Le v Insurance Australia Ltd t/as NRMA Insurance

[2022] NSWPICMR 47

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER

CITATION:

Le v Insurance Australia Limited t/as NRMA Insurance [2022] NSWPICMR 47

ClaimanT:

Huu Tai Le

Insurer:

Insurance Australia Limited t/as NRMA Insurance

Merit RevieWER:

Stephen Boyd-Boland

DATE OF DECISION:

27 July 2022

cATCHWORDS: 

MOTOR ACCIDENTS -  Dispute about the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Motor Accidents Injuries Act  2017 (2017 Act); claimant owned and operated a business as a wardrobe installer operating as a sole trader with an employee and multiple vehicles; calculation of weekly payments; clause 4(1) of schedule 1 to the 2017 Act definition of "Pre-accident weekly earnings"; meaning of “gross earnings”; consideration of ABZ v QBE Insurance and Aktop v Allianz Insurance; consideration of variable costs and fixed costs in the particular circumstances of the business; statutory construction; consideration of Saraswati v The Queen; Held — the reviewable decision is affirmed; “gross earnings” includes all relevant earnings less all business and work related expenses but before tax payable by the claimant.

Determinations made: 

This determination relates to a merit review matter, which is a reviewable decision under Schedule 2(1)(a) of the Motor Accident Injuries Act 2017, about weekly payments of statutory benefits.

My determination of the Merit Review is as follows:

1.    The reviewable decision is affirmed.

2.    Effective Date: This determination takes effect on 27 July 2022.

3.    Legal Costs: The amount of the Claimant’s costs has not been determined.

STATEMENT OF REASONS

introduction

1. This determination relates to a Merit Review, which is a reviewable decision under Schedule 2(1)(a) of the Motor Accident Injuries Act 2017, about weekly payments of statutory benefits to injured persons.

2. There is a dispute between the Claimant and NRMA Insurance Limited (“the Insurer”) in respect to the calculation of weekly payments pursuant to Division 3.3 of the Motor Accidents Injuries Act 2017 (“the Act”).

3. On 31 August 2021 the claimant was involved in a motor accident.

4. On 18 November 2020 the Insurer made a determination that the Claimant’s pre-accident weekly earnings (PAWE) were $685.81.

5. The Claimant then sought an internal review of the decision on or about 8 December 2020.

6. On 11 January 2020 the Insurer confirmed its earlier determination.

7. The dispute relates to the calculation of the PAWE.

8. The Claimant owned and operated a business as a wardrobe installer operating as a sole trader.

9. The Insurer relied upon a report from Mr Matthew Gwynne of PKF(NS) Forensic Accountants Pty Limited dated 28 October 2021.

10. At the telephone conference on there were directions as follows:

    (a)    The Claimant to provide further submissions on or before 23 June 2022; and

    (b)    the Insurer to provide further submissions by 7 July 2022.

DOCUMENTS CONSIDERED

1. I have considered the documents provided in the application and the reply and any further information provided by the parties being the Application, A1 and AD1 for the Claimant and the Reply and R1 from the Insurer.

SUBMISSIONS

1. The Claimant has provided submissions dated 8 February 2022 and 22 June 2022.

2. The Claimant made reference to:

   (a)    ABZ v QBE Insurance (Merit Review) [2018] NSWSIRADRS 52 (20 November 2018); and

   (b) Aktop v Allianz Insurance [2021] NSWPICMR 33 (13 August 2021).

3. The Claimant asserts that the calculation for PAWE:

   (a)    Should include GST;

   (b)    Should not include depreciation ($7,316.00);

   (c)    Should not include interest costs ($1,518.00); and

   (d)    Should not include superannuation ($2,353.00)

4. The Claimant calculated PWAE to be $1,079.63.

5. The Insurer has provided submissions dated 23 February 2022. It elected not to provide further submissions by 7 July 2022.

6. The Insurer has provided submissions I reviewed these submissions.

REASONS

1. Schedule 1 Clause 4(1) of the MAIA provides:

2. (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. 

3. Schedule 1 Clause 4(1) of the MAIA applies unless the Claimant falls within the exceptions set out in Clause 4(2).

4. Neither party contends that any of the exceptions apply, and it was not in issue that the method of calculating the Claimants pre-accident weekly earnings was pursuant to Schedule 1 Clause 4(1).

5. Schedule 1 Clause 4(1) of the MAIA provides:

6. (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. 

7. In my view Schedule 1 Clause 4(1) requires a number of elements:

8. "Pre-accident weekly earnings"

   (a)    in relation to an earner who is injured as a result of a motor accident, means:

   (b)    the weekly average of

   (c)    the gross earnings

   (d)    received by the earner

   (e)    as an earner

   (f)    during the 12 months immediately before the day on which the motor accident occurred,

9. The dispute was limited to the calculation of gross earnings and the meaning of that expression.

10. The Insurer submitted that the calculation:

    (a)    Should not include the GST;

    (b)    Should include depreciation ($7,316.00);

    (c)    Should include interest costs ($1,518.00);

    (d)    Should include superannuation paid to a worker ($2,353.00)

11. The wording of Schedule 1 Clause 4(1) of the MAIA in terms of gross earnings will not cause much difficulty in respect of an ordinary employee, however, it may cause more complication where the claimant is a sole trader, in partnership or running an incorporated corporation.

12. The claimant referred to ABZ v QBE Insurance, the Merit reviewer noted at 15:

13. “As sole proprietor, the Claimant's net earnings are determined by the total business income earned by him in self-employed capacity after accounting for business expenses but before tax.”

14. I do not accept that description.

15. In Aktop v Allianz Insurance at 30 the Merit reviewer concluded that the ordinary meaning of gross earnings is income adjusted for the cost of revenue, and the cost of revenue includes variables costs but not fixed costs. The decision contains various refences to differing accounting approaches adopted in relation to degerming the cost of revenue.

16. In Aktop v Allianz Insurance at 31 the Merit reviewer noted that the ordinary meaning of a statutory provision is to be applied to give effect to the purpose of a legislation unless it does not promote the underlying purpose or object of the Act (Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1); McHugh J at [21]-[22]).

17. I accept that proposition.

18. There is no support in any of the decisions referred to for including GST in earnings. I accept the Insurer’s submissions on that aspect.

19. In relation to the Superannuation, the evidence before me is that this was paid to an employee of the Claimant and paid to that employee in addition to the salary expenses also paid to that employee. I accept the Insurer’s submissions on that aspect.

20. The Insurer relied upon a report from Mr Matthew Gwynne of PKF(NS) Forensic Accountants Pty Limited dated 28 October 2021. That report includes as deductions the amounts for depreciation and interest.

21. The difficulty with the decisions referred to is that they proceed on the basis of various assumptions including assumptions that the claimant would still need to meet fixed costs after the injury. Here the depreciation related to two vehicles and the business expenses included wages to an employee.

22. I find that “gross earnings” includes all relevant earnings less all business and work related expenses but before tax payable by the claimant.

23. I accept that there may be circumstances where a differing approach could be adopted. On the material before me I do not see any basis has been established as to why in the particular circumstances depreciation and interest should not be included as a business expense.

24. I accept the calculation of the Claimant’s pre-accident weekly earnings (PAWE) in the sum of $685.81.

25. The reviewable decision is affirmed.