AAD v AAI Limited t/as AAMI
[2021] NSWPICMR 2
•25 March 2021
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | AAD v AAI Limited t/as AAMI [2021] NSWPICMR 2 |
| APPLICANT: | AAD |
| RESPONDENT: | AAI Limited t/as AAMI |
| MERIT REVIEWER: | Brett Williams |
| DATE OF DECISION: | 25 March 2021 |
CATCHWORDS: | MOTOR ACCIDENTS- Dispute about the amount of weekly payments of statutory benefits under Schedule 2(1)(a) of the Motor Accident Injuries Act 2017; applicant suffered multiple injuries; liability accepted for the first 26 weeks from the date of accident; applicant disputes the basis upon which the defendant has calculated weekly payments; Held- PAWE should be calculated on gross earnings during the 12 months immediately before the day of the motor accident; termination payments not earnings for PAWE; Job Seeker payments not included; reviewable decision set aside; defendant to make weekly payments at new PAWE rate determined. |
| DETERMINATIONS MADE: | 1. The reviewable decision is set aside. 2. In accordance with Schedule 1 subclause 4(1) the amount of AAD’s pre-accident weekly earnings (PAWE) is determined to be $1,029.40. 3. The Insurer is to make weekly payments to AAD pursuant to sections 3.6 and 3.7 accordingly. |
Statement of Reasons
Background
AAD claimed statutory benefits under Part 3 of the Motor Accident Injuries Act 2017 (the Act) as a result of injuries he sustained in a motor accident on 19 July 2020.
The evidence discloses that as a result of the motor accident AAD suffered multiple injuries, including injury to his neck, right shoulder, right knee, and an umbilical hernia.
When the accident occurred AAD was not employed, having been made redundant in February 2020 by his employer at that time, XXX. He was in receipt of Job Seeker payments at the time of the motor accident.
AAD submitted a claim for statutory benefits to AAI Limited on 7 August 2020. Liability for the statutory benefits claim was accepted by the Insurer for the first 26 weeks from the date of the accident.
By separate letter of 4 September 2020, the Insurer explained the basis upon which it had calculated AAD’s entitlement to weekly payments. Relevant to the issues that arise in this dispute, his pre-accident weekly earnings (PAWE) were determined to be $836.23.
AAD did not agree with the Insurer’s assessment of his PAWE and sought an internal review. In his request for internal review, AAD raised an issue with respect to why the income he could have earned had he been able to take up post-accident employment opportunities was not taken into account when determining his entitlements. I will address this issue later in these reasons.
On 2 October 2020 the Insurer issued its internal review decision. The reviewer found AAD’s PAWE to be $768.56, a sum lower than that adopted by the Insurer in its letter of 4 September 2020. The Insurer’s initial decision was varied to reflect this finding by the internal reviewer.
AAD disputes the basis upon which the Insurer has calculated his weekly payments. He has submitted a merit review application in relation to this dispute.
Documents and information
In making this decision, I have considered the Application, Reply and supporting documentation. Since lodging his application a copy of AAD’s payslip from XXX for the period 1 October 2019 – 31 October 2019 has been provided by him and considered by me.
Submissions
AAD says that the Insurer has made an error in the calculation of his weekly payments. He says that this error has resulted in him receiving a sum less than that to which he is entitled.
The Insurer says that AAD’s gross earnings for the purpose of determining PAWE were $38,658.75 and contends that the period over which the gross earnings were to be averaged was 1 August 2019 – 18 July 2020.
On the basis that this period constituted 50.3 weeks the Insurer calculated the weekly average of the gross earnings as follows: $38,658.75 / 50.3 weeks = $768.56.
Accordingly, the Insurer argues that PAWE has been correctly determined by it to be $768.56.
Reasons
Legislative framework
Entitlements to statutory benefits are governed by Part 3 of the Act.
AAD’s entitlement to weekly payments for the first 26 weeks after the motor accident is determined in accordance with sections 3.6 and 3.7. Those provisions read relevantly as follows:
3.6 Weekly payments during first entitlement period (first 13 weeks after motor accident)
(1) An earner who is injured as a result of a motor accident and suffers a total or partial loss of earnings as a result of the injury is entitled to weekly payments of statutory benefits under this section during the first entitlement period.
Note : Only a person who was an earner when injured is entitled to statutory benefits under this section--see Schedule 1.
(2) A weekly payment of statutory benefits under this section is to be at the rate of 95% of the difference between the person's pre-accident weekly earnings and the person's post-accident earning capacity (if any) for the first entitlement period.
(3) …
(4) …
(5) …
3.7 Weekly payments during second entitlement period (weeks 14-78 after motor accident)
(1) An earner who is injured as a result of a motor accident and suffers a total or partial loss of earnings as a result of the injury is entitled to weekly payments of statutory benefits under this section during the second entitlement period.
Note : Only a person who was an earner when injured is entitled to statutory benefits under this section--see Schedule 1.
(2) A weekly payment of statutory benefits under this section is to be at the rate of--
(a) in the case of total loss of earning capacity--80%, or
(b) in the case of partial loss of earning capacity--85%,
of the difference between the person's pre-accident weekly earnings and the person's post-accident earning capacity (if any) after the first entitlement period.
(3) …
(4) …
Determining PAWE is a critical step in calculating weekly payment entitlements in accordance with sections 3.6 and 3.7.
