Insurance Australia Limited t/as NRMA Insurance v Blachnig
[2023] NSWPIC 396
•9 August 2023
| CERTIFICATE OF DETERMINATION OF MEMBER | |
Citation: | Insurance Australia Limited t/as NRMA Insurance v Blachnig [2023] NSWPIC 396 |
| Claimant: | Jacqueline Blachnig |
| insurer: | Insurance Australia Limited t/as NRMA Insurance |
| Member: | Maurice Castagnet |
DATE OF DECISION: | 9 August 2023 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; approval of settlement; section 6.23; damages for non-economic loss; past and future economic loss; claimant now 56 years of age; self-employed cleaner; soft tissue injuries to neck, lower back, right ankle, both shoulders; fractured tooth and chipped teeth; injury to chest wall resulting in ruptured bilateral breast implants; development of psychological injury; claimant has not returned to work since the accident; loss of past and future earnings; small residual earning capacity; Held – proposed settlement of $534,000 approved. |
| determinations made: | CERTIFICATE OF DETERMINATION Settlement Approval 1. The proposed settlement sum of $534,000 is approved under sub-s 6.23(2)(b) of the Motor Accident Injuries Act2017. 2. Pursuant to sub-s 3.40(1)(b) of the Act, the insurer is entitled to deduct the sum of $15,585.49 from the proposed settlement sum by way of recovery for weekly payments of statutory benefits paid to the claimant under Division 3.3. |
STATEMENT OF REASONS
INTRODUCTION
On 21 December 2021, the claimant, Jacqueline Blachnig, made a claim for common law damages for the injuries she sustained in a motor accident on 12 July 2019.
On 10 March 2022, the insurer accepted liability for the claim.
The insurer and the claimant have now agreed to settle the claimant’s claim for the sum of $534,000 (the proposed settlement).
The claimant is not legally represented.
Section 6.23(2) of the Motor Accident Injuries Act 2017 (MAI Act) provides that a claim for damages by a claimant who is not represented in respect of the claim by an Australian legal practitioner, cannot be settled unless the proposed settlement is approved by Personal Injury Commission (Commission).
On 25 May 2023, the insurer lodged an application with the Commission to have the proposed settlement approved.
The matter has been referred to me to consider approval of the proposed settlement.
DOCUMENTS CONSIDERED
In making my decision, I considered the following documents:
(a) the insurer’s bundle of documents submitted with the application marked A-1 to
A-22 (322 pages), and(b) the insurer’s additional bundle of documents marked AD-1, lodged with the Commission on 7 July 2023 (88 pages).
LEGISLATION
In making my decision, I considered the following legislation, rules and guidelines:
· the MAI Act;
· Motor Accident Injuries Regulation 2017 (Regulation);
· Personal Injury Commission Rules 2021 (PIC Rules), and
· the Motor Accident Guidelines, Version 9.1 (Guideline).
COMPLIANCE WITH THE PIC RULES
Section 95 (1) of the PIC Rules requires the insurer to lodge the application for approval with the Commission within seven days of reaching an agreement with the claimant about the proposed settlement.
The material before me showed that the claimant accepted the proposed settlement on 22 May 2023 and that the application was lodged with the Commission by the insurer on 25 May 2023. The application was therefore lodged in compliance with r 95(1).
THE EVIDENCE
The documents before me may relevantly be summarised as follows:
The motor accident
The claimant was 52 years of age when she sustained injuries in the motor accident on 12 July 2019.
On that day, the claimant was travelling north in the far-left hand lane of the M1 freeway at Wahroonga when the insured vehicle, a prime mover, crossed other lanes and collided with the rear of the claimant’s vehicle. In the process, the claimant’s vehicle was spun around and pushed up the freeway for about 150 metres before coming to a stop.
Medical treatment
The claimant was not taken to hospital but she consulted her general practitioner, Dr Gary Wu for treatment on the same day.
The evidence shows that the claimant sustained an injury to her neck, lower back, both shoulders, chest, right ankle, face/teeth, ruptured bilateral breast implants. The claimant developed a psychological injury.
Dr Wu referred the claimant for physiotherapy and psychological treatment.
The claimant was treated with short-term traction for her neck pain.
The claimant’s treating psychologist, Ms Angela Barry, eventually made a diagnosis of post-traumatic stress disorder.
As a result of the chest wall injury, the claimant had her breast implants removed as well as some lymph nodes. The removal procedure was complicated by haemorrhage, and it was necessary for the claimant to undergo further surgery for drainage of the haematoma.
The claimant was also required to have oral surgery for a fractured tooth.
