Kwak v Insurance Australia Limited t/as NRMA Insurance
[2022] NSWPICMR 44
•8 August 2022
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Kwak v Insurance Australia Limited t/as NRMA Insurance [2022] NSWPICMR 44 |
| CLAIMANT: | Gregory Kwak |
| INSURER: | Insurance Australia Limited t/as NRMA Insurance |
| MERIT REVIEWER: | Maurice Castagnet |
| DATE OF DECISION: | 8 August 2022 |
| CATCHWORDS: | MOTOR ACCIDENTS - Merit review matter under Schedule 2 (1)(a) of the Motor Accident Injuries Act 2017 (2017 Act); dispute about the amount of weekly payments of statutory benefits under Division 3.3 of the 2017 Act; calculation of pre-accident weekly earnings (PAWE) under Schedule 1 (4)(1) of the 2017 Act; whether statutory benefits received by the claimant in the 12 months prior to the motor accident should be excluded from gross earnings for the purpose of calculating PAWE under subclause 4(1) of the 2017 Act; Held – the reviewable decision is varied; the reviewable decision concerns the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the of the 2017 Act and is therefore a merit review matter under Schedule 2 (1)(a) of the 2017 Act; the amount of the claimant’s PAWE is determined to be $828.83; the insurer is to apply PAWE of $828.83 when determining the claimant’s entitlements under Division 3.3 of the 2017 Act; the effective date of this decision is 30 October 2021. |
| DETERMINATIONS MADE: | Issued under section 7.13(4) of the Motor Accident Injuries Act 2017 The reviewable decision concerns 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 Act. 1. The reviewable decision is varied. 2. The amount of the claimant’s pre-accident weekly earnings (PAWE) is determined to be $828.83. 3. The insurer is to apply PAWE of $828.83 when determining the claimant’s entitlements under Division 3.3 of the Act. 4. The effective date of this decision is 30 October 2021. |
Statement of Reasons
INTRODUCTION
There is a dispute between the claimant, Gregory Kwak and the insurer concerning the amount of weekly payments of statutory benefits that are payable to the claimant under Division 3.3 of the Motor Accident Injuries Act 2017 (the MAI Act).
BACKGROUND
The claimant is a 60-year-old man who was injured in a motor accident on
30 October 2021.At the time of the accident, the claimant was a self-employed painter.
On 3 November 2021, the claimant made a claim to the insurer for weekly payments of statutory benefits for loss of earnings arising from that employment. On
17 November 2021, the insurer accepted liability for making weekly payments for the first 26 weeks.On 31 January 2022, the insurer notified the claimant it had calculated the claimant’s pre-accident weekly earnings (PAWE) in the amount of $380.83 and that his weekly payments will be based on his PAWE, subject to the usual reductions imposed by the Division 3.3 of the MAI Act.
The claimant disagreed with the insurer’s calculation of his PAWE. On
1 February 2022, he sought an internal review of that aspect of the insurer's decision.On 22 February 2022 the insurer affirmed its original decision.
On 9 March 2022, the claimant made an application to the Personal Injury Commission (the Commission) seeking a review of the insurer’s review decision.
That application is now before me for determination.
DOCUMENTS AND INFORMATION
In making my determination, I have considered the documents and submissions provided to the Commission by the claimant in his application and by the insurer in its reply. I have also considered further documents provided by the parties pursuant to the directions that I issued on 30 June 2022.
LEGISLATION
In making my decision, I have considered the following legislation and guidelines:
· the MAI Act;
· Motor Accident Injuries Regulation 2017 (the Regulation), and
· Motor Accident Guidelines 2017 (Version 8.2) (the Guidelines).
THE DISPUTE
The parties agree that the claimant is an “earner” within the meaning of Schedule 1,
cl 2(a) of the MAI Act and therefore entitled to weekly payments of statutory benefits under Division 3.3.To determine the weekly amount payable, the parties agree that the claimant’s PAWE should be calculated by applying the provision of Schedule 1, cl 4 (1) of the MAI Act.
Schedule 1, cl 4 (1) provides that the claimant’s PAWE as 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.
The relevant period to calculate the claimant’s PAWE is therefore the claimant’s gross earnings received between 29 October 2020 and 29 October 2021 (the relevant period).
