Lavrnja v NRMA (Motor Accident Injuries) - [2022] ACAT 99

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

LAVRNJA v NRMA (Motor Accident Injuries) [2022] ACAT 99

MAI 3/2022
Catchwords: MOTOR ACCIDENT INJURIES – application for review of insurer’s decision pursuant to section 193 of the Motor Accident Injuries Act 2019 – calculation of applicant’s pre-injury weekly income (PIWI) – whether applicant was self-employed – whether common law principles of employment law apply to consideration of applicant’s employment status – onus of proof in procuring information about employment status – calculation of PIWI for self-employed persons where business has significant improvement of profitability
Legislation cited: Motor Accident Injuries Act 2019 ss 81, 82, 193
Fair Work Act 2009 (Cth) ss 12, 13, 14

Subordinate

Legislation cited: Motor Accident Injuries (Income Replacement Benefit) Guidelines 2021
MAI (Internal Review) Guidelines 2019

Cases cited:Potter v Minahan (1908) 7 CLR 277
Coco v R [1994] HCA 15
Thompson v Australian Capital Television Pty Ltd (1994)5 4 FCR 513
Commonwealth Bank of Australia v Barker [2014] HCA 32
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (trading as Construct) [2022] HCA 1
Fair Work Ombudsman v Jooine (Investment) Pty Ltd [2013] FCCA 1696
WorkPac Pty Ltd v Rossato [2021] HCA 23
Neish v Insurance Australia Limited Trading as NRMA [2022] ACAT 24
Brayson Motors Pty Ltd (in liq) v Commissioner of Taxation (1985) 156 CLR 651
PIPE Networks Pty Ltd v Commonwealth Supperannuation Corporation [2013] FCA 444

Tribunal:Acting Presidential Member T Kyprianou

Date of Orders:  23 November 2022
Date of Reasons for Decision:      23 November 2022
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          MAI 3/2022

BETWEEN:

MILICA LAVRNJA
Applicant

AND:

INSURANCE AUSTRALIA LIMITED ACN 000 016 722 TRADING AS NRMA INSURANCE

Respondent

TRIBUNAL:Acting Presidential Member T Kyprianou

DATE:23 November 2022

ORDER

The Tribunal orders that:

The reviewable decision dated 6 April 2022 be set aside and the matter be remitted to the respondent for reconsideration in accordance with the Motor Accident Injuries Act 2019 (MAI Act), the relevant Motor Accident Injuries (Income Replacement Benefit) Guidelines (MAI Guidelines or Guidelines) and the directions made in the reasons for decision.
The same time periods for making the reconsideration decision apply as if order 1 was an application for internal review of the decision to reject liability received by the respondent on the day after the date of these orders.
The applicant is to lodge with the tribunal and give to the respondent any application she wishes to make in relation to costs along with an itemised list of costs she has incurred, in accordance with regulation 6(2) of the Motor Accident Injuries (ACAT Costs Orders) Regulation 2020 by 14 December 2022.
The respondent is to lodge with the tribunal and give to the applicant any submissions it wishes to make, if any, in relation to the application for costs and the applicant’s list of costs, or alternatively advise the tribunal and the applicant that it does not propose to make any submissions by 21 December 2022.

………………………………..

Acting Presidential Member T Kyprianou

REASONS FOR DECISION

In the reasons below, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the Members who heard the application.
The application for review of the insurer’s decision in this matter seeks review of an internal review decision made by the respondent on 6 April 2022 which affirmed that the applicant’s pre-injury weekly income (PIWI) was $331.22.
Pursuant to section 54 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) and with the agreement of the parties, this matter has been decided on the papers without holding a hearing.