As a result of a change of address, the claimant continued treatment through another general practitioner, Dr Mario Fam in West Gosford.
Medico-legal assessment – Dr Harrington
On 18 November 2022, the claimant was examined by orthopaedic surgeon, Dr Christopher Harrington at the request of the insurer.
In his report dated 23 November 2022, Dr Harrington recorded that the claimant reported she was having the following problems:
(a) she was having ongoing trouble with ongoing neck pain. She cannot rotate her neck, particular to the right;
(b) she described bad headaches which occurred at least once a month. She treats this herself by staying in a dark room;
(c) she experiences radiating pain down her dominant arm;
(d) she has restricted movement of her right shoulder;
(e) she experiences pain, stiffness and swelling in her right ankle;
(f) she has back pain below the belt line;
(g) she cannot take her dogs for a walk, and
(h) she is able to do light housework but does not have any hobbies or interests;
Dr Harrington was of the opinion that the claimant sustained a soft tissue injury to her cervical spine and lumbar spine in the accident. He believed the restricted movement of the claimant’s right shoulder could be a combination of localized shoulder pathology (adhesive capsulitis), referred pain from the neck and some tethering from the surgery to the lymph nodes. The restricted elevation of her shoulder interferes with everyday activities.
Dr Harrington stated that the claimant presented with a painful and stiff right ankle after the accident. He was of the opinion that a stiff subtalar joint may have been asymptomatic prior to the accident, but on balance of probabilities, the injury would be causally related to the accident.
Dr Harrington found that the claimant’s injuries gave rise to permanent impairment. He assessed whole person impairment of 5% for the neck injury, 4% for the right shoulder and 4% for the right ankle/hindfoot injury, resulting in a combined whole personal impairment of 13%.
As a result of Dr Harrington’s permanent impairment assessment, the insurer conceded that the claimant was entitled to damages for non-economic loss.
Dr Harrington noted that although it was not within his field of expertise, the mental anguish as a result of the claimant’s breast implant surgery and the post-traumatic stress disorder which followed the accident, should not be ignored.
The claimant’s statement
On 26 April 2023, the claimant provided a statement to the insurer to assist the insurer with assessment of damages for non-economic loss. That evidence may be summarised as follows:
(a) her numerous physical injuries continue to give her day to day grief;
(b) she has problems turning her neck properly and it is painful when she looks over the right shoulder;
(c) she experiences pins and needles in her right arm and numbness in her finger when laying on her right side;
(d) she experiences swelling in her right ankle which then becomes extremely painful. The right ankle ‘cracks’ when she moves up and down;
(e) she experiences pain on the right side of her body generally;
(f) she has problems sitting for long periods of time. She can no longer go to the cinema;
(g) she sustained cracks and chips in her teeth. They ache constantly and are very sensitive;
(h) her smile is not as attractive as before due to the cracked and chipped teeth which causes her to be anxious, especially in a social environment;
(i) she has suffered and continues to suffer from a lot of migraine headaches since the accident. Treatment includes staying in a dark room and taking medication which she did not have to do prior to the accident;
(j) she says she has been diagnosed with post-traumatic stress disorder which severely impacts her daily life;
(k) she suffers from ongoing sleep deprivation and body tremor. She has no stamina and has to rest throughout the day;
(l) she can no longer drive long distances. She is anxious as a passenger. She experiences constant sweating, shortness of breath and ‘sticky palms’ when faced with stresses of daily life;
(m) she experiences forgetfulness, irritation and frequent nightmares related to the accident;
(n) she was a very social outgoing person before the accident. She now avoids socialising with her friends, and
(o) she feels the accident has taken the opportunity away from her to expand on her already successful cleaning business. She intended to employ staff to the extent that she would eventually not have to do the physical work of the business and just manage a small team of staff. She can no longer do so because of her physical and psychological injuries.
THE CLAIMANT’S UNDERSTANDING OF THE PROPOSED SETTLEMENT
In conformity with s 6.23(3) of the MAI Act, before I approve the settlement, I must be satisfied that that it complies with the applicable requirements of the MAI Act and the Guideline.
Sub-clauses 7.37 (c) and (d) of the Guidelines provide that before I approve the proposed settlement under sub-s 6.23(3) of the MAI Act, I must be satisfied that the claimant understands that she is entitled to be represented in respect of the claim by an Australian legal practitioner and understands the nature and effect of the proposed settlement, and is willing to accept it.
On 27 June 2023, I conducted a teleconference to question the claimant about those issues. The claimant appeared in person and Ms Zorana Crnobrnja, Lawyer of NRMA, appeared for the insurer.
