Kary v Insurance Australia Limited t/as NRMA Insurance
[2023] NSWPICMR 56
•2 November 2023
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Kary v Insurance Australia Limited t/as NRMA Insurance [2023] NSWPICMR 56 |
| CLAIMANT: | Nicholas Kary |
| INSURER: | NRMA |
| MERIT REVIEWER: | Katherine Ruschen |
| DATE OF DECISION: | 2 November 2023 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; dispute about amount of payment of weekly benefits payable under division 3.3; schedule 1, clause 4(1); meaning of pre-accident weekly earnings, earnings from self-employment and other employment; whether tax free employment benefits are earnings; compliance with directions; Held – the reviewable decision is set-aside. |
| DETERMINATIONS MADE: | CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act2017 The reviewable decision is about the amount of statutory benefits that are payable under Division 3.3 of the MotorAccident Injuries Act2017 (the MAI Act) and is therefore a merit review matter under Schedule 2(1)(a) of the MAI Act. 1. The reviewable decision is set aside. 2. The claimant’s pre-accident weekly earnings amount is $2,194.91. |
STATEMENT OF REASONS
INTRODUCTION
There is a dispute between Nicholas Kary (the claimant) and the insurer about the amount of weekly payments payable under Division 3.3 of the Motor Accident Injuries Act 2017 (the MAI Act).
The claimant was involved in a motor accident on 10 March 2023.
On 19 March 2023 the claimant lodged an application for statutory benefits under the MAI Act.
On 1 May 2023 the insurer determined the claimant’s pre-accident weekly earnings (PAWE) in the sum of $1,604.86.
The claimant requested an internal review of the insurer’s decision dated 1 May 2023.
On 23 May 2023, the insurer issued their internal review decision in which the insurer varied the claimant’s PAWE amount to $2,191.76.
The claimant has requested a merit review of the insurer’s internal review decision dated 23 May 2023 (the Application).
SUBMISSIONS
There is no dispute that the claimant is an earner for the purpose of the MAI Act and that at the time of the motor accident he received earnings from two sources – as a self employed Uber driver and as an employee of Cerebral Palsy Alliance (CPA). There also does not appear to be any dispute that the claimant’s PAWE falls under Schedule 1, cl 4(1) of the MAI Act.
The parties agree the claimant’s gross earnings received from self-employment in the 12 month pre-accident period totalled $44,038.
The issue in dispute giving rise to this merit review was whether a tax free salary packaged amount received by the claimant as a separate benefit of his employment with CPA that is, separate to his taxable salary paid into his bank account, is to be included as earnings received by the claimant as an earner for the purpose of PAWE.
Directions were issued to the parties. Following provision of further information by the claimant the insurer advised the Personal Injury Commission (Commission) via message in the portal that the insurer now “does not dispute that the $605 tax free payments are received by the claimant as an earner for the purpose of PAWE”. Accordingly, it is not necessary to repeat the parties’ submissions as the only issue to be determined is the amount of the claimant’s PAWE based on agreed earnings received from self-employment and earnings from employment with CPA, including the tax free payments from CPA now conceded by the insurer to be earnings for the purpose of PAWE.
REASONS
Procedural history
Something should be said about the presentation of each party’s case to the Commission in circumstances where the claimant is legally represented and although not legally represented, the insurer is a professional organisation frequently appearing before the Commission.
The parties provided voluminous documents. One bundle from the claimant, for example, exceeded 700 pages. The submissions did not adequately reference pages in the document bundles. There was significant duplication in the material provided and no care had been taken by the parties to ensure documents were provided in a complete and logical form. For example, documents such as bank statements, Uber statements and CPA payslips were either incomplete and/or redacted and were not provided in chronological order. At a basic level these documents ought to have been provided as complete documents in terms of the date range (that is, covering the entire period in issue from 10 March 2022 to 9 March 2023), not have dates missing and ought to have been presented to the Commission in chronological order.
In relation to the dispute as to whether the tax free payments are earnings received as an earner, the claimant provided partial and/or redacted and/or limited cut and paste sections from some other document none of which made clear whether or how the claimant actually received the payments or how many such payments he received in the relevant pre-accident period.
