ABS v AAMI
[2021] NSWPICMR 23
•23 June 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | ABS v AAMI [2021] NSWPICMR 23 |
| APPLICANT: | ABS |
| RESPONDENT: | AAMI |
| MERIT REVIEWER: | Nick Delfendahl |
| DATE OF DECISION: | 23 June 2021 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit review; amount of weekly payments under Division 3.3 of the Motor Accident Injuries Act 2017; Property Manager; second job is self-employment; calculation had not taken into account the earnings from the claimant’s second job; bank statements and business tax returns; insurer failed to consider; income from the business can only be ascertained after any expenses; to treat the income separately would not be in accordance with the Act; Held- combined income from both paid employment taken into account in calculating PAWE; decision set aside. |
| DETERMINATIONS MADE: | 1. The reviewable decision is: i) varied ii) set aside and calculate the claimant’s PAWE at $861.38. 2. The amount of the Claimant’s costs assessed in accordance with the Motor Accident Injuries Regulation 2017, is $0 inclusive of GST. |
Background
There is a dispute between ABS (‘the claimant”) and AAMI (“the Insurer”) about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Act,
The claimant was involved in a motor vehicle accident at the corner of Parramatta Road and Rawson Road on 19 January 2019.
The claimant, through his solicitor, forwarded an application for personal injury benefits to the insurer under cover of letter dated 18 February 2019.
Included in the application are details of the claimant’s earnings as at the date of accident.
It indicates that he was earning $2700 gross per fortnight from a job as a Property Manager with XXX Nationwide (XXX) and a minimum of $500 net per fortnight from a second job.
That second job is self-employment in a partnership with another person and is known by the business name “YY YY”.
Based upon the claimant’s pay slips from XXX the insurer wrote to the claimant on 18 March 2019 indicating that his Pre-accident Weekly Earnings (PAWE) had been calculated as $1254.23.
The claimant solicitor made contact with the insurer indicating that the PAWE calculation had not taken into account the earnings from the claimant’s second job.
The insurer responded by email dated 22 March 2019 indicating that the decision would be reviewed.
10. It appears that that review did not, for reasons that are not clear, take place and in September 2019 the claimant lodged an Application for Internal Review.
11. The application sought a review of the insurer’s determination that the claimant had a minor injury, and the calculation of PAWE noting in particular that there had been no allowance for earnings from the claimant’s second job.
12. The outcome of the dispute concerning minor injury is not known and is in any case irrelevant for the purposes of this application.
13. On or about 6 May 2020 the insurer’s Internal Reviewer issued a decision which determined the claimant’s PAWE was $780.08.
14. The claimant then lodged this application for merit review disputing the insurer’s calculation.
15. In the time between the lodgement of the claimant’s application for personal injury benefits in February 2019 and the Internal Review Decision the claimant provided to the insurer various documents to the insurer to show his income from his second job.
16. Those documents include tax returns for the years ended June 2018 and 2019 for the claimant and the partnership.
17. Also included are the YY YY’s statements and documents described as “Creditor Trust Ledger” which list payments made by XXX to YY YY for work carried out.
Submissions
18. The claimant’s application was lodged in June 2020.
19. It sets out brief submissions stating that the insurer failed to take into consideration the business/partnership returns from YY YY and erred in determining that the claimant’s individual return for 2018 did take into account the claimant’s business/partnership income.
20. The insurer in submissions attached to its Reply says that all information was taken into account but that the information supplied did not allow it to accurately calculate the claimant’s business income for the 12 months immediately preceding the date of accident.
21. The insurer says therefore the only way it could accurately calculate the claimant’s income was by reference to the 2018 tax return.
22. It says the tax return for 2018 indicates that the claimant deducted from his XXX income losses suffered in the business and that as a result the overall taxable income for 2018 did include income (in this case a loss) from the business.
23. The claimant says he did provide bank statements and business tax returns but the insurer failed to consider those.
24. The insurer says it would have been assisted by having available the businesses BAS statements for the 12 months to the date of accident.
Reasons
25. The definition of PAWE is set out at Schedule 1 of the Motor Injuries Act 2017. It is defined as the average weekly gross earnings of the earner in the 12 months immediately preceding the accident.
26. The insurer’s Internal Reviewer provided extensive reasons as to why she had determined the claimant’s PAWE at $780.08.
27. Those reasons do indicate that she had taken into account all documents before her and lists what those documents were.
28. The list includes the business tax returns for the 2018 and 2019 tax years.
29. It does not mention the bank statements for the business.
30. Those reasons also state that although requested YY YY’s BAS had not been provided although requested.
31. The reasons rely on the claimant’s individual taxable income for 2018 in calculating PAWE.
32. The reasons point out that it was not possible to accurately calculate the claimant’s income from YY YY without the BAS.
33. The claimant’s submissions do not set out why it is said the insurer was in error.
34. I accept that the insurer may not have considered the YY YY’s bank statement but the claimant’s submissions do not indicate how those bank statements should have been considered.
