AAMI Limited v Harris
[2021] NSWPIC 367
•13 July 2021
| CERTIFICATE OF DETERMINATION OF MEMBER | |
CITATION: | AAMI Limited v Harris [2021] NSWPIC 367 |
| CLAIMANT: | Arthur Harris |
| INSURER: | AAMI Limited |
| MEMBER: | Susan McTegg |
| DATE OF DECISION: | 13 July 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS - Approval; 56 year old male; rear end collision; injury to the right knee resulting in tear of the medial meniscus; injury to neck; injury to back; 1% whole person impairment; past economic loss; self-employed undertaking maintenance and handyman work; total and partial incapacity for work; fit for pre-accident employment but to avoid repetitive squatting or heavy lifting; modest buffer for future impairment of earning capacity; no entitlement to recover damages for cost of retraining; section 4.5 of the Motor Accident Injuries Act 2017; Held – proposed settlement is just, fair and reasonable; settlement approved. |
| DETERMINATIONS MADE: | 1. This proposed settlement is approved. 2. The proposed settlement is approved under s 6.23(2)(b) of the Motor Accident Injuries Act 2017 (the 2017 Act). 3. The proposed settlement complies with cl 7.38 of the Motor Accident Injuries Guidelines. |
Introduction
On 10 May 2018, Arthur Harris (the Claimant) sustained injury in a motor vehicle accident (the accident).
The Claimant’s vehicle was stationary at lights at the intersection of Macquarie Road and Rawson Street, Auburn when his vehicle was rear-ended by the at fault vehicle.
The Claimant asserts he suffered injury to his neck, back, both shoulders and a meniscal tear of the right knee.
The Claimant has made a claim against AAMI Limited the CTP insurer of the at fault vehicle, for lump sum damages. The Insurer has accepted liability.
The Insurer accepted liability for the claim for statutory benefits and has paid treatment benefits to, or on behalf of the Claimant. No statutory benefits for weekly wage loss were paid to the Claimant.
The Insurer has accepted that Claimant had non-minor injuries and pursuant to Division 3.4 of the 2017 Act he is entitled to payment of reasonable treatment and care for the rest of his life for his accident caused injuries.
The Claimant and the Insurer have agreed to settle the claim for lump sum damages for the sum of $26,000. Because the Claimant is not represented by a lawyer, his settlement must be approved in accordance with the 2017 Act.
The Insurer lodged the application for approval of the settlement, and it was referred to me for consideration. I held a teleconference on 28 June 2021 and again on 6 July 2021.
The Personal Injury Commission (the PIC) was established on 1 March 2021 and the Dispute Resolution Service was abolished by clause 3 of Part 2, Division 2, Schedule 1 to the Personal Injury Commission Act 2020. I am a Member of the Motor Accidents Division of the PIC. Clause 14A (1) of the Personal Injury Commission Regulation 2020 designates the application “pre-establishment proceedings” and clause 14D empowers me to determine those proceedings.
Because of the date of the accident clause 14D(3)(b) provides that the 2017 Act and the Motor Accident Guidelines (the Guidelines) continue to apply.
Relevant documents
I have had regard to the documents furnished by the Insurer in support of the application submitted in one bundle of 245 pages together with a supporting index.
I have also had regard to a further letter of offer from the Insurer dated 6 July 2021.
The relevant law
Section 6.23(1) of the 2017 Act provides a claim for damages cannot be settled within two years after the accident unless the degree of permanent impairment of the injured person caused by the accident is greater than 10%.
Section 6.23(2) and (3) of the 2017 Act requires approval of the settlement and I am not to approve the settlement unless I am satisfied it complies with any of the requirements of the 2017 Act or the Guidelines.
Clause 7.38 of the Guidelines states I must be satisfied as to the following:
(a)the proposed settlement satisfies the timing requirements in s 6.23(1) of the 2017 Act;
(b)the proposed settlement is just, fair and reasonable and within the range of likely potential damages assessments for the claim were the matter to be assessed by a claims assessor, taking into account the nature and extent of the claim and the injuries, disabilities, impairments and losses sustained by the claimant, and taking into account any proposed reductions or deductions in the proposed settlement, and
(c)the Claimant understands the nature and effect of the proposed settlement and is willing to accept the proposed settlement.
Review of the evidence
The Claimant was born on 12 June 1965 and is currently 56 years of age.
In the Application for personal injury benefits the Claimant described his usual occupation as Real Estate Agent. However, in particulars the Claimant stated that at the time of the accident he was self-employed working under the business name Civic Property Services. That business was registered on 21 September 2017. The Claimant was undertaking maintenance and handyman work for homeowners and was also repairing and maintaining his own rental properties as well.