Background

The applicant was injured in a motor accident on 27 November 2021 on the Barton Highway in the Australian Capital Territory. She was a passenger in a motor vehicle which left the roadway and collided with a tree.
As a result of the injuries, she sustained in that motor accident, she was unable to return to work. She applied to the respondent for payment of income replacement benefits.
At all material times, the applicant was a resident of Western Sydney. On the day of the accident, she travelled to Canberra with the owner of the company she was working with as a cleaner and some other colleagues to carry out a commercial cleaning job. The motor accident occurred at about 8:30pm when they were on their way home to Sydney.
The applicant appears to have started work as a cleaner with Waterblue Pty Ltd (Waterblue) in early May 2021.[1] Prior to that she had been receiving Jobseeker Payments from the Commonwealth since November 2020.
[1] Respondent’s submission document number 2, applicant’s bank statement 71, page 11
Between early May and 9 July 2021, the applicant worked 40 hours per week with Waterblue. On a weekly basis, she invoiced Waterblue for 40 hours of work at $35 per hour using an Australian Business Number (ABN) registered in her name. The owner of Waterblue, Mr Admir Arnautovic, deposited $1,400 per week in the applicant’s Commonwealth Bank Account. These payments were all labelled “wages”.
These payments stopped on 9 July 2021.[2]The parties agree that the applicant ceased work at that time because Western Sydney was put in lockdown by the NSW government in an effort to control the COVID-19 pandemic outbreak in that state. She was unable to work again until November 2021 when the lockdown was lifted. During the period she was unable to work, she received COVID-19 pandemic leave disaster payments from the Commonwealth Government.
[2] Respondent’s submission document number 5, applicant’s bank statement 73, page 37
The payments of $1,400 per week from Waterblue resumed on 12 November 2021.
After the motor accident of 27 November 2021, the applicant stopped being paid by Waterblue. Her last payment was on 26 November 2021.[3]
[3] Respondent’s submission document number 6, applicant’s bank statement 74, page 46
It is agreed that as a result of the injuries the applicant suffered in the subject motor accident, she was unable to work at all from the date of the accident for a period. The inability to work continued at the time the applicant lodged her application with the tribunal.

Summary of the dispute between the parties

Both parties lodged submissions outlining their position in relation to the application for review.
The applicant’s primary submission is that the reviewable decision is wrong because the applicant’s PIWI was calculated on the assumption that the applicant was self-employed and thus the wrong test under the Motor Accident Injuries Act 2019 (MAI Act) was applied in calculating her PIWI. The applicant submitted further that had the respondent obtained sufficient information to ascertain the true status of the applicant’s employment they would have found that the applicant was an employee and not a self-employed person. The applicant submitted that the respondent ought to have considered the contractual terms between the applicant and Waterblue and applied the test set out in a number of common law decisions to determine whether the applicant is self-employed or an employee. It was further submitted that there is insufficient information before the Tribunal for the Tribunal to determine the applicant’s employment status and the matter must therefore be remitted to the respondent for reconsideration.
The respondent made the following submissions:
(a)It did not err in fact or in law in determining the applicant’s PIWI as $331.22 as set out in the report of Mr Gwynne, forensic accountant from PKF- (NS) Forensic Accountants Pty imited (PKF).
(b)There has been no error of fact or law in the information gathered by the respondent in reaching that decision as they followed the Motor Accident Injuries (Income Replacement Benefit) Guidelines (MAI Guidelines or Guidelines) in seeking that information.
(c)The applicant had the opportunity to submit information through her solicitor supporting the proposition that she was either an employee or fixed term contractor but did not do so.
(d)The documents sought from the applicant and obtained by the respondent were sufficient to establish the nature of her relationship with Waterblue and further investigations would have gone beyond the parameter of inquiry anticipated by the Guidelines.
(e)There was no error in establishing the applicant was self-employed because she has an ABN, she issues invoices to Waterblue for services rendered and she characterises her income as business income on her tax returns. She derives her income from providing her labour to her business, and this is supported by the invoices she issues to Waterblue. There is no evidence that there is a fixed term contract between her and Waterblue. The fact that she provides invoices for services from time to time means that she is not an ongoing employee.
(f)The elements of being an employee at common law are not relevant to the definitions of ongoing employee, fixed term contractor, or self-employed in the MAI Ac.t Those terms are defined in the MAI Act, and they make no reference to the ‘multifactorial approach’ the common law has adopted in establishing whether a person is an employee, contractor, or self-employed.
(g)The applicant has not provided any evidence that her work situation was ongoing.
(h)The applicant has deliberately chosen to structure her financial circumstances for tax purposes as a self-employed business owner and satisfies the MAI Act’s definition of self-employed businessperson. The Tribunal therefore does not have to look further than the applicant’s own self-characterisation. To classify her as an ongoing employee is inconsistent with her business structure and artificial.

Consideration of issues in Dispute

Can the applicant’s employment status be determined solely by reference to the MAI Act and Guidelines?

