Pearce v AAI Limited t/as AAMI

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Pearce v AAI Limited t/as AAMI [2023] NSWPIC 595
CLAIMANT:	Luke Pearce
INSURER:	AAMI
MEMBER:	David Ford
DATE OF DECISION:	9 November 2023
CATCHWORDS:	MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; claims assessment dispute about the amount of damages to be paid to the claimant under 7.36(3) and 7.36(4); claimant was the rider of a motorcycle involved in a collision with insured vehicle; insurer admitted liability and no allegation of contributory negligence; claimant suffered injuries to right knee, right foot, right hand, extensive scarring to right knee, right forearm, right foot, right elbow, right ankle and right shoulder; chronic post-traumatic stress disorder and chronic adjustment disorder with features of depressed mood resulting in an assessment of whole person impairment of 15%; claimant is a chartered accountant; claim for non-economic loss, past and future economic loss; Held – claimant is entitled to damages for non-economic loss, past and future economic loss.
DETERMINATIONS MADE:	CERTIFICATE Issued under s 7.36(1) of the Motor Accident Injuries Act 2017 Assessment of claim for damages made in accordance with s 7.36 of the Act. 1. On the issue of liability for the claim the AAMI’s insured owed a duty of care to the claimant, breached that duty of care and the claimant sustained injury, loss and damage as a result of that breach of duty. 2. The amount of damages assessed in respect of this claim is $1,546,147 which includes the statutory benefits paid by the insurer. 3. The amount of the claimant’s costs taking into account the amount of damages assessed in respect of this claim, assessed in accordance with the Motor Accident Injuries Act 2017 and the Motor Accidents Injuries Regulation 2017 is $116,422.90 inclusive of GST. 4. Attached to this certificate are reasons for my assessment.

STATEMENT OF REASONS

INTRODUCTION

On 3 November 2018 the claimant was riding his motorcycle southbound in the curb side lane of Rocky Point Road at Sans Souci. It then transpired, the motor vehicle being driven by the insured driver made a left hand turn into Fraters Avenue from the centre lane of Rocky Point Road and collided with the claimant 's motorcycle, causing him to be thrown to the roadway and sustain serious injuries.
Police and ambulance attended the scene of the accident, and he was transported by ambulance to St George Hospital, where he was admitted and subsequently discharged on

6 November 2018.
As a consequence of the accident, he sustained the following injuries:
(a)    right knee-deep contaminated laceration to his right knee through the capsule with a chip fracture of the patella and lateral femoral condyle, also a femoral condyle chondral injury and a complete loss of cartilage on the lateral aspect.
(b)    injury to right hand 5th metacarpal fracture /dislocation and a small avulsion fracture of the hamate. Non- displaced base of 4th metacarpal fracture.
(c)    right foot- plantar aspect vertical laceration.
(d)     lacerations around the right ankle, right shoulder and right elbow.
(e)     loss of skin on the right upper arm and biceps.
(f)    significant scarring on the right knee, right forearm, right foot, right elbow, right ankle and right shoulder, and
(g)    chronic post-traumatic stress disorder, chronic adjustment disorder with features of depressed mood.
At the time of the accident, he was self-employed as a chartered accountant and a joint director of Enterprise 1 Pty Ltd. The business had commenced only two years prior to the accident and it was experiencing good revenue and had successful prospects. His business partner and fellow director, Hilal Ghenem has known the claimant since 2014. The claimant and Hilal Ghenem both own a 50% share in the business and split the profits 50/50. This arrangement was successful until the accident. Mr Ghenem provided a written statement dated 17 August 2023. The insured did not require Mr Ghenem for questioning at the assessment conference.
After the accident, he was not able to resume work until after three months, and thereafter, worked on reduced hours for seven months. Approximately 10 months post-accident he returned to work. However, it is submitted he has not been able to return to work in his pre-injury capacity, both in terms of the work he is able to perform and the hours he works. It is further submitted; his share of the profits has decreased since the accident and he and

Mr Ghenem agreed that a 50/50 split was no longer reasonable, given he is working at a significant reduced capacity. Since the claimant is self-employed, both parties instructed forensic accountants to prepare economic loss reports.
He was born in 1995 and is presently 38 years of age. The medical service, by virtue of Replacement Certificate of Determination dated 2 August 2023, determined his combined whole person impairment for his injuries is 15%, applying the combined tables and accordingly he is entitled to damages for non-economic loss.
Liability is admitted and accordingly the claim comes before me solely to assess damages.

