Allianz Insurance Australia Limited v Shahmiri

Case •

[2022] NSWSC 481

•

22 April 2022

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Allianz Insurance Australia Limited v Shahmiri [2022] NSWSC 481
Hearing dates: 8 April 2022
Date of orders: 22 April 2022
Decision date: 22 April 2022
Jurisdiction:Common Law
Before: Harrison AsJ
Decision:

(1) The Certificate of the Merit Review Panel dated 9 August 2021 issued under the authority of the second defendant purportedly in accordance with s 7.15(4) of the MAIA is set aside.

(2) The matter is remitted to the second defendant, the President of the Personal Injury Commission of New South Wales, for determination according to law.

(3) Costs be reserved.

Catchwords:

ADMINISTRATIVE LAW — Judicial review — Motor Accident Injuries Act — Statutory construction — Calculation of pre-accident weekly earnings — Meaning of gross earnings received by the earner as an earner – Whether earner as an earner define the period by which earnings are to be averaged or limit the earnings to be taken into account – Decision of Merit Review Panel set aside

Legislation Cited:

Motor Accident Injuries Act 2017 (NSW), ss 3.6, 3.7, 7.1, 7.9, 7.15; Sch 1 Cls 2, 4; Sch 2 cl 1

Workers Compensation Act 1987 (NSW)

Workers Compensation Amendment (COVID-19 Weekly Payment Compensation) Regulation 2020 (NSW)

Cases Cited:

Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Category:Principal judgment
Parties: Allianz Australia Insurance Limited (Plaintiff)
Owjan Shahmiri (First Defendant)
The President of the Personal Injury Commission of New South Wales (Second Defendant)
Katherine Ruschen, Brett Williams and Terence O’Riain in their capacity as a Merit Review Panel (Third Defendant)
Representation:

Counsel:
K. Rewell SC (Plaintiff)

Solicitors:
Moray & Agnew (Plaintiff)
Gerard Malouf & Partners (First Defendant)
Crown Solicitors (Second and Third Defendants)
File Number(s): 2021/268321
Publication restriction: Nil

Judgment

  1. HER HONOUR: this matter involves an administrative review of a decision of a Merit Review Panel constituted by the President of the Personal Injury Commission of New South Wales.

  2. The plaintiff is Allianz Australia Insurance Limited (“the insurer”). The first defendant is Owjan Shahmiri. The second defendant is the President of the Personal Injury Commission of New South Wales. The third defendant is Katherine Ruschen, Brett Williams and Terence O’Riain in their capacity as a Merit Review Panel. The insurer was represented by Mr K. Rewell SC. All three defendants made submitting appearances.

  3. By way of amended summons filed 4 November 2021, the insurer relevantly seeks the following orders:

  1. An order in the nature of certiorari or alternatively a declaration setting aside or declaring invalid the Certificate of a Merit Review Panel dated 9 August 2021 issued under the authority of the second defendant purportedly in accordance with s 7.15(4) of the Motor Accident Injuries Act 2017 (NSW).

  2. An order that the matter be remitted to the second defendant for determination by a differently constituted Merit Review Panel according to law.

Background

  1. The facts giving rise to the dispute are not in issue.

  2. On 24 October 2020, the first defendant was injured in a motor vehicle accident (“the accident”). He made an insurance claim in relation to his injuries. This dispute centers on the proper way to calculate the amount of weekly benefits he is entitled to under the Motor Accident Injuries Act 2017 (NSW) (“MAIA”) in respect of the injuries he suffered in the accident.

  3. During the 12 months before the day of the accident, the first defendant had been employed from 23 October 2019 to 10 May 2020 (29 weeks). From 11 May 2020 to 23 October 2020, the first defendant was unemployed.

  4. From 23 October 2019 to 10 May 2020, the first defendant received gross earnings of $24,062. His average weekly gross earnings during that 29 week period were $829.72. Averaged over the full 52 weeks preceding the day on which the accident occurred, the first defendant’s earnings were $462.73 gross per week.

  5. The question for determination is which of these amounts, $829.72 per week or $462.73 per week, should be the basis for calculation of the first defendant’s weekly benefits. The first defendant contended for the higher amount, the insurer for the lower amount.

History of the dispute

  1. When the insurer received the first defendant’s claim for weekly benefits, it calculated his pre-accident weekly earnings by averaging his total gross earnings during the year preceding the accident over the whole 52 weeks of that year.

  2. The first defendant requested that the insurer conduct an internal review of its decision under s 7.9 of the MAIA. The outcome of this review was that the approach to assessment, and the first defendant’s pre-accident weekly earnings were assessed at $462.73 gross per week.

  3. The first defendant applied for merit review of the insurer's decision to the Dispute Resolution Service under the authority of the State Insurance Regulatory Authority (“SIRA”).

  4. The Merit Review was determined by Merit Reviewer, Roohi Koya on 26 February 2021 (“the Merit Reviewer”). The Merit Reviewer set aside the insurer's decision and determined that the first defendant's "pre-accident weekly earnings" were $829.72 gross per week.

  5. The insurer applied for review of the Merit Reviewer’s decision under s 7.15 of the MAIA. By the time that application for review was made, the functions of the Dispute Resolution Service had been taken over by the Personal Injury Commission (“PIC”).

