Aak v AAMI Limited
[2021] NSWPICMR 5
•21 April 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | AAK v AAMI Limited [2021] NSWPICMR 5 |
| APPLICANT: | AAK |
| RESPONDENT: | AAMI |
| MERIT REVIEWER: | Maurice Castagnet |
| DATE OF DECISION: | 21 April 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- dispute about the amount of weekly payments under Division 3.3 of the Motor Accident Injuries Act 2017; pre-accident weekly earnings (PAWE); various forms of employment in the music field; following a period of maternity leave; earner; earnings she could have reasonably expected to earn but for the injury; booked for singing lessons; voice teacher; vocal performer; Held- the reviewable decision is set aside; PAWE amount determined; exceptional circumstances exist to justify payment of legal costs. |
| DETERMINATIONS MADE: | 1. The reviewable decision is set aside. 2. In accordance with Schedule 1, subclauses 4(2)(b) and 4(2)(c) the amount of the claimant’s pre-accident weekly earnings (PAWE) is determined to be $832.74. 3. The insurer is to make weekly payments to the claimant pursuant to sections 3.6 and 3.7 accordingly. 4. This decision takes effect on 23 May 2020. 5. The amount of the claimant’s costs assessed is $2,853.10 inclusive of GST. |
Statement of Reasons
Background
The motor accident
The claimant is a 30-year-old woman who was injured in a motor accident on 22 May 2020.
The evidence reveals that the claimant sustained significant injuries in the accident including multiple spinal fractures, a fractured sternum and a fracture to the right tibia.
The claimant’s background
In her statement dated 4 March 2021, the claimant provided the following information.
She is a freelance concert soprano singer. She specialises in sacred music/oratorio and art song recital although she has had experience and success in different music styles. In 2016, she was recognised by Triple J Unearthed as a rising singer-songwriter in the Indie Pop genre for her debut self-titled album.
She is also a composer. In 2008, she won the Australian Songwriting Contest.
She holds a Bachelor of Music from the University of Newcastle and she has partially completed a Masters of Music (Vocal Performance) course at the Sydney Conservatorium, University of Sydney. She deferred completion of the course to take maternity leave in August 2019.
During the five-year period prior to the accident, the claimant was engaged in various forms of employment in the music field. These included freelance singing performances, working as a singing teacher for a commercial organisation, working as a Soprano Scholar with a church, providing voice lessons to private students and working in a retail music store.
The claimant’s son was born in November 2019. The claimant said that she intended to return to singing as she returned to strength after the birth and to return to teaching when her son was about six months old.
To that end, at the time the accident occurred, the claimant had made arrangements to re-commence her engagements as a freelance singer and to re-commence her business as a voice teacher for private students.
The claim for statutory benefits
On 26 May 2020, the claimant made a claim for statutory benefits under Part 3 of the Motor Accidents Injuries Act 2017 (the Act). Statutory benefits include weekly payments for lost earnings and payments for reasonable treatment and care.
In her claim form, the claimant said she was a singer by occupation. She did not provide the details of her earnings at the time of the accident but indicated that the length of time off work due to the accident was “to be determined.”
By letter of 23 June 2020, the insurer accepted liability for payment of statutory benefits for the first 26 weeks from the date of the accident.
The letter advised the claimant that she was eligible for treatment and care benefits. She was advised to take reasonable steps to minimise loss caused by her injuries, including commencing employment or returning to work.
The letter was silent on the determination of her entitlements to weekly payments for loss of earnings and the claimant was not invited to provide further particulars to determine her entitlements in that regard.
As weekly payments were not forthcoming, the claimant sought legal advice. By letter of 28 August 2020, the claimant’s legal representatives explained that, at the time of the accident, the claimant was in the process of transitioning back into the workforce following a period of maternity leave and confirmed that a claim was made for weekly payments of statutory benefits from the date of the accident and continuing.
Supporting documents regarding her earnings prior to taking maternity leave and information about the arrangements that she had made at the time of the accident to re-commence her voice teaching business as a self-employed person were also provided with the letter.
