AAR v Allianz Australia Ltd
[2021] NSWPICMR 7
•7 May 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | AAR v Allianz Australia Ltd [2021] NSWPICMR 7 |
| APPLICANT: | AAR |
| RESPONDENT: | Allianz Australia Insurance Limited |
| MERIT REVIEWER: | Mr Terence O’Riain |
| DATE OF DECISION: | 7 May 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit review; determination of pre-accident weekly earnings; carpenter and joiner by trade; employed on a casual basis; been overseas and had worked some cash jobs; correct and preferable method for calculating PAWE; earner at the date of accident, but not earning continuously; Held- set aside the reviewable decision and make a decision in substitution; PAWE is $540.59. |
| DETERMINATIONS MADE: | The reviewable decision is about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Motor Accident Injuries Act 2017 (the Act), and is therefore a merit review matter under Schedule 2(1) (a) of the Act. 1. Pursuant to s 7.13(3) I set aside the reviewable decision and make a decision in substitution for the reviewable decision that the pre-accident weekly earnings (PAWE) is $540.59 based on the method provided in subclause 2(a) of Schedule 1, clause 4 of the Act. 2. This decision is to be the decision of the Insurer in accordance with s 7.14(2)(a) of the Act. 3. If the parties disagree with the mathematical outcome of the calculations they have leave to notify the Commission via the Portal and provide their calculations. 4. The amount of the Claimant’s costs assessed in accordance with the Motor Accident Injuries Regulation 2017 is nil. |
STATEMENT OF REASONS
Background
There is a dispute between the Claimant AAR and the Insurer about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Act.
AAR is a carpenter and joiner by trade.
On 25 April 2020, AAR was injured in a motor vehicle accident.
AAR lodged a notice a claim dated 14 June 2020 for statutory benefits including weekly payments and medical treatment.
The Insurer, in accordance with the Act, conceded that AAR was an earner, suffered a non-minor injury and admitted liability on its insured driver's behalf.
AAR requested an internal review of the initial assessment of the Claimant's PAWE.
AAR provided the Insurer with certificates of capacity, which confirmed that he had no capacity for any work from 25 April 2020 until 25 October 2020.
On 19 October 2020 the Insurer made the reviewable decision about PAWE calculated using the method set out in Schedule 2 (4) (1) of the Act.
The Insurer conceded that AAR was entitled to weekly payments of statutory benefits during the first entitlement period pursuant to s 3.6 of the Act.
The internal reviewer examined the individual tax return for the 2018/2019 financial year and noted that his main salary and wage occupation was "construction worker – carpenter and joiner" and that he had been employed by XXX Australia Pty Ltd.
For the 2018/2019 year's AAR's total income was $51,771 (gross) and after a total of $884 deductions, taxable income was $50,887.
The internal reviewer considered a letter from MH, General Manager of YYY Construction (Aust) trading as YYY Civil and Construction Group dated 7 September 2020.
That letter confirmed that AAR had been employed with that firm on a casual basis between 12 March 2020 and mid April 2020.
The internal reviewer examined the tax return 2019/2020 financial year. It was noted that the main salary and wage occupation was "construction worker-carpenter and joiner" and it was noted that AAR's employer in that period was YYY Construction (Aust) Pty Ltd (YYY).
Earnings for the 2019/2020 financial year was $3,600 (gross) and a total of $124 deductions made the total taxable income $3,476.
The Insurer calculated the Claimant’s PAWE using the following method; $3,476.00 / 52 weeks = $66.85, and paid AAR initially 95% of the figure, in accordance with s 3.6 of the Act.
I have examined the same documents, bank statements showing the YYY payments, and had the benefit of a teleconference with the Insurer's CB and AAR on 17 March 2021.
At the teleconference AAR confirmed that in the 2019/2020 financial year that he had been overseas and had worked some cash jobs, and that AAR's sole documented employer in that period was YYY.
Also, AAR told the teleconference that he was employed by YYY at the date of accident and that he expected that employment would have continued but for the accident.
However, due to injuries from the accident AAR could not return to work and his employment was terminated.
At the teleconference on 17 March 2021 I made the following directions:
“ (a) All the following documents and other material are to be provided to myself by uploading to the Portal On or before 31 March 2021:
(b) Insurer will contact YYY C&C Pty Ltd to seek information to confirm that the Claimant’s employment was terminated as a result of him being unfit for work and/or if his employment could have been continued but for the injury.
(c) Insurer will contact AAR to seek further information about his employment and earnings with YYY and other employers during 2019-2020 financial year.
(d) On or before 14 April 2021 the Claimant will provide further material requested by the Insurer regarding his employment and earnings.
(e) On or before 21 April 2021 the Insurer will indicate whether the PAWE assessment will be altered.
(f) On or before 28 April 2021 the Claimant will send a message in the portal to say whether he agrees with any revised assessment of PAWE.
(g) If the Claimant agrees with the revised assessment, then then I will set aside the reviewable decision and remit the matter for reconsideration by the insurer in accordance with any directions I make.”
I also directed that if the Claimant did not agree with any revised assessment, I would provide a Merit Review with certificate and reasons on or before 5 May 2021.
I have not received any of the above additional items so I will make my decision on the material currently before me.