Purported determination of the dispute

  1. The dispute was referred by the second defendant to the third defendant, a Merit Review Panel, comprising three members, namely Members Katherine Ruschen (Chair) (“dissenting member”), Brett Williams and Terence O'Riain (“the Merit Review Panel”).

  2. On 9 August 2021, the Merit Review Panel issued its Certificate purportedly in accordance with s 7.15(4) of the MAIA.

  3. By a majority (Member Ruschen dissenting), the Merit Review Panel confirmed the decision of the Merit Reviewer in the first defendant’s favour. The majority provided joint reasons. The dissenting member provided her own reasons.

  4. It is the meaning of the term “gross earnings received by the earner as an earner” in s.4(1), and in particular the words “earner as an earner”, that is the main point of difference between the majority and the dissenting member. It is not surprising that these words give rise to difficulties in interpretation. Any reader of the English language would find this phrase unintelligible.

  5. The majority found that the term "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" limits the period over which the earnings are to be averaged to the period when earnings were actually received by the injured person. In this matter, the majority found that the number of weeks over which the first defendant's total earnings during the 12 months before the accident are to be averaged over the 29 weeks during which the first defendant actually received earnings.

  6. In contrast, the dissenting member considered that once a person satisfies the definition of an "earner" in Sch 1 cl 2 of the MAIA, the person is "fixed" with that status, and is an "earner" for the whole period of 12 months immediately before the day of the accident, even if the person actually received earnings for only part of that 12-month period. In this case it would mean the first defendant’s earnings during the year preceding the accident are averaged over the whole 52 weeks of that year, even despite him having earned income for only part of the year.

  7. The dissenting member therefore took the words "as an earner" to limit the nature of the "earnings" that can be taken into account for the purpose of assessing "pre-accident weekly earnings" to earnings from employment or from self-employment, and to exclude other sources of income such as investment income.

  8. The insurer asserts that the majority erred in law in its construction of the meaning of the term "pre-accident weekly earnings" in Part 3 and Sch 1 cl 4 of the MAIA. The insurer contends that the dissenting member's construction is correct.

The Majority Decision

  1. The Merits Review Panel considered the insurer’s arguments before arriving at their decision. The Panel made a number of arguments as to why they interpreted cl 4(1) the way they did at [16]-[34] of their reasons (CB, 203-206). The Merits Review Panel relevantly stated:

“[16] In our view, this submission [reproduced at [33]-[35] of this judgment] seems to ignore the exceptions found in Sch 1 cl. 4(2), the application of which may result in an outcome the Insurer argues is contrary to the legislature's intentions. For example, cl. 4(2)(a) would allow PAWE to be determined by reference to a period of less than 12 months and, subject to cl. 4(4), in some cases a much shorter period, including a single week.

[17] Further, sub-cl. 4(2)(c) allows pre-accident weekly earnings [PAWE] to be determined by reference to earnings that were never actually received by an injured person. That provision allows PAWE to be determined on the basis of the average weekly gross earnings that an earner could reasonably have been expected to earn, but for the injury, in employment under an arrangement with an employer or other person to undertake employment or to commence business as a self-employed person. That provision applies to an injured person who is an 'earner' as a result of Sch 1 cl. 2(b), namely a person who, before a motor accident, had entered into an arrangement (whether or not an enforceable contract) with an employer or other person to undertake employment, or to commence business as a self-employed person, at a particular time and place.

…

[21] [in relation to the arguments reproduced at [37]-[49] of this judgment] … sub-cl.4(1) does not require an earner to have been earning continuously for 12 months. That is not what the sub-clause says. While the term 'earning continuously' is used in sub-cl. 4(2)(a), it is not found in sub-cl. 4(1). Further, the Insurer's submission is not consistent with sub-cl. 4(4) …

[22] In our view, critical to the resolution of the dispute is the work done in sub-cl. 4(1) by the term 'as an earner'.

[23] It is arguable that the term 'as an earner' is a qualification on the earnings to be taken into account and not a qualification of the period fixed by sub-cl. 4(1). This argument proceeds on the basis that, as there is no definition of 'earnings' in the MAI Act, if the qualification on earnings 'as an earner' were not included in sub-cl. 4(1) the gross earnings for the purpose of sub-cl. 4(1) might include earnings from both employment or self employment and from other sources such as earnings from investments. In this way, it may be argued, the term 'as an earner' in sub-cl. 4(1) has work to do as a qualification or limitation on the type of earnings that can be included in the calculation required by the clause.

[24] While persuasive, this argument does not appear to take into consideration Sch.1 cl.3 …

[25] Although cl. 3 defines the term 'loss of earnings', as opposed to 'earnings', so as to construe Division 3.3 and Schedule 1 in a cohesive way, it is appropriate to proceed on the basis that, as 'loss of earnings' means 'a loss incurred or likely to be incurred in a person's income from personal exertion', 'earnings' should be taken to mean 'a person's income from personal exertion'. 'A person's income from personal exertion' is income of the type referred to in Sch 1 sub-cl. 3(2) and excludes income of the type referred to in Sch 1 sub-cl. 3(3). In our view, this approach results in a construction of 'earnings' that is cohesive and consistent with the language and purpose of the statute.

