AAL v GIO Limited

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
CITATION:	AAL v GIO Limited [2021] NSWPICMR 6
APPLICANT:	AAL
RESPONDENT:	GIO Limited
MERIT REVIEWER:	Katherine Ruschen
DATE OF DECISION:	20 April 2021
CATCHWORDS:	MOTOR ACCIDENTS- dispute about the amount of weekly payments under Division 3.3 of the Motor Accident Injuries Act 2017; self-employed; sales invoices; insufficient information; provided further documents; impact of COVID-19; natural disasters (droughts and bushfires); earner; profit and loss statement; Held- clause 4 of Schedule 1 does not allow for any adjustment in calculating PAWE; first entitlement period; error in correspondence.
DETERMINATIONS MADE:	1. In relation to Dispute A, the reviewable decision is varied as follows: (a) For the purpose of any entitlement the claimant has or may have to weekly payment of statutory benefits under section 3.6 and/or 3.7 of the Act the claimant’s pre-accident weekly earnings (PAWE) figure is $371.90. 2. In relation to Dispute B, the parties’ records are to reflect that payments already made under section 3.6 of the Act represent payments made at the interim rate under section 3.6(5) for the period 23 June 2020 to 21 September 2020 inclusive (first 13 weeks commencing from the day after the accident). 3. Dispute C has not been substantiated and is therefore dismissed.

BACKGROUND

There is a dispute between AAL (the claimant) and the insurer about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Act.
The claimant is self-employed. He sustained injury as a result of a motor accident on 22 June 2020.
On 15 July 2020 the claimant lodged an application for statutory benefits. In support of his claim for weekly benefits the claimant provided certain documents (namely sales invoices) evidencing income coming into his business. However, the claimant did not provide any documents in relation to the outgoings/expenses of his business.
On 28 August 2020 the Insurer calculated the claimant’s PAWE to be $565.95. This was based on the weekly average of sales invoices for the period 24 June 2019 to 19 June 2020 (a period of 51.71 weeks), which totalled $29,265.53.
The claimant requested an internal review of the insurer’s decision of 28 August 2020. In
doing so, the claimant did not provide sufficient evidence of the outgoings/expenses of his business.
On 15 September 2020 the insurer issued their internal review decision. In this decision, the insurer concluded there was insufficient information (namely information about the outgoings/expenses of the business) to be able to calculate the claimant’s PAWE. Accordingly, the insurer determined that until such time as the claimant’s PAWE can be calculated:

(a) To the extent the claimant is entitled to a weekly payment of statutory benefits under section 3.6 of the Act in respect of the first entitlement period (first 13 weeks after the motor accident) interim payments are to be made in accordance with section 3.6(5).

(b) To the extent the claimant is entitled to a weekly payment of statutory benefits thereafter (that is, under section 3.7 or 3.8) the claimant is entitled to the minimum weekly statutory benefit amount under section 3.7(4) or 3.8(4) (as applicable).
The claimant lodged an application for a merit review of the insurer’s internal review decision dated 15 September 2020.
On 22 October 2020 I conducted a teleconference with the parties in order to identify the precise nature of the dispute and provide the claimant with an opportunity to withdraw all or any part of the application for a merit review and/or to provide further documents.
At the teleconference on 22 October 2020 the following disputes were confirmed:

(a)    What is the amount of the claimant’s PAWE under clause 4 of Schedule 1 of the Act (Dispute A).

(b)    Whether the insurer’s payment records accurately record the gross and net amounts paid for weekly statutory benefits to date (Dispute B).

