Bah v QBE Insurance (Australia) Limited

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
CITATION:	BAH v QBE Insurance (Australia) Limited [2022] NSWPICMR 31
CLAIMANT:	BAH
INSURER:	QBE Insurance (Australia) Limited
MERIT REVIEWER:	Katherine Ruschen
DATE OF DECISION:	19 April 2022
CATCHWORDS:	MOTOR ACCIDENTS- Dispute about payment of weekly benefits under Division 3.3 of the Motor Accident Injuries Act 2017 (MAI Act); pre-accident weekly earnings (PAWE); meaning of earner, schedule 1, clause 2 of the MAI Act; meaning of loss of earnings, schedule 1, clause 3 of the MAI Act; meaning of earnings; meaning of PAWE, schedule 1, clause 4(1) and 4(2)(b) of the MAI Act; change in circumstances, schedule 1, clause 4(3) of the MAI Act; business carried on by company; separate legal entity; Held – the reviewable decision set aside and remitted to the Insurer for reconsideration.
DETERMINATIONS MADE:	The reviewable decision is about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Act, and is therefore a merit review matter under Schedule 2(1)(a) of the MAI Act. 1. The reviewable decision is set aside and remitted to the insurer for reconsideration in accordance with the directions below: (a) if the claimant presses assessment of PAWE under clause 4(2)(b) then he is to provide sufficient and reliable further information to the insurer to enable the insurer to determine actual earnings in the period 8 February 2021 to 5 June 2021 and in turn whether the weekly average in this period was more than the weekly average prior to 8 February 2021; (b) for the purpose of PAWE generally, the claimant is to provide the following further information to the insurer to the extent it is not already available to the insurer or is incomplete: (i) a copy of the 30 June 2021 PAYG certificate issued by BAI; (ii) complete copies of his as lodged individual tax returns for 2019/2020 and 2020/2021 together with the notices of assessment for these years issued by the ATO; (iii) complete copies of the as lodged 2019/2020 and 2020/2021 tax returns of BAJ and the notices of assessment issued by the ATO to BAJ for these years; (iv) complete copies of bank statements in respect of the claimant’s bank account into which wages were paid by BAJ and BAK for the period 6 June 2020 to date, and (v) complete copies of the bank statements of BAJ from which payment of wages were made to the claimant for the period 6 June 2020 to date; (c) the insurer may request any of the above documents by way of a request to the claimant’s accountant to provide documents directly to the insurer pursuant to the claimant’s authority in the application for personal injury benefits; (d) upon receipt of further information, the insurer is to re-determine the claimant’s PAWE including by determining whether clause 4(1) or in the alternative, clause 4(2)(b) applies and the insurer is to calculate PAWE under the applicable clause pursuant to the following directions: (i) PAWE is to be either wholly calculated under clause 4(1) or if clause 4(3) applies, wholly calculated under clause 4(2)(b); (ii) the GIO PAWE decision is to be disregarded; (iii) GIO payments are to be excluded from calculation of PAWE; (iv) only wages received by the claimant from BAJ and BAK in the pre-accident period are to be included in calculation of PAWE (wages from BAJ are to be included regardless of whether they include subsidised payments using Jobkeeper income received by BAJ), and (v) other than the wages paid by BAJ to the claimant no other income or profit of BAJ is to be included in calculation of PAWE.

BACKGROUND

There is a dispute between BAH (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 was involved in a motor accident on 3 April 2021 which is the subject of a separate application for personal injury benefits to another insurer, GIO.
On 6 June 2021 the claimant was involved in the motor accident that is the subject of the application for personal injury benefits that gives rise to this merit review.
On 24 December 2021 the insurer in respect of the subject accident and respondent to this merit review determined the claimant’s PAWE in the sum of $399.85.
The claimant requested an internal review of the insurer’s 24 December 2021 decision.
On 8 February 2022 the insurer issued their internal review decision in which the claimant’s PAWE amount was revised to $1,408.79.
The claimant has requested a merit review of the insurer’s internal review decision dated 8 February 2022.

