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Welcome to the 111th edition of Sparke Helmore’s MAD Weekly!

The Personal Injury Commission (Commission) commenced on 1 March 2021 and, with it, the publication of the majority of decisions issued by the Commission.

To help you navigate the recent decisions of the Motor Accidents Division (MAD) of the Commission, we are publishing weekly the relevant headnotes of select published decisions with a link to the decisions on the Australasians Legal Information Institute (AustLII) website. Please see the latest edition below.

All references to legislation are to the Motor Accident Injuries Act 2017 (NSW) (Act) unless otherwise noted.

Commentary and analysis of trends will be provided on more substantive decisions by our CTP team  and will be separately published when necessary.

Merit Review

Iskander v Insurance Australia Limited t/as NRMA Insurance [2024] NSWPICMR 11 (12 June 2024)

Merit Reviewer: Brett Williams

Determination of pre-accident weekly earnings (PAWE) in accordance with Sch 1 clause 4(1) of the Act – claimant self-employed – meaning of “gross earnings received by an earner as an earner” means the whole gross income without deduction received in return for labour or for services provided by them.

The claimant made a claim for statutory benefits arising from personal injuries sustained in a motor accident on 22 January 2024. The insurer accepted his claim for statutory benefits up to 52 weeks following the motor accident on 21 February 2024 and assessed his PAWE at $531.38 (the decision). The insurer relied on a financial accounting report from PKF (the report) dated 5 March 2024, which calculated PAWE by averaging his earnings over 52 weeks from the net profit earned by the self-employed claimant after accounting for business expenses but before tax.

A dispute arose between the parties because the claimant argued that PAWE should be between $1,500 and $1,600. Relevant to the dispute, the claimant was a self-employed pest technician. He argued that he was earning $6,600 per month when the motor accident occurred. The claimant argued that his PAWE should be calculated gross without any deduction to reflect business expenses.

After the insurer affirmed the PAWE assessment in an internal review certificate dated 26 March 2024, the claimant applied to the Commission seeking review of the decision as a merit review matter of the kind in Sch 2 clause 1(a). There was no dispute that the claimant was an ‘earner’.

The claimant’s application to the Commission recorded that he sought the following outcome:

“A review for PAWE considering my expenses not only my net income so it can cover my work expenses as sole trader as car loan, work insurance, car insurance and other expenses payed [sic] on monthly bases [sic].”

The insurer relied on AGZ v NRMA Insurance Pty Ltd [2019] NSWDRS MR 184 and AHS v Allianz, decisions where the phrase “gross earnings” has been interpreted to mean the net profit/income earned by a self-employed claimant after accounting for all business expenses incurred to run their business. The Merit Reviewer acknowledged that different approaches have been taken by Merit Reviewers to the interpretation of Sch 1 cl 4(1) and determining PAWE of self-employed earners.

As neither “gross earnings” nor “earnings” are defined in the Act, the Merit Reviewer undertook a detailed analysis of judicial interpretation to determine the dispute. He acknowledged the words and expressions defined in Sch 1 apply for the purpose of Division 3.3 regarding weekly payments of statutory benefits, and that Sch 1 cl(4)(1) included the word “gross”. It was stated that the gross earnings of an employed earner, particularly in the hybrid work-from-home environment, are not reduced on account of expenses such as cost of electricity, telephone or internet. It was stated that there should not be a different approach taken to determine the “gross earnings” of a self-employed earner.

The Merit Reviewer assessed PAWE based on the income received from the business less the cost of goods incurred, resulting in gross earnings and a PAWE assessment of $1,197.25, commenting that:

“Having regard to the context, the general purpose and policy of the provision, “the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred” means the whole of the income without any deduction received by an earner in return for labour or services provided by them as an earner during the 12 months immediately before the day on which the motor accident occurred.”

Critically, the Merit Reviewer acknowledged that interpretation of Sch 1 clause 4(1) is “not straightforward” and that these decisions are to be made on a case by case basis.

Held: The insurer’s decision of 11 March 2024 was set aside and a substitute decision recorded. The claimant’s PAWE was determined to be $1,197.25.

View decision

Claims Assessment

BWU v AAI Limited t/as GIO [2024] NSWPIC 297 (5 June 2024)

Member: Elizabeth Medland

Assessment of damages – liability admitted – claim for past and future economic loss – relatively young claimant suffering migraines and psychological injury caused by the accident which reduced her occupational and earning capacity in the future – complex medical history – future economic loss claim pursued on stated intention to become a psychologist – allegation not substantiated by evidence.

The claimant was injured in a motor accident on 22 April 2019. It was a significant accident where the insured vehicle crossed over onto the claimant’s side of the road and collided with her vehicle in a head-on collision at speed. The claimant’s vehicle was pushed back 16 metres and rotated clockwise. She sustained various physical and psychological injuries and alleged residual deficits as a result.

The claimant lodged an application for statutory benefits on 15 July 2019 and subsequently lodged the common law damages claim. Liability was admitted by the insurer in their conduct in both claims.

The claimant’s degree of permanent impairment was assessed in the Commission as not exceeding 10% whole person impairment (WPI). The matter left for determination, and allocated to Member Medland, was the amount of economic loss damages the claimant was entitled to under the Act.

It was the assessment of future economic loss that was most of interest. The claimant pursued a claim for $971,037 on the basis that but for the accident, she would have become a psychologist earning $2,961 per week, but due to her accident-related migraines, ongoing permanent physical issues, mainly attributable to pain and other symptoms in the right knee, she would now manage only low-level employment and consequentially less earnings.

The insurer argued that the claimant’s pre-accident employment capacity was otherwise limited by learning difficulties, a diagnosis of Autism Spectrum Disorder and prior mental ill health. In being persuaded by this position, the Member acknowledged the accident-related impediments, the testamentary evidence of the claimant and her mother, which alleged that the claimant’s “whole demeanour changed” in the months leading up to the accident but found that the claimant’s “past difficulties would have a likely, but for the accident, adversely affected the claimant’s earning capacity for the foreseeable future”.

Member Medland ultimately found that, whilst the claimant was driven and in a critical transition process into adulthood when the accident occurred, the claimant had failed to establish on the balance of probabilities that she would have obtained a psychology degree and pursued such occupation but for the accident. Evidence from a vocational expert was critical in persuading the Member of that finding.

Member Medland calculated future economic loss by way of a buffer in the sum of $350,000 to account for the 43 years left in the workforce, the likely permanent loss of earnings and residual deficits.

View decision

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