Khadka v CIC-Allianz
[2022] NSWPICMR 11
•17 February 2022
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| Citation: | Khadka v CIC-Allianz [2022] NSWPICMR 11 |
| ClaimanT: | Sujina Khadka |
| Insurer: | CIC-Allianz |
| Merit Reviewer: | Katherine Ruschen |
| DATE OF DECISION: | 17 February 2022 |
| CATCHWORDS: | MOTOR ACCIDENTS- Merit review; dispute about payment of weekly benefits under Division 3.3 of the Motor Accident Injuries Act 2017 (MAI Act); meaning of pre-accident earning capacity; schedule 1, clause 7 of the MAI Act; meaning of post-accident earning capacity; schedule 1, clause 8 of the MAI Act; employment reasonably available; whether circumstances other than training, skills and experience relevant to pre-accident earning capacity; weekly benefits under section 3.8 of the MAI Act; Held– the reviewable decision is set aside. |
| 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 Motor Accident Injuries Act 2017 (the MAI Act). 1. The reviewable decision is: (a) set aside and remitted to the insurer for reconsideration in accordance with the directions below: (i) the claimant’s pre-accident earning capacity is to be calculated based on the average weekly earnings of a hotel housekeeper employed on a full-time permanent basis, 38 hours per week. The amount of the claimant’s costs assessed in accordance with the Motor Accident Injuries Regulation 2017 is $0 (nil). |
Issued under section 7.13(4) of the Motor Accident Injuries Act2017
BACKGROUND
There is a dispute between Sujina Khadka (the claimant) and the insurer about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the MAI Act.
The claimant was involved in a motor accident on 9 September 2018.
On 30 January 2020 the insurer made a 78-week post-accident earning capacity decision.
The claimant requested an internal review of the 30 January 2020 decision.
On 12 March 2020 the insurer issued their internal review decision.
As of 12 March 2020, the claimant had a Bridging A visa work restriction, which restricted her from working more than 40 hours per fortnight in Australia whilst she was studying.
Based on this work restriction the insurer assessed the claimant’s pre-accident earning capacity at 20 hours per week.
On 14 May 2020 the work restriction on the claimant’s visa was lifted.
Between February 2021 and June 2021, the claimant was certified by medical professionals as having capacity to work 40 hours per week.
In August 2021, the claimant underwent surgery for a right shoulder injury related to the motor accident.
As a result of this surgery, from 8 August 2021 until 23 October 2021 the claimant was certified as having no capacity to work. The extent to which the claimant has been certified as having any capacity since the last certificate provided for this merit review is not known. If there has been a change in capacity since 23 October 2021 it is open to the insurer to make a further post-accident earning capacity decision in respect of any period from or after 24 October 2021.
It is otherwise understood that for the period 8 August 2021 to 23 October 2021 there is no dispute that the claimant had no post-accident earning capacity.
This dispute is limited to the issue of assessment of the claimant’s pre-accident earning capacity for the purpose of the claimant’s entitlement to payments, if any, after the first 78 weeks after the accident pursuant to section 3.8 of the MAI Act.
SUBMISSIONS
In her submissions the claimant says she does not challenge the insurer’s position that the visa restriction is relevant to assessment of her pre-accident earning capacity and by reason of this, her pre-accident earning capacity was limited to 20 hours per week. The claimant submits, however, that post-accident earning capacity should be assessed without regard to the visa restriction, given it was lifted on 14 May 2020.
However, the claimant’s submissions appear to be poorly articulated. On a literal reading of the claimant’s submissions, they are unhelpful to the claimant because the outcome would be the same. This is because payments under section 3.8 are based on the difference between pre-accident earning capacity and post-accident earning capacity. The insurer appears to assess both pre and post-accident earning capacity based on a restricted 20 hours per week. Pre-accident earning capacity on this basis equates to $534 per week (indexed, net figure). Post-accident earning capacity is nil and therefore, on the insurer’s position the claimant is entitled to 80% of $534 under section 3.8 of the MAI Act.
If the claimant were to accept the insurer’s position that pre-accident earning capacity is $534 then on the claimant’s submission, the outcome is the same. This is because the claimant’s post-accident earning capacity is nil in the period 8 August 2021 to 23 October 2021 regardless of whether her capacity in this period is assessed based on 20 hours or 40 hours per week. Pursuant to the formula set out in section 3.8, $534 less $0 is $534 of which the claimant is entitled to 80%. The result would be the same, regardless of whether post-accident earning capacity is assessed based on a capacity to work part-time or full-time hours.
Taking the claimant’s submissions as a whole, however, I understand the claimant’s intention is to challenge the insurer’s assessment of her pre-accident earning capacity for the purpose of the period 8 August 2021 to 23 October 2021 on the basis it should be assessed based on full-time hours.