SUBMISSIONS

The claimant has provided detailed written submissions, which have been considered. The salient points made in the claimant’s submissions are:
(a)   that three sources of income should be included in calculation of his PAWE, being income from BAK; BAJ and weekly benefits paid by GIO in respect of the previous 3 April 2021 motor accident;
(b)   that his income from BAK should be separately averaged over only the number of weeks he was in receipt of this income and not over 52 weeks on the basis that commencement of employment with BAK amounted to a change in circumstances under Schedule 1, clause 4(3);
(c)   that the PAWE decision of GIO regarding the first motor accident on 3 April 2021 should inform calculation of PAWE in respect of the subject motor accident on 6 June 2021;
(d)   that Jobkeeper payments received by BAJ are subsidies received by the claimant in carrying on a business and are therefore part of his pre-accident weekly earnings, and
(e)   that the sales figure in respect of BAJ adopted by forensic accountants PFK is incorrect or unreliable and the correct sales figure is as set out in the profit and loss records of the company.
The insurer submits:
(a)   the claimant’s income from BAK does not amount to an entitlement to earn continuously and therefore Schedule 1(4)(3) is not triggered;
(b)   weekly benefits paid by GIO for the previous motor accident are excluded from PAWE as they are not standalone loss of earnings and their inclusion in the circumstances of this matter would amount to double dipping by the claimant and an inaccurate financial outcome;
(c)   the decision of GIO has no bearing on the insurer’s decision, as PAWE must be calculated on a case by case base and circumstances my differ;
(d)   given the state of the claimant’s business records, the fact he charged GST when not registered to do so and the difficulty in reconciling source documents with profit and loss statements, the most reliable means of assessing sales in the relevant pre-accident period is a prudent assessment of the gross value of business invoices issued in the relevant period.

REASONS

Issues

There is no dispute that the claimant is an earner within the meaning in the MAI Act.
The issues in dispute are:
(a)   whether the claimant’s PAWE falls for assessment under clause 4(1) or clause 4(3) of Schedule 1 of the MAI Act;
(b)   whether weekly benefits paid by GIO during the pre-accident period should be included in calculation of PAWE;
(c)   the relevance, if any, of GIO’s PAWE decision regarding the 3 April 2021 accident;
(d)   whether Jobkeeper payments received by BAJ are subsidies received by the claimant in carrying on a business and are therefore part of his pre-accident weekly earnings, and
(e)   whether sales of BAJ have been calculated correctly and whether this impacts calculation of PAWE.

Whether clause 4(1) or clause 4(3) applies

Clause 4 of Schedule 1 sets out the meaning of PAWE as follows:

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.
Note: Examples of a change of circumstances to which this subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.
(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.
(emphasis added)