The insurer’s offer of settlement presented for approval on that day was in the sum of $330,000. The offer comprised of damages for non-economic loss in the amount of $180,000, past economic loss in the amount of $42,000, future economic loss in the amount of $108,000.
The claimant had received weekly payments of statutory benefits to a total of $15,585.49. The insurer would therefore be entitled to make a deduction of $15,585.39 from the settlement sum, leaving the claimant with an amount of $314,414.51. On 22 May 2023, the claimant accepted the offer of settlement.
At the teleconference, the claimant stated that she was still having the problems that she outlined in her statement to the insurer on 26 April 2023. She was not currently having psychological treatment and was looking to find a suitable therapist.
Following discussions, I advised the parties that considering the evidence before me and the statements from the claimant today, I was not satisfied that the settlement sum was just, fair and reasonable in the circumstances.
Ms Crnobrnja sought some time to obtain further instructions on behalf of the insurer. On that basis, I adjourned the matter to a further teleconference on 11 July 2023.
At the teleconference on 11 July 2023, I was advised by Ms Crnobrnja that the insurer had revised the settlement sum to $500,000 and that the claimant had accepted it.
I indicated to Ms Crnobrnja that I was satisfied that the amounts now offered for damages for non-economic loss ($280,000) and future economic loss (about $157,000) were just, fair and reasonable. However, I had some concerns about how the allowance of $63,240.36 for past economic loss was arrived at, considering the evidence shows that the claimant has not worked since the accident (four years to the day of this teleconference) and that prior to the accident she was earning $465 net per week.
During the course of the teleconference, Ms Crnobrnja was able to obtain instructions from the insurer to revise the amount allowed for past economic loss to $96,720, bringing the overall settlement offer to $534,000. I advised the parties that I was now satisfied the proposed settlement was just, fair and reasonable and that I would approve it. My reasons for doing so are further explained below.
I explained to the claimant that proceeding with the proposed settlement will not affect her ongoing rights to benefits for reasonable and necessary treatment and care, for the rest of her life. I indicated to the claimant that those benefits cover a wide range of benefits, including the costs of medical treatment, medication, home and transport modifications, home assistance such as lawnmowing and future surgery.
I explained to the claimant that according to the MAI Act, the insurer is entitled to be repaid all the weekly payments of statutory benefits that have been made to her and according to paragraph 2.2 of the proposed Settlement Agreement, the insurer will be deducting the sum of the insurer of $15,585.39 for that purpose. The claimant stated that she was aware that the deduction would be made.
I explained to the claimant that if she has received any Centrelink benefits after the accident, those benefits may become repayable under a notice of charge by Centrelink. I further explained to the claimant that the insurer must obtain a clearance from Centrelink in that regard and that the insurer is required to pay any charge issued by Centrelink before releasing the settlement funds to her.
I indicated to the claimant that the net result of the proposed settlement is that she will receive the sum of $518,414.51 once the above deduction is made by the insurer and subject to any charge by Centrelink. The claimant reconfirmed her wish to accept the proposed settlement.
I am satisfied that the claimant understands that she is entitled to be represented in respect of the claim by an Australian legal practitioner, but she has chosen not to do so.
I am satisfied that the claimant understands the binding nature and effect of the proposed settlement and that she will be precluded from making any further claim for damages arising from the motor accident.
I am satisfied that the claimant understands that following the settlement of her claim for damages, she has ongoing rights to claim future treatment and care.
I am satisfied that the claimant is willing to accept the proposed settlement.
IS THE PROPOSED SETTLEMENT JUST, FAIR AND REASONABLE?
Clause 7.37 (b) provides that before I approve a proposed settlement under s 6.23(3) of the MAI Act, I must be satisfied that it is just, fair and reasonable and within the range of likely potential damages assessments for the claim were the matter to be assessed by the Commission, 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.
The proposed settlement of $ 534,000 represents damages for non-economic loss, past economic loss and future economic loss.
Damages for non-economic loss
In the proposed settlement, the insurer has made an allowance of $280,000 for damages for non-economic loss.
Section 1.4 of the MAI Act defines “non-economic loss” as meaning:
(a) pain and suffering, and
(b) loss of amenities of life, and
(c) loss of expectation of life, and
(d) disfigurement.
Having considered the statement of the claimant to the insurer dated 26 April 2023, the claimant’s responses to my questioning at the teleconferences on 27 June 2023 and 11 July 2023, the medical evidence, the photographs depicting the disfigurement caused by the removal of the breast implants and the claimant’s age, I am satisfied that the sum $280,000 is an appropriate allowance for damages for the claimant’s non-economic loss.