On 13 March 2018 the Claimant consulted his GP Dr Younis with back pain. She diagnosed spondylolisthesis and referred the Claimant for an x-ray of his lumbo-sacral spine. The x-ray disclosed degenerative disc disease at L5/S1.
On 20 March 2018 the Claimant was referred to Mary Street Physiotherapy in respect of lower back pain.
The Claimant again consulted Dr Younis on 21 March 2018 in respect of retrolisthesis at L3/4, L5/S1 and L4/5.
On 16 April 2018 the Claimant consulted Dr Naqvi in relation to chronic low mood and low motivation. The clinical notes include the notation “do work but not paid full time work”. A Mental Health Care Plan was prepared with a diagnosis of depression and anxiety recorded. The Claimant was referred to a psychologist, Rabeah Bardouh.
The next consultation was with Dr Naqvi on 12 May 2018 following the accident. Dr Naqvi recorded a history of the accident stating inter alia:
“Felt jolt on back only, tingling in back Shocked
This morning rt knee started hurting painful and cracking feeling in joint can move knee with some pain 5/10 also stiff upper back
no skin laceration
Ambulance arrived at accident but no one taken to hospital and he was feeling ok after initial shock.”
Dr Naqvi diagnosed right knee pain and muscular strain to the right shoulder area.
The Claimant underwent an MRI on 16 May 2018 which disclosed a complex undisplaced tear of the right medial meniscus. The Claimant was referred to Dr Peter Walker, orthopaedic specialist.
A Care Plan dated 1 June 2018 states “lower back pain getting worse, may need to see spinal surgeon”.
The Claimant underwent a right knee arthroscopy and partial medial meniscectomy and chondroplasty on 30 July 2018 under the care of Dr Walker.
The Claimant underwent an Initial Needs Assessment conducted by IPAR on 12 November 2018. The Claimant reportedly returned to work on an intermittent basis at the end of August or beginning of September 2018.
The Claimant was referred to Guardian Exercise Rehabilitation on 10 December 2018. The Claimant was instructed in a program of exercises which he carried out at Dooleys Gym at Lidcombe. In a Final Exercise Report of 6 March 2019, it was reported the Claimant experienced minimal right knee pain in general but occasional pain when the knee is under heavy load. The Claimant had improved functional tolerances for squatting, steps, lunging and lifting. It was considered he was fit for pre-injury duties as a real estate agent. The Claimant was advised to continue with his exercises.
The Claimant underwent a further MRI of the right knee on 19 March 2019 which disclosed, inter alia, “Focal Grade III-IV chondromalacia patellae demonstrated particularly superiorly”.
On 17 April 2019 Dr Huzaia certified the Claimant fit for pre-injury duties on the basis he avoids squatting, climbing ladders, and putting any significant stress on the knee.
On 1 May 2019 Dr Huzaia reported the Claimant still suffered from some restriction in knee movements and sometimes from pain. The Claimant was advised of the increased risk of osteoarthritis in the right knee.
On 22 July 2020 the Claimant was reviewed by Dr Ian Barrett, orthopaedic surgeon at the request of the Insurer. Dr Barrett recorded the Claimant was self-employed and continued working but struggled to do certain tasks which involved excessive use of his right knee such as lawn mowing. He reported complaints of intermittent pain in the right knee, particularly with excessive squatting or heavy physical work. The Claimant described difficulty getting in and out of the car and a feeling of tightness in the knee in the morning. He also reported intermittent back pain since the accident.
Dr Barrett expressed the following opinion as to diagnosis:
“As a result of the subject motor vehicle accident Mr Harris appears to have sustained a compression twisting injury to his right knee resulting in a posterior horn tear of the medial meniscus of the right knee. He has required subsequent surgery in the form of a partial medial meniscectomy. At the time of surgery he was also noted to have some chondral damage involving the medial compartment which appears to be responsible for his continuing symptomology.”
Dr Barrett opined the Claimant would have had difficulty resuming full pre-accident employment in the first few months after the accident and would also have had some difficulty for four to six weeks following the arthroscopic procedure. He felt the Claimant was fit to resume his pre-accident employment providing he avoids repetitive squatting or heavy lifting.
Dr Barrett assessed a whole person impairment of 1%. Where the Claimant has not been able to establish he has sustained a whole person impairment of more than 10% he is not entitled to recover damages for non-economic loss.
