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AFC v NRMA [2019] NSWDRS MR 129

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionMerit Review
CatchwordsWeekly payments of statutory benefits – PAWE – self-employed graphic designer – personal injury benefits – insufficient proof of weekly earnings – bank statement – income tax return – profit and loss statement – claim for damages – pre-accident weekly earnings – earner – loss of earnings
Legislation cited                    Motor Accidents Injury Act (NSW) s 6.3, 6.25, Division 3.1, 3.3, Schedule 1, Schedule 2 clause (a) & (y)
Motor Accident Guidelines effective 13 July 2018 s 4.41, 4.59, 4.60, 4.61, 7.12(1)
Motor Accident Injuries Regulation 2017
Cases cited

N/A

Text citedN/A
PartiesAFC - Claimant
NRMA - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

Merit Review Certificate

Merit Reviewer's Reasons for Determination

Background

1.   There is a dispute about the amount of the claimant's pre-accident weekly earnings (PAWE) under Division 3.3 of the Motor Accidents Injuries Act 2017 ("the Act").

2.   The claimant is a self-employed graphic designer. They were injured in a motor vehicle  accident on 16 April 2019.

3.   The claimant lodged an application for personal injury benefits which was received by the insurer on 26 April 2019.

4.   On 16 May 2019, the insurer accepted the claimant's claim for weekly payments of statutory benefits under the Act and requested documents confirming the claimant's weekly earnings.

5.   On 21 May 2019, the claimant's legal representatives provided copies of the claimant's bank statements for the 12-month period prior to the motor accident and made a claim for weekly payments of $1,979.79 from the date of the accident and continuing.

6.   On 27 May 2019, the insurer advised the claimant's legal representative that the bank statements were insufficient proof of weekly earnings and requested income tax returns and profit and loss statements for the claimant's business and the claimant's income tax returns and Notice of Assessment for the most recent financial year prior to the accident.

7.   On 27 May 2019, the claimant's legal representatives advised the Insurer that income tax returns and profit and loss statements were not available for the 2018 financial year and invited the Insurer to determine the claim for weekly payment of statutory benefits on the bank statements.

8.   The claimant applied for an internal review on 27 and 28 May 2019.

9.  The claimant applied for merit review by the Dispute Resolution Service on 25 June 2019.

Documents and Information

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

Submissions

11.  The claimant submits:

  • They are a self-employed Graphic Designer
  • The insurer does not dispute that they are unfit for work
  • The claimant remains unfit for work
  • They do not have tax returns, profit and loss statements for the 2018 financial year.
  • They have provided their bank statements for the 12-month period prior to the accident which demonstrates earnings of $101,285.00, which equates to average weekly earnings of $1,947.79 per week.
  • They are entitled to weekly payments of $1,979.79 from 16 April 2019 to date and continuing.
  • It is unreasonable for the insurer to request documentation that they do not have in order to pay weekly benefits.

12.  The insurer submits:

  • The claimant's application for merit review has been referred for assessment as a dispute under Schedule 2, Clause l(y) in regard to the "claimant providing particulars". The Insurer believes the matter should be assessed as Schedule 2, clause l(a), amount of weekly benefits.
  • The claimant is a self-employed Graphic Designer and operates a business called XXX.
  • The claimant has only provided bank statements for the 12-month period prior to the accident as evidence of their earnings.
  • The bank statements show irregular bank deposits from unknown sources and fail to demonstrate that they were earnings from personal exertion.
  • The claimant has since provided their income tax returns for the financial year ending 2017.
  • The 2017 income tax returns do not assist with the calculation of the claimant's PAWE.
  • There is no other evidence to verify the earnings alleged by the claimant.
  • The insurer continues to invite the claimant to provide further financial documentation to assist with the calculation of the claimant's PAWE.

Legislation

13.   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

Nature of dispute

14.   The claimant's application has been referred for assessment as a merit review dispute under Schedule 2, clause 1(y) of the Act, which provides:

"(y) whether the claimant has provided the insurer with all relevant particulars about a claim in accordance with section 6.25 (Duty of claimant to provide relevant particulars of claim for damages)."

15.   Section 6.25 of the Act provides:

"Duty of claimant to provide relevant particulars of claim for damages

(1)   A claim for damages must provide the insurer of the person against whom the claim is made with all relevant particulars about the claim as expeditiously as possible after the claim is made.

(2)   For the purposes of this section, relevant particulars about a claim are full details of:

(a)  the motor accident concerned, and

(b)  the injuries sustained by the claimant in the motor accident, and

(c)  all disabilities and impairments arising from those injuries, and

(d)   any economic losses and other losses that are being claimed as damages,

sufficient to enable the insurer, as far as practicable, to make a proper assessment of the claimant's full entitlement to damages.

16.   "Claim" is defined in the Act as "a claim for statutory benefits or a claim for damages".

17.   "Damages" is defined as "damages in respect of the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle but does not include statutory benefits".

18.   The claimant's application is in respect of a dispute about weekly payment of  statutory benefits  and not a claim for damages and accordingly, section 6.25 of the Act is not relevant to the dispute.

19.   Accordingly, I assess the claimant's merit review application pursuant to Schedule 2 clause 1(a) of the Act, which provides:

"(a) the amount of statutory benefits that is payable under section 3.4 (Statutory benefits for funeral expenses) or under Division 3.3 (Weekly payments of statutory benefits to injured persons)."

Pre accident weekly earnings

20.   Pursuant to Division 3.1 of the Act, statutory benefits are payable in respect of death or injury resulting from motor accident and include weekly payments.