The MAI Act defines ‘self-employed person’ in section 82 to mean:
(i) A person injured in a motor accident who was, on the date of the motor accident, self-employed.
Section 74 of the MAI Act defines ‘self-employed’ as follows:
self-employed—a person is self-employed if the person derives income from providing labour, skills or knowledge to a business carried on by the person.
Under the above definition, for the applicant to be self-employed, the decision maker needs to be satisfied that at the relevant time she carried on a business to which she provided her labour, skills or knowledge.
In some cases, establishing that a person carries on a business to which they provide labour skills or knowledge and are therefore self-employed is straight forward either because there is no dispute about the issue or because the documentary evidence clearly supports that the person carries on such a business. However, in other cases it is not obvious whether a person provides their labour, skills or knowledge to a business they conduct or to another business.
In my view, where there is a dispute about the person’s employment status or where the documentary information or evidence available does not clearly establish that the person carries on a business to which they supply labour, skills or knowledge, it is necessary, for the decision maker to reach a conclusion about the person’s employment status by considering the relevant facts in light of the provisions made in the MAI legislative scheme as well as the common law principles of employment law. This is because the MAI Act and Guidelines do not alter the common law doctrines of employment law, nor do they purport to define the terms ‘employee’ and ‘self-employed’ to the exclusion of common law doctrines.
Establishing the right status of a person’s employment is necessary because the MAI Act and the Guidelines make different provisions for calculating a person’s PIWI depending on their employment status.[4]
[4] See sections 81-88 of the MAI Act
In order to determine whether a person is an employee or self-employed, one needs to look beyond the definition of those terms as defined by the MAI Act. The common law in Australia has dealt with the definition of the words ‘employee’, ‘self-employed’ and ‘contractor’ over many decades. There is nothing in the MAI Act which suggests that the Legislature intended to displace the complex principles developed over the years by the common law in defining those terms. In statutory interpretation, there is a presumption against alteration of common law doctrines.[5]
[5] See statement of O’Connor J in Potter v Minahan (1908) 7 CLR 277 at [304] cited with approval more recently in Coco v R [1994] HCA 15; Thompson v Australian Capital Television Pty Ltd (1994) 54 FCR 513 at [526]
I do not agree with the respondent’s submission that the indicia of establishing whether a person is an employee at common law are not relevant to the definitions of ongoing employee, fixed term contractor or self-employed person set out in the MAI Act, though those definitions make no reference to the ‘multifactorial approach’ the common law has adopted in establishing whether a person is an employee, a contractor or self-employed.
In Commonwealth Bank of Australia v Barker,[6] their Honours French CJ, Bell and Keane JJ said:
The employment relationship, in Australia, operates within a legal framework defined by statute and by common law principles, informing the construction and content of the contract of employment.
[6] [2014] HCA 32 at [1]
The Fair Work Act 2009 (Cth) (FWA) regulates employment relationships for a large number of employers and employees in Australia including employers who are constitutional corporations[7] and their employees. The terms ‘employer’ and ‘employee’ are defined in that Act to “have their ordinary meaning”.[8] Their Honours Gageler and Gleeson JJ in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (trading as Construct)[9] (Construct) said in relation to those definitions:
The “ordinary meanings” to which that foundational definition refers are not grammatical meanings of the legislatively chosen words purposively construed in their statutory context. The reference in the definition is instead to the meanings ascribed to “employer” and “employee” at common law. ….
The meanings ascribed to “employer” and “employee” at common law have been formulated over the past two centuries principally in the context of drawing, for the purpose of tortious liability, “the distinction between employees…and independent contractors”… The common law distinction which has been drawn for that purpose has been said in this century in this country to be “too deeply rooted to be pulled out”.
[7] Section 14(1) of FWA
[8] See sections 12, 13, and 14 of FWA
[9] [2022] HCA 1 at [93]-[94]
Just as the common law meanings of employer/employee are relevant to the interpretation of those terms in the FWA, they are also relevant to the interpretation of the terms employee/ self-employed in the MAI Act.
Is there sufficient information to conclude that the applicant is self-employed?
From the information available in the MAI documents and the respondent’s submissions, the only evidence that suggests that the applicant carried on a business is the following:
(a)she had an ABN;
(b)she gave invoices to the Waterblue director once a week for 40 hours of cleaning services; and
(c)she described her income on her personal tax return as business income.
I do not consider that the above evidence is sufficient to establish that the applicant carried on a business or that she satisfies the definition of a