[26] That being the case, the term 'earnings' used in sub-cl. 4(1) does not require qualification and the term 'as an earner' must be included in the provision for a different purpose.

[27] We have concluded that the work done by the term 'as an earner' in sub-cl. 4(1) is to define the period over which the gross earnings received by an earner, during the 12 months immediately before the day on which the accident occurred, are to be averaged by reference to the number of weeks the earner was actually earning income from personal exertion during that 12-month period.

[28] In our view, the words 'during the 12 months immediately before the day on which the motor accident occurred' in sub-cl. 4(1) establish the period during which gross earnings received by an earner are to be quantified, as opposed to defining the period over which the weekly average of the gross earnings received by an earner is to be calculated.

[29] In summary, we have concluded that, for the purposes of sub-cl.4(1), PAWE is calculated by:

(a) determining the earner's gross earnings received during the 12 months immediately before the day on which the motor accident occurred;

(b) determining the number of weeks during the 12 months immediately before the day on which the motor accident occurred that the earner was earning as an earner; and

(c) averaging the sum arrived at in answer to (a) by the number of weeks arrived at in answer to (b).

…

[31] Having regard to the other provisions in cl. 4, and Schedule 1 more broadly, the construction of sub-cl. 4(1) that we prefer is compatible with both when construed as a whole.

[32] We consider that the construction of sub-cl. 4(1) that we prefer is consistent with the overall scheme of Part 3 Division 3.3 and the objects of the MAI Act, which include providing early and ongoing financial support for people injured in motor accidents.

[33] This construction does not offend the other objects of the MAI Act found in s 1.3. As recorded earlier in these reasons, there are other sub-clauses in cl. 4 that would result in the same, or similar, outcomes.

[34] Finally, we note that our decision results in an outcome that is consistent with the decision under review and a number of other merit review decisions that address the construction of Sch 1 cl. 4(1) and the basis upon which PAWE is to be determined in accordance with that provision. ....”

The Dissenting Decision

  1. The dissenting member provided her own reasons for decision. They relevantly read (CB, 207-217):

“…

[10] There is no dispute that the claimant is an earner under clause 2(a).

…

[11] Clearly, clause 2(a) provides that a person is still considered an "earner" for the purpose of weekly benefits and the Act generally, even if they did not generate income for the whole of the relevant 12-month period. The threshold is a minimum of 13 weeks to be an "earner" for the purpose of weekly benefits.

[12] It is also implicit in the inclusion of the words "and, at the date of the motor accident, had not retired permanently from all employment'' that a person may not be receiving income as at the date of the accident (and income may have ceased up to 39 weeks prior, having regard to the 13 week threshold) but is still an "earner" on the date of the accident and at all material times for the purpose of the Act.

[13] This is reinforced in sections 3.6 and 3.7 which both state the following:

…

[14] As noted, under clause 2(a) a person does not need to be in receipt of earnings from employment or self-employment at the time of the accident to meet the definition of "earner". However, they "must be an earner when injured to be entitled to statutory benefits". It follows from this that once a person meets the definition of "earner" under clause 2(a) they are then an "earner" at all material times under the Act, including for each and every week of the relevant 12-month period under clause 4(1), including any period within the 12 months where there were no earnings.

[15] To say an injured person is an "earner'' only at those times when they actually receive earnings from employment or self-employment when they have not retired permanently from all employment is inconsistent with the definition of "earner'' in clause 2(a) and the wording of sections 3.6 and 3.7. A person's status as an "earner" under the Act is not intermittent such that it stops when earnings cease and starts when earnings begin again and so on. A person's status as an "earner" under the Act clearly does not wax and wane as and when income is received in the relevant period. Once an injured person meets the definition of "earner" under the Act their status as an "earner'' is fixed in every practical sense and for all material times for the purpose of the Act.

[16] The fixed status of "earner" is apparent when one considers the use of the word "earner" in sections 3.6 and 3.7. If an "earner'' is only an "earner" at a point in time when they are actually in receipt of earnings a literal reading of sections 3.6 and 3.7, which require Mr Shahmiri to be an earner on the date of the accident, would result in Mr Shahmiri, who was not working on the date of the accident, having no entitlement to weekly benefits under section 3.6 or 3.7

[17] Accordingly, once Mr Shahmiri establishes he is an earner under clause 2(a) he continues to be an "earner'' at all material times during the pre-accident period for the purpose of clause 4(1), even if there are periods within the pre-accident period when he did not earn. To say otherwise would require that "earner'' be given two different meanings;

(a) one for the purpose of clause 4(1) that is, a definition that says a person is only an "earner" at the times or during the periods they are actually in receipt of earnings from employment or self-employment; and

(b) another for the purpose of sections 3.6 and 3.7 that is, that a person is an earner on the date of the accident, even if they are not in receipt of earnings from employment or self-employment as at that date, provided they have not retired permanently.

…

[21] It follows from the reasoning above in relation to the definition of "earner" that the words in clause 4(1) "earnings as an earner" do not prescribe that the period over which the weekly average is to be calculated is the total sum of the number of weeks in which the earner actually earned. As discussed above, to do so would be inconsistent with the definition of "earner" in clause 2(a) and the wording and intention of sections 3.6 and 3.7.

