor Accident Injuries Regulation 2017 (NSW) (the Regulation)

Reviewable decision(s)

15.  The application for merit review is made on the basis that the Insurer determined ACT’s weekly payments of statutory benefits using interim payments. ACT says that he wants a determination of the actual rate.

16.  Clause 3.6(5) of the Act provides for interim payments:

If a weekly payment of statutory benefits is payable under this section, but further information is required to determine the amount of the payment, interim payments are to be made in accordance with the Motor Accident Guidelines until the correct amount of the payment can be determined and paid.

17.  The Insurer submits the interim rate was used because at the time of the internal review there was not enough evidence to properly calculate ACT’s PAWE.

18.  On the information before me now and given the reasons below, I find the amount of ACT’s PAWE is $504.93. Therefore, the Insurer is to determine and pay ACT the correct amount of payment(s) under section 3.6 having regard to that finding.

Definition of PAWE

19.  Clause 4(1) of Schedule 1 of the Act defines PAWE as:

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.

20.  Subclause (2) offers different methods to calculate PAWE. However, those other methods do not apply because ACT was either a self-employed person when the motor accident occurred or he was obtaining earnings from multiple sources during the period of 2 years immediately preceding the motor accident.

21.   ACT’s PAWE under clause 4(1) is the weekly average of the gross earnings received by him as an earner during the 12 months immediately before the day on which the motor accident occurred. This not only requires consideration of the weekly average of the gross earnings received by ACT during the 12 months immediately before the day on which the motor accident occurred, but also of such earnings he received “as an earner”.

Earnings received "as an earner"

22.  Clause 2 of Schedule 1 of the Act defines an “earner” to be a person who:

(a) was employed or self-employed (whether or not full time) …

(b) before the motor accident, had entered into an arrangement (whether or not an enforceable contract) … or

(c) was, immediately before the motor accident, receiving a weekly payment or other payment in respect of loss of earnings under [the Act] or the Workers Compensation Act 1987.

23.  While it is accepted that ACT is an earner, there is no evidence before me to support he meets the definition of an earner under subclauses (b) or (c). He was however employed or self- employed for periods during the 12 months immediately before the day on which the motor accident occurred.

24.  In this regard, I  accept that  ACT was employed  by XXXX  between  10 October 2017 to 29 October 2017 and therefore an “earner” for this period. I consider his submission that he worked for that length of time is consistent with a customer’s copy of a 2017- 18 tax return showing that he only received $1,138 of earnings with that employer during the 2017-18 financial year.

25.  ACT’s submission that he commenced as a self-employed taxi driver on 14 April 2018 is supported by a “Profit and Loss Statement for the period 14 April 2018 to 30 June 2018”. A taxi driver agreement form that ACT signed on 1 May 2018 also shows that he would work on Mondays and Thursdays, without specifying an end date. I am therefore satisfied that ACT was self-employed from 14 April 2018 to 13 August 2018, being the day immediately before the day on which the motor accident occurred, and therefore that he was also an “earner’ for this period.

26.  While ACT was receiving a disability pension in the 12 months prior to the motor accident, a pension is not “earnings received by the earner as an earner” under the meaning of PAWE, as it is not income received from employment or self-employment.

27.  I therefore find that during the 12 months immediately before the day on which the motor accident occurred, ACT was receiving earnings as an earner during the weeks of 10 October 2017 to 29 October 2017 and 14 April 2018 to 13 August 2018.

28.  Under clause 4(1), his PAWE is the weekly average of the gross earnings received by him during those times.

PAWE under clause 4(1)

29.  During the 12 months immediately before the day on which the motor accident occurred, the total gross earnings received by ACT for his employment with XXXX and as a self-employed taxi driver total $7,069. Under clause 4(1), I find the weekly average of that amount is $504.93.

30.  These figures are based on the calculations below.

XXXX

31.  ACT has provided a customer’s copy of his 2017-18 tax return for his employment with XXXX. The gross earnings he received from 10 October 2017 to 29 October 2017 (a period of 2.857 weeks) equals $1,138.

Taxi driver

32.  The evidence setting out ACT’s earnings as a taxi driver is limited to taxation information that ends on 30 June 2018. While the Insurer has attempted to ascertain information from ACT about the earnings he received after 30 June 2018, he is not able to provide it. He told the Insurer that the Taxi industry is cash and that he stored the evidence of his earnings on his mobile phone. The difficulty for ACT here is that the information stored on this mobile phone was erased during phone repairs undertaken on 28 September 2018.