self-employed person set out in the MAI Act.
In the absence of other evidence of business activity, merely having an ABN does not mean that the worker is self-employed.[10]There is no information available to the Tribunal, nor was any available to the decision maker of the internal review decision, as to the reason the applicant wrote her ABN on the invoices she gave Waterblue each week for the hours she worked. It may be that she was required by Waterblue to have an ABN in order to receive payment, or it may be that she was indeed conducting a business of her own and it was appropriate for her to use an ABN to earn her income. However, the information available to date cannot meaningfully establish the existence of a business owned by the applicant. Further, even if the applicant was conducting a business of her own accord, there is no information available to establish whether she was providing services to Waterblue, or Waterblue’s clients, under a fixed term contract, in which case her PIWI would need to be calculated pursuant to section 81 and paragraph 5.1.4 of the Guidelines and not under section 82 of the MAI Act and paragraph 5.2 of the Guidelines.
[10] See for example Fair Work Ombudsman v Jooine (Investment) Pty Ltd [2013] FCA 16 at [96 ](Jooine)
The invoices the applicant provided to Waterblue for the cleaning services she provided do not offer any support for the proposition that she was either an independent contractor or self-employed. She invoiced Waterblue for 40 hours of work each week at $35 per hour, that is she was paid a wage per hour rather than a fee for completing a job. The method of payment does not support the proposition that the applicant’s contract or agreement with Waterblue was a contract for service. It suggests instead that it was a contract of service and that she was working for Waterblue’s business.[11]
[11] See Construct at [158] and Jooine at [41]
The description by the applicant of her income in her tax return as small business income[12] is at best marginally helpful in determining whether she was self-employed or an employee. That description is consistent with the fact that the applicant was receiving her income by rendering invoices for her labour with an ABN on them, but it does not provide evidence of the existence of a business. How a worker labels their employment status is hardly relevant to the characterisation of that status. As the plurality stated in Construct:
To say that the legal character of a relationship between persons is to be determined by the rights and obligations which are established by the parties’ written contract is distinctly not to say that the “label” which the parties may have chosen to describe their relationship is determinative of, or even relevant to, that characterisation.[13]
[12] Respondent’s submission document number 4, applicant’s tax return, page 31
[13] Construct at [63]
In any event, contrary to how her income is described in her tax return, the applicant has described herself as an employee both in her defined benefit application[14] and in her interview with Benchmark Rehabilitation.[15]
[14] Respondent’s submission document number 11, applicant’s defined benefit application, page 63 where she nominated Waterblue as her employer and not herself
[15] Respondent’s submission document number 20, initial assessment report, page 114 where she nominated Waterblue as her employer and listed her duties as cleaning duties without including any tasks pertaining to the conduct of a business, such as administrative or entrepreneurial tasks.
I note that the applicant was asked by the respondent to provide the name of her business, a copy of her business’s profit and loss statements, her BAS statements, her sales records and her business’s tax returns and financial statements.[16] None of these documents appear in the MAI documents. Neither party has made any reference to the existence or absence of these documents, so I assume that they have not been produced because they do not exist. It is usually necessary for a business to have such financial records and to be registered for GST when an ABN number is registered. I note further that the PKF report states that the applicant’s ABN is not registered for GST. The complete absence of any of these records raises further doubts as to whether the applicant conducted a business in this case.
[16] Respondent’s submission document 15, letter from respondent to applicant requesting information to calculate PIWI, page 90 and 91