35. In addition, the claimant does not submit what the amount of business income should have been calculated at or how it should have been calculated.
36. If it is that the claimant says that they provided an indication of the business’s gross income in the 12 months to the accident that may be correct although it is uncertain as to whether all income for the business was paid into that account.
37. The “Creditor Trust Ledgers” appear to show only payments made by XXX to the partnership.
38. In any case, if those documents do show all income for the business it has to be considered if that constitutes “gross earnings” as set out in the definition of PAWE.
39. The Act does not include a definition of gross earnings.
40. Although not clear I have assumed the claimant’s position is that the insurer should make their calculation based on earnings only without regard to any business deductions.
41. In my view the gross earnings of any business must take into account any expenses to the business.
42. In any case, the claimant is able to also deduct business losses from his individual income which provides a taxable income for the particular year.
43. The insurer relies on a decision in AHS v Allianz [2019] NSWDRMR 206. That decision is to the effect that gross earnings are to be calculated after all deductions have been made but before tax.
44. I am in agreement with that decision.
45. The claimant’s income from the business can only be ascertained after any expenses. The business declared a loss in both the 2018 and 2019 tax years.
46. The best way to ascertain that is by way of reference to taxation records.
47. The business lodged a tax return for 2018 that showed an income of $33973 and expenses of $38087 resulting in a loss of $4114.
48. In the 2018 tax year the claimant was entitled to 50% of the business income or losses.
49. He was required to declare any income or loss from the business in his individual tax return as that formed part of his overall income.
50. As there was a loss of $2057 that reduced his assessable income by an equivalent amount.
51. Had the business made a profit his taxable income would have been greater.
52. The accident occurred in January 2019 and approximately 6 months into the 2019 tax year.
53. The business income in that year was greater than in 2018 but expenses were also higher resulting in a loss to the business of $10866 although in that year the claimant’s proportion of the business was 30% only.
54. The claimant’s individual tax return in that year shows his income from XXX was higher than it had been in 2018 but that the business loss was also included thus reducing his taxable income.
55. The claimant therefore received a benefit in each year in that his taxable income was reduced.
56. The claimant has not submitted why the income from XXX and YY YY should be treated separately.
57. If that is the claimant’s submission there is nothing to indicate why it should be treated separately.
58. In my opinion to treat the income separately would not be in accordance with the Act.
59. Schedule 1 Part 3(2) of the Act defines what is considered to be income from Personal Exertions which requires a calculation of all income sources including income from self-employment.
60. Therefore it is the combined income from both paid employment, bonuses and self-employment that must be taken into account in calculating PAWE.
61. The next issue is the period in which PAWE is to be calculated and how to calculate it.
62. Schedule 1 provides that the period is to be the 12 months to the day immediately preceding that date of accident.
63. In this case that would be the period from 18 January2018 to 18 January 2019.
64. The insurer initially made its calculation on that period using the claimant’s payslips from XXX only.
65. The claimant requested the insurer to also include income from the business which the insurer’s Internal Reviewer attempted to do.
66. The Internal Reviewer was unable to make an accurate calculation of the business income and expenses in the 12 months to 18 January 2019 and therefore calculated PAWE based on the claimant’s 2018 individual tax return.
67. However, I accept that that is the period in which it must be calculated.
68. I have assumed that he did return to work at some time between the date of accident and the end of the 2019 tax year.
69. In my view the fairest way to calculate the PAWE is by reference to 50% of the claimant’s income shown in his tax return for 2018 and 50% of that shown in his 2019 tax return.
70. That is on the basis that the accident occurred slightly greater than half way through the 2019 tax year.
71. In my calculation therefore the claimant’s PAWE in the year from 18 January 2018 to 18 January 2019 is $861.38.
72. I appreciate that that does not take into account that the claimant’s share of losses from the business was less in the 2019 tax year than it was in 2018 as the claimant only claimed 30% in 2019 but 50% in 2018.
73. Equally, I cannot be fully satisfied that in the period after 18 January 2019 what the business’s income would have been had the claimant not been involved in the subject motor vehicle accident.
74. I note also the delay between the date of lodgement and the date of allocation.
75. On allocation to myself the parties were provided with the opportunity to provide any further submissions or other evidence.
76. No response was received and as a result I have proceeded to provide my determination.
Conclusion
77. The reviewable decision is:
i)varied
ii)set aside and calculate the claimant’s PAWE at $861.38.
78. The amount of the Claimant’s costs assessed in accordance with the Motor Accident Injuries Regulation 2017 is $0 inclusive of GST.
Legislation and Guidelines
79. In making this decision, I have considered the following:
· The application, reply and supporting documentation
· Motor Accident Injuries Act2017 (NSW) (the Act)
· Motor Accident Guidelines
· Motor Accident Injuries Regulation (NSW) (the Regulation)
Nick Delfendahl
Merit Reviewer
Personal Injury Commission
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