Outline issues in dispute

The following issues have arisen in this matter:
(a)    non-economic loss.
(b)    past economic loss.
(c)    future economic loss, and
(d)    Fox v Wood.
The main issues requiring my determination are as follows:
(a)    what is the entitlement to damages for non-economic loss.
(b)    to what extent if at all, have the claimant’s injuries and ongoing disabilities resulted in the claimant suffering a diminution in his ability to earn an income from the date of the accident up until the present time and for the remainder of his working life, and
(c)    what is the entitlement to damages which flow from the findings on the above issues.

Documents considered.

I have considered the documents provided in the application and the reply and any further information provided by the parties.

Submissions made by the claimant.

At the commencement of the assessment conference, the claimant was questioned by his senior counsel regarding a number of reports from his treating specialists. In particular, he was questioned in relation to the report of his treating orthopaedic surgeon, Dr Michael Symes and I refer to his report dated 7 March 2019. Dr Symes recorded the following:
“Luke has continued to go from strength to strength in his rehabilitation thus far in terms of the pain He is almost back to his premorbid status, and he only has some mild residual aches and pains, deep within the knee on prolonged activity. Other than this, he has minimal swelling, and he is happy with his progress.”
At the assessment conference, the claimant stated he did not agree with the statements made by Dr Symes. I further note in the report the following paragraph:
“I had a lengthy discussion with Luke today and once again reinforced his pleasing and remarkable progress given how well he has been doing. I will see him on an as needed basis. If there are any future concerns, please don't hesitate to let me know.”
Whilst the claimant, when consulting Dr Symes and the other treating specialist may well have been optimistic about his recovery, which is important, it is also important he be realistic about his future prospects and need for rehabilitation. Treating medical reports are important in determining a claim for damages, but they also must be read in conjunction with medico legal reports from accredited specialists, who are asked relevant questions, such as capacity for work and the likely prognosis for future recovery from injuries.
I refer to the statement of the claimant dated 18 August 2023 and commencing at paragraph 61, he has provided a comprehensive description of his ongoing disabilities in relation to his right knee, right dominant hand, scarring and in relation to psychological disabilities commencing at paragraph 64, he provides detailed information in relation to the effect the accident has had upon his social and recreational activities, social functioning, concentration, persistence and pace, and post-accident employment. I was assisted by the comprehensive detail in relation to the continuing disabilities suffered by him.
I note the following paragraph in the claimant’s statement dated 23 November 2021:
“84, Since my return to work in November 2018, I have struggled to perform my usual preinjury level of work. This is due to my right hand requiring a break approximately every 30 minutes while using a keyboard due to pain and my right knee requiring me to stand up and move about, approximately every 30 minutes ,due to pain This has resulted in me being less productive than my pre injury level and I lose a considerable amount of time during the working day, taking breaks that I would not need, but for my injuries. I estimate I am losing at least 15 hours per week of billing working hours due to my injuries.”
I further note paragraph 94:
“Due to my injuries and pain, I now find that I am often unable to work beyond mid-afternoon particularly, if I have had to walk or drive to client meetings during the morning because with use my knee tends to become very painful, For example, I was recently requested by a client to deliver a taxation seminar Interstate and during the presentation for which I was required to stand and talk for 30 minutes I found that I had to support my full weight on my left leg because my right knee had become too painful I then had to restrict my engagement with potential clients after the conclusion of my presentation due to pain, client engagement a big part of my role in gaining new clients and maintaining relationships with existing clients and I feel that my restricted ability to engage with clients and potential clients as I would pre injury has resulted in a loss of work this loss is very difficult to assess”
I refer to the statement of Mr Hilal Ghenem dated 17 August 2023. The insurer did not require Mr Ghenem to attend the assessment conference for questioning. I note the following paragraphs:
“21. I witnessed Luke no longer wanting to participate in those business activities he appeared to me to have completely lost his motivation he was clearly dealing with the psychological and physiological effects of his injuries.
22. I have noticed Luke has become forgetful and confused and his memory is not reliable. I recall him mixing up a client’s facts at a meeting, which did not bode well for this particular client.
23. Luke's demeanour and lack of drive after his accident has impacted upon our ability to generate new clients from our existing clients because Luke was not leading the business down those pathways anymore and driving for more work.
24. Following the accident, it appeared to me as though Luke's outlook on life had changed the way he would interact with clients was like he was dragging a ball and chain. His interactions with clients were slow and he appeared to lack motivation and drive.
25. From a business perspective I feel that Luke's demeanour and lack of motivation has significantly impacted our business. I have tried to be very sympathetic, and I have not wanted to be confrontational with Luke because I can see he is struggling psychologically.
26. Given the change in Luke's demeanour I have found it difficult to work with Luke on a day-to-day basis this caused me to start working more independently as opposed to working as a team like we did before Luke's accident. This has resulted in a negative impact on our business’s performance.”
Also refer to paragraph 38 of his statement as follows:
“Overall, Luke is working a lot less than he did before the accident. I would estimate he is probably working approximately 20 hours per week less than he was this coupled with the task taking longer to perform and losing new clients Luke's contribution to the business is significantly less than half and I would estimate our contributions to be me at 70% and Luke at 30% .Not having two partners working at full capacity has undoubtedly affected the business profits since the accident and this is likely to continue if Luke remains working in such a reduced capacity It has been two years since the accident and there has been no improvement .I cannot see Luke's contribution increasing in the future and the business will continue to be less profitable.
39. It had been my intention before Luke's accident to remain a 50/50 business relationship with Luke until our retirement. continuing to grow our business oh I am now uncertain about our future as business partner.”
The solicitor for the claimant arranged for him to be examined on a medico legal basis by

