Mackary v Allianz Australia Insurance Limited
[2022] NSWPICMR 35
•3 June 2022
| DETERMINATION OF MERIT REVIEW PANEL | |
| CITATION: | Mackary v Allianz Australia Insurance Limited [2022] NSWPICMR 35 |
| CLAIMANT: | Sidney Makary |
| INSURER: | Allianz |
| MERIT REVIEWER: | Katherine Ruschen |
| DATE OF DECISION: | 3 June 2022 |
| CATCHWORDS: | MOTOR ACCIDENT- Merit review; dispute about payment of weekly benefits under Division 3.3 of the Motor Accident Injuries Act 2017 (the 2017 Act); pre-accident weekly earnings; meaning of PAWE; schedule 1 clause 4(1) of the 2017 Act; COVID-19 lockdown; interruption to earnings; projected earnings; COVID-19 disaster payments; earnings as an earner; insufficient documents; section 6.24 of the 2017 Act; 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 Motor Accident Injuries Act 2017 (the MAI Act), and is therefore a merit review matter under Schedule 2(1)(a) of the MAI Act. 1. The reviewable decision is: (a) set aside; (b) the claimant’s pre-accident weekly earnings (PAWE) are $958.07, and (c) should the claimant provide the information and documents to the insurer, as directed in the interim directions dated 25 April 2022, the insurer is to re-determine PAWE based on the further information and documents provided. |
Certificate
Issued under section 7.13(4) of the Motor Accident Injuries Act2017
BACKGROUND
There is a dispute between Sidney Makary (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 15 September 2021.
The claimant made an application for personal injury benefits under the MAI Act.
On 19 November 2021 the insurer determined the claimant’s (PAWE) in the sum of $1,168.70 for the purpose of calculating whether the claimant is entitled to weekly payment of statutory benefits under sections 3.6 and 3.7 of the MAI Act.
The claimant requested an internal review of the insurer’s PAWE decision of 19 November 2021.
On 14 December 2021 the insurer issued their internal review decision in which the insurer affirmed their earlier determination that the claimant’s PAWE is $1,168.70.
The claimant has requested a merit review of the internal review decision dated 14 December 2021.
SUBMISSIONS
The claimant is a self-employed solar electrician and submits his business was “closed down” for several months during the relevant pre-accident period by reason of the COVID-19 pandemic lockdown. The claimant submits that his PAWE should be adjusted to take this into account, as otherwise it does not reflect “actual or estimated earnings” but for the lockdown.
The insurer submits:
(a) the claimant’s PAWE is to be calculated under Schedule 1, clause 4(1) of the MAI Act, which requires earnings to be averaged over a 52 week period;
(b) that there can be no adjustment by reason of COVID-19, or to factor in anticipated post-accident earnings, but for the injury, and
(c) Covid-19 disaster payments and a rebate amount are not earnings for the purpose of calculation of PAWE.
REASONS
Issues
The following issues arise for determination in this merit review:
(a) whether the claimant’s PAWE falls under clause 4(1) or one of the exceptions in clause 4(2)(b);
(b) whether the claimant’s PAWE can be adjusted under the applicable sub-clause under clause 4 to account for the impact of the COVID-19 pandemic on earnings in the pre-accident period and/or to reflect anticipated post-accident earnings, but for the injury;
(c) whether COVID-19 disaster payments and a rebate amount are included in PAWE, and
(d) calculation of the claimant’s PAWE.
Does clause 4(1) or one of the exceptions in clause 4(2) apply to the claimant?
Pursuant to Schedule 1, clause 4 “PAWE” means:
(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) In the following cases, "pre-accident weekly earnings", in relation to an earner who is injured as a result of a motor accident, means--
(a)if, on the day of the motor accident, the earner was earning continuously, but had not been earning continuously for at least 12 months--the weekly average of the gross earnings received by the earner as an earner during the period from when the earner started to earn continuously to immediately before the day of the motor accident,
(a1) if the earner was employed or self-employed during a period or periods equal to at least 26 weeks during the first year of the pre-accident period, but was not obtaining earnings from any source at any other time during the pre-accident period--the average weekly gross earnings received by the earner as an earner during the first year of the pre-accident period,
(b)if subclause (3) applies--the weekly average of the gross earnings received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident,
(c)if the earner is an earner by reason of having entered into an arrangement with an employer or other person to undertake employment or to commence business as a self-employed person--the average weekly gross earnings that the earner could reasonably have been expected to earn, but for the injury, in employment under that arrangement.
(2A) The "pre-accident period" , in relation to a motor accident, is the period of 2 years immediately preceding the motor accident.
(3) This subclause applies if, during the 12 months immediately before the day of the motor accident, there was, as a result of any action taken by the earner, a significant change in his or her earnings circumstances that resulted in the earner regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred.
Note : Examples of a change of circumstances to which this subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.
(4) For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.