[22] The qualification in clause 4(1) that it be the average of earnings "as an earner" can only be a qualification on the nature of earnings to be taken into account and not a qualification in relation to the period fixed by clause 4(1). A person is an "earner" under clause 2(a) by reason of "employment or self-employment". Accordingly, their "earnings as an earner" for the purpose of clause 4(1) are their earnings from "employment or self-employment" (clause 2(a)) and not from any other source such as investments. ·

[23] There is no definition of "earnings" in the Act. Accordingly, if the qualification on earnings "as an earner" were not made in clause 4(1) the gross earnings for the purpose of clause 4(1) might include earnings from both employment or self-employment and from other sources such as earnings from investments. In this sense the wording "as an earner" in clause 4(1) has work to do as a qualification or limitation on the type of earnings that can be included in the calculation required by the clause.

[24] Whilst it is tempting to take the definition of "loss of earnings" in schedule 1 as also a definition of "earnings" the position remains that if clause 4(1) is given the effect desired by Mr Shahmiri the definition of "earner" for the purpose of clause 4(1) would not be reconcilable with the use of the term "earner" in other provisions of the Act.

[25] In any event, "loss of earnings" and "earnings" are not the same. The term "loss of earnings" does not appear in clause 4(1) which does not concern actual or anticipated loss or any loss at all, but the opposite. Clause 4(1) concerns positive earnings in the relevant period preceding the accident. "Loss of earnings" on the other hand becomes a relevant term once the injured person has met the definition of earner and has had their PAWE calculated under clause 4. It then becomes necessary to look at actual loss in the post-accident period for the purpose of making payments under section 3.6 or 3.7 of the Act. If, for example, a person is an "earner" and has had their PAWE calculated at say $500 but they are able to continue to earn $500 in any week after the accident (or have been paid sick leave in this sum) then they have not suffered a "loss of earnings" (sick leave being excluded in the definition of loss of earnings). As such, even though they have been found to be an "earner" and had their PAWE calculated, weekly benefits would not be payable in any such week.

[26] Clearly, "earnings as an earner" means earnings from employment or self-employment. The definition of "loss of earnings" particularises the types of payments that are included in or excluded from actual post-accident loss of earnings for the purpose of calculating the extent to which weekly benefits become payable under sections 3.6 and 3.7 which is distinct from the calculation to be carried out under clause 4(1).

…

[29] If the words "earnings as an earner" were considered to somehow also fix the period for calculation of the weekly average (in addition to limiting the type of earnings) such that the period over which the weekly average is calculated is limited to the total number of weeks in which earnings were actually received it would result in overcompensation in many circumstances. Take for example the seasonal worker who ordinarily works only 13 weeks per year (meeting the threshold to be an earner under clause 2(a)) during fruit picking season or at a ski resort in ski season. If that worker were injured and their PAWE calculated as the average earnings over the 13-week earning period only, the weekly benefits payable would amount to a windfall.

…

[32] The words "earnings as an earner" in clause 4(1) limit the earnings that can be taken into account to earnings obtained through "employment or self-employment" only. The period over which the average of those earnings is then taken is "during the 12 months". By reason of the definition of "earner" discussed above, Mr Shahmiri is considered an earner for each and every day of this 12-month period, even if he did not obtain earnings from employment or self-employment during some of this period. It follows that the words "during the 12 months" fixes the period for the purpose of calculating the average at 52 weeks.

[33] Words in a statute are to be given their ordinary meaning. The ordinary meaning of "during" is "throughout the duration" of the specified period, which in this case is the 12-month period preceding the date of the accident. Mr Shahmiri's PAWE is therefore his total gross earnings from employment or self-employment received throughout the duration of the 12-month pre-accident period, divided by 52 weeks.

[34] In reaching the above conclusion regard has also been had to the entirety of clause 4. Clause 4(1) is one of a number of subclauses dealing with calculation of the 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).

…

[38] In short, regardless of whether an injured person's PAWE is assessed under Clause 4(1) or one of the subclauses 1 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 during the relevant period, regardless of the reason.

…

[43] The Workers Compensation Act 1987 (the WC Act) 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 specifically amended the WC Act to factor in COVID-19 circumstances into calculation of a worker's PIAWE. The amendments to the WC Act mean:

(a) in calculating PIAWE, an adjustment may be made to the relevant earning period if a worker has had a financially material reduction in earnings due to the pandemic, and

(b)v only earnings for work performed may be included in the calculation of PIAWE.

[44] Whilst there are similarities between parts of the WC Act and parts of the Motor Accident Injuries Act 2017 (the MAI Act), they are distinctly different schemes, having different purposes. Unlike the WC Act, Parliament has not taken steps to amend the MAI Act to accommodate the impact Covid-19 may have on an injured person's PAWE.

…

[56] My conclusion, on the basis of the above reasoning is that pursuant to clause 4(1) Mr Shahmiri 's PAWE is his gross earnings as an earner in the 12-month period preceding the accident divided by 52 weeks. Accordingly, I am of the view that the merit review decision of 26 February 2021 should be set aside and the insurer's internal review decision dated 17 December 2020 that Mr Shahmiri's PAWE is $462.73 be reinstated.”

Relevant legislation

  1. Section 7.1 of the MAIA provides a number of definitions. It relevantly reads:

“merit review matter means a matter declared by Schedule 2 to be a merit review matter for the purposes of this Part.”

