Naderi v AAI Limited t/as GIO
[2025] NSWPICMR 1
•14 January 2025
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
CITATION: | Naderi v AAI Limited t/as GIO [2025] NSWPICMR 1 |
CLAIMANT: | Zahra Naderi |
INSURER: | GIO |
MERIT REVIEWER: | Katherine Ruschen |
DATE OF DECISION: | 14 January 2025 |
CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; dispute about payment of weekly benefits under Division 3.3 of the Act; meaning of pre-accident weekly earnings (PAWE); Schedule 1, clause 4; earnings through a company; company as separate legal personality; onus of proof; reliability of evidence; inconsistencies in evidence; Held – the reviewable decision is set aside. |
DETERMINATIONS MADE: | CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act2017 DETERMINATION The reviewable decision is about the amount of weekly payments of statutory benefits 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 reviewable decision is set aside, and the following determination is made: (a) the claimant’s pre-accident weekly earnings amount is $63.46. |
STATEMENT OF REASONS
INTRODUCTION
There is a dispute between Zahra Naderi (the claimant) and the insurer about the amount of the claimant’s pre-accident weekly earnings (PAWE) for the purpose of weekly benefits under Division 3.3 of the Motor Accident Injuries Act 2017 (MAI Act).
The claimant was involved in a motor accident on 10 March 2022.
The claimant lodged an Application for personal injury benefits.
On 27 September 2023, the insurer declined to determine the claimant’s PAWE on the basis of insufficient information.
On 19 July 2024, the insurer maintained their original decision of 27 September 2023 that there was insufficient information upon which to determine the claimant’s PAWE.
The claimant has requested a merit review of the insurer’s decision dated 19 July 2024 (the Application).
SUBMISSIONS
The claimant submits that at the time of the accident she was a working director and shareholder of Sydney College of Hair Beauty & Make Up Pty Limited (the Company).
The claimant submits the period over which PAWE is to be calculated is the 12 months immediately before the day of the accident that is, 10 March 2021 to 9 March 2022.
The claimant acknowledges “a degree of incongruity among the financial records” but submits the insurer is required to assess PAWE notwithstanding this.
The claimant relies on her tax returns and notices of assessment for the years 2021 and 2022 and submits that in the circumstances, PAWE should be based on the average of these notices of assessment. The claimant submits taxable income was $34,858.00 in 2021 and $28,077 in 2022. The average of these is $31,467.50, which would equate to a PAWE of $605.14.
The insurer declined to assess the claimant’s PAWE on the basis of both inconsistent and insufficient evidence. The insurer submits that whilst various financial documents have been made available there continues to be a number of anomalies such that there is no reliable means of assessing PAWE.
The insurer submits the claimant bears the burden of proof in relation to identifying earnings received pre-accident, on the balance of probabilities. The insurer submits the evidence submitted by the claimant is insufficient for the insurer to accurately assess pre-accident income noting the claimant’s income reported in her income tax returns does not correlate with pre-accident bank statements, pre-accident payslips or company tax returns.
ISSUES AND INTERIM DIRECTIONS
The claimant’s financial records contain numerous inconsistencies and anomalies, a position that is acknowledged by the claimant in her submissions. The documents provided by the parties for this merit review indicate the insurer made attempts to have the claimant clarify, or otherwise address, the inconsistencies and anomalies to no avail. Whilst there were responses from the claimant to the insurer, those responses contained little, if any substance. For example, the claimant stated she would clarify certain matters with her accountant, but no clarification or further information was subsequently provided to the insurer.
Given the unsatisfactory state of the claimant’s financial records the claimant submits the insurer should simply adopt the average off her taxable income in the 2021 and 2022 tax years, as stated in her Notices of Assessment from the Australian Taxation Office. However, both the 2021 and 2022 tax returns were prepared on or about 5 July 2023, more than a year after the motor accident and the income declared is inconsistent with the source documents. The reliability of the tax returns is therefore in question. Further, Schedule 1, cl 4(1) of the MAI Act, in my view, does not permit the insurer to ignore the specified period in cl 4(1) and adopt a weekly average over some other period.
Accordingly, on 17 October 2024 I issued interim directions, which invited the claimant to clarify the inconsistences and anomalies in her documents, as follows:
“1. By on or before 31 October 2024 the claimant is to provide:
a.A copy of their bank statements for the complete period 1 March 2021 to 2 April 2023 marked up by highlighting the deposits that the applicant says represent payment of wages/income to her by the Company.