The claimant effectively submits that his PAWE should be determined under a combination of clause 4(1) and clause 4(3). He submits that average weekly earnings from BAJ should be calculated under clause 4(1) and average weekly earnings from BAK should be calculated under clause 4(3) (or rather, 4(2)(b)) and then the two should be combined to ultimately produce the figure for PAWE. However, clause 4 states clause 4(1) applies unless one of the exceptions in clause 4(2) applies. Where an exception applies such as sub-clause 4(2)(b)
(if clause 4(3) is triggered), it follows from the language “unless” that clause 4(1) no longer applies and the whole of calculation of PAWE falls under the relevant exception in clause 4(2).
That only one formula applies to PAWE as a whole is also apparent from the fact that PAWE has a different “meaning” depending on whether it falls under clause 4(1) or in this case, clause 4(2)(b). PAWE is to be calculated pursuant to the formula in the specific sub-clause.
In other words, clause 4(1) becomes redundant, as follows:
(a)under 4(1): “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;
(b)under 4(2): “In the following cases, "pre-accident weekly earnings" … means - (a different meaning is then given for each subclause under clause 4(2));
(c)once one of the “following cases” listed under clause 4(2) applies, clause 4(1) no longer applies.
Accordingly, the MAI Act does not permit two separate calculations under two separate subclauses for the purpose of determining PAWE. PAWE is either wholly calculated pursuant to the meaning of PAWE in clause 4(1) or it is wholly calculated pursuant to the meaning (in so far as this case is concerned) in sub-clause 4(2)(b).
Sub-clause 4(2)(b) is applicable if, under clause 4(3) there has been a significant change in earnings resulting in the earner becoming entitled to earn more than he had previously earned. Accordingly, it is expected that calculation of PAWE under clause 4(2)(b) would result in a higher PAWE than calculation under clause 4(1) and in such case, clause 4(2)(b) would be the most applicable subclause over clause 4(1) and the whole of PAWE would be calculated under clause 4(2)(b).
Therefore, the claimant’s PAWE is to be calculated either based on his earnings from BAJ and from BAK combined, under clause 4(1) or it is to be calculated based on his earnings from BAJ and BAK combined, under clause 4(2)(b) but not a combination of both.
Under clause 4(1) weekly earnings are averaged over the 52 week period immediately before the accident. Under 4(2)(b) weekly earnings are averaged, in the alternative, over the period commencing from the date of the significant change to the day before the accident. In the claimant’s case the period under clause 4(1) is 6 June 2020 to 5 June 2021. The alternative period under 4(2)(b) is from 8 February 2021 to 5 June 2021.
Before PAWE can be calculated it is necessary to determine whether clause 4(3) is triggered.
Clause 4(3) is triggered 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
[the claimant’s] “earnings circumstances that resulted in the claimant] regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred”.
The claimant relies on the commencement of employment with BAK on 8 February 2021 as a
“significant change” that resulted in him “regularly earning … more” on a weekly basis than he did prior to 8 February 2021. To determine whether clause 4(3) is triggered it is necessary to determine:
(a)whether combined weekly earnings from BAJ and BAK in the period after
8 February 2021 were more than weekly earnings prior to this date, and
(b)if so, whether the claimant would have been entitled to “regularly” earn more after 8 February 2021if he had not had the two motor accidents.
The insurer’s submission that employment with BAK does not amount to “continuous” employment is misconceived. The word “continuously” does not appear in clause 4(2)b) or clause 4(3). The definition of “continuously” in clause 4(4) is only relevant to subclause 4(2)(a). However, the claimant must demonstrate he “regularly” became entitled to earn more under clause 4(3). In this regard, payslips from BAK demonstrate the claimant was employed on a regular basis from 8 February 2021 until the date of the first motor accident in
April 2021 and that his employment was on a “full time” basis. Accordingly, on balance the current evidence establishes the claimant regularly became entitled to earnings from BAK.
Whether earnings from BAK combined with any earnings from BAJ received after 8 February 2021 amounted to more than the claimant was earning prior to 8 February, however, is unknown on the current evidence. The claimant has not provided evidence of earnings from BAJ in the specific pre-accident period, whether that be under clause 4(1) or clause 4(2)(b). He has only provided the annual figure for the financial years ending 30 June 2020 and 30 June 2021.
Whilst in many cases taking on a second job is likely to result in increased earnings from that point on this may not always be the case. For example, a party might reduce hours in the first job or may wind down their employment in the first job as they phase into the second. In the claimant’s case it may be that a regular or sufficient income from BAJ was no longer available due to a downturn in sales, hence the job with BAK.
The claimant has the onus of providing sufficient evidence to establish the amount of earnings he received in the relevant pre-accident period. Whilst there is a letter from the claimant, as director of BAJ stating he received income of $84,900 from
BAJ in the period 1 July 2020 to 4 April 2021 there are two issues with this evidence:
(a)it is self-serving evidence of the claimant, and
(b)it does not assist to determine how much of the income of $84,900 was received by the claimant prior to 8 February 2021 and how much of it was received by him after this date.
Several curiosities (that perhaps warrant further enquiry) arise from the financial records of BAJ, a company in respect of which the claimant is the sole director and shareholder. These include that BAJ charged consumers GST when not registered to do so and that the employment of the claimant’s wife appears to potentially be fictional employment for the sole purpose of claiming Jobkeeper for a second employee. Of note, wages paid to the claimant’s wife in the relevant financial year amount to the same amount as Jobkeeper payments received by BAJ said to have been passed on to the claimant’s wife. In other words, her wages were fully subsidised by Jobkeeper payments in circumstances where she received no wages before or after the subsidy was available. A reasonable inference is available from this that the claimant’s wife was not employed at any time before or after receipt of Jobkeeper and her position was created for the sole purpose of BAJ being able to claim Jobkeeper in respect of a second employee.
Further, the contention that the whole of the $84,900 the claimant states in his 11 November 2021 statement was received on or before 4 April 2021 is inconsistent with the source documents, being PAYG certificates and ATO pre-filing statements. Whilst the pre-filing statement records that the whole of the BAK income was received on or before 4 April 2021, the PAYG and pre-filing statement state that the income from BAJ was received up to 30 June 2021, which is a period extending beyond the pre-accident period. To the extent any of the $84,900 was received after 5 June 2021 it is excluded from PAWE.
Considering all of the above, I am not prepared to accept the claimant’s self-serving statement of 11 November 2021 at face value, absent any independent source documents.
This is a matter in which it would be prudent for the insurer to scrutinise the claimant’s financial information, including that the claimant should be required to provide ongoing financial documents regarding BAJ for the purpose of determining whether he continues to derive an income from BAJ post-accident.
Importantly, the claimant’s PAWE under clause 4(2)(b) is the weekly average of the earnings received by him only in the period 8 February 2021 to 5 June 2021. Presumably, there would be source records, other than the tax return and PAYG certificate, which reveal the date(s) on which wages were paid to the claimant and the amount that was paid on each date, which can be reconciled against the total of $84,900 paid in the financial year ending 30 June 2021.
Should the claimant press for his PAWE to be determined under clause 4(2)(b) in the alternative to clause 4(1) then he will need to provide this evidence that is, evidence of exactly what payments were received by him from BAJ in the period 8 February 2021 to 5 June 2021. Having regard to the determination of the other issues in this merit review below, the claimant’s PAWE under clause 4(2)(b) is to then be calculated as follows:
(a)“A” being total wage payments actually received by the claimant from BAJ in the period 8 February 2021 to 5 June 2021;
(b)A + “B” being total wages received from BAK in the period 8 February 2021 to 5 June 2021 = “C”, and
(c)C divided by 16.86 weeks (number of weeks from 8 February 2021 to 5 June 2021 – 118 days).