The claimant is an “earner” within the meaning in the MAI Act on the basis he falls within the ambit of Schedule 1, clause 2(a), as he was injured as a result of a motor accident, is over 15 years of age, was employed or self-employed for at least 13 weeks of the 52 weeks of the year immediately preceding the accident and had not permanently retired at the date of the accident.
Prima facie, clause 4(1) applies to calculation of the claimant’s PAWE, unless one of the exceptions in clause 4(2) applies to the claimant’s circumstances.
The evidence establishes the claimant had been earning continuously in his business for at least 12 months. Accordingly, clause 4(2)(a) does not apply.
For the exception under clause 4(a1) to apply the claimant must have received earnings for at least 26 weeks during the first year of the two year pre-accident period and must not have received any earnings after the first year of the two year pre-accident period. In the claimant’s case, this means the claimant must receive all earnings (and for at least 26 weeks) in the period15 September 2019 to 14 September 2020 and no earnings in the period 15 September 2020 to 14 September 2021. As the claimant was in receipt of earnings in the second year of the two year pre-accident period that is, after 15 September 2020, clause 4(2)(a1) does not apply.
Clause 4(2)(b) applies, if clause 4(3) is satisfied. Clause 4(3) is satisfied if, during the 12 months before the date of the motor accident, the claimant took action that resulted in a significant change in his earnings circumstances that resulted in him regularly earning more. There is no evidence of any action taken by the claimant before the accident that resulted in him regularly earning or becoming entitled to regularly earn more than he did before the change occurred. In so far as anticipated post-accident earnings are concerned this is not a change that had occurred before the accident. It is also not a change brought about by an action taken by the claimant. Whilst it is expected that the claimant’s earnings would likely increase post lockdown as compared to during lockdown this is not the result of an action taken by the claimant. As the change neither occurred before the accident or by reason of action taken by the claimant, clause 4(3) is not satisfied and accordingly, clause 4(2)(b) does not apply.
There is no evidence to suggest clause 4(2)(c) applies. The claimant is not an earner by reason of having, before the accident, entered into an arrangement to commence a sole trader business at a particular time and place after the day of the accident pursuant to Schedule 1, clause 2(b). The claimant was already running his business before the accident and on this basis, he is an earner pursuant to Schedule 1, clause 2(a)(i), not clause 2(b). Clause 4(2)(c) therefore does not apply.
As none of the exceptions under clause 4(2) apply the claimant’s PAWE falls for assessment under clause 4(1). Pursuant to clause 4(1) the claimant’s PAWE is the weekly average of the gross earnings he received as an earner during the 12 months immediately before the day on which the motor accident occurred. This period is 15 September 2020 to 14 September 2021.
Can the claimant’s PAWE be adjusted by reason of the COVID-19 pandemic or projected post-accident earnings?
There are no provisions under the MAI Act, Motor Accident Injuries Regulation or the Motor Accident Guidelines that permit adjustment of PAWE to account for the impact of the COVID-19 pandemic on a person’s ability to earn during the pre-accident period. The reasons for this are set out by Harrison AsJ in the Supreme Court decision in Allianz Insurance Australia Limited v Shahmiri [2022] NSWSC (Shahmiri). In Shahmiri Harrison AsJ held that pursuant to Schedule 1, clause 4(1) PAWE is to be “calculated by taking … earnings over the whole of the 12-month period immediately before the day of the accident and dividing it by 52 reflecting the number of weeks during the whole 12-month period” and that the MAI does not allow any adjustment to this by reason of the COVID-19 pandemic or other break or reduction in employment or earnings.
Accordingly, the claimant’s PAWE cannot be adjusted under clause 4(1) to account for interruption or reduction in earnings during the COVID-19 lockdown.
There can also be no adjustment to take into account anticipated post-accident earnings. Clause 4(1) is clear in its terms that PAWE comprises only earnings that had been “received” by the claimant in the 12 month period “before” the accident. As the claimant’s projected earnings are not earnings received before the accident, they are excluded from PAWE.
Covid-19 disaster payments and rebate
In so far as the claimant received COVID-19 disaster payments during the 37 week pre-accident period they are excluded from PAWE. This is because the claimant achieves earner status for the purpose of the MAI Act by reason of being in receipt of earnings from employment or self-employment as per the definition of earner in Schedule 1, clause 2. Pursuant to clause 4(3) and 4(2)(b) only earnings received by the claimant “as an earner” can be included in calculation of PAWE.
The claimant did not receive Centrelink COVID-19 disaster payments “as an earner”. He did not perform any work for those payments. The claimant is not in a relationship of employee and employer with Centrelink and did not render services to Centrelink. Accordingly, the claimant did not receive the payments in the capacity of employee or for any services rendered.
Accordingly, COVID-19 disaster payments are not earnings received by the claimant as an earner and are therefore excluded from PAWE. This conclusion is consistent with the article “COVID-19 hub for injured workers and road users” published by the State Insurance Regulatory Authority which states “COVID-19 Disaster Payments are not considered earnings for the purpose of [PAWE]”.
For the same reasons, the rebate amount is also not earnings received by the claimant as an earner and is therefore excluded from PAWE.