The applicant’s 2020/2021 tax return does not support the respondent’s submission that the applicant has deliberately chosen to structure her financial circumstances for tax purposes as a self-employed business owner. That tax return declares all of the income the applicant derived from working for Waterblue and claims unspecified tax-deductible expenses of $600. Apart from the jobseeker payments for the period she was unemployed prior to commencing work for Waterblue (November 2020 to April 2021) no other income appears in the tax return. This hardly supports that the applicant gained any tax advantage from being a self-employed business owner.
What information is required to establish the applicant’s employment status?
The MAI Act defines ongoing employee or fixed term contractor in section 81(2) as follows:
ongoing employee or fixed term contractor means a person injured in a motor accident who was, on the date of the motor accident engaged in ongoing employment or under a fixed term contract.
The starting point in determining whether a person is an ongoing employee or fixed term contractor under the definition above would be the written contract, if one exists, between the person and the entity which pays the person their income. The documents available to the Tribunal do not include any such contract, nor is there any evidence that the respondent asked the applicant to produce the contract between her and Waterblue. Prior to the application for external review, the applicant and her legal representative also made no reference to any such contract. Counsel for the applicant has asserted in submissions that no written contract exists. This may be so. However, given the importance of a written contract in establishing the true nature of the employment status of the applicant, which I discuss below, I consider it is essential that actual evidence, as distinct from a submission, be procured about its existence or lack of it.
Even if the applicant was at the relevant time self-employed, which for the reasons I set out above the available information so far does not establish, she may have sub-contracted to Waterblue for a fixed term. A written contract if one exists should establish this. On the other hand, if there is no written contract, inquiries ought to be made as to the agreed terms of any oral agreement between the applicant and Waterblue about the arrangement between them including the length of time Waterblue proposed to offer the applicant work.
In order to establish whether the applicant was employed by Waterblue as distinct from being self-employed and subcontracting to Waterblue, the terms of the agreement between them need to be examined closely and assessed against the principles established at common law which determine whether a worker is an employee or independent self-employed contractor.
Those principles were analysed and to a certain degree reconstituted in Construct. In that case, the worker was a backpacker on a working holiday in Australia. He entered into an agreement with the respondent which was a labour supply company. Under the terms of that agreement, the worker was engaged as a ‘self-employed contractor’ to supply his labour to builders. He was offered work on a building site. The builder at the building site had an agreement with Construct, to supply workers to its building sites. After he was dismissed by Construct, the worker, Mr McCourt, sought damages for contraventions of the FWA from Construct. He submitted that he was in fact an employee of Construct and not a self-employed contractor. Like the applicant in this matter, Mr McCourt provided invoices to Construct on a weekly basis and he was paid at an hourly rate. Six of the seven justices of The High Court held that Mr McCourt was an employee despite the agreement between him and Personnel describing him as self-employed. Kiefel CJ, Keane and Edelman JJ, held that:
Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceed by reference to the rights and obligations of the parties under the contract…
…
The foregoing should not be taken to suggest that it is not appropriate, in the characterisation of a relationship as one of employment or of principal and independent contractor, to consider “the totality of the relationship between the parties” by reference to indicia of employment that have been identified in the authorities”[17]
[17] Construct at [59] and [61]
Their Honours Kiefel CJ, Keane and Edelman JJ in that case found that despite the written contract naming him as self-employed the worker was an employee because under the terms of the agreement with Construct he was obliged to work for Construct’s customer and was entitled to be paid by Construct. Construct, had the right to fix his remuneration, was responsible for paying him, had control over him and could terminate the agreement between them if he did not obey directions issued by Construct or the builder who was Construct’s customer.[18]
[18] Construct at [71]
In the same case, Gageler and Gleeson JJ held that Mr McCourt was an employee for the following reasons:
First, Mr McCourt was engaged by Construct under the ASA to supply nothing but his labour to Hanssen, which he in fact did and for which he was paid an agreed hourly rate by Construct. Second, by supplying his labour to Hanssen, Mr McCourt was at the same time supplying his labour to Construct for the purpose of Construct’s business. He was not in any meaningful sense in business for himself. Third, and most importantly, when supplying his labour to Hanssen, Mr McCourt was subject to the direction and control of Hansenn through the back to back operation of his obligation to Construct under the ASA and Construct’s obligation to Hanssen under the LHA. Those aspects of the relationship made it a relationship of employment.[19]
Turning to this case the information available establishes that the applicant supplied her labour to clients of Waterblue and was paid an hourly rate for that labour by Waterblue.[20] By supplying her labour to Waterblue’s clients, she was at the same time supplying her labour to Waterblue so that it could conduct its business. As was the case in Construct, there is no evidence available so far that the applicant in this matter was in any meaningful sense in business for herself. It is not entirely clear to what extent she was subject to the direction and control of the director of Waterblue in carrying out her tasks as no enquiries have been made in relation to this issue.
The majority in Construct held that the control and direction that the putative employer had over the worker was a very important factor in determining whether the worker was an employee or self-employed. Kiefel CJ, Keane and Edelman JJ, put it in these terms:
Th[e] promise to work for Construct’s customer, and his entitlement to be paid for that work, were at the core of Construct’s business of providing labour to its customers. The right to control the provision of Mr McCourt’s performance of work for, and at the direction of, Hanssen was a direct result of the deployment by Construct of this asset in the course of its ongoing relationship with its customer.
In these circumstances, it is impossible to conclude other than that Mr McCourt’s work was dependent upon, and subservient to, Construct’s business. That being so, Mr McCourt’s relationship with Construct is rightly characterised as a contract of service rather than a contract for services.[21]
[19] Construct at [158]
[20] Respondent’s submission document number 20, Benchmark’s initial needs assessment report, pages 114 - 116
[21] Construct at [89]-[90]

42. It is clear from the passages in Construct set out above that in order to ascertain whether the applicant was self-employed or an employee at the time of the motor accident information needs to be obtained from the applicant and Waterblue about the terms of the agreement between them. If there is a written contract, its terms will be crucial in establishing the relationship between the parties. If there is no written contact, information needs to be procured as to the arrangements between the applicant and Waterblue including whether the agrement was entirely oral or partially oral and partially written. Central to those inquires is whether Waterblue exercised control over the applicant in the way she carried out her work for Waterblue’s customers. In other words, was she supervised by Waterblue or its director in the way she carried out her work? Did Waterblue have the right to control the work of the applicant? Was she directed where to work each week and what tasks to carry out? Could Waterblue terminate the agreement between it and the applicant if Waterblue or its customers were dissatisfied with the standard of her work? To what extent did the applicant act in the business of, and under the control and direction of Waterblue?[22]For how long was the agreement between them to continue?