By letter of 8 September 2020, the insurer determined that the claimant was not an earner for the following reasons:
· She was not employed during the eight weeks immediately preceding the motor accident.
· She was not earning during a period of at least 13 weeks during the year immediately preceding the motor accident.
· She was not earning during a period or periods equal to at least 26 weeks during the two years preceding the motor accident.
· She had not entered into an arrangement (whether or not an enforceable contract) with an employer or other person to undertake employment.
· She was not about to commence business as a self-employed person.
On 11 September 2020, the claimant’s legal representatives provided the insurer with 19 remittance advices for income received from YYY Uniting Church as a Soprano Scholar for the period 21 March 2019 to 14 May 2020.
By letter of 22 September 2020, the insurer accepted liability to make weekly payments of statutory benefits to the claimant for the first 13 weeks from the date of the accident.
The letter did not state whether the insurer had accepted that the claimant was an earner but it is apparent that the insurer could not have made this decision without accepting that she was an earner.
The letter advised the claimant that the insurer was unable to determine her pre-accident weekly earnings (PAWE) on the available information and she would need to provide her taxation returns and business and taxation information for self- employment and/or income.
The insurer advised the claimant that she would receive interim payments of $522.50 for those 13 weeks, pending the determination of her PAWE. This is a requirement under subsection 3.6(5) of the Act and clause 4.43 of the Motor Accident Guidelines.
On 3 December 2020, the insurer determined the claimant’s PAWE to be $111.04. This was on the basis that she was an earner within the meaning of Schedule1, subclause 2(a) of the Act and the amount of her PAWE calculated on the basis of her average weekly gross earnings as a Soprano Scholar with YYY Uniting Church under Schedule1, subclause 4(2)(b).
On 11 December 2020, the claimant sought a review of the insurer’s decision. The claimant provided the insurer with further information about her singing performances booked prior to the accident and the arrangements she made before the accident to re-commence her business as a voice teacher. She submitted that her expected earnings from these income streams should also be considered in the calculation of her PAWE.
On 4 December 2021, the insurer issued its review decision confirming its original decision.
The claimant makes this application to the Commission to review the insurer’s review decision.
Documents and information
In making this decision, I have considered the Application, Reply and supporting documentation. I have also considered further submissions received from both parties during the proceedings.
The dispute
The claimant does not dispute that she was an earner within the meaning of Schedule1, subclause 2(a) of the Act by virtue of her employment with YYY Uniting Church prior to the accident.
The claimant does not dispute the insurer’s quantification of her PAWE in the amount of $111.04 pursuant to Schedule 1, subclause 4(2)(b) based on her gross earnings received as an earner from that employment prior to the accident.
The claimant does not accept that the amount represents a full quantification of her PAWE based on all her income streams.
The claimant contends that she was also an earner within the meaning of Schedule1, subclause 2(b) by virtue of the arrangements she had made with other persons before the accident, to undertake employment as a singer and her arrangement to re-commence business as a voice teacher.
The claimant contends that the insurer has made an error by not calculating a further component of her PAWE pursuant to Schedule1, subclause 4(2)(c) for the average weekly earnings she could reasonably have expected to earn but for the injury in employment under those arrangements.
Submissions
The claimant says at the time of the accident, she was already booked for singing performances. Those bookings alone mean that she was an earner within the meaning of earner under Schedule 1, subclause 2(b)(i) because she had entered into an arrangement with various organisations to undertake employment as a vocal performer.
The insurer does not directly say whether or not the claimant falls within the meaning of earner under Schedule 1, subclause 2(b)(i) on the basis of these pre-accident singing performance bookings. Instead, the insurer says the cancellation of the bookings were not due to the injuries sustained by the claimant in the accident but due rather to a non-related intervening event – the Covid-19 pandemic. Therefore, the suggestion that these prospective earnings should be included in the claimant’s PAWE cannot be accepted.
The claimant says that weekly payments are intended to commence immediately following the subject accident and it cannot be the case that, having delayed the calculation of PAWE, the insurer can then calculate those earnings according to the prevailing situation at some point after the subject accident. That would defeat the idea of calculating what the claimant would have earned, or expected to earn pre-accident.