[Note: At present, no statements have been provided for that part of the 12 month pre-accident period from 10 March 2021 to 2 July 2021. The statements currently provided do not commence until 3 July 2021, ending on 2 April 2023. The earlier period of 10 March 2021 to 2 July 2021 is to be included in the marked up bundle of bank statements to be provided pursuant to the above direction.]
b.If wages were paid into any other bank account, copies of the bank statements for the same period required by direction 1a. above, with wage deposits highlighted, for any such other bank account.
c.Complete bank statements of the Company for the 12 month pre-accident period from 10 March 2021 to 10 March 2022, if such statements show transactions which are payment of wages/income to the claimant by the Company in this period. Any such transactions are to be clearly highlighted in the statements.
d.A copy of the Statement of Earnings/PAYG/group certificates issued by the Company to the claimant in respect of earnings in the 2021 and 2022 financial years.
e.A signed statement from the claimant setting out her evidence relevant to the dispute. The statement should address, in addition to any other relevant matter:
i.An explanation as to how the claimant was paid by the Company during the 12 month pre-accident period.
ii.The reason(s) for the sporadic numbering of the payslips.
iii.An explanation for the inconsistencies among the documents, including:
·Year to date (YTD) earnings in the Company payslips differ to the amount declared as income from the Company in the claimant’s 2021 and 2022 individual tax returns.
·The bank statements do not show transactions consistent with payment of monthly wages suggested by the payslips.
·To the extent there are some transactions recorded as ‘wages’ in the bank statements, neither the amounts nor payment dates align with or can be reconciled with any payslips.
·The payslips suggest significant earnings during a period when the bank statements suggest the claimant was in receipt of a regular Centrelink pension/allowance (the Centrelink payments do not appear to be separately declared in the relevant tax return. Details of these payments should be provided for example, whether they were in respect of a COVID-19 government allowance, jobseeker, aged pension or other pension or allowance).
f.To the extent such evidence has not already been provided the claimant’s statement should have annexed to it her documentary evidence in support (e.g. payslips and pay as you go certificates/statements of earnings issued by Centrelink showing the type of payment, amounts paid etc).
g.Any other submissions or documents on which the claimant seeks to rely.
2. By on or before 14 November 2024 the insurer is to provide any further submissions or documents on which they seek to rely.”
In response to these directions the claimant:
(a) provided marked up personal bank statements for only part of the requested period (no statements have been provided for any period before 3 July 2021);
(b) did not identify any other bank account into which wages were allegedly paid, or any other means of payment of wages;
(c) provided bank statements of the Company for the requested period;
(d) did not provide any statement of income or pay as you go (PAYG) certificate from the Company in support of income allegedly paid by the Company;
(e) provided a very brief statement dated 6 November 2024, which does not include any explanation in response to the inconsistencies expressly identified in the interim directions at directions 1.e.ii. and 1.e.iii, and
(f) did not provide any further submissions.
Supplementary submissions have been received from the insurer pursuant to interim direction 2.
REASONS
Legislation
Pursuant to cl 4 in Schedule 1 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.”
The effect of cl 4 is that unless one of the exceptions in cl 4(2) apply the claimant’s PAWE is to be assessed under cl 4(1). There does not appear to be any dispute that the claimant’s PAWE falls under cl 4(1), and that the applicable pre-accident period is 10 March 2021 to 9 March 2022, as stated in the claimant’s submissions. No submission to the contrary is made by the claimant.
There also does not appear to be any dispute that in the circumstances of earnings through a company, PAWE is calculated based on the claimant’s individual earnings received from the Company and not the Company’s earnings. In this case, the claimant’s individual earnings are the wages the claimant contends were paid to her by the Company for her services as a working director.
What is the claimant’s PAWE under cl 4(1)?
The claimant has provided payslips allegedly issued by the Company in respect of her wages. However, I do not consider these records reliable for the following reasons:
(a) the claimant is said to be the sole director and shareholder of the Company and accordingly, it is assumed she prepared the payslips herself (this appears to be confirmed by the claimant’s statement of 6 November 2024 that she did not work from April 2024 and therefore did not send any work hours to her accountant “and MYOB for my Payslip”);
(b) the payslips are inconsistent with income declared in tax returns prepared by an accountant and accordingly, it is apparent the accountant did not base the tax returns on the particular payslips provided by the claimant for the purpose of her motor accident claim;
(c) the bank statements do not support the payment of wages alleged in the payslips (the claimant has not identified any other means by which wages were paid, which might account for the absence of corresponding transactions in bank statements. The claimant was given an opportunity to explain the inconsistency between the payslips and bank records but has not done so);
(d) the numbering of the payslips is sporadic, which suggests they likely were not prepared contemporaneously and may have been prepared after the accident, as was the case with the tax returns (the claimant was asked to address the sporadic numbering in the payslips but has not done so), and
(e) the payslips suggest significant earnings during a period when bank statements show the claimant was in receipt of a regular Centrelink pension or allowance to the extent that if the claimant was in fact in receipt of the wages shown in the payslips one might question her eligibility for the Centrelink payments.