(c)    Whether the insurer deliberately missed making any payments to the claimant (Dispute C).
The claimant was directed to advise whether all or any part of his application for this merit review is withdrawn and if the application is only partially withdrawn, to state which of Disputes A, B and/or C he wishes to have proceed to a merit review determination.
Directions were also made for the parties to provide any further documents and/or submissions in relation Disputes A, B and/or C.
The claimant obtained legal representation following the 22 October 2020 teleconference and from at least 20 November 2020, he has been represented by Ms Mary Arida, solicitor of One Law.
At the claimant’s request, the time for the claimant to comply with the directions of 22 October 2020 and for the parties to provide any further documents was extended.
On 20 January 2021 Ms Arida advised the claimant wished to proceed with his application for a merit review in relation to Disputes A, B and C.
Ms Arida provided further documents on behalf of the claimant on 11 March 2021.
On 11 March 2021 the claimant also provided an additional document.
On 20 April 2021 I conducted a further teleconference with the parties. During this teleconference Dispute B was further clarified as being a dispute about the start and end dates of the first entitlement period (first 13 weeks) for weekly benefits rather than whether the correct amounts had been paid. The claimant accepted he had been paid the equivalent of 13 weeks at the interim rate pursuant to section 3.6(5) of the Act. However, correspondence from the Insurer to the claimant stated the first entitlement period would run from the date of the claimant’s application for statutory benefits (18 July 2020). Other correspondence from the Insurer stated it would run from the day after the accident (23 June 2020).

SUBMISSIONS

In relation to Dispute A, the claimant submits that calculation of his PAWE should take into account a number of factors which impacted his earnings as a self-employed business operator in the 12 month period preceding the accident, including the impact of COVID-19 and natural disasters (drought and bushfires). The claimant also submits that general fluctuations in business earnings should be taken into account.
In relation to Dispute B, the claimant initially submitted the insurer’s records of weekly payments made to date do not accurately reflect the payments he has received. However, pursuant to paragraph 20 above this has been clarified to a dispute about when the first entitlement period begins. The claimant seeks clarification on this point, given the inconsistent information from the insurer referred to in paragraph 20 above.
In relation to Dispute C the claimant contends the insurer deliberately missed payments and/or underpaid weekly benefits so as to avoid paying the claimant his full entitlements.
In relation to Dispute A the insurer submits that there is insufficient information to calculate the claimant’s PAWE and therefore the claimant is only entitled to interim payments in the first entitlement period and the minimum weekly statutory benefit amount thereafter.
In relation to Dispute B the insurer maintains the correct payments have been made in accordance with their internal review decision of 15 September 2020 and that payments were adjusted/back paid so as to reflect the correct 13 week period from the day after the accident.
The insurer denies Dispute C.

REASONS

Dispute A

Calculation of the claimant’s PAWE

There is no dispute that the claimant is an earner under the Act.
Pursuant to clause 4(1) of Schedule 1 of the Act “pre-accident weekly earnings” 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”.
There is no suggestion by either party that any part of subclause (2) applies. In any event, I consider that none of the circumstances in subclause (2) arise in this matter. Accordingly, the claimant’s PAWE is to be calculated under clause 4(1) of Schedule 1 that is, the average weekly earnings during the 12 month period immediately before the day of the accident. This period is 22 June 2019 to 21 June 2020.
Whilst the Act does not contain a definition of “gross earnings”, in the context of an earner who generates earnings as a self-employed person it means income from earning capacity, after deducting all business expenses but before tax. The claimant’s gross earnings received as an “earner” are derived from the income of his business, after accounting for the costs and expenses of running the business, but before tax. An individual’s earnings from self-employment do not include the expenses of the business required in order to generate those earnings. Business expenses must first be deducted in any calculation of the claimant’s personal earnings derived from his business. This approach is consistent with basic accounting principles and the method of calculation in previous Merit Review decisions, including Merit Review MA01/18, Merit Review MA06/18 and ABQ v NRMA Insurance [2018] NSWDRS MR 043.
At the time of the insurer’s internal review the claimant had not made available any documents that would have enabled the insurer to calculate the claimant’s gross earnings, after business expenses. Accordingly, I am of the view that the insurer’s decision to make interim payments during the first entitlement period, in the absence of sufficient information, was correct at the time.
However, this is a merit review and my role is to decide what is the correct and preferable decision based on the information before me. This may include any additional information that has become available since the insurer’s internal review.
I now have before me the claimant’s profit and loss statement for the period 1 July 2019 to 30 June 2020, which was not available to the insurer at the time of their internal review. This document demonstrates a net profit (that is, after business expenses but before tax) of $19,339.05.
The profit and loss statement extends beyond the 12 month period for the purpose of calculating the claimant’s PAWE by nine days (22 to 30 June 2020 inclusive). However, absent any information to the contrary, it can be assumed the weekly average during the 12 months from 1 July 2019 to 30 June 2020 is similar, or close to the weekly average for the specific 12 month period from 22 June 2019 to 21 June 2020.
Accordingly, I am of the view the claimant’s PAWE should be calculated based on the weekly average of the net profit of the claimant’s business in the financial year ending 30 June 2020.
The profit and loss statement is for a 52 week period from 1 July 2019 to 30 June 2020 and produces a weekly average of $371.90 ($19,339.05 divided by 52 weeks). The claimant’s PAWE is therefore $371.90.
Accordingly, any entitlement to weekly payments under section 3.6 or 3.7 of the Act is to be calculated on the basis the claimant’s PAWE is $371.90.