The claimant says, in any event, only one of the claimant's booked performances had been cancelled (the performance on 24 May 2020 with Aurora Choralis). The claimant expected that all her other paid performances would continue, but that possibly the way in which she delivered her performances would be adjusted in light of Covid-19 such as giving performances online.
The claimant says that she was also an earner within the meaning of Schedule 1, subclause 2(b)(ii) because at the time of the accident, her plans were already in place to re-commence business as a voice teacher.
The insurer conceded the evidence suggests that the claimant was in the process of offering singing lessons again, with the setting up of her studio and printing of posters or flyers.
However, the insurer considers that a mere intention to commence work is not sufficient in order to give consideration to the prospective earnings. There is no evidence of any lessons having been scheduled, were subsequently cancelled due to the injuries sustained by the claimant in the accident and thereby demonstrating a loss of earnings.
The insurer says there is no evidence to confirm that the alleged eight hours of singing lessons per week at $75 per hour was even available or that these lessons were subsequently cancelled due to the injuries sustained by the claimant in the accident to demonstrate a loss of earnings.
The claimant says the insurer’s submission on this point must be rejected as a matter of statutory construction.
The claimant says that subclause 2(b)(ii) provides that 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 had before the accident, entered into an arrangement (whether or not an enforceable contract) to commence business as a self-employed person at a particular time and place.
The claimant says the words "entered into an arrangement" are not defined in the Act and there is no reason those words should be narrowly construed. They are not limited to an enforceable contract. The arrangement does not need to be with a person (unlike subclause 2(b)(i)). The words "entered into an arrangement" should simply be construed as meaning a plan of preparation for something which the claimant had taken steps to initiate. The claimant’s statement and supporting documents provided to the insurer show ample evidence that the claimant had entered into a plan to re-commence business as a self-employed voice teacher.
The claimant says that her business was not a pipe dream, or a mere idle wondering. She had taken concrete steps towards re-commencing the business. Just prior to the motor accident it was intended that the business would go ahead. The claimant submits that she unequivocally falls within the ambit of Schedule 1, subclause 2(b)(ii) for the purpose of her plan to re-commence her business as a voice teacher.
The insurer says that there were two remittance advices from YYY Uniting Church submitted by the claimant for calculation of the claimant’s PAWE which post-dated the accident (23 June 2020 and 7 July 2020). The insurer submits that any assertion by the claimant that she had sustained a loss of earnings due to the injuries suffered in the accident is not supported by the evidence.
Consideration
Entitlements to statutory benefits are governed by Part 3 of the Act.
The claimant’s entitlements to weekly payments of statutory benefits for the first 78 weeks after the motor accident are determined in accordance with sections 3.6 and 3.7.
Those provisions read relevantly as follows:
3.6 Weekly payments during first entitlement period (first 13 weeks after motor accident)
(1) An earner who is injured as a result of a motor accident and suffers a total or partial loss of earnings as a result of the injury is entitled to weekly payments of statutory benefits under this section during the first entitlement period.
Note : Only a person who was an earner when injured is entitled to statutory benefits under this section--see Schedule 1.
(2) 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.
(3) …
(4) …
(5) …
3.7 Weekly payments during second entitlement period (weeks 14-78 after motor accident)
(1) An earner who is injured as a result of a motor accident and suffers a total or partial loss of earnings as a result of the injury is entitled to weekly payments of statutory benefits under this section during the second entitlement period.
Note: Only a person who was an earner when injured is entitled to statutory benefits under this section--see Schedule 1.
(2) A weekly payment of statutory benefits under this section is to be at the rate of--
(a) in the case of total loss of earning capacity--80%, or
(b) in the case of partial loss of earning capacity--85%,
of the difference between the person's pre-accident weekly earnings and the person's post-accident earning capacity (if any) after the first entitlement period.