Submissions
Claimant’s submissions
AAR’s submission is that the Insurer calculated PAWE incorrectly and that the Insurer was meant to pay him what he was earning at the time (of accident).
AAR was working in construction at the time of the accident and the Insurer has assumed he was making $60 a week.
Insurer’s submission
The Insurer’s submissions are set out at document R1 submitted to the Portal.
The Insurer maintains that Claimant’s PAWE are $66.85, having regard to the Claimant’s financial documents, the Claimant’s PAWE ought to be calculated using the total taxable income minus expenses/deductions.
In addition to the below submissions, the Insurer also relies upon the Certificates of Determination – Internal Review dated 19 October 2020 (R2).
The subject accident occurred on 25 April 2020. The Claimant declared on the Application for Personal Injury Benefits dated 14 June 2020 that he was unemployed at the time of the accident and as such had not taken any time off work or lost any income due to his injuries (R3).
The Insurer confirmed that this was later clarified, and the Claimant was found to be employed by YYY Construction (Aust) Pty Ltd at the time of the accident.
The Insurer accepted the Claimant is an earner as defined by clause (2) of Schedule 1 of the Act.
The Claimant provided financial documentation by way of an Individual Tax Return for 1 July 2019 – 30 June 2020 (R4).
The Insurer submits that the correct method for calculating PAWE is under clause 4, Schedule 1 of the Act, unless one of the sub-clauses set out in clause 4(2), Schedule 1 of the Act apply.
Clause 4 (1), Schedule 1 of the Act defines PAWE as,
“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.”
The Insurer submits the Claimant’s tax return for the 2019/2020 financial year is the most accurate representation of his earnings in the 12 months before the subject accident, being 25 April 2020.
For the 2019/2020 year the Claimant’s total income was $3,600 (gross). The Insurer notes the Claimant claimed a total of $124deductions taking his total taxable income to $3476 (i.e. net).
Having regard to the above, the Insurer submitted that the Claimant’s total taxable income minus deductions/expenses is $3,476and therefore, the Claimant’s PAWE has been calculated using the following method: $3,476/ 52 weeks = $66.85
The Insurer maintains the most correct and preferable calculation of the Claimant’s PAWE is the above method and therefore, the Claimants PAWE is calculated at $66.85.
Reasons
In determining a merit review, according to s 7.13(1) of the Act, I must decide what the "correct and preferable decision" should be, according to the material before me.
I am required to step into the shoes of the Insurer and make my own decision on the merits of the dispute – s 7.13(2).
Pursuant to s 7.13(3), as merit reviewer I may decide to:
· affirm the reviewable decision, or
· vary the reviewable decision, or
· set aside the reviewable decision and make a decision in substitution for the reviewable decision, or
· set aside the reviewable decision and remit the matter for reconsideration by the insurer in accordance with any direction made by the merit reviewer.
From the material submitted by AAR and the Insurer, I discern that I am required to choose sub-clause 2(a) of Schedule 1, clause 4 of the Act, as the correct and preferable method for calculating PAWE.
Sub-clause (2) (a) of the Act provides:
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) 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.
The evidence points to AAR being an earner at the date of accident, but not earning continuously for the entire 12 months prior to the date of accident.
In his telephone conference attendance, he told me that he had spent part of the 2019/2020 financial year travelling overseas for almost three months and partly working for cash, although while in Australia in that period he estimated he worked a full workload.
AAR’s only documented employer in 2019/2020 was YYY, which employed him from 12 March 2020 until the date of accident, which was six weeks and three days.
The tax return for 2019/2020 financial year only contains the YYY earnings.
The bank statements AAR provided only show YYY earnings.
The correct method for calculating in those circumstances is under sub-clause 2(a) of Schedule 2 (4) of the Act.
In the circumstances it is the preferable method to calculate PAWE on that basis because,
(a) the only documented earnings for 2019/2020 is from AAR's time with YYY.
(b) It provides an outcome more in line with AAR's earning capacity as documented in the 2018/2019 financial year tax return. That year he earned $50,887.
(c) The method under sub-clause 1 provides an ineffective level of compensation, bearing in mind the objects of the Act set out at s 1.3 Objects of Act particularly at:
(2)(b) to provide early and ongoing financial support for persons injured in motor accidents.
By applying the method in sub-clause 2(a) the PAWE is $3,476/6 weeks and 3 days
(6.43 weeks) = $540.59.I note that the calculations in the teleconference interim report had a different outcome, which was my error.
Conclusion
Pursuant to s 7.13(3) I set aside the reviewable decision and make a decision in substitution for the reviewable decision that the PAWE is $540.59, based on the method in sub-clause 2(a) of Schedule 1, clause 4 of the Act.
This decision is to be the decision of the Insurer in accordance with s 7.14(2)(a) of the Act.
If the parties disagree with the mathematical outcome of the calculations, they have leave to notify the Commission via the Portal and provide their calculations.
The amount of the Claimant’s costs assessed in accordance with the Motor Accident Injuries Regulation 2017 is nil.
Legislation and Guidelines
In making this decision, I have considered the following:
· The application, reply and supporting documentation;
· Motor Accident Injuries Act2017(NSW);
· Motor Accident Guidelines, and
· Motor Accident Injuries Regulation 2017.
Terence O'Riain
Merit Reviewer
Personal Injury Commission
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