Dr Jonathan Negus, surgeon, and I refer to his report dated 10 September 2021. The doctor has provided a comprehensive report and he has recorded the claimant’s current symptoms, commencing on page 3. I refer to page 7 of his report, where he states the following:
“The patient’s current capacity for work is significantly prejudiced by the fact a sustained these injuries. his knee pain and stiffness are the predominant symptoms that affecting his ability to undertake preinjury duties at work. The restrictions on his ability to work relate to his ability to manage his pain and the amount of walking that he can undertake as part of his role.”
On page 8 of his report, inter alia, the doctor states the following:
“Regarding his knee, he is clearly significantly debilitated with pain and is affecting him psychologically as well as physically. He has inquired about a lateral unicompartmental knee replacement although I have recommended against this as a treatment due to the unreliability of the results from this procedure especially in someone of his age who has minimal chrondall loss in the lateral compartment as a whole I do not feel he is appropriate either for osteotomy surgery and therefore ,I have no good surgical options to recommend to him currently...”
He was also seen on a medico legal basis by Dr Malcolm Linsell, specialist plastic and aesthetic surgeon. The report is dated 1 November 2021 and he has noted the claimant’s current complaints on page 2 of his report. He carried out a physical examination of the claimant and on page 4 of his report, he has noted the impact upon the claimant’s activities of daily living, which he has listed as follows:
(a)    kneeling and rising from a sitting position on the floor.
(b)    putting on shorts or footwear.
(c)    necessity to wear fitted shoes outdoors.
(d)    limitation of outdoor activity or sport as his scars are irritated by direct sunlight.
(e)    sleeping as the location and sensitivity of his scars often waken him at night, and
(f)    sexual relations as the scar hypersensitivity affects intimacy with his partner.
He was also seen on a medico legal basis by Dr Jeff Bertucen, consultant psychiatrist, and I refer to his report dated 9 June 2023, on page 7, he records the following:
“Although Mr Pearce engages in his preinjury profession full time, he noted a reduction in his efficiency, pace and organisational abilities which he attributes to the effect of pain and chronically disturbed sleep secondary to pain. These impairments and deficiencies did not exist prior to the subject motor vehicle accident.
Mr Pearce, nonetheless, has the psychological capacity to work full time in his field of accounting, although may be expected to experience reductions in concentration, pace and efficiency into the foreseeable future until such time as his pain and /or sleep impairment symptoms are treated more effectively.
In my opinion, Mr Pearce could certainly benefit from involvement with a psychiatrist and appropriate psychiatric medications. Mr Pearce himself stated during the interview that he was somewhat sceptical with regards to the potential benefits of psychological therapy stating, ‘you just can't talk away pain’ and to a certain extent. he is right, Nonetheless, in my opinion, psychological therapy can be helpful in terms of developing distraction techniques or self centering/meditation techniques which can assist sleep and help to reduce arousal and improve distress tolerance. I would advise that he engage with a psychologist over the course of 8 to 12 sessions at a cost of $270 per hour. Primarily Mr Pearce would benefit, in my opinion, from engaging with a psychiatrist and use of appropriate psychiatric pharmaco therapy (particularly at night). He would benefit from 4 to 6 sessions with a psychiatrist over the next 12 months at an average cost of $300 per half hour”.
The solicitor for the insurer arranged for him to be examined on a medico legal basis by