(3) …
(4) …
To qualify for those entitlements, the claimant as an injured person, must show that she was an earner and that she has suffered a loss of earnings as a result of the injury. The amount of her loss is then calculated on the basis of the difference between her PAWE and her post-accident earning capacity (if any).
The first step is to determine whether the claimant is an earner.
Section 3.5(2) states that words and expressions in Part 3, Division 3.3 that are defined in Schedule 1 have the meanings provided by that Schedule. The Schedule provides definitions of an earner, loss of earnings, pre-accident weekly earnings and post-accident earning capacity.
Schedule 1, clause 2 relevantly provides:
2 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,
and, at the date of the motor accident, had not retired permanently from all employment, or
(b) before the motor accident, had entered into an arrangement (whether or not an enforceable contract)
(i) with an employer or other person to undertake employment, or
(ii) to commence business as a self-employed person,
at a particular time and place, or
(c) was, immediately before the motor accident, receiving a weekly payment or other payment in respect of loss of earnings under this Act or the Workers Compensation Act 1987.
The evidence reveals and the parties agree that the claimant was an earner within the meaning of Schedule1, subclause 2(a) of the Act by virtue of her employment with St Stephen's Uniting Church prior to the accident.
I accept the claimant’s submission that she was also an earner within the meaning of Schedule 1, subclause 2(b)(i) because she had entered into an arrangement with various organisations before the accident, to undertake employment as a vocal performer.
I do not agree with the insurer’s submission that the claimant’s loss of earnings arose from the Covid-19 pandemic. The claimant’s evidence was that only one performance was cancelled because of Covid-19, and that other performances were not or would have continued through other means such on-line performances. Therefore, I do not need to deal with the claimant’s argument concerning statutory construction.
I accept the claimant’s submission that she was also an earner within the meaning of Schedule 1, subclause 2(b)(ii) on the basis of her plans to re-commence business as a voice teacher were already in place before the accident for the following reasons.
In my view, there is no requirement as suggested by the insurer, to show evidence of cancelled lessons having been scheduled in order to qualify as an earner under subclause 2(b)(ii).
The claimant observed that the words "entered into an arrangement" are not defined in the Act. There is no reason those words should be narrowly construed. They are not limited to an enforceable contract. The arrangement does not need to be with a person (unlike subclause 2(b)(i)). The words "entered into an arrangement" should be construed as meaning a plan for self-employment that the claimant had taken steps to initiate.
The evidence shows that the claimant’s plans were not matters of mere intention but were well advanced before the accident. The claimant:
(a) had appropriate experience and qualifications to engage in employment as a voice teacher;
(b) had engaged in employment as a voice teacher prior to the birth of her child;
(c) had set herself the goal of re-commencing business as a voice teacher when her child was six months old;
(d) had a dedicated space within her residence at SSS to conduct lessons;
(e) had arranged for her mother to care for her son while giving voice lessons;
(f) had produced flyers advertising her services which she intended to display in the local area;
(g) had spoken to her Pastor about advertising in the local church newsletter, and
(h) had been contacted about her services as a voice teacher a few days after the accident.
Quantification of the claimant’s PAWE
The parties agree that the claimant’s PAWE as an earner under Schedule 1, subclause 2(a) is calculated under Schedule 1, subclause 4(2)(b) based on her gross earnings received with St Stephen's Uniting Church prior to the accident.
This yields an amount of $111.04 for PAWE.
Once the claimant qualifies as an earner as a singing performer under subclause 2 (b)(i) and as a voice teacher under subclause 2 (b)(ii), her PAWE is calculated under subclause 4(2)(c) based on the average weekly gross earnings that the earner could reasonably have been expected to earn in these occupations.
63. Clause 4 of Schedule 1 provides:
4 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 as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.
(2) In the following cases, pre-accident weekly earnings, in relation to an earner who is injured as a result of a motor accident, means—
(a)…
(a1)…
(b)…
(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.
(2A) …
(3) …
(4) ...
