Merzeo v Allianz Australia Insurance Limited

[2023] NSWPICMR 33

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER

Citation:

Merzeo v Allianz Australia Insurance Limited [2023] NSWPICMR 33

ClaimanT:

Bryon Merzeo

Insurer:

Allianz Australia Insurance Limited

Merit Reviewer:

Katherine Ruschen

DATE OF DECISION:

23 June 2023

CATCHWORDS:

MOTOR ACCIDENTS - Merit review; dispute about payment of weekly benefits under Division 3.3 of the Motor Accident Injuries Act 2017; pre-accident weekly earnings (PAWE); meaning of PAWE, Schedule 1, clause 4(1); burden of proof; insufficient evidence; earnings from self-employment; earnings received after the pre-accident period; Held – the reviewable decision is set aside.

Determinations made: 

CERTIFICATE OF DETERMINATION
Issued under s 7.13(4) of the Motor Accident Injuries Act` 2017

DETERMINATION
The reviewable decision is about the amount of weekly benefits that are payable under Division 3.3 of the Motor Accident Injuries Act 2017 (the MAI Act), and is therefore a merit review matter under Schedule 2(1)(a) of the MAI Act.

1.    The determination is as follows:

(a)  the reviewable decision is set aside, and

(b)  the claimant’s pre-accident weekly earnings (PAWE) amount is $920.82.

STATEMENT OF REASONS

INTRODUCTION

1. There is a dispute between Bryon Merzeo (the claimant) and the insurer about the amount of weekly payments of statutory benefits payable under Division 3.3 of the Motor Accident Injuries Act 2017 (MAI Act).

2. The claimant was involved in a motor accident on 26 January 2022.

3. On 5 April 2023 the insurer issued their internal review decision in which the claimant’s pre-accident weekly earnings (PAWE) amount was assessed at $887.50.

4. The claimant requested a merit review of the insurer’s internal review decision dated 5 April 2023.

5. On 15 May 2023 the claimant relocated overseas. The claimant now resides in Switzerland. As a result, pursuant to s 3.21 of the MAI Act the claimant has no entitlement to weekly benefits from 15 May 2023 unless the Personal Injury Commission (Commission) or the insurer has determined that the claimant’s loss of earning capacity is likely to be of a permanent nature.

6. The issue that arises under s 3.21 is a separate issue to be determined by the insurer or the Commission, should the claimant make an application for a determination under s 3.21. It is not the subject of this merit review. This merit review is limited to determination of PAWE only.

SUBMISSIONS

1. There is no dispute that the claimant is an earner for the purpose of the MAI Act. There also does not appear to be any dispute that the claimant’s PAWE falls under Schedule 1, cl 4(1) of the MAI Act.

2. The dispute is about the amount of gross earnings received by the claimant in the 12 month pre-accident period under Schedule 1, cl 4(1).

3. The claimant submits gross earnings for the purpose of PAWE were $73,401, comprising:

   (a)    earnings received as an employee from Deloitte: $5,713;

   (b)    earnings received as an employee from Nomad: $31,735;

   (c)    earnings received as an employee from Right at Home: $17,475, and

   (d)    earnings received as a sole trader: $18,478.

1. The insurer has excluded certain payments comprising the above on the basis they were received by the claimant either before commencement of the 12 month pre-accident period or after the pre-accident period came to an end. The insurer has also excluded all income said to have been received by the claimant as a sole trader on the basis there are no source documents to verify the receipt of such income.

REASONS

The issue

1. The issue to be determined is the gross earnings received by the claimant in the 12 month pre-accident period and in particular, the extent to which the claimant received any income as a sole trader in this period.

The legislation

1. Pursuant to Schedule 1, cl 4 of the MAI Act PAWE means:

   “(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) 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,

   (a1) if the earner was employed or self-employed during a period or periods equal to at least 26 weeks during the first year of the pre-accident period, but was not obtaining earnings from any source at any other time during the pre-accident period--the average weekly gross earnings received by the earner as an earner during the first year of the pre-accident period,

   (b) if subclause (3) applies--the weekly average of the gross earnings the earner received as an earner, or could reasonably have been expected to receive, during the 12 months after the change of circumstance referred to in the subclause occurred,

   (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) The ‘pre-accident period’, in relation to a motor accident, is the period of 2 years immediately preceding the motor accident.

   (3)     This subclause applies if, during the 12 months immediately before the day of the motor accident, there was, as a result of any action taken by the earner, a significant change in his or her earnings circumstances that resulted in the earner regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred.

   …

   (4)     For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.”

2. There is no evidence to suggest any of the exceptions in cl 4(2) apply to the claimant and in any event, it appears the parties agree cl 4(1) applies.

What is the claimant’s PAWE under cl 4(1)?

1. Pursuant to cl 4(1) the pre-accident period is 26 January 2022 to 25 January 2023, being the 12 month period immediately before the day on which the motor accident occurred.