Damages for past economic loss
At the time of the accident, the claimant was working as a self-employed cleaner.
Since the accident, the claimant has not returned to her pre-injury work or any other work.
According to her tax return for the financial year ending 30 June 2019, the claimant’s taxable income was $25,884, which is an amount of $497.77 gross per week. That is the amount that was utilised by the insurer as the claimant’s pre-accident weekly earnings (PAWE) to make payments of statutory benefits to the claimant.
On a net basis, the amount yields net weekly earnings of $465.
The allowance for past economic loss made by the insurer is for four years at the rate of $465 per week, making a total of $96,720.
I am satisfied that the allowance accords with the evidence.
Damages for future economic loss
Section 4.5(1)(a) of the MAI Act provides that damages may be awarded for past or future economic loss due to loss of earnings or the deprivation or impairment of earning capacity.
In cases such as Medlin v State Government Insurance Commission [1995] HCA 5 and Husher v Husher [1999] HCA 47, the High Court of Australia confirmed that the issue to be determined in the present case is whether the claimant has sustained a loss or diminution of her earning capacity and if so, whether that loss or diminution will result in economic loss.
In calculating any economic loss into the future, I must have regard to the provisions of s 4.7 of the MAI Act.
Section 4.7(1) of the MAI Act provides that damages may not be awarded for future economic loss unless the claimant first satisfies the Court or Commission that the assumptions about future earning capacity or other events on which the award is to be based, accorded with the claimant’s most likely future circumstances but for the injury.
Section 4.7(2) of the MAI Act provides that the amount of damages for future economic loss that would have been sustained on those assumptions is to be adjusted by reference to the percentage possibility that the events concerned might have occurred but for the injury.
Section 4.7(3) of the MAI Act provides that if an award for future economic loss is made, the Court or Commission is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted.
Section 4.9(1) of the MAI Act provides that where an award of damages is to include compensation, assessed as a lump sum, in respect of damages for future economic loss which is referrable to deprivation or impairment of earning capacity, the present value
of the future economic loss is to be qualified by adopting the prescribed discount rate. Section 4.9(2) of the MAI Act prescribes a discount rate of 5%.Section 4.7 of the MAI Act does not preclude the awarding of a buffer for future economic loss. The occasion for a buffer in accordance with the principles enunciated in Penrith City Council v Parks [2004] NSWCA 201 is when the impact of the injury on the economic benefit from exercising earning capacity after injury is difficult to determine.
The claimant is now 56 years of age. According to the claimant’s evidence, she intended to continue working in her cleaning business until retirement. She was also working towards expanding her business by hiring extra staff and train them to do the physical aspects of cleaning while she could concentrate on the management aspects of the business, as she got older.
I accept that the claimant’s most likely future circumstances but for the injuries was that she would have continued with that career path until retirement at 67.
Dr Harrington considered that the claimant has not been able to return to this type of work in a meaningful or financial capacity. He recommended vocational rehabilitation, which he says can sometimes be a futile exercise.
Nevertheless, he believed that the claimant had some capacity for work in a sedentary environment.
The insurer has made an allowance of $157,200. This was made on a buffer basis.
I consider that as a result of her injuries and disabilities, it is unlikely that the claimant would be able to return to full time work as a cleaner until age 67.
I consider that is more likely than not that she would be restricted to part-time sedentary work until retirement. On that basis, I consider that the claimant has been left with a residual earning capacity of about 20% until retirement.
A loss of earnings of $400 net per week until retirement yields an amount of $150,994
($400 x 444.1 less 15% vicissitudes x .85).The insurer has made an allowance of $157,280 on a buffer basis. I am therefore satisfied that the allowance is just, fair and reasonable.
It was not clear whether there was any tax paid on the weekly payments of statutory benefits made to the claimant at $497.77 gross per week. In any event, I am satisfied that the difference between the amount of $150,994 and $157,280 would represent more than a reasonable allowance for any tax paid on the weekly payments of statutory benefits.
CONCLUSION
Having regard to all of the above matters, I am satisfied that 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 the Commission, taking into account the nature and extent of the claim and the injuries, the disabilities and the impairments sustained by the claimant.
The proposed settlement of the claimant’s claim for damages in the sum of $534,000 is approved under sub-s 6.23(2)(b) of the MAI Act.
Pursuant to sub-s 3.40(1)(b) of the MAI Act, the insurer is entitled to deduct the sum of $15,584.49 from the proposed settlement sum by way of recovery for weekly payments of statutory benefits paid to the claimant under Division 3.3.
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