Section 3.5(2) states that words and expressions in Division 3.3 that are defined in Schedule 1 have the meanings provided by that Schedule.
As none of the exceptions in Schedule 1 subclause 4(2) apply to this dispute, PAWE is relevantly defined in Schedule 1 subclause 4(1) as follows:
4 Meaning of "pre-accident weekly earnings"—general
(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.
The dispute
The Insurer has admitted liability to make weekly payments of statutory benefits for the first 26 weeks following the motor accident. There is no issue arising under Part 3 Division 3.1.
For the purposes of sections 3.6 and 3.7, the Insurer agrees that AAD was an earner who was injured as a result of the motor accident and that he suffered a loss of earnings as a result of the injury.
The Insurer agrees that AAD is entitled to weekly payments of statutory benefits payable under sections 3.6 and 3.7.
The dispute is about the quantification of AAD’s entitlements, in particular the basis upon which his PAWE should be determined in accordance with Schedule 1 subclause 4(1).
The earnings records
As I will explain below, subject to the application of Schedule 1 subclause 4(1), it is AAD’s gross earnings received by him as an earner during the 12 months immediately before the day on which the accident occurred that are relevant to determining his PAWE.
The accident occurred on 19 July 2020. Accordingly, the 12 months immediately before the day on which the accident occurred commences on 18 July 2019.
The table below contains a summary of AAD’s earnings records from XXX for this period. The contents of this table reflect my findings in relation to his gross earnings for the periods enumerated in the table.
With respect to the first period the relevant pay record states that payment was made on 25 July 2019 for the period 1 July 2019 – 31 July 2019. To arrive at the gross earnings for the period 18 July 2019 – 31 July 2019 I have divided the monthly gross pay ($4,166.66) by 4.4 weeks. This equates to $946.97 gross per week. I have multiplied that amount by two to reflect the two week period. This yields a figure of $1,893.94.
Period Number of Weeks Gross Earnings 1 18.7.19 – 31.7.19 2 $1,893.94 2 1.8.19 – 31.8.19 4.4 $4,166.66 3 1.9.19 – 30.9.19 4.3 $4,166.66 4 1.10.19 – 31.10.19 4.4 $4,166.66 5 1.11.19 – 30.11.19 4.3 $4,166.66 6 1.12.19 – 31.12.19 4.4 $5,894.75 7 1.1.20 – 31.1.20 4.4 $4,627.77 8 1.2.20 – 29.2.20 4.1 $4,166.66 Total 32.3 $33,249.76
Should the termination payments be included in PAWE?
A question arises as to whether the termination payment received by AAD should be included in his gross earnings for the purposes of determining his PAWE.
In evidence is a XXX payment record that states AAD received a gross termination payment in the sum of $11,469.59 on 18 March 2020.
The term ‘earnings’ as used in Schedule 1 Clause 4 is not defined.
Including the termination payment in the calculation of PAWE is likely to materially distort the weekly average of the gross earnings. The question of how many weeks over which the termination payment is to be averaged would arise. Averaging the termination payment over one or two weeks would have the effect of materially increasing the weekly average of the gross earnings. On the other hand, averaging the payments over a longer period could materially reduce the weekly average of the gross earnings.
The potential that including the termination payments in the gross earnings has to distort the weekly average of the gross earnings militates against including those payments in the gross earnings.
Further, in my view the termination payments were not earnings received by AAD as an earner in the sense that they do not represent earnings received by him for work he performed while employed by XXX.
For these reasons, I have not included the termination payments in the calculation of AAD’s PAWE.
Resolution of the PAWE issue
In accordance with Schedule 1 subclause 4(1) AAD’s PAWE should be calculated on the basis of the weekly average of his gross earnings received as an earner during the 12 months immediately before the day on which the motor accident occurred.
The Insurer, correctly, did not include the Job Seeker payments received by AAD for the purpose of determining his PAWE. I have adopted the same approach.
Income AAD could have received from employment opportunities he was not able to accept after the accident occurred is not relevant to assessing his PAWE. This is because the focus is on his earnings before the motor accident occurred, not post-accident earnings or potential earnings.
His earnings prior to 18 July 2019 are not taken into account as Schedule 1 subclause 4(1) is concerned with earnings in the 12 months immediately before the day on which the accident occurred.
AAD was not employed at any time between his employment with XXX being terminated and the accident. I have not included this period, during which he was not receiving earnings as an earner, when determining the weekly average of his gross earnings for the purposes of Schedule 1 subclause 4(1).
In the 12 months immediately before the day on which the accident occurred AAD was earning as an earner from 18 July 2019 until 29 February 2020, a period of 32.3 weeks.
During this period his gross earnings were $33,249.76.
Dividing the gross earnings received during this period by the number of weeks worked - $33,249.76/32.3 - yields a weekly average of $1,029.40. This sum represents AAD’s PAWE and should be applied when determining his entitlements under sections 3.6 and 3.7.
Conclusion
The reviewable decision is set aside.
In accordance with Schedule1 Clause 4(1) AAD’s PAWE is determined to be $1,029.40.
The Insurer is to make weekly payments to AAD pursuant to sections 3.6 and 3.7 accordingly.
Brett Williams
Merit Reviewer
Personal Injury Commission
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