For the purpose of the claimant’s PAWE during the relevant period, the parties agree that the claimant’s gross earnings received from his self-employment from his business “Botanica Painting” is the claimant’s partnership income which represents 50% of the business income. The other 50% of the business income is attributed to his wife as an equal partner in the business.
For that purpose, the insurer has calculated the claimant’s gross earnings to be $19,803. Although it is apparent from the information[1] before me that the insurer has incorrectly applied the relevant period (by applying, instead, income received by the claimant from the business between 30 October 2020 and 30 October 2021), the claimant does not dispute that the amount of $19,803 adequately represents his gross earnings from the business during the relevant period.
[1] See Annexure 1 of the report of PKF on page 26 of the insurer’s reply bundle.
During the relevant period, the claimant also received weekly payments of statutory benefits under the MAI Act from another insurer, AAI Limited trading as GIO (the GIO). The claimant received those payments as loss of earnings from his self-employment as a painter, as a result of being injured in an earlier motor accident on 13 August 2020. The total of those payments for the period between 13 August 2020 and
13 February 2021 was $44,916.In its review decision, the insurer concluded that – “the wages received from AAI Limited is not income from personal exertion and must be excluded for the purposes of PAWE calculation”.
The dispute in this matter is solely about the insurer’s conclusion in this regard. The claimant contends that the weekly payments he received from the GIO during the relevant period should be included in the calculation of his PAWE.
SUBMISSIONS
The insurer says that based on Schedule 1, cls 3(1) and 3(3) of the MAI Act, the wages received from the GIO are not income from personal exertion and must be excluded from the calculation of the claimant’s PAWE. Although not specifically stated, the insurer appears to rely also on Schedule 1, cl 3(2) in making this contention.
The claimant says that the weekly payments of statutory benefits he received from the GIO during the relevant period and specifically between 1 November 2020 and
29 October 2021 must be included in the calculation of his PAWE. The claimant calculates that the total of those payments was $23,281.36. On that basis, his gross earnings during the relevant period were $43,084 ($19,803 + $23,281). Dividing that figure by 52 weeks results in PAWE of $828.53.The claimant says that the legislative basis to include the GIO weekly payments in the calculation of his PAWE is found in Schedule 1, cl 2(c), in that immediately before the accident, he was receiving those payments as an earner. Further, as he did not have capacity to work as a result of the subject accident, he has suffered a loss of earnings and is likely to suffer a loss of earnings within the definition of Schedule 1, cl 3(1).
THE RELEVANT LEGISLATIVE PROVISIONS
Entitlements to statutory benefits are governed by Part 3, Division 3.3 of the MAI Act.
The claimant’s entitlements to weekly payments of statutory benefits for the first 78 weeks after the motor accident are determined in accordance with ss 3.6 and 3.7 of the MAI Act.
Those provisions read relevantly as follows:
“3.6 Weekly payments during first entitlement period (first 13 weeks after motor accident)
(1) An earnerwho 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 Sch 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 earningsand the person's post-accident earning capacity (if any) for the first entitlement period.
(3) …
(4) …
(5)…
(Emphasis added)
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 Sch 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) …
(4) …”
(Emphasis added)
Section 3.5(2) of the MAI Act states that words and expressions in Part 3, Division 3.3 that are defined in Schedule 1 have the meanings provided by that schedule. The schedule provides definitions of an earner, loss of earnings, pre-accident weekly earnings and post-accident earning capacity.
As previously noted, there is no dispute about whether the claimant is an “earner”. However, in view of the issue in dispute and the claimant’s contentions, it is necessary to refer to the legislative provisions in that regard.
Schedule 1, cl 2 of the MAI Act relevantly 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 or periods equal to at least 13 weeks during the year immediately preceding the motor accident, or
(iii) during a period or periods equal to at least 26 weeks during the 2 years immediately preceding the motor accident,
and, at the date of the motor 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, immediately before the motor accident, receiving a weekly payment or other payment in respect of loss of earnings under this Act or the Workers Compensation Act 1987.”
(Emphasis added)
Schedule 1, cl 3 of the MAI Act relevantly provides:
“3 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.”