On the information before me I cannot be comfortably satisfied of the amount of wages from BAJ actually received by the claimant after 8 February 2021 and accordingly, I cannot determine:
(a)whether the claimant’s combined earnings after 8 February 2021 were more than his average earnings prior to that date, or
(b)the claimant’s PAWE under clause 4(2)(b), if combined earnings were in fact more after 8 February 2021.
Accordingly, should the claimant press for his PAWE to be determined under clause 4(2)(b) he may submit further evidence to the insurer and the insurer may recalculate PAWE pursuant to my determination at paragraphs 29(a) to 29(c) above.
As to what the claimant’s PAWE is under clause 4(1) in the alternative, if clause 4(3) is not triggered:
(a)the pre-accident period under clause 4(1) is 6 June 2020 to 5 June 2021;
(b)the pre-accident period is not the same as the period covered by the documents provided by the claimant being 1 July 2020 to 30 June 2021 and the documents are insufficient to determine actual earnings received in the specific pre-accident period;
(c)for the reasons discussed above I give little weight to the claimant’s self-serving statement that wages of $84,900 were paid by BAJ to him in the period 1 July 2020 to 4 April 2021 (given the PAYG certificate extends to 30 June 2021 there is a probability that some of this income was paid to the claimant after 4 April 2021, including after the pre-accident period ending 5 June 2021, and
(d)the evidence shows in the financial year ending 30 June 2020 that the only income the claimant received was wages from BAJ in the sum of $30,300 (of note, the claimant was also in receipt of insurance payments from Allianz in the financial year ending 30 June 2020 in the sum of $17,558 so presumably there is a third motor accident that has not been fully disclosed by the claimant).
If the claimant’s PAWE were calculated under clause 4(1) by adopting a weekly average from the 30 June 2020 tax return, which overlaps the pre-accident period and accepting all wages from BAJ and BAK in the 2020/2021 tax year were received prior to the date of the accident, the claimant’s PAWE calculation is as follows:
(a)the weekly average of the $30,300 received from BAJ in the 30 June 2020 tax year (for reasons set out below the Allianz payments included in this tax return are excluded from PAWE) is $582.69;
(b)the overlapping period in relation to the 30 June 2020 tax return is 6 June 2020 to 30 June 2020 which is 25 days or 3.57 weeks and therefore the income received in that part of the pre-accident period under clause 4(1) from 6 June 2020 to
30 June 2020 is $2.080.20 (weekly average of $582.69 x 3.57 weeks);
(c)income received from BAJ from 1 July 2020 to 5 June 2021 (inclusive of
Jobseeker subsidised wages) is $84,900;
(d)in addition, income received from BAK during the pre-accident period is $18,461;
(e)accordingly, earnings in the pre-accident period total $86,980.20 ($2,080.20 plus $84,900) from BAJ and $18,461 from BAK which totals $105,441.20, and
(f)the pre-accident period is 52 weeks from 6 June 2020 to 5 June 2021 and accordingly, PAWE is $2,027.71 ($105,441.20 divided by 52 weeks).
However, I am not comfortably satisfied on the information before me that the whole of the BAJ income of $84,900 was received on or prior to 5 June 2021, or prior to 4 April 2021 as contended by the claimant (the documents show BAJ continued to invoice clients for sales well beyond 4 April 2021 and that it did not have any significant capital in cash to pay wages ahead of sales). The PAYG certificate and pre-filing statement also suggest wage payments to the claimant from BAJ continued after 5 June 2021.
I am also of the view payments from BAK should be verified as having been received by the claimant, as a quick online search suggests the claimant may have some relationship with BAK or its owners other than merely as an employee and there are also errors in the payslips
which one would not ordinarily expect (for example, the year to date earnings in each payslip are not updated). A statement of earnings from BAK held by the ATO and available to the claimant’s accountant through the ATO tax agent’s portal and/or the notice of assessment issued by the ATO for the 2020/2021 tax year (that can be reconciled against payments from GIO, BAJ and BAK) will likely verity the extent to which the claimant received wages from BAK. The insurer should attend to this either on the documents already available to the insurer or by request to the claimant for further documents.
Given the above, it is appropriate that the claimant provide further information and that the matter be remitted back to the insurer for redetermination upon receipt of further information from the claimant pursuant to the directions set out below.

