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AHS v Allianz Australia Ltd [2019] NSWDRS MR 206

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionMerit Review
CatchwordsWholly or mostly at fault – statutory benefits – minor injuries – personal injury benefits – traffic light – ambulance report – traffic phasing report – t-intersection – contributory negligence – conflicting statements
Legislation cited Motor Accident Injuries Act 2017 (NSW) ss 3.1, 3.11, 3.28, 7.36(4), 7.36(5), Schedule 2(3)(d) & (e)
Motor Accident Injuries Regulation 2017
Motor Accident Guidelines 2017 (as amended on 15 January 2019) cl 7.441
Cases cited N/A
Text cited N/A
Parties AGQ – Claimant
AAMI Insurance – Insurer 
Disclaimer This 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.  AHS (“The claimant”) suffered injuries as a result of a motor vehicle accident on 29 November 2018.

2.  There is a dispute between the claimant and Allianz Australia Insurance Limited (“the Insurer”) in respect to the calculation of the Pre-Accident Weekly Earnings (“PAWE”) under Clause 4 of Schedule 1 of the Motor Accidents Injuries Act 2017 (“the Act”).

3.  The Insurer made a decision in relation to the Pre-Accident Weekly Earnings on 7 August 2019, the amount determined was NIL.

4.  The claimant then sought an internal review of that decision.

5.  The Insurer conducted an Internal Review providing the decision on 21 August 2019. The Insurer affirmed its decision that the claimant’s Pre-Accident Weekly Earnings was NIL.

6.  A Dispute Resolution Service Application Form was completed by the claimant on 26 August 2019. The form appears to have been completed by the claimant despite noting at page 3 reference to the claimant being represented by Law Partners.

7.  At Section 7 the nature of the Dispute is not readily identified however, reference is made to an earlier Internal Review Decision of 22 August 2019.

8.  In relation to the question “What is the dispute/issue?” the response is “More treatments … financial assistance required …”.

9.  The claimant disputes the insurer’s determination that his pre-accident weekly earning (“PAWE”) are NIL.   The application has been made in accordance with section 7.12(1) of the Act and the Guidelines.

Documents and Information

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

11.  I have also conducted two telephone conferences on 6 November 2019 and 20 November 2019.  At the first teleconference on 2 November 2019 the claimant clarified to me that he did not have a legal representative assisting him with the dispute.  I suggested to the claimant that he may wish to seek legal advice.

12.  I was informed at the second teleconference on 20 November 2019 that the claimant had been provided with some assistance through the Legal Advisory Service (LAS) and that he would be submitting further documents.

13.  I note that an Application for personal injury Benefits form was completed and signed by the claimant on 4 February 2019.  Under section 7 “Employment Details” it describes the claimant’s usual occupation as entertainment promoter/musician/private real estate agent and the employer as XXX Entertainment & AHS Realty.

14.  At the time of the accident it was accepted that the claimant was operating two businesses, the entertainment business and the real estate business.

15.  The insurer obtained an accounting report prepared by Lance Kahler of Vincents dated 1 August 2019. It was noted that it was not possible to extract with certainty, the figures in respect of the precise period from 29 November 2017 to 28 November 2018.

16.  The assessment was that in the part of this period up to 30 June 2018 both the entertainment business and the real estate business operated at a loss. In respect of the period from 30 June 2018, the “business” had also operated at a loss.

17.  On 25 October 2019 the claimant’s accountant, Michael Grima, CPA provided a letter in response to my request for further documents.  That letter provided:

“…Unfortunately the 2017/2018 financial year was not a good trading year for the business.  This was due to higher operating costs, added expenses and lower turnover.   The 2017/2018 financial year is not a true reflection of the performance of the business…”

18.  The claimant provided further material dated 20 November 2019, this material included a list of various “income” in the period from November 2017 to November 2018.

19.  Unfortunately, the material does not add anything further and is consistent with if not identical to the material contained in the Tax Return for the year to 30 June 2018 and the Business Activity Statements in the period up to 31 December 2018.

20.  The claimant provided further material dated 26 November 2019, this material included a list of matters contributing to his loss. Whilst this is of assistance in understanding the claimant’s circumstances, it is unfortunately not of assistance in terms of the calculations in accordance with the Act.

Submissions

21.  The submissions made by the claimant on 17 September 2019  are to the effect that as an earner he is entitled to a minimum basic wage and rejects the insurer’s calculation of a NIL loss.

22.  The insurer submits the weekly amount of Nil is the correct and preferable estimate of the Claimant’s PAWE.

23.  The submissions made by the insurer rely upon an accounting report prepared by Lance Kahler of Vincents dated 1 August 2019.  In that report it was noted that it was not possible to extract with certainty, the figures in respect of the precise period from 29 November 2017 to 28 November 2018 however over the period the “business” had operated at a loss.

24.  The claimant provided further material dated 20 November 2019, this material included a list of various “income” in the period from November 2017 to November 2018.

25.  The claimant provided further material dated 26 November 2019, this material included a list of matters contributing to his loss.

26.  On 4 December 2019, the insurer noted that they did not wish to provide any further substantive submissions in relation to the material and maintained the position as outlined in the Respondent Submissions dated 12 September 2019.

Legislation

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

a.  Motor Accident Injuries Act 2017 (NSW) (“the Act”)

b.  Motor Accident Injuries Regulation 2017 (NSW) (“the Regulation”)

c.  Motor Accident Guidelines effective 13 July 2018 (“the Guidelines”)

Reasons

28.  Pre Accident weekly earnings

29.  The claimant falls within the definition of an “earner” in accordance with Clause 2(a) of Schedule 1 of the Act.

30.  Calculation of the statutory benefits to be paid to an earner injured as a result of a motor accident is determined with reference to pre-accident weekly earnings.

