Is receipt of a carer's allowance indicative of a claimant's residual earning capacity? – Insurance Australia Ltd t/as NRMA Insurance v O’Rourke [2017] NSWSC 494

The claimant was injured in a motor vehicle accident on 20 March 2011. At the time of the accident, she was employed as an assistant aged care nurse. She ceased work and when her parents came to live with her in 2013, she was granted a carer’s allowance in respect of her elderly mother, of $648 per fortnight.

The claimant lodged a claim for compensation with the compulsory third party insurer of the party at fault. Eventually the matter proceeded to assessment by the Claims Assessment and Resolution Service (CARS) and the Claims Assessor assessed damages, which included allowances for past and future economic loss. The Claims Assessor rejected a submission by the insurer that the economic loss allowance should reflect a finding that the claimant had a residual earning capacity as evidenced by receipt of the carer's allowance. She preferred medical evidence to the effect that there was no residual earning capacity. Importantly, there was no evidence before the Claims Assessor addressing the characterisation by Centrelink of the care provided to the mother; whether it was physical or merely supervisory.

The insurer commenced proceedings in the Supreme Court of New South Wales (the Supreme Court), seeking judicial review of the Claims Assessor's decision, challenging the legal validity of the Claims Assessor’s findings in relation to past and future economic loss. Relevantly, the issue was whether payment of a Centrelink allowance to the claimant for care of her mother constituted evidence of the claimant's residual earning capacity that should have been accounted for.

Davies J held that the Claims Assessor did not fall into error in finding that the claimant had no residual earning capacity, notwithstanding the receipt of a Centrelink carer's allowance. This is because pursuant to s 197(1) of the Social Security Act 1991 (Cth), care could be classified as "providing attention and supervision", not just "physical" assistance. There was no evidence before the Claims Assessor that clarified Centrelink's characterisation of the benefit.

Because of separate procedural issues, this had not been thoroughly addressed during the course of the CARS assessment conference. His Honour rejected the insurer's challenge to the validity of the assessment on that issue and held that the Claims Assessor was entitled to prefer the medical evidence that supported a finding that there was no residual earning capacity.

At [73] his Honour added:

"It would, nevertheless, have been open to the Assessor to find that [the claimant] had some residual earning capacity but to have awarded damages for economic loss in the same amount because the amount of the carer's allowance was properly to be disregarded by a combination of s 1160 of the Social Security Act and what was said in Redding v Lee. In that way, the [insurer] suffers no practical injustice in the way the Assessor went about her task."

The insurer's summons was dismissed.

Insurers seeking to assert that receipt of a carer's allowance by a claimant is evidence of economic capacity will need to establish that the basis of the allowance was in fact for the provision of physical assistance rather than mere support and supervision. Although it appears not to have been ventilated in this case, the provision of supervisory care may be indicative of capacity. Even then, the evidence is not necessarily conclusive. Each case will turn on its own facts.

It remains to be seen whether the insurer seeks to challenge the correctness of the Supreme Court's conclusion. Arguably, whether or not the amount of the carer's allowance was to be disregarded, a finding of residual earning capacity (that a claimant could have exercised) should be reflected in the damages assessed.