Dr James Powell and in particular, I refer to his report dated 12 November 2020. He states the following on page 14 of his report:
“Being self-employed and being physically in an office type job, even including travel he will continue this work. His symptoms may cause him to shift his physical position from time to time, such as his knee, needing to stand and move about end with his hand the break up computer type work. He should try and maximise technology development to reduce dependence of computer work on hand and keyboard activity he may work normal hours and may vary these as at his symptomatic discretion.”
I have reviewed the colour photographs taken of his extensive scarring. The photographs are of a high quality, and they provide a good insight as to the nature and extent of his scarring.
The solicitor for the claimant also served reports from Vincent forensic accountants dated

12 June 2023 and October 2023. These reports were of assistance to me in determining the nature of the claim for both past and future economic loss.

Submissions made by the insurer.

I refer to the further submissions of the insurer dated 12 October 2023. The insurer refers to a number of medical reports from the claimant’s treating specialists. It is submitted these reports conclude the claimant’s injuries have “excellently progressed”. It is further submitted there is a clear divergence about levels of pain and levels of restriction described by medico legal reports versus those described by treating specialist. The insurance submits the treating experts corroborate one another and these reports should be preferred over the medico legal opinions. The treating reports lead to a conclusion his physical injuries are resolved and do not cause any consistent current or likely future disabilities or impairments.
I do not accept these submissions. The reports from treating medical practitioners are important when assessing a claim for damages, as stated above in paragraph 13 they must be read in conjunction with any medical legal reports which have been served in the matter, as such reports are an integral part of the assessment process and provide more detail and relevant information regarding the injured persons injuries and ongoing disabilities and prospects for recovery. In addition, the opinions of medical legal experts regarding the issue of whether any person’s capacity for work has been impaired is also of importance in the assessment process.
I also note the submission that since the claimant refused mental health treatment, despite a recommendation by his treating doctor, Dr Lau, then his continual refusal to engage in appropriate psychological treatment and medication “must yield a failure to mitigate damages to the extent that incapacity is due to psychiatric factors”. It is submitted the evidence demonstrates if the claimant complied with the recommendations from a treating practitioner, his psychological condition would improve and most likely resolve. I reject this submission and the report from Dr Bertucen does not provide any guarantee of success if the claimant did undergo psychological treatment, but rather he has recommended such treatment on the basis it may benefit him and that such psychological therapy can be helpful in terms of developing distraction techniques or self-centering meditation techniques which can assist sleep and help to reduce arousal and distress tolerance. At the assessment conference, the claimant stated he now wants to have such treatment and may consider consulting Dr Bertucen.