Can the claimant’s PAWE be adjusted to take into account factors such as COVID-19?

The claimant contends his PAWE should take into account factors impacting earnings in the 12 months preceding the accident, including the impact of COVID-19, which did not impact his business in previous years.
However, the Act does not allow for any adjustment to be made to calculation of an injured person’s PAWE by reason of factors impacting a business in the relevant period, which may not have impacted the business in previous years. There is no flexibility in clause 4(1) to vary calculation of an injured person’s PAWE by making adjustments to account for circumstances not accommodated by, or failing outside clause 4.
The Workers Compensation Act 1987 (NSW) contains similar provisions regarding calculation of an injured worker’s pre-injury average weekly earnings (PIAWE). The Workers Compensation Amendment (COVID-19 Weekly Payment Compensation) Regulation 2020 amended the Workers Compensation Act to factor in COVID-19 circumstances into calculation of a worker’s PIAWE such that adjustment may be made to the relevant earning period if a worker has had a financially material reduction in earnings due to COVID-19. However, no such amendment has been made to the Motor Accident Injuries Act.
A fundamental principle of statutory interpretation is that the Act is to be construed as a whole. As the High Court said in Project Blue Sky v Australian Broadcasting Authority
(S41-1997) [1998] HCA 28 (at [69]):

“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined by reference to the language of the instrument viewed as a whole. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.”
In other words, you cannot construe the meaning of a specific provision in an Act without considering the sections which surround it, and the structure and meaning of the Act as a whole. The Act should be construed so as to operate coherently, consistently, and harmoniously, as a whole.
In considering the sections surrounding Clause 4(1) it is to be observed that Clause 4(1) is preceded by a number of clauses, including Clause 2 which sets out the meaning of “earner”. An injured person is an “earner” if they are over the age of 15 and are employed or self-employed during one of the specified periods in Clause 2 “and, at the date of the motor accident, had not retired permanently from all employment…” By allowing for persons to still be an earner even if they were not working at the time of the accident, unless this was a permanent intention, the Act contemplates there will be circumstances where an earner has not earned for the whole of the relevant pre-accident period under Clause 4.
Clause 4(1) is also one of a number of subclauses dealing with calculation of PAWE in different circumstances. An injured person who is an earner falls under subclause (1), unless they fall under one of subclause (2)(a) to (c).
Clause 4(2)(a) accommodates injured persons who first began to obtain earnings less than 12 months prior to the accident. However, whilst the 12 month period is adjusted to the period from when the earner first began to earn continuously, as with Clause 4(1), it continues up to the day before the accident and does not allow further adjustment, for example to accommodate periods of interruption when there were no earnings, regardless of the reason.
Subclause (2)(a1) accommodates injured persons who worked during the first year of the two year pre-accident period but did not obtain any earnings at any time during the second year of the pre-accident period. Even if they did not earn each week for the whole of the first year (they only need to have earned for at least 26 weeks) and did not earn over consecutive weeks, their PAWE is nonetheless calculated based on “average weekly gross earnings received … during the first year…”. In other words, like the second year of the two year pre-accident period under Clause 4(1), any PAWE calculated under (2)(a1) is the gross earnings in the first year of the two year pre-accident period, divided by 52 weeks.
Clause 4(2)(b) allows the period over which the average is calculated to commence from the date of the change of circumstances, until the accident. Other than an adjustment to the beginning of the relevant period, subclause (2)(b) also does not allow for any other adjustment. The average must still be taken over the period up to the date of the accident and therefore is inclusive of any periods where there was an interruption in earnings.
Regardless of whether an injured person’s PAWE is assessed under Clause 4(1) or under one of the subclauses under Clause 4(2) there is no provision for any adjustment to be made to the period specified under the applicable subclause to accommodate interruption to employment or earnings or a reduction in earnings, regardless of the reason.
There may be many circumstances in which an earner’s pre-accident earnings have been interrupted during the relevant period. It may be because, as contended by the claimant, COVID-19 impacted their ability to earn or it may be because other circumstances required them to take leave of absence (for example due to a pre-accident illness or injury, maternity leave or a need to care for an injured or sick family member). It may be because an employer made redundancies or closed their business and the person did not find new work immediately thereafter.
Clause 4 of Schedule 1 does not allow for any adjustment under any subclause to be made in calculating PAWE by reason of an interruption to, or reduction in, earnings during the relevant period, regardless of the circumstances.
Whilst there are similarities between parts of the Workers Compensation Act and parts of the Motor Accident Injuries Act, they are distinctly different schemes, having different purposes. Unlike the Workers Compensation Act, Parliament has not taken steps to amend the Motor Accident Injuries Act to accommodate the impact COVID-19 may have on an injured person’s PAWE.
Accordingly, the relevant provisions in Schedule 1 continue to apply. Clause 4(1) is clear in its terms that there is to be a calculation of 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” regardless of whether those earnings were impacted by COVID-19 or other factors not present in previous years.
The Claimant’s PAWE is therefore the weekly average of the gross earnings received over the relevant 12 month period being the amount received divided by 52 weeks. Pursuant to paragraphs 36 and 37 above, I have determined the claimant’s PAWE to be $371.90.