The insurer submits that apart from changed visa conditions in 2020 there is no other evidence that the claimant would have had available to her more than 20 hours per week of work and that therefore, pre-accident earnings are limited to her 20 hour per week earnings.
REASONS
Legislation
Section 3.8 of the MAI Act provides that:
“(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.
Note : ...
(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.
(3) A weekly payment of statutory benefits to a person under this section is not to exceed the maximum weekly statutory benefits amount less the person’s post-accident earning capacity (if any) after the second entitlement period.
(4) A weekly payment of statutory benefits to a person under this section is not to be less than the minimum weekly statutory benefits amount or the person’s pre-accident earning capacity, whichever is the lesser.” (emphasis added)
The meaning of “pre-accident earning capacity” is relevantly set out in schedule 1, clause 7 of the MAI Act, as follows:
“(1) ‘Pre-accident earning capacity’ of an injured person means the weekly amount a person had the capacity to earn before the motor accident concerned in employment reasonably available to the person in view of the person's training, skills and experience.
(2)..” (emphasis added)
Post-accident earning capacity is relevantly defined in schedule 1, clause 8 of the MAI Act, as follows:
“(1) ‘Post-accident earning capacity’ of an injured person means--
(a)…
(b)for any period after the second entitlement period--the weekly amount the person has the capacity to earn in any employment reasonably available to the person, determined on the basis of the person's fitness for work in any such employment.
(2) ...
(3) A person's fitness for work after the second entitlement period is to be determined having regard to the following--
(a)the nature of the injury and the likely process of recovery,
(b)treatment provided and rehabilitation undertaken and the potential for further treatment and rehabilitation,
(c)the person's training, skills and experience,
(d)the age of the person,
(e)any medical certificate provided by the injured person as to the person's fitness for work.
(4) The Motor Accident Guidelines may make provision for the matters to be taken into account for the purposes of determining the employment reasonably available to a person in any period after the second entitlement period.” (emphasis added)
Pursuant to section 3.16 of the MAI Act an insurer can make a decision about either pre-accident or post-accident earning capacity of an injured person at any time.
The Motor Accident Guidelines (Guidelines) may provide for the procedure to followed in making such decisions.
Clause 4.56 of the Guidelines pertains to post-accident earning capacity only (not pre-accident) and provides as follows:
“4.56 When determining employment reasonably available to a claimant at any time after the second entitlement period (from week 79 after the motor accident), the matters to be considered include:
(a)the nature and extent of the claimant’s injuries
(b)the claimant’s age, education, skills and work experience
(c)rehabilitation services that are being or have been provided
(d)the nature of the claimant’s pre-injury employment
(e)the claimant’s place of residence at the time of the motor accident
(f)the details given in the claimant’s Certificate of Fitness
(g)the length of time the claimant has been seeking employment
(h)any other relevant circumstances.”
Importantly, clause 4.56 of the Guidelines only applies to an assessment of post-accident earning capacity. There is no similar list of factors to be considered in the Guidelines (or the MAI Act) relevant to determining pre-accident earning capacity.
It is important to note there is a distinct change in the legislation after the first entitlement period for weekly benefits under section 3.6 of the MAI Act. Under section 3.6 weekly benefits are assessed based on the difference between pre-accident weekly earnings (PAWE) and post-accident earning capacity. However, under sections 3.7 and 3.8 weekly benefits are assessed based on the difference between pre-accident earning capacity (not actual pre-accident earnings) and post-accident earning capacity.
The position taken by the insurer effectively raises two issues for consideration:
(a) whether the visa restrictions in place at the time of the motor accident are relevant to a consideration of pre-accident earning capacity, and
(b) whether it is necessary for the claimant to provide evidence that without the visa restriction she would have had available to her more than 20 hours per week of work.
Is the visa restriction a relevant consideration for pre-accident earning capacity?
The work restriction on the claimant’s visa prior to the accident clearly impacts PAWE. Assuming compliance with the restriction the claimant’s actual earnings upon which to calculate PAWE would have been limited to the maximum dollar equivalent of 20 hours per week. However, PAWE and pre-accident earning capacity are not the same. As noted above, PAWE is not relevant to calculation of weekly benefits under section 3.8.
The insurer’s internal review decision and submissions for this merit review do not consider the definition of pre-accident earning capacity at all. Only the definition for post-accident earning capacity and the considerations for an assessment of post-accident earning capacity in schedule 1, clause 8 of the MAI Act and in the Guidelines are set out and considered by the insurer in the internal review decision. Of note, however, the MAI Act contains separate definitions for pre-accident and post-accident earning capacity. In my view, the insurer has conflated the concepts of PAWE, and pre-accident earning capacity, and has conflated pre-accident earning capacity with post-accident earning capacity. This conflation is apparent for example in paragraph 29 of the internal review decision and in paragraph 36 of that decision where the insurer relies on clause 8(1)(b) in determining what work was reasonably available to the claimant pre-accident. However, clause 8(1)(b) is not relevant to pre-accident capacity. It only applies to determining post-accident earning capacity. Given the different definitions for pre and post-accident capacity, the legislation clearly requires that each of these concepts be separately considered within the context of the applicable definition. Contrary to paragraph 36 of the internal review decision the definition of pre-accident earning capacity is contained in clause 7, not clause 8 of schedule 1.