Whether weekly benefits paid by GIO are PAWE

37.A fundamental principle of statutory interpretation is that the MAI 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.”
38.In other words, you cannot construe the meaning of a specific provision in an MAI Act without considering the sections which surround it or relate to it and the structure and meaning of the MAI Act as a whole. The MAI Act should be construed so as to operate coherently, consistently, and harmoniously, as a whole. With this in mind, the starting point is sections 3.6 and 3.7 which are the sections under which weekly benefits are paid by reference to PAWE. Sections 3.6 and 3.7 provide that
“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 [relevant] entitlement period” (emphasis added).
39.The meaning of earner is set out in clause 2 of Schedule 1 and includes that a person is an earner if immediately before the motor accident they were, receiving a weekly payment or other payment in respect of loss of earnings under the MAI Act.
40.The claimant was in receipt of weekly payment in respect of loss of earnings under the MAI Act from GIO immediately before the subject motor accident. Accordingly, if he did not meet the definition of “earner” under any other subclause in clause 2 of Schedule 1 he would be deemed an earner on the basis he was in receipt of the GIO payments. Whether the claimant is an earner within the meaning of clause 2 of Schedule 1 is the threshold test. Thereafter, relevant matters such as loss of earnings and PAWE are defined separately under the clauses that follow the threshold requirement in clause 2.
41.The meaning of PAWE in clause 4 requires a calculation of “earnings” received in the relevant pre-accident period. The word “earnings” in isolation is not defined in the MAI Act. However, “loss of earnings” is the trigger for sections 3.6 and 3.7 and is defined in clause 3, which precedes clause 4, as follows:
Meaning of "loss of earnings "
(1)"Loss of earnings" means a loss incurred or likely to be incurred in a person's income from personal exertion.
(2)A person's "income from personal exertion" is -
(a)the amount that is the income of the person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered, and
(b)the proceeds of any business carried on by the person either alone or in partnership with any other person, and
(c)any amount received as bounty or subsidy in carrying on a business.

(3)A person’s “income from personal exertion" does not include -
(a)interest, unless the person's principal business consists of the lending of money, or unless the interest is received in respect of a debt due to the person for goods supplied or services rendered by the person in the course of the person's business, or
(b)rents or dividends, or
(c)any employer superannuation contributions, or
(d)the monetary amount of any annual, sick or other leave entitlement.

42.It is clear from the above that there is a distinction in the MAI Act between passive and active income. Passive income is excluded from the meaning of “loss of earnings”. Only active income counts as loss of earnings that is, income from “personal exertion” being income from employment or from services rendered or from carrying on a business.
43.The claimant is not an employee of GIO. He does not receive the GIO payments for services rendered. He does not receive the GIO payments from carrying on a business. The GIO payments are passive income, which fall outside the definition of “loss of earnings”.
44.Having regard to the principles of statutory interpretation and considering the MAI Act as a whole and in particular, considering the meaning of PAWE in the context of clause 3 of Schedule 1 and sections 3.6 to 3.8 of the MAI Act it can only be concluded that the intention of the MAI Act is that “earnings” for the purpose of calculating PAWE under clause 4 are those same earnings in respect of which the claimant may suffer a loss (that is “loss of earnings”) such that he becomes entitled to payment of weekly benefits under Division 3.3 of the MAI Act.
45.Accordingly, it follows that only earnings that inform “loss of earnings” under clause 3 for the purpose of determining whether the claimant becomes entitled to payment of weekly benefits under Division 3.3 of the MAI Act can be included in calculation of PAWE. On this basis, the GIO payments which are passive income, being not income derived from personal exertion are excluded from PAWE.