  1. Pursuant to Sch 2 cl 1(a) of the MAIA a dispute as to the amount of statutory benefits payable under Division 3.3, as this case is, is a merits review matter. It relevantly reads:

“1 Merit review matters

The following matters are declared to be merit review matters for the purposes of Part 7—

(a) the amount of statutory benefits that is payable under section 3.4 (Statutory benefits for funeral expenses) or under Division 3.3 (Weekly payments of statutory benefits to injured persons)

…”

  1. Division 3.3 of the MAIA deals with weekly payments of statutory benefits to injured persons. Sections 3.6 and 3.7 deal with the entitlement to weekly payments during period from the accident until 78 weeks following the accident. Section 3.8 deals with entitlement post that 78 week period. These sections relevantly read:

“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.

…

3.7 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.

…

3.8 Weekly payments after second entitlement period (after week 78)

(1) A person who is injured as a result of a motor accident and suffers a total or partial loss of earning capacity as a result of the injury is entitled to weekly payments of statutory benefits under this section after the end of the second entitlement period, but only if the person—

(a) is at least 18 years of age (whether or not the person is an earner), or

(b) is under 18 years of age and is an earner.

…

(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 earning capacity and the person’s post-accident earning capacity (if any) after the second entitlement period.

…”

  1. As is evident from the above, pursuant to ss 3.6 and 3.7 of the MAIA the calculation of weekly payments during the first two entitlement periods (up to 78 weeks from the date of the accident) and the calculation of the injured person’s entitlement is carried out by reference to the difference between the injured person’s “pre accident weekly earnings” and their post-accident earning capacity.

  2. The term ‘’pre-accident weekly earnings" is defined in sch 1 cl 4(1) of the MAIA, subject to the qualifications in subclauses (2), (2A), (3) and (4). Schedule 1 cl 4 provides:

“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.

(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 received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident,

(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.”

  1. As sch 1 cl 4 of the MAIA deals uses the words “in relation to an earner” the definition of earner in sch 1 cl 2 is relevant. That cl provides:

“2 Meaning of "earner"

A person who is injured as a result of a motor accident is an earner if the person is at least 15 years of age and who:

(a) was employed or self-employed (whether or not full-time);

(i) at any time during the 8 weeks immediately preceding the motor accident, or

(ii) during a period of periods equal to at least 13 weeks during the year immediately preceding the motor accident, or

(ii) during a period or periods equal to at least 26 weeks during the 2 years preceding the motor accident,

and, at the date of the accident, had not retired permanently from all employment, or

(b) before the motor accident, had entered into an arrangement (whether or not an enforceable contract);

(i) with an employer or other person to undertake employment, or

(ii) to commence business as a self-employed person, at a particular time and place, or

(c) was receiving a weekly payment or other payment in respect of loss of earnings under this Act or the Workers Compensation Act 1987.”

  1. As this matter turns on the statutory interpretation of sch 1 cl 4 it is relevant to note that the term “earnings” is undefined, as is the phrase “earned as an earner”. The definition of the latter, as previously mentioned, is a central issue in this dispute.

Grounds of Judicial Review

  1. The amended summons filed by the insurer sets out the following grounds of review:

  1. The majority of the Merit Review Panel erred in law in determining that the term “pre-accident weekly earnings” means the average weekly earnings of the injured person only during the period the person was actually employed or self-employed during the year preceding the accident, rather than the injured person’s total earnings during the year preceding the accident averaged over the full 52 weeks of that year.

  2. The majority of the Merit Review Panel erred in law in determining that the term “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” should be construed as requiring that the person’s total earnings during the 12 months immediately before the motor accident should be “averaged” only over the number of weeks during which the person was actually employed or self-employed, rather than over the whole 12-month period, when the term “earner as an earner” does not have that meaning or effect.

  3. The majority of the Merit Review Panel erred in law in failing to give literal effect to the words of sch 1 cl 4(1) of the MAIA as it was required to do, and if they had it would have resulted in the first defendant’s total earnings during the 12 months preceding the date of the accident being averaged over the full 52 weeks, not just the 29 weeks during which the first defendant was employed.

  4. The majority of the Merit Review Panel erred in law in concluding that the term “earner as an earner” in sch 1 cl 4 of the MAIA has the effect of varying the requirement in cl 4(1) that the earnings of the injured person be averaged over the full 12 months immediately before the day on which the accident occurred unless one of the circumstances referred to in cl 4(2) applies. None of the circumstances specified in cl 4(2) apply in this case. The majority of the Merit Review Panel erred in law in varying the period of 12 months over which averaging was required where cl 4(2) is not engaged.

  5. The majority of the Merit Review Panel erred in failing to have regard to relevant information namely that an amendment regulation under the workers compensation scheme was published on 23 October 2020, which expressly varied the effect of a similar provision in that scheme to Sch 1 cl 4(1) of the MAIA, so as to achieve the same result that the majority of the Merit Review Panel achieved by its construction of cl 4(1). No such amendment regulation has been published under the MAIA. Only the dissenting member took this information into account.

The insurer’s submissions

Judicial Ground (1)

  1. The insurer submitted that the majority of the Merit Review Panel erred in law in determining that the term "pre-accident weekly earnings" means the average weekly earnings of the injured person only during the period the person was actually employed or self-employed during the year preceding the motor accident, rather than the injured person's total earnings averaged over the full 52 weeks of that year.