There is no requirement to prove an actual loss of earnings for the purposes of subclause 4(2)(c). Loss of earnings is defined in Schedule 1 to mean not only a loss incurred but also a loss likely to be incurred in a person’s income from personal exertion. In this instance, PAWE is calculated on the basis of the average weekly gross earnings that the claimant could have reasonably expected to earn, but for the injury.
The evidence reveals that before the accident, the claimant was booked for the following singing performances:
· 11/07/20, St George Chamber Orchestra, Bach's B Minor Mass, XXX Anglican Church, South Hurstville, $450;
· 12/07/20, St George Chamber Orchestra, Bach's B Minor Mass, YYY Uniting Church, $450;
· 12/09/20, Mosman Symphony Orchestra, Sydney Sacred Music Festival, $600;
· 01/11/20, Aurora Charalis concert, Mosman Art Gallery, $200;
· 12/12/20, St George Chamber Orchestra, Bach's Christmas Oratorio, XXX Anglican Church, South Hurstville, $450;
· 13/12/20, St George Chamber Orchestra, Bach's Christmas Oratorio, YYY Uniting Church, Sydney, $450, and
· 19/12/20, Aurora Choralis Christmas Concert, $200.
The total amount of these expected gross earnings over a period of 23 weeks (11 July 2020 to 19 December 2020) is $2,800.
This yields average weekly gross earnings that the claimant could reasonably have expected to earn of $121.74 and I am satisfied that this figure is appropriate for her PAWE.
The claimant’s remittance advices show that she was paid by YYY Uniting Church on 23 June 2020 and 7 July 2020. The claimant explained these payments were made ex gratia, not because she had earned them by performance: see Zheng v Cai (2009) 239 CLR 446. Accordingly, I do not take those payments into account.
In her statement, the claimant stated that she had anticipated charging $75 per hour as a voice teacher and quickly obtaining upwards of 20 regular paying students through her business. The claimant indicated that she planned for her lessons to go for one hour.
The claimant submits that it would be appropriate, taking into account the vicissitudes, to proceed on the basis that the claimant had an expectation, at least during the early stages of her business, of engaging in not less than eight hours of paid work per week – a total of $600 per week.
I accept the claimant’s submission in that regard. The evidence reveals that she had previously conducted the business of private singing lessons and bank statements provided for the financial year 1 February 2015 - 1 February 2016 disclose a regular pattern of earning through the claimant's previous business, but do not include cash-in-hand jobs that the claimant received. Having the expectation to engage in not less than eight hours of singing lessons per week in the early stages of her business is reasonable in my view.
This yields a figure of $600 for PAWE.
Combining the three PAWE pursuant to subclauses 4(2)(b) and 4(2)(c), the claimant’s total PAWE = $832.74.
I note that the claimant has made a mathematical error in adding their three figures and this error has been corrected in my determination of the claimant’s PAWE in the amount of $832.74.
Does the Act permit the combination of PAWE?
The claimant submits that when determining her PAWE, it is permissible under the Act to combine the figures arrived under more than one subclause in Schedule 1, clause 4 to arrive at her final PAWE.
The insurer did not make any submission on the issue.
There is nothing in the Act to suggest that I cannot do so. Indeed, to do otherwise, would disadvantage for example, claimants who derive their income from more than one occupation or from different types of employment arrangements or those who have had a change of circumstance from one of those occupations during the relevant period.
Costs
The Regulation does not make provision for the payment of legal costs for a merit review of PAWE under Schedule 2(1)(a).
The claimant makes an application for payment of her legal costs by the insurer pursuant to subsections 8.10(3) and 8.10(4) of the Act.
Subsection 8.10(3) provides that the claimant is only entitled to recover reasonable and necessary costs if payment is permitted by the Regulation or the Commission.
Subsection 8.10(4) provides that the Commission can permit payment of legal costs incurred by the claimant if exceptional circumstances exist to justify the payment of those costs.
The claimant’s submissions
The claimant submits that this is a complex matter involving novel issues in relation to weekly payments under the Act. Detailed submissions have been provided which deal, with those issues of statutory construction. This matter involves a degree of complexity which is removed from the usual issues involved in a weekly payments dispute.