[22] See Construct at [62] where the court cited with approval the test first formulated in WorkPac Pty Ltd v Rossato [2021] HCA 23

43. The applicant should also be asked to provide information about the reason she invoiced Waterblue for her labour on a weekly basis using an ABN and declared her income in her tax return as small business income if she was, as she has claimed to be, an employee of Waterblue.

The first step in assessing the PIWI is to ascertain the applicant’s employment status as self-employed, ongoing employee, fixed term contractor, or casual employee. The information necessary to make that assessment was not available to the respondent when calculating the applicant’s PIWI. The respondent relied on the report of PKF which nominated the applicant as self-employed on the basis that she provided invoices for her labour to Waterblue with an ABN reference which was registered to her name, and the fact that her personal tax return characterised her income as small business income. As set out above, the authorities establish that these indicia on their own are not sufficient to establish that the applicant was self-employed. However, I do not consider that the available information establishes clearly that the applicant was an employee of Waterblue rather than an independent contractor either.
Further information needs to be obtained from the applicant and Waterblue about the terms of the agreement between them under which the applicant provided cleaning services to Waterblue and/or its clients and Waterblue paid the applicant for those services.
Does the applicant’s failure to provide information establishing her employment status mean the reviewable decision is correct?
In my view, the short answer to the above question is no.
The respondent has submitted that the applicant had the opportunity to submit information through her solicitor supporting the proposition that she was either an employee or fixed term contractor but did not do so. She also did not provide any information that she had an ongoing contract with Waterblue. Neither the applicant nor her solicitor provided such information to the respondent before the reviewable decision was made. However, this does not mean that the respondent’s decision is correct in fact and law.
The role of the Tribunal is to determine whether the decision is correct on the facts and in law.[23] As stated earlier in these reasons, in my view, the respondent was in error in assuming that the definitions of self-employed and employee as they appear in the MAI Act are exclusive of the common law principles defining those terms.
[23] See section 193 of the MAI Act and Neish v Insurance Australia Limited Trading As NRMA [2022] ACAT 24 at [17]-[20]
Further, the respondent relied on the PKF report to calculate the applicant’s PIWI which proceeded on the assumption that the applicant was self-employed. The fact that the applicant could not produce any of the documents usually associated with owning and conducting a business did not raise concerns as to whether the applicant was in truth
self-employed. Nor did the fact that she had said in her application for defined benefits that she was in fact an employee and Waterblue was her employer.
The MAI Act does not impose an onus of proof on either party. The applicant has a duty under section 20 of the Act to disclose all relevant information in relation to her claim and to provide information reasonably requested by an insurer. There is no suggestion that the applicant has failed to provide any of the information she was asked by the respondent to provide.
I note that the applicant herself required an interpreter to engage with the rehabilitation assessor engaged by the respondent to assess her. I assume from this that she is not proficient in English which would pose an impediment in finding out what information she needed to provide in support of her claim in addition to the information the respondent requested from her.
The lawyer who represented the applicant at the time should have been aware of the significance of providing more information about her employment status, especially when an internal review of the decision was sought. However, the MAI legislative scheme envisages that injured people will lodge their claims without the need for legal representation and that the relevant insurer will guide the procurement of whatever information is necessary to assess a claim. Applicants for defined benefits cannot recover legal fees incurred in obtaining legal advice and representation in relation to their claims prior to the external review stage. Under these circumstances, I am not prepared to dismiss the applicant’s application on the basis that her lawyer did not provide any pertinent information to challenge the respondent’s finding that the applicant was self-employed.
The respondent had a duty to obtain information pertinent to the review of the decision. The 2019 MAI (Internal Review) Guidelines, which were applicable at the time of the internal review, state that the insurer should request the applicant to provide any information or documents reasonably required for the review. There is no evidence before the Tribunal that the respondent raised with the applicant that she needed to provide any further information about her employment status during the review process. The fact is that neither party turned their mind to the employment status of the applicant in conducting the review, despite the glaring shortcomings in the process engaged to determine her employment status in the first instance decision.