  2. The insurer noted that Sch 1 cl 4 of the MAIA, which defines the term ''pre-accident weekly earnings", repeatedly uses the words "earner as an earner" and submitted that that expression is in part at the root of the disagreement between the majority and the dissenting member.

  3. The insurer noted however that the word "earner" is defined in sch 1 cl 2 of the MAIA, and that in essence it limits "an earner" to an employed or self-employed person. The insurer also noted that the dissenting member found that this definition of "earner" assisted in the construction of the word "earnings" in the phrase "pre-accident weekly earnings".

  4. The insurer further noted that the dissenting member pointed out that the word "earnings" is not defined in the MAIA. She found that Sch 1 cl 2, and the term "earner as an earner", has the function of limiting "earnings" to income from employment or self-employment, where no other specific restriction on the meaning of the word "earnings" appears.

  5. In the insurer’s submission, the dissenting member's construction gives harmonious effect to all of the provisions of Sch 1 of the MAIA: Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 (“Project Blue Sky”) at [69].

  6. The insurer gave the following example in order to illustrate its point. If an injured person was in the habit of working only 13 weeks per year on a seasonal basis, then on the majority's approach they would be assessed as being entitled to weekly benefits based on pre-accident weekly earnings that were four times the person's actual average earnings over the whole of each year, and the weekly benefits the person would receive after the accident would bestow on them an amount more than three times greater than the amount they would actually have earned, had they remained uninjured.

  7. The insurer continued, that on the majority's construction, if a claimant was in the habit of working only one week each year, and worked only one week in the 12 months preceding the accident in which they were injured, the claimant's "pre-accident weekly earnings" would be their earnings for that one week, and the weekly benefits payable to the claimant by the end of the first year after the accident would be at least 40 times their prospective earnings, had the accident not occurred. The insurer submitted that this outcome cannot have been Parliament's intention and appears absurd.

Judicial Ground (2)

  1. The insurer submitted that the majority of the Merit Review Panel erred in law in determining that the term "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" should be construed as requiring that the person's total earnings during the 12 months immediately before the accident should be "averaged" only over the number of weeks during which the person was actually employed or self-employed, rather than over the whole 12-month period, when the term "earner as an earner'' does not have that meaning or effect.

  2. In the insurer’s submission, as the dissenting member found, the words "earner as an earner" operate to limit the nature of the earnings that can be taken into account for the purpose of calculating "pre-accident weekly earnings': not the period over which the person's earnings are "averaged".

Judicial Ground (3)

  1. The insurer submitted that the majority of the Merit Review Panel erred in law in failing to give literal effect to the words of Sch 1 cl 4(1) of the MAIA as it was required to do, and as would have resulted in the first defendant's total earnings during the 12 months preceding the date of the accident being averaged over the full 52 weeks, not just the 29 weeks during which the first defendant was employed.

  2. In the insurer’s submission the literal meaning of Sch 1 cl 4(1) of the MAIA is clear. The insurer submitted that it refers to the weekly average of the gross earnings received "by the earner as an earner" during the 12 months immediately before the day of the accident. The insurer submitted the literal meaning of those words clearly calls for an averaging to take place over a 12-month period, not some lesser period, unless one of the other subclauses of cl 4 applies.

  3. The insurer submitted that cls 4(2), (3) and (4) "cover the field" in the event that the injured person was not continuously employed for the whole of the 12-month period preceding the accident.

  4. The insurer submitted that none of cls 4(2), (3) or (4) apply to the first defendant. In the insurer’s submission if any of them applied, the first defendant would have been entitled to a better outcome, in terms of the amount of weekly payments of statutory benefits, than the outcome to which he is entitled when his actual earnings received during the 12 months immediately before the accident, are divided by 52, despite the fact that he was not employed for the full 52 weeks.

  1. The insurer submitted that the circumstances in which the injured person will receive weekly benefits greater than the average over 52 weeks of the income from employment or self-employment earned during the 12 months before the accident, regardless of the number of weeks in which such income was actually earned, are fully covered in cls 4(2), (3) and (4).

  2. In the insurer’s submission, if as the majority found, a person in the first defendant's position was intended to receive weekly payments of statutory benefits on the basis of an average of his pre­accident earnings only during the period that he actually received earnings, here 29 weeks out of 52, that would have been made clear in a subclause following clause 4(1).

  3. The insurer further submitted that the literal effect of Sch 1 cl 4(1) is to require the total earnings received by an injured person during the 12 months immediately before the relevant motor accident, to be averaged by dividing that sum by 52, regardless of the actual number of weeks during that period for which the injured person was actually employed or self-employed.

  4. In the insurer’s submission, the potential unfairness of giving literal effect to cl 4(1) for a person who was in "continuous employment" at the time of the accident, but had not been in employment for the whole of the 12 months preceding the accident, is cured by cls 4(2)(a) and 4(4).

  5. The potential unfairness of giving literal effect to cl 4(1) for an injured person who worked for at least 26 weeks during the year before the year immediately preceding the accident, is in the insurer’s submission, cured by cl 4(2)(a1).