The Claimant’s submissions
The Claimant provided particulars of his claim after receiving an email from the Insurer in August 2020. He stated he suffered whiplash to his neck and back, a torn meniscus in his right knee and pins and needles in his fingers. Continuing disabilities included discomfort with some pain in the right knee when squatting or playing sports like tennis, running, and doing yoga. He also still experienced numbness in his left-hand fingers with a tingling sensation.
The Claimant asserts he was unfit for work and sustained a loss of income until 18 January 2021 when he commenced a business in home repairs. The Claimant states he could not continue in his pre-injury occupation and was required to retrain in another vocation. He completed the following courses:
·Certificate 3 – Waterproofing: Masters Builders Association
· TAFE 40116 Certificate IV in Training and Assessment
The Claimant has also enrolled in the following courses:
·Certificate 3 Wall and Floor Tiling
·Certificate 4 Constructions.
The Claimant indicated he wished to claim the cost of retraining at a total estimated cost of $8,000. The Claimant asserts these courses will allow him to transition from hands on work to project managing construction work. The courses will provide the Claimant with a licence which will permit him to contract others to do the hands-on work.
He also claims the loss of income from his business Civic Property Services and the income loss and capital loss from investment properties and residences. The Claimant states he is the owner of three properties which he has been unable to repair and maintain. He asserts the properties have fallen into disrepair resulting in a loss of rental income. The Claimant estimates the cost of labour to complete the maintenance on those properties is approximately $60,000.
The Claimant states his personal tax returns show the following net income:
·2015 - $15,500
·2016 - $36,888
·2017 - $24,185
·2018 - $10,000.
Civic Property Services started trading in September 2017 and ceased following the accident. The Claimant states his gross business income from Civic Financial Group Trading as Civic Property Services in the financial year ended 30 June 2018 was
$11,818.18.
The Claimant asserts a loss of $280,000 calculated on total sales divided by six months. He asserts the BAS statements disclose a drop in income following the accident on 10 May 2018 as follows:
·December quarter 2017- Sales $5,000
·March quarter 2018 – Sales $7,000
·June quarter 2019 – Sales $1,000.
The Claimant submits that on the basis he was starting a business at the time of the accident and it takes times to establish a business his loss of income should be calculated on the average earnings for a male in Australia.
The Insurer’s submissions
The Insurer submits the Claimant was fit for his normal duties (albeit with minor restrictions) from 17 April 2019, and that the cessation of the Claimant’s business was not related to the accident. For that reason, the Insurer does not make any allowance for the cost of retraining.
The Insurer disputes, even with growth, the average earnings of the business would be in the vicinity of the average weekly earnings of a male in Australia.
The Insurer notes the business had an outstanding shareholder loan in the sum of
$101,215 for the 2018 financial year. Further, the gross income from the business in the 2018 financial year, that is, in the eight months since the inception of the business to the month after the accident was only $11,818.18.
The Insurer submits based on the sales disclosed by the BAS Statements the average earnings over the six-month pre-accident period is approximately $461 net per week.
Furthermore, the Insurer submits there is a period of five weeks when the Claimant was in Japan which is not compensable.
The Insurer conceded the Claimant was totally incapacitated for work from 10 May 2018 until 10 September 2018 (17 weeks and 5 days but say 18 weeks). The Insurer assesses damages for that period at $500 net per week for 18 weeks in the sum of
$9,000.
Thereafter, the Insurer concedes the Claimant would have been partially incapacitated for work from 11 September 2018 until 17 April 2019. However, in assessing damages for that period the Insurer notes the following:
“You told Dr Barrett you returned to your pre-injury duties of “gardening, lawn mowing, general repairs, painting and flooring” on flexible hours after your surgery, in August or September 2018.
On 26 February 2019, you then told the exercise physiologist you had been renovating your home, and whilst you were working, there was minimal work available at that time.
Subsequently, at a case conference on March 2019 you told Dr Kamil Huzaia and the rehabilitation provider you were managing all your duties, albeit with pain. You were certified fit for a trial of pre-injury duties at that time. We note you were then were certified fit for pre-injury duties (albeit, on the proviso you were to avoid squatting, climbing ladders, and putting any significant stress on the knee) on 17 April 2019 by Dr Kamil Huzaia.”
On that basis the Insurer has allowed damages calculated at $150 net per week on the basis of partial incapacity for the period 11 September 2018 to 17 April 2019 (31 weeks) in the sum of $4,650.
The Insurer noting the Claimant has a working life of 12 years before retirement age and the opinion of Dr Barrett that he should avoid repetitive squatting and heavy lifting has also allowed a buffer of $20,000 for loss of future earning capacity.