GIO’s PAWE decision

46.GIO’s PAWE decision has no bearing on a PAWE decision arising from a separate motor accident. GIO’s decision was based on the facts, matters and circumstances as made known to GIO at the time of their decision.
47.Each decision must be based on the facts, matters and circumstances specific to the matter. The facts, matters and circumstances, as known, may differ at any given time. In this case, all information made known to GIO and the extent to which GIO considered it reliable is not known. Further the pre-accident period applicable to the GIO decision differs from the preaccident period in this current matter.
48.The GIO decision is the opinion of the GIO internal decision maker at the time. It is not a binding decision. Indeed, GIO’s decision may be found not to be the correct and preferable decision, if scrutinised. The documents considered and how GIO reached their determination is not known. The GIO decision is not the subject of this merit review and therefore cannot be scrutinised as part of this merit review to determine whether it is the correct and preferable decision. Given the analysis undertaken in this merit review, however, I consider the GIO PAWE decision may not be the correct and preferable decision and it may amount to a windfall to the claimant.
49.In the above circumstances it is not appropriate to have regard to or be influenced by the GIO decision when determining this current merit review.

Are Jobkeeper payments received by BAJ subsidies received by the claimant in carrying on a business?
50.The claimant does not operate as a sole trader. The “business” from which the claimant derives benefit is operated by a registered corporation, BAJ. Any benefit received from the company by the claimant is either in the form of wages paid to him by the company as employee of the company or dividends paid to him by the company as a shareholder.
51.As a matter of law, a company business structure is a separate legal entity, unlike a sole trader or a partnership structure. Pursuant to the Corporations Law a company has a separate legal existence that is distinct from that of its owners, managers, operators, employees, agents, directors and shareholders. Pursuant to the Corporations Law a company’s money and other assets belong to the company and must be used for the company’s purposes.
52.Accordingly, payments (whether Jobkeeper or otherwise) to BAJ as a company are not payments to the claimant. Payments to BAJ become the company’s money. If the money is received by the company and either held by the company or paid elsewhere, they are not monies received by the claimant. Accordingly, to the extent the company received Jobkeeper payments they do not form part of the claimant’s PAWE.
53.Jobkeeper broadly comprises a wage subsidy to help businesses keep staff employed. Jobkeeper payments are assessable income of the company that receives them. In this case, it is assessable income of BAJ. In turn, payments made by BAJ as wages to the claimant were subsidised by the Jobkeeper payments received by BAJ. As such, they are converted into wages or earnings received by the claimant in exchange for services rendered to BAJ. Accordingly, any part of the claimant’s wages subsidised by Jobkeeper payments received by BAJ forms part of the claimant’s PAWE.
54.The sum of $84,900 received as wages by the claimant in the 2021 tax year is inclusive of wages subsidised by Jobkeeper payments received by BAJ. Accordingly, it is already included in PAWE and to somehow include it again as the claimant’s submissions might suggest would amount to double dipping. As 50% of the Jobkeeper payment was used to subsidise wages paid to the claimant’s wife, that amount cannot be included in the claimant’s PAWE on the basis BAJ is a separate legal personality from the claimant, as is the claimant’s wife.
55.With respect to PFK their methodology ignores the fact that the claimant does not operate the business as a sole trader and ignores the legal position that the entity that operates the business is a corporation which is a separate legal personality from the claimant.

Sales of BAJ

56. It is not necessary for me to determine this issue because:
(a)as discussed above, BAJ is a separate legal entity;
(b)as a separate legal entity, the claimant only receives income from the “business” carried on by the company, if the company makes payments to him as an employee or shareholder;
(c)the claimant was paid wages by the company which are included in calculation of PAWE;
(d)for any other income from the company to be included in PAWE there must be evidence of payment by the company to the claimant, for example dividend payments to the claimant as shareholder;
(e)the claimant’s own financial records of BAJ for the year ending 30 June 2021 record a net profit of the business of only $760.36, that no dividend was paid to any shareholder in the relevant pre-accident period and that no recommendation to pay a dividend was made;
(f)consistent with BAJ’s records showing no dividend payments to the claimant in the relevant period, the claimant did not declare any earnings from dividends paid by BAJ in his 2021 tax return, and
(g)accordingly, any profit of BAJ remains the company’s money under the Corporations Law regardless of the correct sales figure and has no bearing on calculation of PAWE as the only money paid by BAJ to the claimant, as a
separate legal person, were wages paid to the claimant in his capacity as employee of BAJ.