  6. The potential unfairness to an injured person who was earning more immediately before the accident than earlier in the 12 months preceding the accident, for example because of promotion, is in the insurer’s submission, cured by cls 4(2)(b) and 4(3).

  7. The potential unfairness to an injured person who had entered into an arrangement to commence employment or business at the time of the accident but had not actually started in that employment or business, is in the insurer’s submission cured by cl 4(2)(c).

  8. The insurer submitted that the fact that a range of circumstances justifying payment of statutory benefits greater than would be calculated by the "straight averaging" over 52 weeks in cl 4(1) is provided for in cls 4(2), (3) and (4), strongly indicates that it was the intention of Parliament that these qualifications to cl 4(1) "cover the field". No such qualification is made for a person such as the first defendant, who has worked for only part of the 12 months preceding the accident. The insurer noted that the dissenting member points out that there are good reasons for this to be so in her decision.

  9. The insurer finally submitted that if the construction of the term "pre-accident weekly earnings" was intended by Parliament to be as the majority found, that could have been easily expressed in cl 4(1) as the weekly average of the gross earnings received by the injured person "during such part of the 12 months immediately before the day on which the motor accident occurred during which the injured person was actually employed or self-employed.”

Judicial Ground (4)

  1. The insurer submitted that the majority of the Merit Review Panel erred in law in concluding that the term "earner as an earner" in Sch 1 cl 4 of the MAIA has the effect of varying the requirement in cl 4(1) that the earnings of the injured person be averaged over the full 12 months immediately before the day on which the motor accident occurred, unless one of the circumstances referred to in cl 4(2) applies.

  2. In the insurer’s submission, none of the circumstances specified in cl 4(2) apply in this case. The majority of the Merit Review Panel erred in law in varying the period of 12 months over which averaging was required where cl 4(2) is not engaged.

Judicial Ground (5)

  1. The insurer submitted that the majority of the Merit Review Panel erred in failing to have regard to relevant information namely that an amendment regulation under the workers compensation scheme was published on 23 October 2020, which expressly varied the effect of a similar provision in that scheme to Sch 1 cl 4(1) of the MAIA, so as to achieve the same result that the majority of the Merit Review Panel achieved by its construction of cl 4(1). No such amendment regulation has been published under the MAIA. Only the dissenting member took this information into account.

  2. The insurer acknowledged that no submissions were made by it or by the first defendant to the third defendant with respect to the amendment regulation.

Resolution

  1. If there was an error made by the Merits Review Panel, as was put by Counsel for the insurer in oral submissions, this Court would be “entitled here to say that there is really only one allegation of error and … it's just an error of statutory construction” (T14.45-46).

  2. The error propounded by the insurer, differently stated in its grounds of judicial review concerns the construction of Sch 1 cl 4 of the MAIA. The parties agree that the first defendant’s weekly payments are to be determined in accordance with cl 4(1), but disagree on that clauses’ proper construction. Essentially the insurer’s contention is that the Merits Review Panel have proposed a construction of cl 4(1) which leaves cls 2 and 4(2) with no work to do, and consequently this cannot be a proper construction of the MAIA.

  3. Relevant to the determination of the proper construction of cl 4 is the following passage from Project Blue Sky at [69]:

“[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.”

  1. The first defendant falls within the ambit of sch 1 cl 2(a) of the MAIA as he was injured as a result of a motor accident, is over 15 years of age, was employed for 29 of the 52 weeks of the year immediately preceding the accident and had not permanently retired at the date of the accident. The wording of cl 2, in my opinion, makes it plain that once it is established that a claimant fits within the definition of an earner, they are to be considered an earner at all material times during the pre-accident period, even if they are not earning for the entirety of that period. As was pointed out by the dissenting member, this interpretation is supported by consideration of ss 3.6 and 3.7 of the MAIA. The dissenting member writes at [16] of her reasons:

“[16] The fixed status of "earner" is apparent when one considers the use of the word "earner" in sections 3.6 and 3.7. If an "earner'' is only an "earner" at a point in time when they are actually in receipt of earnings a literal reading of sections 3.6 and 3.7, which require Mr Shahmiri to be an earner on the date of the accident, would result in Mr Shahmiri, who was not working on the date of the accident, having no entitlement to weekly benefits under section 3.6 or 3.7.”

  1. Central to the Merit Review Panel’s argument is their interpretation of the phrase ‘earner as an earner’ as defining the period over which the earner’s gross earnings are to be averaged, at [27] of their decision (CB, 205). On the basis of my above reasoning, that is not how I interpret that phrase.

  2. The qualification that only the gross earnings received by the earner as an earner are to be taken into account to determine a claimant’s pre-accident weekly earnings, is in my opinion intended to exclude earnings earned by the earner that do not fall within the ambit of cl 2(a) because they are not earnings from employment or self-employment. For example, passive forms of income such as payments received from a rented property, or income from shares.

  3. As noted by the entirety of the Merits Review Panel there is no definition of earnings in the MAIA. The majority resolved this issue at [24]-[25] of their reasons by forming their own definition of earnings from the definition of ‘loss of earnings’ in Sch 1 cl 3 of the MAIA (CB, 204-205). The majority opine at [25] that on the basis of the definition of loss of earnings as “a loss incurred or likely to be incurred in a person’s income from personal exertion” earnings can be defined as “income from personal exertion”. However, as is pointed out by the dissenting member at [24] of her reasons, this would mean that “the definition of "earner" for the purpose of clause 4(1) would not be reconcilable with the use of the term "earner" in other provisions of the Act” (CB, 210-211).