Calculation of the claimant’s PAWE
Pursuant to clause 4(1) the claimant’s PAWE is the weekly average of the gross earnings received by him as an earner during the 52 week period from 15 September 2020 to 14 September 2021.
Pursuant to the decision of Harrison AsJ in Shahmiri, the claimant’s earnings are to be averaged over the whole of this 52 week period, regardless of any break or reduction in earnings because of the pandemic, including any lockdown period.
The claimant has not provided sufficient information to allow a proper calculation of PAWE under clause 4(1). As a self-employed earner the gross earnings the claimant receives as an individual earner for the purpose of the MAI Act are the net profit of his business (before tax), after accounting for all expenses incurred by the business. The claimant has failed to provide sufficient evidence of the business income and expenses in the specific period from 15 September 2020 to 14 September 2021.
On 25 April 2022 directions were issued to the parties which required the claimant to provide the following:
(a) complete copies of his tax returns and Australian Taxation Office notices of assessment for the financial years ending 30 June 2020 and 30 June 2021;
(b) complete copies of his Business Activity Statements (BAS) for the period 1 July 2020 to 30 September 2021;
(c) a copy of the profit and loss statement for the period 1 July 2020 to 30 June 2021;
(d) a complete copy of all sales invoices for the period 1 July 2020 o 30 June 2021 that support the gross profit figure (excluding COVID-19 disaster payments and rebate) in the profit and loss statement for this period in the form of a single PDF document with invoices placed in chronological order;
(e) a complete copy of sales invoices for the period 1 July 2021 to 30 September 2021 that support the gross profit figure (excluding COVID19 disaster payments) in the profit and loss statement for this period in the form a single PDF document with invoices placed in chronological order, and
(f) any further submissions he wishes to make.
The claimant failed to comply with these directions. No further documents have been provided.
Pursuant to section 6.24 of the MAI Act the claimant has an obligation, among other things, to:
(a) co-operate fully in respect of the claim for the purpose of giving sufficient information to be satisfied as to the validity of the claim, and
(b) comply with any reasonable request by the insurer to furnish specified information (in addition to the information furnished in the claim) or to produce specified documents or records.
The claimant’s obligations under section 6.24 are mandatory, as are the directions issued on 25 April 2022 in this merit review. The directions for the claimant to provide further documents represent a reasonable request for further information and documents that ought to have been made by the insurer in circumstances where the evidence is insufficient to calculate PAWE over the correct period from 15 September 2020 to 14 September 2021. The request ought not be onerous to the claimant as it is simply a request for records of the business of a kind that ought to be maintained by a business owner such as the claimant in any event. The documents and information therefore ought to be readily available from the claimant and/or his accountant.
Absent sufficient records for the specific PAWE period from 15 September 2020 to 14 September 2021, the insurer agreed to assess PAWE based on net business earnings in the period 1 July 2020 to 14 September 2021 (Adjusted Period). The documents evidence net earnings of the business in the Adjusted Period as follows:
(a) 1 July 2020 to 30 June 2021: $47,132.90 (after excluding the rebate and Covid-19 disaster payments), and
(b) 1 July 2021 to 14 September 2021: $13,081.98.
Total earnings in the Adjusted Period from 1 July 2020 to 14 September 2021 are $60,214.88.
The insurer purports to average this figure over the number of weeks in the Adjusted Period by dividing the total by 52 weeks to produce a weekly average of $1,157.97. However, there is a fundamental error by the insurer in that the Adjusted Period does not comprise 52 weeks. Rather, it comprises 62.85 weeks. Accordingly, if the weekly average is taken over the Adjusted Period from 1 July 2020 to 14 September 2021 it must be averaged over the number of weeks in that period, being 62.85 weeks (Shahmiri makes clear the weekly average is the total divided by the number of weeks in the period in question). Accordingly, the weekly average in the Adjusted Period 1 July 2020 to 14 September 2021 is in fact $958.07 ($60,214.88 divided by 62.85, being the number of weeks in the Adjusted Period).
I accept that taking an average over the Adjusted Period might be an appropriate basis upon which to determine PAWE on the basis of the incomplete documents. However, the insurer’s mathematical error (dividing total earnings in the Adjusted Period by 52 weeks instead of the correct number of weeks in the Adjusted Period, which is 62.85) must be corrected. Accordingly, the claimant’s PAWE is $958.07 being total earnings in the Adjusted Period 1 July 2020 to 14 September 2021 ($60,214.88) divided by the number of weeks in this period (62.85 weeks).
CONCLUSION
The reviewable decision is:
(a) set aside;
(b) the claimant’s PAWE amount is $958.07, and
(c) should the claimant provide the information and documents to the insurer, as directed in the interim directions dated 25 April 2022, the insurer is to re-determine PAWE based on the further information and documents provided.
LEGISLATION AND GUIDELINES
In making this decision, I have considered the following:
· the application, reply and supporting documentation;
· the MAI Act;
· Motor Accident Guidelines, and
· Motor Accident Injuries Regulation 2017.
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