33.  On this basis, I accept that the best information available to determine the weekly average of the gross earnings received by ACT from when he commenced as a self-employed taxi driver to immediately before the day of the motor accident is provided in the taxation information that ends on 30 June 2018.

34.  The Insurer made a decision about the amount of ACT’s PAWE on 26 November 2018. While that reviewable decision is not subject to this merit review, I note that the Insurer had also

determined ACT’s PAWE in relation to his work as a taxi driver based on his tax information, averaging his earnings from 1 April 2018 to 30 June 2018.

35.  However, as explained earlier, the information before me in this merit review supports a finding that ACT commenced self-employment on 14 April 2018. Therefore, I consider the best approach to determine the amount of his PAWE under clause 4(1) for his self-employment is to average the gross earnings he received from that date.

36.  A business activity statement, dated 31 October 2018, sets out the earnings ACT received as a self-employed taxi driver between 14 April 2018 and 30 June 2018, including the amounts he received in sales, GST and amounts incurred as business expenses.

37.  As PAWE is the “gross earnings received by the earner as an earner”, ACT’s gross earnings is the gross earnings that he received in return for his personal exertion as a taxi driver. This does not include any amounts he received for GST and also any business expenses in connection with his self-employment are to be deducted from his total sales amount.

38.  ACT submits that he thinks his accountant may have mistakenly failed to include GST as a part of his income in the business activity statement when it should have been included.

39.  However, at “G1” of the business activity statement, it is indicated that ACT received $9,880 in sales that is inclusive of GST. At “A1”, the amount of GST is declared to be $898.

40.  The business activity statement also shows that ACT’s business expenses (for fuel, pay-in, telephone and wash) totalled $3,390. However, ACT was entitled to recover 10% of that amount, or $339, from the Australian Taxation Office. On this basis, I am satisfied that his business expenses for the April to June quarter were $3,051 ($3,390 - $339).

41.  Therefore, I find the total gross earnings ACT received between 14 April 2018 and 30 June 2018 (a period of 11.143 weeks) as a self-employed taxi driver is $5,931, calculated as follows:

$9,980 in sales - $898 in GST - $3,051 in business expenses = $5,931.

Calculation of PAWE

42.  ACT’s PAWE is the weekly average of the gross earnings received by him as an earner during the 12 months immediately before the day on which the motor accident occurred.

43.  I have information to show the earnings he received as an earner for the periods 10 October 2017 to 29 October 2017 and 14 April 2018 to 30 June 2018 (14 weeks in total).

44.  In my view, that is the best information available to calculate ACT’s PAWE under clause 4(1), and it shows that he received $7,069 in total earnings ($1,138 from XXXX and $5,931 as a taxi driver).

45. I therefore find the amount of ACT’s PAWE is $504.93 (rounded to the nearest cent), calculated as follows: $7,069 total earnings received ÷ 14 weeks = $504.928[…].

Calculation of weekly payments of statutory benefits

46.  During the first entitlement period (the first 13 weeks that starts on the day after the day of the motor accident), ACT’s entitlement weekly payments of statutory benefits is to be determined under section 3.6 of the Act.

47.  Section 3.6(2) provides:

A weekly payment of statutory benefits under this section is to be at the rate of 95% of the difference between the person’s pre-accident weekly earnings and the person’s post-accident earning capacity (if any) for the first entitlement period.

48.  ACT’s PAWE is $504.93. Clause 8(1) and (2) of Schedule 1 of the Act is the relevant provision to address his post-accident earning capacity (if any). However, the issue on ACT’s post- accident earning capacity is not before me.

49.  Therefore, the Insurer is to determine the amount of statutory benefits that is payable under Division 3.3 (Weekly payments of statutory benefits to injured persons) to ACT, having regard to my finding that the amount of his PAWE is $504.93.

Determination

My determination of the Merit Review is as follows:

  • The reviewable decision is set aside and remitted to the Insurer for reconsideration with the following directions:
o The Insurer is to determine the amount of statutory benefits that are payable under Division 3.3 (Weekly payments of statutory benefits to injured persons) to ACT, on the basis that the amount of ACT’s PAWE is $504.93.
  • Effective Date: It is the function of the Dispute Resolution Service on merit review to arrive at the correct and preferable outcome in respect of the weeks covered by the reviewable decision that is referred for review.

    Accordingly, this determination has effect from the date of the reviewable decision, being 5 October 2018, and any weeks of weekly payments of statutory benefits prior to that date that were affected by the reviewable decision (if any) until 13 November 2018.

    This is because on 26 November 2018, the Insurer made a new decision and gave effect to that decision from 14 November 2018.

James Lowe
Dispute Resolution Service Merit Reviewer