In her 6 November 2024 statement the claimant seeks to clarify the overlap of Centrelink payments with earnings contended in payslips as follows:
“1. I had health issue on November 2020 because of breast cancer and I was involved with that until my operation in April 2021. During these periods of time, I used to go to my college for teaching. It continued until December 2021 when COVID-19 forced us to close our college on May 2021 completely by government policy for beauty salons.
2. I reopen my business on December 2021 and during those time I have got some government funds from Australian taxation and after that couple of months Centrelink assistance. All those times I reduced my monthly work hours and wages rate because I did not have any business income. On December 2021 I started to reopen business and started my advertising. I paid all college expenses including rent, phone, electricity, advertising etc.. once we were closed. I start to apply my full wages from January 2022”.
[sic].
The claimant also states payment of wages recorded in the payslips from January 2022 was deferred.
Given the matters identified in paragraphs 21(a) to (e) above and the claimant’s own statement that her business had no income for a period of time and from January 2022 payment of wages was deferred, I conclude the payslips cannot be relied upon to determine PAWE.
The claimant acknowledges the difficulty with her documents but submits one can simply adopt the average from her 2021 and 2022 tax returns/notices of assessment. However, cl 4(1) is in specific terms in so far as the period over which pre-accident gross earnings are to be averaged. Clause 4(1) states PAWE is “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” (emphasis added). That period is 10 March 2021 to 9 March 2022 whereas the 2021 and 2022 tax returns cover the periods 1 July 2020 to 30 June 2021 and 1 July 2021 to 30 June 2022 respectively.
In some cases, there may be special or exceptional circumstances in which it may be appropriate for PAWE to be averaged over the nearest 12 month period in respect of which there are reliable records of earnings. However, I do not consider this to be the present circumstance where the claimant has provided documents riddled with inconstancies with no reasonable explanation for the inconsistencies or why she cannot provide cogent, reliable evidence of her pre-accident earnings.
The claimant submits the insurer is required to make a [positive] PAWE determination notwithstanding the unsatisfactory state of the claimant’s evidence. Whilst the claimant does not need to disprove a hypothesis, or speculation, by the insurer as to her pre-accident earning circumstances the claimant has the onus of proof meaning there must be at least some evidence to support the claimant’s contentions (that is, evidence to establish her alleged facts are at least a probability and not a mere possibility). The claimant contends significant pre-accident earnings that were at least equal (if not more) than her average weekly earnings based on her 2021 and 2022 tax returns and notices of assessment. The question I must decide in this merit review is whether the claimant has established, on the balance of probabilities, her contended pre-accident earnings and if not, the likely amount of pre-accident earnings (if any).
In determining the question of pre-accident earnings, the decision maker is informed and persuaded only by the presentation of evidence to them. Evidence is material which tends to persuade the decision maker of the truth or probability of the facts being alleged. Evidence may be photography, documentary, or testimonial, but will only succeed in being persuasive if it appears as being truthful, reliable, and cogent. In civil cases such as this the standard of proof depends on the balance (or preponderance) of probabilities. This simply means a party must prove their case is more likely than not to be true. If the scales tip in favour of the party, however slight, they have proved their case. But if the probabilities are equal, they have failed to prove their case.
For the reasons set out in this merit review I do not find the claimant’s documentary evidence, nor her 6 November 2024 statement to be reliable or cogent. The only reliable evidence before me would appear to be the bank statements.
As the tax returns are inconsistent with both payslips and bank statements and were not prepared contemporaneously but were prepared after the accident and after making the claim, I do not consider the tax returns to be reliable evidence.
Clause 4(1) is only concerned with earnings that were in fact “received” by the claimant from the Company in the relevant pre-accident period. It is not concerned with notional, intended, anticipated, or deferred payment of earnings. If the earnings were not in fact received by the claimant in the relevant pre-accident period they are excluded even if they are subsequently received and represent payment for work done before the accident.
In the circumstances of this case, I have rejected the claimant’s proposition that PAWE should be calculated by averaging the earnings stated in the tax returns, which represent a different period to the period specified in cl 4(1). Accordingly, the question to be determined is what earnings did the claimant receive in the period 10 March 2021 to 9 March 2022?
The claimant has provided her personal bank statements commencing from 3 July 2021. Despite being asked to do so in the interim directions, the claimant has not provided personal bank statements for the period 10 March 2021 to 2 July 2021.
The claimant was asked to identify the transactions in her bank statements that she contends are payment of wages by the Company by marking up the bank statements and has done so for both Company and personal bank statements. The claimant has not identified any transactions in the Company bank statements as being payment of wages to her in the period 10 March 2021 to 2 July 2021 (the period over which there are no personal bank statements). This appears consistent with the claimant’s statement that although the Company continued to operate, the claimant was otherwise occupied with personal illness from November 2020 to April 2021 and that from May 2021 to December 2021 the business was impacted by COVID-19 restrictions.