CONCLUSION

57.For the reasons set out above:
(a)the MAI Act does not permit PAWE to be calculated under a combination of clause 4(1) and clause 4(2)(b);
(b)the claimant’s PAWE is to be assessed wholly under clause 4(1) or in the alternative, wholly under clause 4(2)(b);
(c)there is insufficient information to determine whether clause 4(3) is triggered and accordingly, absent further information clause 4(1) applies;
(d)there is insufficient information to determine the amount of earnings received by the claimant from BAJ in the pre-accident period under clause 4(1);
(e)GIO payments are excluded from calculation of PAWE regardless of whether
PAWE is calculated under clause 4(1) or clause 4(2)(b);
(f)the GIO PAWE decision is irrelevant to determining the claimant’s PAWE in relation to the subject accident on 6 June 2021;
(g)to the extent wages of the claimant received in the pre-accident period were subsidised by Jobkeeper payments they are characterised as wages for the purpose of PAWE, however, the primary payment of Jobkeeper to BAJ is excluded, and
(h)the sales figure for BAJ is irrelevant as BAJ is a separate legal entity and did not make any payments to the claimant other than wages.

58.Directions are made below for the provision of further documents. It appears some of these documents may already be available to the insurer but were not provided by either party for this merit review. Accordingly, the extent to which documents provided are complete or incomplete is not known.
59.The reviewable decision is set aside and remitted to the insurer for reconsideration in accordance with the directions below:
(a) if the claimant presses assessment of PAWE under clause 4(2)(b) then he is to provide sufficient and reliable further information to the insurer to enable the insurer to determine actual earnings in the period 8 February 2021 to 5 June
2021 and in turn whether the weekly average in this period was more than the weekly average prior to 8 February 2021;
(b)for the purpose of PAWE generally, the claimant is to provide the following further information to the insurer to the extent it is not already available to the insurer or is incomplete:
(i)a copy of the 30 June 2021 PAYG certificate issued by BAK;
(ii)complete copies of his as lodged individual tax returns for 2019/2020 and 2020/2021 together with the notices of assessment for these years issued by the ATO;
(iii)complete copies of the as lodged 2019/2020 and 2020/2021 tax returns of BAJ and the notices of assessment issued by the ATO to BAJ for these years;
(iv)complete copies of bank statements in respect of the claimant’s bank account into which wages were paid by BAJ and BAK for the period 6 June 2020 to date;
(v)complete copies of the bank statements of BAJ from which payment of wages were made to the claimant for the period 6 June 2020 to date, and
(vi)any other documents reasonably requested by the insurer.

(c)the insurer may request the above documents by way of a request to the claimant’s accountant to provide documents directly to the insurer pursuant to the claimant’s authority in the application for personal injury benefits;
(d)upon receipt of further information, the insurer is to re-determine the claimant’s PAWE including by determining whether clause 4(1) or in the alternative, clause 4(2)(b) applies and the insurer is to calculate PAWE under the applicable clause pursuant to the following directions:

(i)PAWE is to be either wholly calculated under clause 4(1) or if clause 4(3) applies, wholly calculated under clause 4(2)(b);
(ii)the GIO PAWE decision is to be disregarded;
(iii)GIO payments are to be excluded from calculation of PAWE;
(iv)Only wages received by the claimant from BAJ and BAK in the pre-accident period are to be included in calculation of PAWE (wages from BAJ are to be included regardless of whether they include subsidised payments using Jobkeeper income received by BAJ), and

(e) other than the wages paid by BAJ to the claimant no other income or profit of BAJ is to be included in calculation of PAWE.

LEGISLATION AND GUIDELINES

60. In making this decision, I have considered the following:
•The Application, Reply and supporting documentation;
•MAI Act;
•Motor Accident Guidelines, and
•Motor Accident Injuries Regulation 2017.

Katherine Ruschen

Merit Reviewer

Personal Injury Commission

[2022] NSWPICMR 31

19 April 2022