(Emphasis added)
Schedule 1, cl 4(1) of the MAI Act provides:
“4Meaning 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)…
(2A) …
(3) …
(4) …”
DISCUSSION
It is the claimant’s submission that the legislative basis to include the GIO weekly payments as gross earnings in the calculation of his PAWE is found in Schedule 1,
cl 2(c) in that, immediately before the accident, he was receiving those earnings as an earner.I do not accept this submission for two reasons. Firstly, Schedule 1, cl 2 is not concerned with the calculation of PAWE but only with whether the claimant qualifies as an “earner” to be eligible to claim “loss of earnings” under ss 3.6 and 3.7 of the MAI Act. Secondly, the claimant does not in any event qualify as an earner under subclause 2(c) because he was not “immediately before the accident”, receiving weekly payments for loss of earnings under the MAI Act from the GIO. From the information before me, he received those payments for the period between 13 August 2020 and 13 February 2021 and that period is well before the accident.
Nevertheless, as previously noted, there is no dispute between the parties that the claimant qualified as an earner within the meaning of Schedule 1, cl 2 (a) for the purposes of ss 3.6 and 3.7. He was injured in the accident, he was 60 years old at the time of the accident, he was employed or self-employed during the eight weeks immediately preceding the motor accident, and he had not retired permanently from employment.
Whether the claimant is an earner is a threshold issue determined by the provisions of Schedule 1, cl 2. Once the claimant qualifies as an earner, Schedule 1, cl 2 has no further work to do. The calculation of the claimant’s PAWE for the purposes of ss 3.6 and 3.7 is then determined by the provisions of Schedule 1, cl 4 whereby different considerations apply.
In that regard, the parties agree that Schedule 1, cl 4(1) is the appropriate method to calculate the claimant’s PAWE.
As previously noted, subclause 4 (1) provides that the claimant’s PAWE as an “earner” who is injured in 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 of the motor accident. The relevant period to calculate the claimant’s PAWE is between 29 October 2020 and 29 October 2021.
During the relevant period, the claimant received weekly payments of statutory benefits from the GIO for loss of earnings during the period between 29 October 2020 and
13 February 2021.It is the insurer’s submission that those payments must be excluded from the calculation of the claimant’s PAWE because they are not “income from personal exertion” within the meaning of Schedule 1, cls 3(1) and 3(2).
I do not accept this submission for the reasons that follow.
For the purposes of ss 3.6 and 3.7 of the MAI Act, Schedule 1, cl 3(1) defines “loss of earnings” as a loss incurred or likely to be incurred in a person’s income from personal exertion.
A person’s income from personal exertion is defined to include the proceeds of any business carried on by the person either alone or in partnership with any other person: Subclause 3(2)(b).
In the present circumstances, the claimant received weekly payments from the GIO for loss of earnings incurred by the claimant as a result of injury sustained in an earlier motor accident in his capacity as a self-employed painter in his business, Botanica Painting. Those payments are proceeds of the business carried on by the claimant. They were made in substitution for, and represent, income earned from personal exertion. I find that the payments are income from personal exertion.
In his 2021 Individual Tax Return, the claimant has appropriately declared the weekly payments as income received by him during the relevant period, rather than damages for loss of earning capacity that would not be subject to income tax.
Contrary to the insurer’s submission, the type of payment received by the claimant from the GIO is not specifically excluded under Schedule 1, cl 3(3).
Considering all the above factors, I find that Schedule 1, cl 3(2)(b) is satisfied. It follows that the GIO weekly payments should be included as gross earnings for the purpose of calculating the claimant’s PAWE under Schedule 1, cl 4(1).
By adding the claimant’s gross earnings of $23,281 received from the GIO to the claimant’s gross earnings from his business of $19,803, I find that the total of the claimant’s gross earnings during the relevant period is $43,084. Dividing that figure by 52 weeks yields a PAWE of $828.53.
CONCLUSION
The reviewable decision is varied.
The amount of the claimant’s PAWE is determined to be $ 828.53.
The insurer is to apply PAWE of $828.53 when determining the claimant’s entitlements under Division 3.3 of the MAI Act.
The effective date of this decision is 30 October 2021.
The claimant was self-represented. The issue of legal costs does not arise.
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