21.   The amount of weekly payments payable under Division 3.3 of the Act requires a calculation of the injured person's pre-accident weekly earnings ("PAWE").

22.   PAWE is defined by Schedule 1 of the Act:

"Meaning of "pre-accident weekly earnings"- general
(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 during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.
"Meaning of "loss of earnings"
(1)Loss of earnings means a loss incurred or likely to be incurred in a person's income from personal exertion.

(2)   A person's income from personal exertion is:

(a)  the amount that is the income of the person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities,  allowances and gratuities received in the capacity of employee or in relation to any services rendered, and

(b)  the proceeds of any business carried on by the person either alone or in partnership with  any other person, and

(c)  any amount received as bounty or subsidy in carrying on a business.

23.   Only a person who was an 'earner' when injured is entitled to statutory benefits under this section. Earner is defined by Schedule 1 of the Act:

"Meaning of "earner"
A person who is injured as a result of a motor accident is an earner if the person is at least 15 years of age and who:
(a)  was employed or self-employed (whether or not full-time):
(i)   at any time during the 8 weeks immediately preceding the motor accident, or

(ii)   during a period or periods equal to at least 13 weeks during the year immediately preceding the motor accident, or

(iii)  during a period or periods equal to at least 26 weeks during the 2 years immediately preceding the motor accident.

24.   The period 12 months immediately before the day on which the claimant's motor accident occurred is, by my calculations, April 2018 to April 2019.

25.   There is no definition of 'gross earnings' in the Act for the purposes of calculating the claimant's PAWE. However, I accept the Insurer's interpretation of the phrase "gross earnings" to mean the taxable income (or net profit) earned by the claimant after accounting for business expenses but before income tax.

26.   The claimant has provided bank statements for the period March 2018 to March 2019. The claimant's legal representatives submit that the deposits identified in the bank statements, other than those deposits crossed out, show the claimant's earnings for the 12-month prior to the motor accident.

27.   The statements show the source of the deposits as either an ATM deposit, YYY gift deposit and/or merchant settlement.

28.   There are a number of difficulties I have in accepting the bank statements as evidence of the claimant's gross earnings.

29.   Firstly, the claimant has not provided evidence that the deposits represent earnings from the claimant's business. The sources are unknown and not substantiated by sales records, such as invoices for services rendered.

30.   Secondly, the claimant has not identified any business expenses in their bank statements.

31.   The bank statements on their own do not show the claimant's net profit position and I cannot therefore make any reliable decision in relation to the claimant's gross earnings or PAWE using the information in the bank statements.

32.The insurer has requested a number of other financial documents in order to assess the claimant's gross earnings and PAWE, they include:

a.  Financial statements and income tax returns for the business for the most recent financial year prior to the accident;

b.  A summary of the profit and loss of the business for the 12 months period ending immediately prior to the date of the accident

c.  The claimant's income tax returns and Notice of Assessments for the most recent financial year prior to the accident.

33.   The claimant's legal representative has provided the claimant's 2017 personal Income tax return but has advised that the claimant does not have tax returns or profit and loss statements for the 2018 financial year. Given the claimant does not have any 2018 tax returns, I consider there is little merit in the insurer continuing to request them. However, I consider that further supporting financial information is required before a reliable calculation as to gross earnings and PAWE can me made.

34.   Although the claimant submits that it is unreasonable for the insurer to request documentation that they do not have in order to pay weekly benefits, the interpretation of the provisions of the Act must be within the confines of the actual language employed. The definition of PAWE, as reproduced above, requires "the weekly average of the gross earnings" received by the claimant in the 12 months before the motor accident. This, in my view, requires at the very least, some reliable information which substantiates the claimant's net profit or gross earnings.

35.The claimant also has a duty to act in good faith and disclose relevant information. Section 6.3 of the Act provides:

"(2) The duty of a claimant to act with good faith includes the following duties:
(a)  a duty to act honestly and not mislead,

(b)  a duty to disclose all relevant information (including reports by health professionals) in a timely manner,

(c)  a duty to promptly do all things reasonably necessary to facilitate the resolution of any dispute involving the claim."

36.   In my view, the following documents would assist in calculating the claimant's gross earnings and PAWE:

a.  Personal income tax returns and notice of assessment for the financial year 2019

b.  Business income tax returns for the financial year 2019

c.  Profit and Loss Statement showing gross earnings for the 12-month period prior to the accident

d.  Sales records evidencing earnings and proceeds from the business

e.  Purchase/expense records evidencing business expenses.

37.   I would also add that in the absence of sufficient evidence to substantiate the claimant's earnings in the 12-month prior to the motor accident, of for a period equal to at least 26 weeks during the 2 years immediately preceding the motor accident, the claimant does not satisfy the definition of 'earner' under Schedule 1 of the Act. Only a person who was an 'earner' when injured is entitled to weekly payments of statutory benefits under Division 3.3 of the Act.

Determination

My determination of the Merit Review is as follows:

  • The reviewable decision is varied and remitted back to the Insurer for reconsideration with the following directions:

The claimant is to provide either or all of the following:

  • Personal income tax returns and notice of assessment and business income tax returns for the financial year 2019
  • Profit and Loss Statement showing gross earnings for the 12-month period prior to  the accident
  • Sales records evidencing earnings and proceeds from the business and purchase/expense records evidencing business expenses
  • Effective Date: This determination takes effect on 27 May 2019.

Jeanette Woollacott
Merit Reviewer, Dispute Resolution Service