However, I reject the submission his refusal to date is a failure to mitigate damages. The insurer must show, that having regard to the prospect the treatment will alleviate the claimant's condition, refusal was unreasonable. The insurer must show how and to what extent the loss would have been diminished and that the claimant’s refusal for treatment is unreasonable. There are factors which are relevant in determining whether the refusal is reasonable, including the prospect of improving the claimant's condition versus the risk of death or aggravation, inconvenience, discomfort, cost to the claimant in actual expenditure and income loss. The test of whether the refusal is reasonable is objective, but factors particular to the claimant must be considered. Factors considered include anxiety states, language difficulties, prior experience with medical treatment and cultural background. It is not necessary to prove the treatment would have been successful. What the insurer must establish is having regard to the prospects of success, a reasonable person in the claimant’s position would have attempted to mitigate his or her damage by accepting treatment.
The solicitor for the insurer arranged for the claimant to be examined on a medical legal basis by Dr Kaplan, psychiatrist. I was informed by the parties at the assessment conference the insurer had not served a report from Dr Kaplan.
It is further submitted in relation to the claimant’s business partner Mr Ghenem “that he is not a medical practitioner, and he is not able to provide an opinion on the effects of the claimant’s injuries on his earning capacity”. I do not accept this submission. The statement made by

Mr Ghenem is an attempt to express a medical opinion but rather I consider it to be the observations of a lay person. I find Mr Ghenem is able to make such observations regarding the claimant’s behaviour and demeanour. I further note the insurer did not require

Mr Ghenem to attend the assessment conference for the purpose of questioning.
The insurer also arranged for him to be examined by the Vocational Capacity Centre and I refer to their report dated 4 July 2022. It is submitted I should accept the opinion of Dr Farag who is a physiotherapist. Dr Farag states on page 9 of his report the following:
“Based upon his demonstrated abilities at this assessment, Mr Pearce is considered capable of undertaking a range of work that falls in the sedentary semi sedentary and light work categories, as well as occasional work from the moderately heavy work category, provided there is a limitation on heavier handling from floor level .He is considered capable of undertaking the duties of his current and pre injury position of a chartered accountant, this includes the travel requirements and meeting clients on site, that is a component of the business development aspect of the role Modification in his work practices may be required on occasion, but his limitations, associated with the right knee and the right hand, are not so significant they are likely to limit his abilities to undertake the physical job demands of an accountant Mr Pearce is considered capable of working full time hours.”
It is also submitted the claimant’s alleged diminution of 15 hours per week completely lacks an evidentiary basis. It is submitted the 15 hours diminution as simply being lifted from the claimant’s forensic accounting report. It is submitted a forensic accountant is also not equipped to prognosticate on residual earning capacity on the basis of injuries. The insurer served a forensic economic loss report from PKF accountants dated 31 August 2023, as in the case of the report from Vincents Accountants the purpose of both accounting reports is to provide some guidance when endeavouring to assess the claimant’s’ past and future economic loss. Both reports are of assistance in endeavouring to understand his accounting business, but such reports are to be considered in conjunction with all other material and documentation provided by the parties, which includes the statement of the claimant, the statement of Mr Ghenem, treating medical reports and medico legal reports.

Reports from the medical service.

I note the solicitor for the claimant lodged on the portal the Certificate and Reasons of Medical Assessor Minogue and the Certificate and Reasons of the Review Panel dated

2 August 2023. It is submitted by the solicitor for the claimant the Commission’s Medical Assessors did not raise any issues with regards to the claimant’s consistency of presentation.

REASONS

Non-economic loss

The claimant is entitled to damages for non-economic loss. The solicitor for the claimant has submitted a sum of $380,000 for such damages, and in response, the insurer has submitted a sum of $300,000. In determining the appropriate amount to be awarded to the claimant, I was assisted by the reports of, Drs Negus, Linsell and Bertucen.
I was also assisted by the statements of the claimant and Mr Ghenem. I find the claimant to be honest and forthright when questioned by both his senior counsel and counsel for the insurer at the assessment conference. This accident has had a significant impact upon his enjoyment of life, as well as his physical and mental well-being. I accept he is suffering from the various disabilities which he complains of, arising from his injuries, and listed in detail in his statement, and I further accept on a regular basis, he is in discomfort and, at times, in distress. His ongoing disabilities are permanent. I have reviewed the photographs of his extensive scarring and I have also taken such scarring into account when assessing damages for non-economic loss.
I therefore consider an appropriate allowance for non-economic loss, having regard to his age and his injuries and disabilities, is the sum of $380,000.