PAWE is not relevant to this matter, which is in relation to weekly benefits under section 3.8. The parties agree the claimant has no post-accident earning capacity in the period relevant to this merit review for the purpose of section 3.8. This leaves pre-accident earning capacity, as defined in schedule 1, clause 7 to be assessed.
The question is whether the visa restriction is a factor to be taken into account in an assessment of pre-accident earning capacity.
As noted above, the definition of pre-accident earning capacity in schedule 1 of the MAI Act is limited to “the weekly amount a person had the capacity to earn before the motor accident concerned in employment reasonably available to the person in view of the person's training, skills and experience”. In other words, it is only the person’s “training, skills and experience” that is relevant to determining the employment reasonably available to them. Accordingly, what is required is a theoretical assessment of what the claimant would have been able to earn if she realised the full potential to earn based on her specific training, skills and experience. A theoretical assessment of earning potential based on the limited factors of “training, skills and experience” does not make room for other considerations such as the availability of work based on the person’s place of residence or other factors such as visa restrictions.
There is no scope in the definition of pre-accident earning capacity for other considerations such as those relevant to assessing post-accident earning capacity, which includes a person’s age, place of residence at the time of the motor accident, the nature of pre-injury employment and the length of time the claimant has been seeking work, in addition to training, skills and experience. These other considerations expressly and only form part of the definition of post-accident earning capacity in the MAI Act. If it were intended that they also form part of the definition of pre-accident earning capacity, it follows that the definition of pre-accident earning capacity would have been expanded. However, the definition of pre-accident earning capacity is confined to consideration of only the person’s “training, skills and experience”.
The distinction between pre-accident and post-accident earning capacity effectively means there is to be a theoretical assessment of pre-accident earning capacity (that is, what the claimant could have earned if she had realised the full earning potential arising from her training, skills and experience) and a practical assessment of post-accident earning capacity (that is, a practical assessment of the extent to which the claimant is able to realise that theoretical earning capacity, post-accident).
Given the distinctly different definitions of pre-accident earning capacity and post-accident earning capacity and the limitation on the definition of pre-accident earning capacity that it is to be assessed based on the employment that would be available based only on training, skills and experience, I conclude the visa restriction is not a factor relevant to determination of pre-accident earning capacity.
Is the claimant required to provide evidence that more than 20 hours per week of work would have been available to her but for the visa restriction?
It follows from the above reasoning in relation to whether the visa restriction is relevant to assessing pre-accident earning capacity that whether more than 20 hours of work would have been available to the claimant is not relevant and is not a matter upon which evidence is required for an assessment of pre-accident earning capacity.
Pre-accident earning capacity is limited to a theoretical assessment of what could have been earned if the claimant realised the full potential to earn in view of her training, skills and experience. The definition in schedule 1, clause 7 does not extend to considerations as to whether in fact the earning capacity could have been realised by reason of other factors such as those set out in the definition of post-accident earning capacity and clause 4.56 of the Guidelines.
There are many reasons why a person may not have realised the full potential of their earning capacity pre-accident. It may be due to visa restrictions because they chose to live and work in a country where they do not have nationality or permanent residency. It may be due to family matters or because they simply chose not to work full-time hours. Where a person did not realise the full potential of their earning capacity before the accident, as reflected in their PAWE, it would be difficult and, in many instances, impossible to obtain evidence that work was otherwise available to them, particularly if they did not seek out additional work at the time. In any event, the provisions of the MAI Act and in particular, the definition of pre-accident earning capacity do not require the claimant to provide evidence of the number of hours that would have been specifically available to her, if she did not have a visa restriction on working hours.
The insurer’s position that there needs to be evidence the claimant would have had more than 20 hours of work made available to her, if she was not subject to a visa work restriction, is not a test required on any construction of schedule 1, clause 7 or section 3.8 of the Act. It is also inconsistent with theoretical pre-accident earning capacity being the expected earnings of a person if they were to maximize the expectation of actual earnings. Lastly, as per paragraph 36 of the internal review decision the submission is based on a false premise that clause 8 of schedule 1 somehow applies to an assessment of pre-accident earning capacity.
What is the claimant’s pre-accident earning capacity?
The meaning of pre-accident earning capacity requires a consideration of the type of employment reasonably available to the claimant in view of her training, skills and experience.