2. Clause 4(1) provides that the claimant’s PAWE is “the weekly average of the gross earnings received by” the claimant in this 12 month period. Accordingly, only earnings received by the claimant in the period 26 January 2022 to 25 January 2023 are included in PAWE. Earnings received before or after this period are excluded, including earnings received after 25 January 2023 even if they represent work carried out prior to this date.

Earnings as an employee

1. The claimant seeks to have earnings in the sum of $5,713 received from employer Deloitte included in PAWE. However, the evidence, including an extract provided by the claimant from their bank statement, establishes these earnings were received by the claimant prior to commencement of the pre-accident period under cl 4(1) on 26 January 2022. The evidence establishes the earnings were received in 2021. Accordingly, these earnings are excluded from PAWE under cl 4(1).

2. The claimant seeks to have earnings received from employer Nomad in the sum of $31,735 included in PAWE. I am satisfied on the evidence that the claimant received earnings in the relevant pre-accident period from Nomad in the sum of $31,734.80. It also appears this is not disputed by the insurer.

3. The claimant seeks to have earnings received from employer Right at Home in the sum of $17,475 included in PAWE. I am satisfied on the evidence that the claimant received the total sum of $15,641.31 in gross earnings from Right at Home in the period 26 January 2022 to 25 January 2023, as follows:

Date received by claimant (date of payment on payslip)	Amount
30 August 2022	$1,429.52
13 September 2022	$956.96
27 September 2022	$429.37
11 October 2022	$903.34
25 October 2022	$1,265.19
8 November 2022	$1,868.33
22 November 2022	$2,429.30
6 December 2022	$1,928.89
20 December 2022	$1,279.36
3 January 2023	$1,339.59
17 January 2023	$1,811.46
31 January 2023	Received after 25 January 2023 therefore excluded from PAWE
14 February 2023	Received after 25 January 2023 therefore excluded from PAWE
Total	$15,641.31

1. My calculation above differs from the insurer’s figure. However, the insurer appears to have made a mathematical error in their calculation. The insurer has also included a notional amount to represent work carried out in the period 16 January 2023 to 25 January 2023 even though earnings were not received in this period. Clause 4(1) does not permit this. If the earnings were not in fact received before the end of the pre-accident period, they are excluded from PAWE.

2. As to the difference between my determination that earnings from Right at Home for the purpose of PAWE are $15,641.31 and the claimant’s contention that earnings from Right at Home are $17,475 the claimant has included earnings received after the pre-accident period ended on 25 January 2023, which are excluded under cl 4(1).

3. Payslips demonstrate work was performed for Right at Home by the claimant in the period 16 January 2023 to 29 January 2023. The relevant payslip does not specify whether any of this work was carried out prior to the end of the 12 month pre-accident period on 25 January 2023. It may have all been carried out after 25 January 2023 but in any event, the payslip records that the earnings were paid to the claimant on 31 January 2023 which is after the relevant 12 month pre-accident period under cl 4(1) had ended. As noted above, cl 4(1) only concerns earnings “received” by the claimant in the 12 month period before the accident. The last payment by Right at Home falling within the 12 month pre-accident period was made to the claimant on 17 January 2023. All earnings received from Right at Home after this date were received by the claimant after the 12 month pre-accident period ended on 25 January 2023 and are therefore excluded from PAWE. They would, however, be relevant to an assessment of loss of earnings for the purpose of s 3.6 of the MAI Act.

Earnings from self-employment

1. The claimant seeks to have earnings in the sum of $18,478 said to have been earned from self-employment as a sole trader included in PAWE. The claimant has provided a spreadsheet contending the following income from self-employment:

Income source/business name	Amount	Dates
Travel VC	$5,000	1 March 2022
Theatre Time	$3,736	26 January 2022 to 25 January 2023
NSW EPA Litter Research Project	$5,000	February to December 2022
Private Care Work	$4,742	26 January 2022 to 25 January 2023
PayPal income	$15,782	Not specified

1. There is also a spreadsheet of business expenses suggesting a net business income of $3,736 after deducting business expenses.

2. The spreadsheets are not reconcilable with any source documents evidencing the receipt of such income other than the following:

   (a)    an invoice from the claimant in the sum of $5,000 under their business “Travel VC” dated 1 March 2022 and a corresponding bank deposit in the claimant’s bank statement for payment of this invoice;

   (b)    an invoice from the claimant in the sum of $372.72 to National Disability Insurance Scheme (NDIS) client Lode Lievens dated 29 October 2022 and two corresponding payments in the claimant’s bank statement with reference Lode Lievens INV 29.10.22 on 7 November 2022 for payment of this invoice, and

   (c)    an invoice from the claimant in the sum of $253 to NDIS client Hendrik Lievens dated 26 September 2022 and a corresponding bank deposit on 5 October 2022 in the claimant’s bank statement for payment of this invoice.