Was the PIWI correctly calculated if the applicant is self-employed?
Though I propose to set the decision aside because it was made on the assumption that the applicant was self-employed and that assumption is not sufficiently supported by the facts available, or by the common law principles of who is a self-employed person, I do not consider the decision was correctly made even if there was sufficient evidence to conclude that the applicant was self-employed.
The PIWI of a self-employed person is calculated pursuant to section 82 of the MAI Act. That section states:
pre-injury weekly income, for a self‑employed person, means the average weekly amount of the sum of the following amounts from all paid work undertaken by the person in the 52 weeks immediately before the date of the motor accident:
(a) the person’s gross income as an employee;
(b) the person’s net income as a self-employed person.
Section 88 of the MAI Act provides that the MAI guidelines[24] may make provision in relation to the matters to be taken into account to determine an injured person’s PIWI or pre-injury earning capacity.
[24] The MAI Commission may make guidelines about any matter required or permitted by the MAI pursuant to section 487 of the MAI Act. An MAI guideline is a disallowable instrument – section 487(5)
To calculate the average weekly amount, one must therefore turn to the Guidelines.[25] Those Guidelines provide advice to insurers about a number of matters including how to work out the amount of a benefit payment.[26]
[25] I note that the PKF report upon which the respondent relied to make the reviewable decision refers to the MAI (Income Replacement Benefit) Guidelines 2019. Those Guidelines had been repealed and replaced by the 2021 IRB Guidelines on 9 December 2021. However, the effect of the 2019 Guidelines set out in the PKF report are no different to the 2021 Guidelines
[26] Guidelines at [1]
Paragraph 5.2 of the Guidelines deals with the calculation of PIWI for self-employed persons. Relevantly paragraph 5.2.1 provides that an insurer will need to work out the net income a self-employed person derives, or will derive, from the personal services (labour, skills, or knowledge) the person provides, or will provide to a business to calculate the person’s PIWI or pre-injury earning capacity. Paragraph 5.2.3 provides that the insurer is to base their calculation of net income of a self-employed person using the net income figure in the last tax return of the business (emphasis added), to determine the person’s pre-injury weekly income. It provides further that an insurer should use the 12-month period for the tax return to determine the person’s PIWI rather than the 52-week period immediately prior to the accident.
In this case there was no business tax return. The applicant was a sole trader. The only available tax return was the applicant’s personal tax return which declared all of the income she earned through the invoices for her labour which she provided to Waterblue.
Paragraph 5.2.4 relevantly states that if a tax return has not been lodged, or there has been a significant improvement in profitability of the business, a weekly income figure is to be calculated using recent financial statements, accounting records and business activity statements for the business. If a person is starting a new business, the insurer is to base the calculation of financial projections for the business prepared prior to the accident.
There is no information about the date the applicant set up her business, so it is not possible to determine if hers was a new business.
If the applicant was self-employed, she was a sole trader. She, therefore, did not need to lodge a business tax return, because all of the income earned through the business was declared in her personal tax return. Her personal tax return was treated by PKF as the tax return in respect of the business.
As PKF rightly acknowledged, the profitability of the applicant’s business had significantly improved. Accordingly, the income she derived in the 2020/ 2021 financial year and declared in her tax return did not reflect her PIWI, and in accordance with Guideline 5.2.4, her business’s recent financial statements accounting records and business activity statements, or financial projections for the business had to be used to calculate her net income as a self-employed person. The only documents which were available to PKF which disclosed the business’s income were:
(a)the invoices the applicant provided to Waterblue;
(b)the remittance advices for those invoices; and
(c)the money she received in her bank account from Waterblue.
It is agreed between the parties that the applicant did not work between July 2021 and early November 2021 because of a COVID-19 lockdown imposed by the health authorities in NSW which prevented her from working or leaving the local council area she lived in. It is also agreed that during that period she received COVID-19 disaster payments. I agree with the respondent that those payments cannot be taken into account in calculating the applicant’s PIWI as they are not amounts received by the applicant for paid work as defined by section 82 of the MAI Act or the Guidelines. Prior to the lockdown, the applicant had been earning $1,400 per week since 7 May 2021. Her 2020/ 2021 tax return records that she claimed expenses of $601 for that year.