Dispute B

At the teleconference on 20 April 2021 this dispute was further clarified as being a dispute as to the date upon which the first entitlement period under section 3.6 of the Act begins.
The Insurer agreed there was an error in correspondence suggesting it begins from the date of the claimant’s application for statutory benefits. The insurer accepts it begins from the day after the motor accident and has corrected their initial error by making back payments for the period from the day after the motor accident to the date of the claimant’s application for statutory benefits.
Accordingly, the claimant has been paid weekly statutory benefits under section 3.6 of the Act for a total of 13 weeks commencing from 23 June 2020 (the day after the motor accident) to 21 September 2020 inclusive at the interim rate under section 3.6(5) of the Act and the claimant and insurer should adjust their records, if necessary, to reflect this.

Dispute C

Whilst the documents suggest some initial errors were made by the insurer in relation to weekly payments during the second entitlement period (for example, by stating the first entitlement period commences from the date of the claimant’s application for statutory benefits instead of from the day after the motor accident) any error has been rectified by the insurer (namely by making back payments).
There is no evidence of any conduct by the insurer deliberately designed to withhold or avoid payments. Accordingly, I find that Dispute C is unsubstantiated and therefore dismissed.

Conclusion

In relation to Dispute A, the reviewable decision is varied, as follows:

(a) For the purpose of any entitlement the claimant has or may have to weekly payment of statutory benefits under section 3.6 and/or 3.7 of the Act the claimant’s pre-accident weekly earnings (PAWE) figure is $371.90.

In relation to Dispute B, the parties’ records are to reflect that payments made under section 3.6 represent payments made at the interim rate under section 3.6(5) for the period 23 June 2020 to 21 September 2020 inclusive (first 13 weeks commencing from the day after the accident).
Dispute C has not been substantiated and is therefore dismissed.

Legislation and Guidelines

In making this decision, I have considered the following:

· The application, reply and supporting documentation;
· Motor Accident Injuries Act2017 (NSW);

· Motor Accident Guidelines, and
· Motor Accident Injuries Regulation 2017.

Katherine Ruschen

Merit Reviewer

Personal Injury Commission

[2021] NSWPICMR 6

20 April 2021