31.  Schedule 1 Clause 4(1) of the MAIA provides:

32.  (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.

33.  Therefore, Schedule 1 Clause 4(1) of the MAIA applies unless the Claimant falls within the exceptions set out in Clause 4(2) In the following cases,

34.  "pre-accident weekly earnings”, in relation to an earner who is injured as a result of a motor accident, means:

35.  (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,

36.  (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,

37.  (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,

38.  (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.

39.  (2A) The "pre-accident period" , in relation to a motor accident, is the period of 2 years immediately preceding the motor accident.

40.  (3) This subclause applies if, during the 12 months immediately before the day of the motor accident, there, 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.

41.  (4) For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.

42.  In my view none of the exceptions in Subclause (2) apply and agree with the insurer’s submissions in relation to this.

43.  Calculating Pre-accident Weekly Earnings

44.  The Act does not contain the definition of “gross earnings”, the Insurer sets out its views on the interpretation of this phrase at paragraph 6 of the Respondent’s Submissions dated 12 September 2019. It is to the effect that it means income from earning capacity after deducting all business or work related expenses but before tax.   I note that this is based upon the interpretation provided by Lance Kahler, forensic accountant in his report dated 1 August 2019.   I agree with this interpretation.

45.  Pre-accident weekly earnings will be determined as set out in Clause 4(1) unless one of the exceptions within Clause 4(2) applies.

46.  The insurer submits that the exceptions contained in Clause 4(2) do not apply to these circumstances and also relies upon the opinion of Lance Kahler, Accountant dated 1 August 2019 in respect of this.   I agree with this submission.

47.  In relation to Clause 4(2)(a) I agree that this exception does not apply and as part of my consideration note the claimant’s financial records support that he was earning continuously for at least 12 months.

48.  I also note that the claimant asserts in his submissions dated 17 September 2019 that he had been operating his business for well over 26 years which is supported by the letter from the Claimant’s accountant, Michael Grima dated 25 October 2019 who confirmed he had acted for the claimant’s business for a period in excess of 25 years.

49.  Based on the evidence before me I do not consider the exception contained in Clause 4(2) applies.

50.  In relation to Clause 4(2)(a1) I note for this to apply the claimant would have been employed for periods equal to at least 26 weeks during the first year of the pre-accident period (2 years immediately preceding the motor accident) and not obtaining earnings from any source at any other time during that period.   The claimant’s financial records provided for 2017/2018 period note his earnings during that time.  I also refer to the report of Lance Kahler, accountant dated 1 August 2019 which sets out the claimant’s earnings during the period 29 November 2017 to 28 November 2018.

51.  Further, I refer to the letter from the claimant’s accountant, Michael Grima dated 25 October 2019 regarding the business trading for the financial year 2017/2018.

52.  I therefore do not accept that based upon the evidence before me that Clause 4(2)(a1) applies.

53.  I also do not consider any of the other exceptions contained in Clause (2) apply.

54.  In relation to Clause 4(2)(b) I note that there is no evidence before me of the claimant having a significant change in his earnings circumstances to fall within this clause.   In coming to this decision I have relied upon all of the evidence including the claimant’s financial records and letter from the claimant’s accountant dated 25 October 2019, noting that he has been running his business for a long period of time.

55.  In relation to Clause 4(2)(c) I note that there is no evidence to support the claimant had entered into an arrangement with an employer or other person to undertake employment or to commence business as a self employed person.  This is noting that in the claimant’s submissions dated 17 September 2019 he confirmed that he had been running his business for at least 26 years which is also supported by his accountant’s letter dated 25 October 2019.

56.  I also note the parties do not assert that in the circumstances any of the exceptions contained in Clause 4(2) apply and I agree that none of the exceptions apply.

57.  Therefore, I consider that PAWE is to be calculated in accordance with Clause 4(1) of Schedule 1.

Findings

58.  Within the terms of terms of Schedule 1 Clause 2(a) the claimant was an earner at the time of the motor accident.

59.  Schedule 1 Clause 4(1) of the MAIA applies unless the Claimant falls within the exceptions set out in Clause 4(2).

60.  I do not consider that the claimant falls within the exceptions set out in Clause 4(2).

61.  I agree with the approach adopted by Lance Kahler of Vincents in the report dated 1 August 2019 in respect of requirements pursuant to Clause 4(1) “… the weekly average of the gross earnings …” during the period is from 29 November 2017 to 28 November 2018.

62.  The losses for the businesses noted in the report of 1 August 2019 are consistent over both the period to 30 June 2018 and the period after.

63.  I also note that the claimant’s accountant Michael Grima in his letter dated 25 October 2019 noted that the 2017/2018 financial year was not a good trading year for the business which is consistent with the opinion of Lance Kahler of Vincents.

64.  I consider that pursuant to Section 7.13(1) of the Act the correct and preferable decision is that the insurer was correct in assessing the claimant’s PAWE as NIL.

65.  In these circumstances, the reviewable decision is affirmed.  The determination takes effect from 20 December 2019.

Legal Costs

66.  No submission was made in relation to costs.

67.  I am not satisfied that the Claimant is entitled to the payment of legal costs.

Determination

My determination of the Merit Review is as follows:

  • The reviewable decision is affirmed
  • Effective Date: This determination takes effect on 20 December 2019.
  • Legal Costs: Legal costs have not been claimed.  I find that legal costs are not recoverable in accordance with section 8.10(3) of the Act.

Andrea Boyd-Boland
Merit Reviewer, Dispute Resolution Service