3. I therefore accept the claimant’s business received gross income of $5,625.72 in the 12 month pre-accident period, as demonstrated by the invoices and transactions in the bank statements outlined above.

4. As to the balance of the invoices provided by the claimant:

   (a)    an invoice from the claimant for $5,000 in respect of “NSW EPA Litter reduction project” is dated 9 March 2023 being a date after the 12 month pre-accident period ended on 25 January 2023. Even if the invoice represents work carried out before 25 January 2023 the invoice amount would not have been received by the claimant before 25 January 2023 given the invoice was not issued until after this date. Accordingly, any earnings in relation to this invoice are excluded from PAWE;

   (b) an invoice from the claimant to “NDIS client: Anton Lievens” for $406.36 dated 31 January 2023 is also after the end of the 12 month pre-accident period. Although this invoice records work carried out during the pre-accident period the claimant would not have received the earnings for the purpose of cl 4(1) until after the end of the pre-accident period given the date of the invoice. Accordingly, this is also excluded from PAWE, and

   (c)    an invoice dated 31 January 2023 to Active Plan Manage for $335.94 also post-dates the 12 month pre-accident period and therefore any payment would have been received after the end of the pre-accident period and is excluded from PAWE.

5. There are insufficient documents to demonstrate deposits by PayPal Australia into a bank account represent earnings received by the claimant from self-employment. There are no corresponding invoices. There is no contract for work. Whilst bank statements show deposits from “PayPal Australia” there are no documents to establish the deposits are for payment of work carried out by the claimant. Further, deposits shown in the bank statements from PayPal total a lower sum than the sum contended in the claimant’s spreadsheet. I am therefore not satisfied on balance that monies received from PayPal are earnings received by the claimant as an earner for the purpose of PAWE.

6. The documents from the claimant in relation to the balance of the sole trader income contended by the claimant are deficient for the purpose of determining the extent to which the claimant received earnings through self-employment. The claimant has the onus of establishing on the balance of probabilities that they received the sole trader income contended in their spreadsheet. Absent sufficient source documents I cannot be comfortably satisfied on balance that the claimant’s business received income in the relevant pre-accident period other than the sum of $5,625.72, as outlined above.

7. As to the sum of $5,625.72 which I accept the claimant’s business received as gross profit during the relevant pre-accident period there is the question of business expenses which must be deducted from this amount to produce the net profit of the business. The net profit is in turn the claimant’s gross earnings as an individual earner from the business. This is consistent with previous merit review decisions, including those referenced by the insurer in their submissions.

8. The evidence is insufficient to calculate the business expenses incurred in the period 26 January 2022 to 25 January 2023. There is a spreadsheet prepared by the claimant suggesting business expenses of $16,994 in the 12 month pre-accident period as follows:

   (a)    bank account expenses: $2,294, and

   (b)    credit card expenses: $14,700.

9. The claimant’s 2021/2022 tax return includes part of the pre-accident period. For the financial year 1 July 2021 to 30 June 2022 the claimant declared net income of the business, after accounting for all business expenses, of only $1,028. Given the claimant’s tax obligations and declaration in the tax return, the gross business income in the tax return presumably includes the $5,000 payment received through the claimant’s business Travel VC on or about 1 March 2022.

10. The 2022 tax return shows the following in the 12 month period from 1 July 2021 to 30 June 2022:

    (a)    gross business income: $11,593;

    (b)    total business expenses: $10,565, and

    (c)    net business income after deducting business expenses: $1,028.

11. The expenses represented approximately 91% of gross income.

12. As the evidence is insufficient to determine business expenses in the precise 12 month pre-accident period from 26 January 2022 to 25 January 2023, I consider the most appropriate measure of business expenses is to take the percentage from the nearest tax year, which is 91%.

13. Accordingly, I calculate the claimant’s net business income in the pre-accident period as follows:

    (a)    expenses: total gross income of $5,625.72 x 91% = $5,119.40, and

    (b)    net business income: gross income of $5,625.72 less $5,119.40 for expenses = $506.32.

14. I therefore calculate gross earnings received by the claimant as an earner in the period 26 January 2022 to 25 January 2023 in the sum of $47,882.43 broken down as follows:

    (a)    Nomad: $31,734.80;

    (b)    Right at Home: $15,641.31, and

    (c)    sole trader earnings: $506.32.

15. The weekly average is $920.82 ($47,882.43 divided by 52 weeks). The claimant’s PAWE is therefore $920.82.

CONCLUSION

1. For the reasons set out above I determine on balance that the claimant received gross earnings as an earner in the period 26 January 2022 to 25 January 2023 in the sum of $47,882.43 which equates to PAWE in the amount of $920.82.

LEGISLATION AND GUIDELINES

1. In making this decision, I have considered the following:

   ·        the application, reply and supporting documentation;

   · the MAI Act;

·        the Guidelines, and

· Motor Accident Injuries Regulation 2017.