  4. Further, as is pointed out by the dissenting member at [25]-[28] of her reasons, ‘loss of earnings’ and ‘earnings’ are not the same. Loss of earnings only becomes relevant once a claimant has already been defined as an earner and has had their pre-accident weekly earnings calculated. She relevantly states at [26] of her reasons (CB, 211):

“[26] Clearly, "earnings as an earner" means earnings from employment or self­ employment. The definition of "loss of earnings" particularises the types of payments that are included in or excluded from actual post-accident loss of earnings for the purpose of calculating the extent to which weekly benefits become payable under sections 3.6 and 3.7 which is distinct from the calculation to be carried out under clause 4(1).”

  1. She continues at [28] of her reasons (CB, 211):

“If “earnings" were given the same definition as "loss of earnings" then for the purpose clause 4(1) all annual leave, sick leave or any other leave entitlements (which are excluded from the definition of "loss of earnings) paid in the relevant pre-accident period would need to be deducted from a claimant's gross earnings before calculating their PAWE, which is clearly not what is required of clause 4(1). This reinforces that "earnings” and "loss of earnings" are not the same and it cannot be implied into the act that the definition of "loss of earnings" is also to be taken as the definition of "earnings".”

  1. For completeness’ sake, regard should also be had to the other subclauses in sch 1 cl 4 of the MAIA. None of the subclauses 4(2)(a)-(c) suggest there should be an adjustment made to the period specified within those clauses to accommodate periods where the claimant was not earning.

  2. Turning specifically to subclause 4(2)(a). This subclause applies to claimants who were earning continuously at the date of their accident but not for at least 12 months and specifies that the period over which their earnings are to be averaged is only that from when they began to earn continuously until the date of the accident. It is unclear what reason there would be for including this subclause if the majority’s interpretation of the statute is correct. If where a claimant falls within clause 4(1) the period over which their pre-accident weekly earnings are to be averaged is only the period during which they were earning, there would be no reason to specify in subclause 4(2)(a) that the relevant period to be considered is “… from when the earner stated to earn continuously to immediately before the day of the motor accident.” The only difference between cls 4(1) and 4(2)(a) on the majority’s interpretation of the statute is that in subclause 4(2)(a) there is an erroneous specification that the claimant had to be earning at the time of the accident, otherwise the method of calculation is the same. This cannot have been the intention of parliament.

  3. As was noted in the decision of the dissenting member at [43] (CB, 214), the Workers Compensation Act 1987 (NSW) (“1987 Act”) had a similar provision to that in Sch 1 cl 4 of the MAIA, but was amended to achieve the result that the majority of the Merits Review Panel here wished to achieve, and one must infer that the failure to similarly amend the MAIA is deliberate. The Workers Compensation Amendment (COVID-19 Weekly Payment Compensation) Regulation 2020 (NSW) inserted a new cl 8EA into Sch 3 cl 2(3)(a) of 1987 Act, which allows for adjustment of the relevant earning period where there had been a change to the worker’s employment arrangements as a direct result of the impact of the COVID-19 pandemic.

  4. Curiously, though the dissenting member’s decision was circulated amongst the other members of the Merits Review Panel there is no reference to this point in the majority decision. It may be that the other members were attempting to cure what appears to be an unfairness on the face of the legislation. Here we have an injured party who only worked for a 29-week period over the 12 months previous to the accident due to the effects of COVID-19, and who may have worked the whole 52-week period had it not been for COVID-19, but by application of the statute may have those 29 weeks of earnings averaged across the whole 12-month period to arrive at a determination of his “pre-accident weekly earnings”. This ostensibly produces an unfairness. However, one cannot construe an act to accommodate a particular circumstance, no matter how unfair that circumstance may be.

  5. In accordance with my above reasoning, I accept the insurer’s submission that the Merits Review Panel has made an error in their calculation of the first defendant’s pre-accident weekly earnings. The first defendant’s pre-accident weekly earnings should have been calculated by taking his earnings over the whole of the 12-month period immediately before the day of the accident and dividing it by 52 reflecting the number of weeks during the whole 12-month period. This results in the first defendant’s pre-accident weekly earnings being found to be $462.73.

Result

  1. The result is that the insurer’s application for judicial review of the Certificate of the Merit Review Panel dated 9 August 2021 is upheld. The matter is to be remitted to the second defendant for redetermination.

The Court Orders

  1. The Certificate of the Merit Review Panel dated 9 August 2021 issued under the authority of the second defendant purportedly in accordance with s 7.15(4) of the MAIA is set aside.

  2. The matter is remitted to the second defendant, the President of the Personal Injury Commission of New South Wales, for determination according to law.

  3. Costs be reserved.

**********

Amendments

16 May 2022 - Correction to Third Defendant's name.

17 May 2022 - Correction to Third Defendant's name.

Decision last updated: 17 May 2022

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Cases Citing This Decision

27

Klironomos v Insurance Australia Limited t/as NRMA Insurance [2025] NSWPICMR 17
Charity v QBE Insurance (Australia) Limited [2025] NSWPICMR 15
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