Directions were issued on 10 August 2023. Further directions were issued on
22 September 2023. The directions required the claimant to provide documents evidencing actual receipt of the tax free payments from CPA. Following purported compliance by the claimant with the directions there continued to be insufficient evidence of actual receipt by the claimant of the tax free payments in dispute. Accordingly, on 29 September 2023 time was extended for the claimant to provide such evidence by 6 October 2023. It was not until 10 October 2023 that the claimant ultimately provided a complete record of a Mastercard account for his benefit into which the employer made payment of the tax free amounts in dispute. Had this document been provided from the outset the tax free payments would not likely have been disputed as earnings by the insurer (noting that since receipt of this material the insurer has advised this is no longer disputed).
Further, it seems neither party adequately reviewed the supplementary PKF report dated 22 May 2023. Had they done so, they would have seen that despite the body of that report suggesting the tax free payments had been excluded from PKF’s PAWE calculation that PKF had in fact inadvertently included these payments. This is evident by comparing payslips with the summary of earnings received from CPA in annexure 1.3 to PKF’s supplementary report. It is clear from such comparison that the amounts in PKF’s annexure 1.3 are inclusive of the $605 tax free payments appearing on the corresponding payslips. For example, PKF include in their summary $2,768.56 as gross earnings received by the claimant from CPA on 15 February 2022 (pay period 30 January 2022 to 12 February 2022). However, the payslip clearly shows this is inclusive of the tax free amount of $605. Appearing below $2,768.56 as gross earnings on the corresponding payslip is the deduction of $605 as the tax free amount. The payslip then records gross earnings exclusive of the tax free amount as $2,163.56. Had the claimant properly considered PKF’s supplementary report it would have been apparent that PKF had included the tax free amounts that were in dispute.
The legislation
Schedule 1, cl 4(1) relevantly provides:
“"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…”
(emphasis added)Accordingly, only earnings “received” by the claimant in the 12 month period before the accident can be included in PAWE. Clause 4(1) is not concerned with when the work was physically carried out in order to become entitled to those earnings. Clause 4(1) is only concerned with when the earnings were “received” by the claimant. Unless the earnings were received by the claimant in the 12 months before the day of the motor accident, they are excluded from PAWE.
In other words, only monies representing earnings as an earner received into the claimant’s bank account can be included in PAWE, regardless of whether any of the work carried out in order to receive those earnings was carried out before or during the pre-accident period.
The 12 month pre-accident period under cl 4(1) is 10 March 2022 to 9 March 2023.
PKF has included earnings received by the claimant after the 12 month period ended on 9 March 2023 by including earnings paid by CPA to the claimant on 15 March 2023 on a pro rata basis to account for a portion of those earnings representing work carried out during the pre-accident period. PKF has also excluded a portion of earnings received by the claimant on 16 March 2022 because part of the corresponding pay period is before the pre-accident period commenced on 10 March 2022.
For the reasons set out above, this methodology adopted by PKF is not a correct application of cl 4(1).
I also discern from the claimant’s submissions that the claimant seeks to include one or more payments received outside the 12 month pre-accident period. However, only monies “received” by the claimant during the 12 month pre-accident period from
10 March 2022 to 9 March 2023 can be included in PAWE, regardless of whether the work was carried out during this period. Accordingly, the whole of the amount paid by CPA to the claimant on 15 March 2023 is excluded from PAWE because the claimant did not receive these earnings during the period 10 March 2022 to 9 March 2023. These earnings were received after the 12 month pre-accident period for the purpose of cl 4(1) had ended.
What is the claimant’s PAWE?
The parties agree gross earnings in the 12 month pre-accident period from self-employment totalled $44,038.
The parties now also agree the tax free payments by CPA represent earnings received by the claimant as an earner and are to be included in PAWE. For reasons set out above, the tax free payments can only be included to the extent the claimant received the payments during the 12 month pre-accident period.
The evidence establishes the employer maintained a Mastercard account and issued a card to the claimant for the claimant’s private use (subject to some restrictions which I do not consider relevant here). The insurer debited $605 per fortnight as a tax free benefit to the claimant’s Mastercard, which the claimant then used to pay for personal expenses.