Should I approve this settlement
Firstly, there is only an entitlement to damages at common law for non-economic loss and for economic loss. The Claimant has not established he has a permanent impairment greater than 10% and therefore, has no entitlement to non-economic loss.
Section 4.5 of the Act places the following limits on economic loss:
“(1) The only damages that may be awarded for economic loss are (subject to this Division)--
(a) damages for past or future economic loss due to loss of earnings or the deprivation or impairment of earning capacity, and
(b) damages for costs relating to accommodation or travel (not being the cost of treatment and care) of a kind prescribed by the regulations, and
(c) damages for the cost of the financial management of damages that are awarded, and
(d) damages by way of re-imbursement for income tax paid or payable on statutory benefits or workers compensation benefits arising from
the injury that are required to be repaid on an award of damages to which this Part applies.”
There is no entitlement to recover damages for the cost of retraining at common law having regard to the provisions of s 4.5 of the 2017 Act. The cost of treatment, rehabilitation and vocational training are statutory benefits payable pursuant to Division
3.4 of the Act and not within the purview of this settlement.
Noting the entitlement to damages for economic loss is limited to loss of earnings or the deprivation or impairment of earning capacity there is also no clear entitlement to recover damages for the cost of labour to complete maintenance on the Claimant’s investment properties. Furthermore, there is no evidence to verify a loss of rental income because the properties fell into a state of disrepair.
I agree with the Insurer that it is appropriate to measure the entitlement to economic loss by reference to a net weekly loss. Having regard to the Claimant’s earnings as disclosed in his personal taxation returns for the financial years ended 30 June 2015 to date, I consider the figure of $500 net per week to be reasonable.
I consider it is appropriate to assess damages for total incapacity from the date of accident until six weeks post-surgery, that is, from 10 May 2018 until 10 September 2018 (18 weeks) at $500 net per week.
For the reasons set out in paragraph 48 above I agree it is also appropriate to allow damages calculated at $150 net per week on the basis of partial incapacity for the period 11 September 2018 to 17 April 2019 (31 weeks) in the sum of $4,650.
In relation to future economic loss the Insurer has correctly recognised that the Claimant has an impairment of his earning capacity which may disadvantage him on the open labour market.
In assessing future economic loss, I must have regard to the provisions of s 126 of the Motor Accidents Compensation Act 1999 which states:
“No allowance may be made for future loss of earning capacity unless the Claimant establishes that the accident has caused a change in his or her most likely future circumstances.”
In cases such as Medlin v State Government Insurance Commission (1995) 185 CLR and Husher v Husher (1999) 197 CLR 138, the High Court confirmed that the fundamental questions to be determined in a case such as this, are whether the Claimant has sustained a loss or diminution in her earning capacity and, if so, whether that loss or diminution will result in economic loss.
It is appropriate to award a buffer when the impact of an injury upon the economic benefit from exercising earning capacity after injury is difficult to determine, as per Penrith City Council v Parks [2004] NSWCA 201. I agree with the Insurer that this is an appropriate case for the award of a buffer.
I also agree that it is appropriate to award a modest buffer noting the Claimant’s past earnings as disclosed in his taxation returns, the opinion of Dr Barrett and the Claimant’s age. I agree a buffer for $20,000 for future economic loss is fair and reasonable.
Accordingly, I consider the assessment of damages in the total sum of $33,650 proposed by the Insurer to be fair.
The Insurer advised it would not deduct and pay monies to Medicare under the Health and Other Services (Compensation) Act 1995 (Cwlth) from the settlement sum.
If a charge is raised by Medicare in respect of treatment expenses paid by Medicare relating to the injury, the Claimant should ask the Insurer to pay that charge pursuant to his statutory benefits claim as part of their obligation to pay reasonable treatment costs.
Conclusion
I find the timing requirements of section 6.23(1) of the 2017 Act satisfied where it is now two years since the date of accident.
I am satisfied the proposed settlement is just, fair and reasonable and within the range of likely potential damages assessments if the claim was to proceed to assessment taking into account the nature and extent of the claim, the injuries, disabilities, impairments and losses sustained by the Claimant.
I am satisfied the Claimant is aware he can seek legal advice but does not wish to do so.
I am satisfied the Claimant understands the binding nature of the settlement and that he will be precluded from making a further claim for damages arising out of the accident. I am satisfied the Claimant is willing to accept the proposed settlement.
Accordingly, pursuant to section 6.23(2(b) of the 2017 Act I approve the settlement of the claim for damages in the sum of $33,650.
Susan McTegg
Member (Motor Accidents Division) Personal Injury Commission
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