The claimant relies on the decision in GIO v Moon [2020] NSWSC714, in particular the following observations made by Wright J in relation to subsection 8.10(4):
97. When regard is had to s 8.10(4), the DRS's [now the Commission’s] power to permit payment of legal costs can be seen as designed to deal with particular, unusual situations where the maximum costs fixed by the regulations may not be adequate.
…
99. In addition, other cases can be envisaged which are exceptional, because they involve an unusual degree of factual or legal complexity or for some other reason, and this requires the incurring of more substantial legal costs by a claimant. These cases fall within s 8.10(4). It would be consistent with the objects and other provisions of the MAI Act, including for example s 7.46, and the express terms of s 8.10(3) and (4), to permit the amount of legal costs recoverable under s 8.10 in such exceptional cases to exceed the maximum fixed by regulation, where that was reasonably required to prevent injustice, hardship or some other relevant adverse consequence.
Without intervention by way of an exceptional costs order, the claimant will recover nothing for the extensive legal work that has been undertaken. This is exactly the kind of matter where an exceptional costs order is appropriate.
On the basis of rate of $380 per hour (incl GST) for legal work performed and not less than 10 hours of relevant legal work in this matter, the claimant submits that it would be appropriate to make an order for the payment of $3,850.
The insurer’s submissions
The insurer submits that the claimant was not under a legal disability and no exceptional circumstances exist in this matter that would justify payment of legal costs incurred by the claimant.
Had the claimant provided evidence of confirmed singing lessons or performance bookings being cancelled as a result of the accident, a solicitor would not have been required to provide speculative prospective earnings.
The additional evidence provided does not constitute anything more than isolated enquiries for singing lessons without evidence of ongoing prospective singing lessons or guaranteed work.
The insurer submits that the information submitted does not support that there are exceptional circumstances to justify payment of legal costs in respect to this application.
In the alternative, should the Commission find that there should be an allowance for costs in this matter, the insurer submits it would only be appropriate to allow approximately eight monetary units of costs.
My determination on costs
I accept the claimant’s submissions that the issues that arose for determination in this matter presented a much higher degree of complexity beyond the usual issues relating to weekly payments under the Act. In particular, it involved novel issues of statutory construction which necessitated the conduct of a teleconference with the parties to explore these issues and the need for the parties to provide further submissions.
I do not accept the insurer’s submission that this matter would have been resolved by the insurer if the claimant provided evidence of confirmed singing lessons or performance bookings being cancelled as a result of the accident, would have avoided the need for legal representation. It is apparent that the claimant through her legal representative provided this evidence to the insurer before its review process was conducted. Had the insurer accepted the evidence and issued a revised PAWE at the review stage, no issue of the claimant’s legal costs would have arisen.
I am satisfied that exceptional circumstances exist in this matter to justify the payment of the claimant’s reasonable and necessary legal costs beyond what is permitted by the Regulation. Accordingly, I exercise my discretion pursuant to section 8.10(4)(b) and permit the claimant’s reasonable and necessary costs recoverable from the insurer.
Applying the rate for monetary units provided by the Regulation, I assess the claimant’s reasonable and necessary costs at 25 monetary units for professional fees ($103.75 x 25 = $2,593.75 plus GST). This equates to the amount of $2,853.10 inclusive of GST.
Conclusion
The reviewable decision is set aside.
In accordance with Schedule 1, subclauses 4(2)(b) and 4(2)(c) the amount of the claimant’s PAWE is determined to be $832.74.
The insurer is to make weekly payments to the claimant pursuant to sections 3.6 and 3.7 accordingly.
This decision takes effect on 23 May 2020.
The amount of the claimant’s costs assessed is $2,853.10 inclusive of GST.
Legislation and Guidelines
In making this decision, I have considered the following:
•Motor Accident Injuries Act2017 (the Act);
•Motor Accident Guidelines 2017(Version 7 - March 2021), and
•Motor Accident Injuries Regulation 2017 (the Regulation).
Maurice Castagnet
Merit Reviewer
Personal Injury Commission
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