Submissions have been made by the claimant about how the claimant’s employment contract should be interpreted as evidence of tax free payments by CPA to the claimant. However, the contract represents anticipated earnings based on the salary package outlined in the contract. As cl 4(1) is only concerned with earnings actually received by the claimant the best evidence of this is the Mastercard transaction statement, which the claimant finally provided on 10 October 2023. The Mastercard statement records 26 payments each in the sum of $605 debited by CPA to the account during the period 10 March 2022 to 9 March 2023 as funds available for use by the claimant using the card issued to him. These payments are as follows:
Date Amount 16 March 2022 $605 30 March 2022 $605 13 April 2022 $605 27 April 2022 $605 11 May 2022 $605 25 May 2022 $605 8 June 2022 $605 22 June 2022 $605 6 July 2022 $605 20 July 2022 $605 3 August 2022 $605 18 August 2022 $605 31 August 2022 $605 14 September 2022 $605 28 September 2022 $605 12 October 2022 $605 26 October 2022 $605 9 November 2022 $605 23 November 2022 $605 7 December 2022 $605 21 December 2022 $605 4 January 2023 $605 18 January 2023 $605 1 February 2023 $605 15 February 2023 $605 1 March 2023 $605 TOTAL $15,730
Accordingly, gross earnings received by the claimant as an earner by way of the tax free employment benefit component of the claimant’s salary package in the period
10 March 2022 to 9 March 2023 total $15,730.As set out above, the PKF summary of taxable earnings received by the claimant from CPA in annexure 1.3 to their supplementary report is erroneous because:
(a) the $605 tax free payments were included in annexure 1.3 despite the body of the report suggesting they had been excluded;
(b) PKF excluded some earnings from the first payment on 16 March 2022 because these earnings in part represent work carried out before the 12 month pre-accident period commenced on 10 March 2022. However, as the whole of the payment was received on 16 March 2022 it is to be included in PAWE, and
(c) PKF included part of the earnings received on 15 March 2023 as representing work carried out before the 12 month pre-accident period ended on 9 March 2023. However, as the whole of this payment was received after 9 March 2023 all of it is excluded from PAWE.
Again, the bank statements are the most reliable evidence as to what earnings the claimant actually received in the period 10 March 2022 to 9 March 2023 and the payslips record the tax deducted before making payment to the claimant so as to enable gross earnings to be calculated.
The bank statements and payslips evidence gross earnings received by the claimant as an earner in the 12 month pre-accident period from 10 March 2022 to 9 March 2023 (excluding the tax free benefit as I have calculated this separately above) as follows:
Date paid/deposited into claimant’s bank account Net amount deposited into bank account Tax Gross earnings (excluding tax free amount) 16 March 2022 $1,696.61 $364 $2,058.67 30 March 2022 $1,696.61 $364 $2,058.67 13 April 2022 $296.46 $140 $436.46 13 April 2022 $1,696.61 $364 $2,058.67 27 April 2022 $1,696.61 $364 $2,058.67 11 May 2022 $1,696.61 $364 $2,058.67 25 May 2022 $1,696.61 $364 $2,058.67 8 June 2022 $1,696.61 $364 $2,058.67 22 June 2022 $1,696.61 $364 $2,058.67 6 July 2022 $1,696.61 $364 $2,058.67 20 July 2022 $1,696.61 $364 $2,058.67 3 August 2022 $1,696.61 $364 $2,058.67 17 August 2022 $1,696.61 $364 $2,058.67 31 August 2022 $1,696.62 $364 $2,058.68 14 September 2022 $1,688.60 $358 $2,044.66 28 September 2022 $1,696.61 $364 $2,058.67 12 October 2022 $1,696.61 $364 $2,058.67 26 October 2022 $1,696.61 $364 $2,058.67 9 November 2022 $1,696.61 $364 $2,058.67 23 November 2022 $1,696.61 $364 $2,058.67 7 December 2022 $1,696.61 $364 $2,058.67 21 December 2022 $1,696.61 $364 $2,058.67 4 January 2023 $1,696.62 $364 $2,058.68 18 January 2023 $1,741.50 $424 $2,163.56 1 February 2023 $1,741.50 $424 $2,163.56 15 February 2023 $1,741.50 $424 $2,163.56 1 March 2023 $1,741.50 $424 $2,163.56 TOTAL $44,579.89 $9,838 $54,367.45
Gross earnings received from CPA from 10 March 2022 to 9 March 2023, in addition to the tax free payments, therefore total $54,367.45 as set out in the table above.