According to the documents which disclose the applicant’s business income the business’s profitability improved significantly initially on 7 May 2021 because she managed to get what appears to have been regular work with Waterblue. The information available suggests that the business’s income was interrupted by the COVID-19 lockdown. The profitability of the business improved again in early November when the applicant could return to the work provided by Waterblue once the COVID-19 lockdown restrictions were lifted.
The author of the PKF report averaged the improved profitability of the applicant’s business for the combined period 7 May to 30 June 2021 and 12 November to 27 November 2021 over a period of 52 weeks prior to the accident; that is between 27 November 2020 and 27 November 2021 to calculate the applicant’s PIWI as a self-employed person at $331.22.[27] The income earned by the applicant’s business from the work done for Waterblue during that 52 week period less projected expenses of $977[28] was averaged over 52 weeks.
[27] calculation set out on p139 of MAI documents lodged by respondent
[28] Expenses calculated on the assumption that the expenses shown in the applicant’s tax return of $603 were variable and proportionate to each week she earned income
In my view, this calculation is contrary to what Guideline 5.2.4 provides. The Guideline states that where there is evidence of significant improvement in profitability a weekly income figure is to be calculated using recent financial statements, accounting records and business activity statements for the business. The Guideline does not state that the improved profit is to be averaged over the 52-week period prior to the motor accident. The applicant’s records show that her business income when it improved was $1,400 per week. The business expenses she incurred in earning that income need to be deducted from that income because the Guidelines provide that the net income of the business is to be calculated by deducting the expenses from the gross income.[29] However, absent any evidence that improved profitability would not have continued, there is no basis for averaging the weekly income the applicant’s business was earning over the year prior to the accident. The IRB Guidelines do not provide for such averaging.
[29] Guideline 5.2.2
The purpose of paragraph 5.2.4 is to give the applicant the benefit of the increased income she would have earned though her business as a self-employed person but for the motor accident.
Section 82 of the MAI Act states that the PIWI for a self-employed person is the average weekly amount of the sum of the self-employed person’s gross income as an employee and their net income as self-employed for the 52 weeks immediately prior to the motor accident. However, section 88 allows the MAI Commission to make provision in relation to the matters to be considered to determine an injured person’s PIWI. In effect, the Guidelines are delegated legislation, which together with the MAI Act form the legislative scheme which provides for payment of benefits to injured road users. The methodology by which the average weekly amount of the net income of a self-employed person for the 52 weeks prior to the accident is set out in the Guidelines. It is permissible to look at subordinate legislation, “not to construe an overall scheme or to throw light on ambiguity in a statutory provision, but to ascertain what the scheme is”.[30]
[30] See Brayson Motors Pty Ltd (in liq) v Commissioner of Taxation (1985) 156 CLR 651 at [652], cited by the Federal Court in PIPE Networks Pty Ltd v Commonwealth Superannuation Corporation [2013] FCA 444 at [94]
Those Guidelines provide that the relevant 52-week period is generally the 52 weeks of the last tax return relevant to the business prior to the accident. However, if the evidence establishes that the profitability of the business improved significantly from the average weekly income calculated by reference to the last tax return, paragraph 5.2.4 of the Guidelines provides guidance on how the PIWI should be calculated. It is by reference to the documents which show the improved profitability.
In this case, the applicant’s business’s financial position improved significantly when she entered into the arrangement with Waterblue to provide cleaning services in May 2021. That arrangement was interrupted by the COVID-19 lockdown for some months but then it resumed once the lockdown was over. The applicant’s business was then earning the same amount as it was prior to the lockdown. The financial records which showed the improved profitability on a weekly basis as of May 2021 ought to have been used to calculate the applicant’s weekly income. Averaging those earnings over 52 weeks defeats the intention of paragraph 5.2.4 of the Guidelines and it is in my view erroneous.

Conclusion

For the reasons set out above, the decision under review is set aside and remitted to the respondent for reconsideration. I make the following directions in relation to the reconsideration:
(a)The respondent must obtain from the applicant and Waterblue Pty Ltd information pertaining to the terms of contract or agreement between the applicant and Waterblue, relevant to establishing the applicant’s employment status, including but not necessarily limited to, the information set out in paragraphs 42 and 43 of these reasons.
(b)The applicant must provide to the respondent any information the respondent requests which is reasonably required to establish her employment status and any documents in her possession or control which are relevant to her employment and/or her business.

………………………………..

Acting Presidential Member T Kyprianou

Solicitors for the Applicant:	Ms Dalliwall. Gajic Lawyers
Solicitors for the Respondent:	Ms McJannett, HWL Ebsworth Lawyers