Past loss of earnings

I find the claimant has suffered a loss of income from the date of the accident up until the present time and in the future. The insurer relies upon the report of PKF Accountants and in this report, Mr Gwynne notes the company's profits and income have increased every year post accident. Mr Gwynne concedes the claimant has suffered a past loss of income and submits a loss $33,907 net.
I refer to the detailed submissions from the solicitor for the claimant in relation to past economic loss. Reliance is placed upon the report of Vincents Accountants who have quantified past loss of earnings in the sum of $127,058. In addition, in assessing past economic loss, I was assisted by the reports of Drs Negus and Bertucen as well as the statements of the claimant and Mr Ghenem. I accept that since the accident he has been working less hours per week which he estimates as being 15 hours, because of his injuries and ongoing disabilities. I further accept this decrease in working hours will continue and will be permanent for the remainder of his working life. His injuries and ongoing disabilities will always continue to interfere with his ability to work longer hours. I therefore prefer the calculations regarding past economic loss as detailed in the Vincents Accountants report.
Therefore, the total amount to be awarded for past economic loss of earnings is $127,058.
The insurer has made statutory payments totalling $21,791.

Future loss of earnings

The insurer submitted an allowance should be made for future loss of earnings by way of a buffer in the sum of $100,000. He is presently 38 years of age and has an expected working life to the age of 67 years. The multiplier for the 29-year period 809.6. I do not accept the submission I should allow an amount by way of a buffer. I find the assessment for future loss of earnings can be calculated on a net weekly loss basis, having regard to the report of Vincents Accountants and the statements of the claimant and Mr Ghenem as well as the medico legal reports which I have referred to above.
I find the most likely future circumstances for the claimant is he will continue to suffer from his ongoing disabilities, which will cause him to suffer a diminution in his earning capacity for the remainder of his working life. In addition, having regard to the statement of Mr Ghenem, he will always be at risk on the open labour market should his business arrangement with

Mr Ghenem terminate. I also find, but for the accident, his business would have increased its profit and I note the hourly rate charged by the business has been increased from

1 July 2023 to $500 plus GST.
I consider it appropriate to award future economic loss based upon a diminution of $1,500 net per week, which in accordance with the actuarial tables, less 15% for vicissitudes, results in a calculation of $1,032,298.

Fox v Wood

The parties have agreed the amount to be awarded for Fox v Wood is the sum of $6,849.

Assessment of damages summary

Under sub-section 7.36 (1)(b) of the Motor Accident Injuries Act 2017. I am required to make an assessment of the amount of damages for that liability that a court would be likely to award.
I assess the claim as follows on the findings set out above:
non-economic loss  $380,000
Past loss of earnings  $127,058
Future loss of earnings  $1,032,240
Fox v Wood  $6,849
Total of economic losses and non-economic loss  $1,546,147
Reduction for contributory negligence  Nil
TOTAL DAMMAGES ASSESSED  $1,546,147

Costs and disbursements

I assess the claimant's legal costs and disbursements in accordance with the Motor Accident Injuries Act 2017 and the Motor Accident Injuries Regulation 2017 in accordance with the attached sheet.

CONCLUSION

On the issue of liability for the claim the AAMI's insured owed a duty of care to the claimant, breached that duty of care and the claimant sustained injury, loss and damage as a result of that breach of duty.
I specify the amount of damages for this claim as $1,546,147 which includes the statutory benefits paid by the insurer.
The amount of the claimant’s costs, taking into account the amount of damages assessed in respect of this claim, assessed in accordance with the Act is $116,422.90 inclusive of GST.

LEGISLATION

In making my decision I have considered the following legislation and guidelines:
(a) Motor Accident Injuries Act 2017.
(b) Motor Accident Injuries Regulation 2017.
(c) Personal Injury Commission Regulation 2020.
(d) Motor Accident Guidelines 2017, and
(e) Personal Injury Commission Rules 2021.

[2023] NSWPIC 595

9 November 2023