The claimant has demonstrated through the evidence upon which her PAWE was assessed that she has the training, skills and experience to have available to her employment in hospitality in the capacity of a hotel housekeeper. Vocational assessments also demonstrate the claimant’s training, skills and experience are such that employment would have also been available to her in roles such as administrative assistant, guest services officer, customer services officer and retail worker.
None of these occupations carry with them a restriction on the number of hours that a person might expect to be able to work in such occupation by reason of the nature of the occupation. Whilst this may be so in some cases, when looking at the type of employment available based on a person’s specific training, skills and experience, there is nothing in the meaning of pre-accident earning capacity that requires an assessment of whether full-time hours would have specifically been available to a claimant.
A person who only has the training, skills and experience to be employed in a particular kind of seasonal work and no other occupation due to a lack of transferrable skills, for example, likely would only have available to them such employment during the season specific to that employment. This is then reflected in calculation of the weekly amount a seasonal worker could expect to earn in that type of seasonal employment. For example, if it is $1,000 per week over a 10-week season being $10,000 per year the weekly earnings are $192.31 being $10,000 divided by 52 weeks.
However, the type of employment reasonably available to the claimant based on her specific training, skills and experience is not a type of employment that is likely to have any inherent restriction on available hours arising from the nature of the occupation. If the claimant were to realise the full potential to earn (without visa or other such restrictions that I have found are not relevant to pre-accident earning capacity) in employment as a housekeeper, administrative assistant, guest services officer, customer services officer or retail worker there is no reason why she would not expect to earn in such employment on a full-time basis. Based on her training, skills and experience, full-time employment as a housekeeper or in one of the other roles identified in the vocational assessments would be reasonably available to the claimant.
The weekly amount the claimant had the capacity to earn pre-accident is therefore to be assessed based on the average full-time earning equivalent in such occupation and not the claimant’s casual hourly rates that informed PAWE. This is because a casual loading is paid to staff employed on a casual basis in lieu of leave entitlements and job security. Generally, the casual loading is 15% to 25% of the hourly rate paid to permanent employees and should be stated in the relevant award or enterprise agreement. If full-time earnings are based on the casual hourly rate over 52 weeks, it would artificially inflate the expected amount of earnings on a full-time basis as a person is not expected to earn full-time hours on a casual basis for each of the 52 weeks in a year. They are expected to take unpaid holiday and sick leave for example, and unpaid public holidays if no work is available. Further, the casual loading accounts for the fact that there is no guarantee of work from week to week under a casual contract of employment.
It appears from the information provided to me that PAWE capacity has been calculated by the insurer based on casual rates (indexed). It appears the current indexed casual rate is $29.35 per hour. Assuming a casual loading of 15% the full-time equivalent rate would be $24.95 per hour. This would produce a pre-accident earning capacity on a full-time basis of $948.10 on the basis full-time employees usually work an average of 38 hours per week (see This is on par with the weekly average of casual earnings, after allowing for 4 weeks unpaid annual leave, 10 days (2 weeks) of unpaid sick leave and unpaid public holidays.
Having found the claimant’s pre-injury earning capacity is to be assessed on the basis she had the capacity to earn on a full-time permanent basis the full-time permanent pay rate is to be used in place of the casual rate to calculate the weekly amount she could have expected to earn under clause 7.
It seems to me the weekly amount of the claimant’s pre-accident earning capacity is around $948 based on a fulltime hourly rate of around $24.95. However, I have not been provided with sufficient information to be comfortably satisfied that the sum of $29.95 represented in the documents is in fact the casual hourly rate (indexed) or that the correct casual loading percentage is 15% (which I adopted above from the usual range of 15% to 25%) under the award or enterprise agreement applicable to the hotel industry. Accordingly, the matter is to be remitted back to the insurer to determine the weekly amount of the claimant’s pre-accident earning capacity based on my finding that this amount is to be calculated on the basis the claimant had the capacity to work as a housekeeper on a full-time permanent basis, working 38 hours per week.
Costs
The claimant seeks costs of this merit review. A merit review in relation to payment of weekly benefits under Division 3.3 of the MAI Act is not a regulated matter for the purpose of section 8.10 of the MAI Act and Schedule 1 of the Motor Accident Injuries Regulation 2017. Accordingly, no costs are allowed.
CONCLUSION
50. The reviewable decision is:
(a) set aside and remitted to the insurer for reconsideration in accordance with the directions below:
(i)the claimant’s pre-accident earning capacity is to be calculated based on the average weekly earnings of a hotel housekeeper employed on a full-time permanent basis, 38 hours per week.
51. The amount of the claimant’s costs assessed in accordance with the Motor Accident Injuries Regulation 2017 is $0 (nil).
LEGISLATION AND GUIDELINES
52. In making this decision, I have considered the following:
· The application, reply and supporting documentation
· the MAI Act
· Guidelines
· Motor Accident Injuries Regulation 2017
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