There is an difference of $50.44 between total net payments into the claimant’s bank account and net earnings after tax. The additional $50.44 paid to the claimant is reimbursement of a card fee, presumably in relation to the Mastercard account into which the tax free benefit is paid. Reimbursement of card fees is not earnings received as an earner and is excluded from PAWE. The gross payments in the far right column above reconcile with gross taxable earnings in the payslips before any adjustment for the card fee and is therefore considered to be correct.
Gross earnings received by the claimant from employment and self-employment in the 12 month period under Schedule 1, cl 4(1) from 10 March 2022 to 9 March 2023 are therefore $114,135.45 broken down as follows:
(a) self-employment (agreed amount): $44,038;
(b) CPA tax free payments (per Mastercard statement): $15,730, and
(c) CPA taxable earnings (per bank statements and payslips): $54,367.45.
The claimant’s PAWE is therefore $2,194.91 ($114,135.45 divided by 52 weeks).
Not surprisingly, this outcome closely aligns with PKF’s PAWE calculation in their supplementary report because of the inadvertent inclusion of the tax free benefit by PKF in their calculation said to exclude the tax free payments. As noted above, this should have been obvious to the parties if they had properly considered the documents. The claimant also had his bank statements which are the most reliable evidence of when earnings were received and in what amount for the purpose of cl 4(1). Had the claimant or their solicitor calculated payments evidenced in the bank statements, including the Mastercard account they likely would have reached the same outcome. If so, there would likely have been no need for a merit review given PAWE calculated on the bank statements (and as determined in this merit review decision) aligns closely to the PAWE amount determined by the insurer in their internal review decision dated 23 May 2023.
Other issues
The claimant failed to fully comply with directions in this matter. Compliance with the directions is mandatory. The directions required the claimant to provide bank statements up to and including at least 30 June 2023. In relation to bank account number ending 185 the claimant only provided bank statements up to 30 May 2023. In relation to bank account number ending 003 the claimant only provided statements up to 30 April 2023. The claimant also did not provide a Schedule of Earnings declaring his post-accident earnings, which is required by the Commission as part of his merit review application.
In relation to the failure to provide statements for the Mastercard account beyond
31 March 2023 the claimant’s solicitor stated that statements for this account “from 1 April 2023 to 30 June 2023 do not exist as the claimant was on leave without pay following the motor vehicle accident”. However, this is inconsistent with the available bank statements which show the claimant continued to receive earnings from CPA on 12 April 2023, 25 April 2023 and 10 May 2023, in addition to earnings received from CPA after the accident on 15 March 2023. Bank statements also indicate the claimant continued to receive earnings from self-employment after the accident, as he received payments from Superhero (understood to be a delivery driver service) at least on 28 March 2023 and 15 May 2023.
The claimant has an obligation to disclose such earnings to the insurer as they are relevant (including the 15 March 2023 earnings) to the extent to which the claimant suffered any loss of earnings for the purpose of calculating the amount of payments of weekly benefits under s 3.6 of the MAI Act.
It is unclear whether ongoing earnings from CPA have been disclosed by the claimant to the insurer. The statement in the claimant’s submissions to the effect there have been no earnings from CPA from 1 April 2023 to 30 June 2023 suggests post-accident earnings have not been disclosed. Steps should be taken by the insurer to verify the extent to which the claimant received post-accident earnings during any period that has been or is to be the subject of payment of weekly benefits to the claimant given:
(a) the claimant’s failure to declare post-accident earnings in a Schedule of Earnings, and
(b) the inconsistency between the statement in submissions that the claimant was on leave from CPA at least from 1 April 2023 to 30 June 2023 “without pay” and evidence of earnings paid by CPA into the claimant’s bank account in this same period.
Enquires in this regard should include requiring the claimant to produce up to date/ongoing bank statements for both bank accounts and the Mastercard account to the insurer. In relation to the Mastercard account, if the claimant is only “on leave” from CPA the Mastercard account would presumably remain open with statements available showing zero debit transactions, if there have been no payments by CPA since
31 March 2023.
CONCLUSION
For the reasons set out above gross earnings received by the claimant in the relevant 12 month pre-accident period under Schedule 1, cl 4(1) of the MAI Act (10 March 2022 to 9 March 2023) total $114,135.45 which equates to PAWE in the sum of $2,194.91.
Accordingly:
(a) the reviewable decision is set-aside, and
(b) the claimant’s PAWE is $2,194.91.
LEGISLATION AND GUIDELINES
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.
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