The claimant has provided personal bank statements for the balance of the pre-accident period in question from 3 July 2021 to 9 March 2022 (and beyond) which identify payment of wages to the claimant in this period on only one occasion being $3,000 paid on 16 December 2021.
The claimant’s bank statements show further payments of wages on 30 March 2022 and in April, July, August, October and December 2022. The March and April 2022 payments are purported in the transaction description to be payment of wages for January, February and March 2022. However, as stated above, cl 4(1) is only concerned with earnings “received” by the claimant in the 12 months before the day of the accident and not when the wages were earned. As these payments were received after the accident, they are excluded from PAWE irrespective of whether they represent deferred payment of wages earned before the accident.
The claimant’s bank statements also record ongoing post-accident earnings received by the claimant from the Company from July 2022 to at least 13 October 2022. These payments are described as “wages” for the post-accident periods of April, May, June, July, August and September 2022. According to the bank statements the claimant has continued to have a source of significant earnings post-accident (commencing with the 30 March 2022 wages payment), which would suggest there has been no loss of earnings post-accident for the purpose of s 3.6 or s 3.7 of the MAI Act in any event. There are some anomalies in relation to these payments, as identified by the insurer in their supplementary submissions, which continue to put the veracity of the claimant’s assertions about her wages into question. However, this merit review only concerns earnings received pre-accident and as such, I do not propose to address any anomalies regarding post-accident earnings.
The claimant has identified the following transactions in the Company bank statements as payment of wages to her in the 12 months before the accident:
(a) 16 July 2021: $1,525;
(b) 23 August 2021: $500;
(c) 29 November 2021: $300, and
(d) 16 December 2021: $3,000.
The 16 July 2021 transaction is described only as “pay to 15 July”. There is no corresponding transaction in the claimant’s bank statements. The claimant did not identify any other account into which she received wages when asked to do so in the interim directions. The Company had other employees and accordingly, this payment may have been wages paid to another employee. In all of these circumstances, I am not satisfied on balance that the payment on 16 July 2021 is payment of wages to the claimant.
The 23 August 2021 payment, whilst described as a payment to the claimant, is not described as a payment for “pay” or “wages”. It is also paid to account ending “xx2114” which is not the account into which the claimant says she was paid wages. Accordingly, I am not satisfied on balance that this payment represents payment of wages to the claimant.
There is a corresponding payment in the claimant’s bank statements for the 29 November 2021 payment (albeit not highlighted by the claimant in her personal bank statements and only highlighted in the Company’s bank statements) and I am prepared to except on balance that this Is likely a payment of wages to the claimant.
There is a corresponding payment in the claimant’s bank statements for the 16 December 2021 payment with a description that includes “wages” and I accept on balance this is payment of wages to the claimant.
On the analysis above, the only reliable evidence of any earnings received by the claimant from the Company in the period 10 March 2021 to 9 March 2022 is $300 paid on 29 November 2021 and $3,000 paid on 16 December 2021. There is no reliable or cogent evidence of any other earnings received by the claimant in the period 10 March 2021 to 9 March 2022.
Accordingly, gross earnings received by the claimant in the 12 months before the day of the accident are $3,300, which equates to a weekly average of $63.46. This is the claimant’s PAWE.
COSTS
The insurer’s solicitor seeks payment (by their insurer client) of their costs pursuant to s 8.3(4) by seeking an order from the Personal Injury Commission (Commission) permitting payment of their costs in circumstances where such costs are not permitted by the regulations.
Section 8.3(4) provides:
“An Australian legal practitioner is not entitled to be paid or recover legal costs for any legal services provided to a party to a claim for statutory benefits (whether the claimant or the insurer) in connection with the claim unless payment of those legal costs is permitted by the regulations or the Commission”.
Relevantly, s 8.3(4) only provides for costs to be permitted by the “Commission”. As Merit Reviewer, I am not the Commission and therefore do not have jurisdiction to consider whether costs outside costs permitted by the regulations should be permitted by the Commission pursuant to s 8.3(4). Accordingly, the insurer would need to make a separate application to the Commission for any determination on the question of costs under s 8.3(4).
CONCLUSION
For the reasons set out above I conclude the claimant’s PAWE is $63.46.
There is no jurisdiction as part of this merit review to determine the question of the insurer’s (or the claimant’s) costs under s 8.3(4). Separate application would need to be made to the Commission.
LEGISLATION AND GUIDELINES
In making this decision, I have considered the following:
· the Application, Reply and supporting documentation;
· MAI Act;
· Motor Accident Guidelines, and
· Motor Accident Injuries Regulation 2017.
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